Nelson Mandela Bay Municipality said it had developed a 14-point management plan to address irregular expenditure of R11.5 billion rand identified by the Auditor General is his annual report for the 2016/2017 financial year.
Mayor, Athol Trollip said this was historical debt going back to 2002.
Addressing a media briefing in City Hall on Tuesday, Trollip said the Auditor-General's report would be tabled at the first Council meeting for 2018 on Thursday.
"There are many issues around this annual report which are of interest to the public because it deals with public money."
He said that the audit report covers a period in which the budget was established by the ANC-led administration with expenditure on that budget starting before the new administration (DA-led coalition) took over after the 2016 Municipal election.
The DA-led coalition was then responsible for "part of that expenditure to the end of the financial year, 2016/2017," Trollip said while calling for "dual accountability and responsibility" for this particular annual report.
He said the Auditor-General, Kimi Makwetu, made three findings with the "main finding of concern" being irregular expenditure totalling R11.5bn.
Trollip said this was "historical debt" going back to 2002 "in a previous dispensation when there were very little internal controls, very poor document management "and many of the files not being available when the auditor-general was auditing.”
"What was happening was that contracts were being awarded, they were opened ended and the contract just grew and grew. This was clearly illustrated in the book by Dr Crispian Olver, How To Steal A City - and those contracts were used for political purposes as well."
"So, what we found in the past was that of that R11.5bn was simply poor financial management and administration. We are now accountable as the new administration to regularise that or to write it off so that we can start with a clean slate and deal with our own financial year, because at the end of this financial year we will have to account and we won’t be able to blame anyone but ourselves."
"So, in order to prevent further irregular findings and the other qualifications around Plant, Equipment and Depreciation and Retentions of Creditors Payments, we have come with a 14-point management plan to make sure, in conjunction with our relationship with the auditor-general that we will not have perennial findings,” Trollip said.
“What we've also done is that we have made sure that there is a performance management agreement with all executive directors that is linked to the Mayoral Committee Member."
Trollip said “there will be both political and administrative responsibility and consequence management” if these targets were not met.
These are some of the measures announced by Trollip on Tuesday:
*We have hired a new Supply Chain Management Director and the previous director has been dismissed. This will result in all-around better management of the supply chain process.
*A UIFW Policy has been developed in order to better deal with historic financial issues.
*We have, for the first-time signed procurement plans in place for the 2017/18 financial to improve supply chain processes, expenditure patterns and limit deviations
*We have finalised delegations to the Executive Directors to sign-off on contracts which will serve as a financial control for the current financial year and improve contract management and accountability.
*Hired a head of Demand Management who is also a quantity surveyor to ensure value for money in terms of the procurement process.
*Initiated a contract management unit which specifically deals with the contracts that the City enters into and ensures that all processes are correctly followed in terms of legislation.
*Developing of an Electronic Management System to monitor and manage contracts.
*Improved file management including the central storage and securing of tender documents. As a result of this improved control the municipality incurred no new limitation of scope.
*All irregular expenditure (the bulk of which is historic) will be subjected to consequence management and disciplinary process to ensure there is accountability.
*Updating the Supply Chain Policy (to include the construction industry) to strengthen controls and management of the procurement process.
*Investigating all prior year tenders which are open-ended in order to prevent further irregular expenditure.
*The City is finalizing an action plan to address the revaluation of the useful lifespan of plant, property and equipment.
*We will be streamlining the existing systems in order to comply with the AG’s findings.
