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Unqualified result for Mogale
02 December 2009 By Mogale City Reporter MOGALE CITY looks set to achieve its first unqualified report from the auditor-general, Terence Nombembe, for the 2008/2009 financial year. This is according to the City’s chief financial officer, Leslie Mahuma, who says indications look positive for this year’s satisfactory auditing results. The municipality has received qualified reports for the past three financial periods, which means that although the financial statements were considered fair, the auditor-general could not give a clean bill of financial health as some areas still needed attention. Mahuma says Mogale City had a lot of challenges to overcome, especially building capacity in critical management positions. “We have streamlined a lot of things, and have put people into the right positions.” Areas highlighted by the auditor-general that have led to qualification in the past included the City’s landfill sites, which needed funding set aside for rehabilitation once they reached capacity, as required by law; issues surrounding leave pay; and the City’s asset register, particularly intangible assets such as computer software. “All these things we have been dealing with successfully.”Asset register
In the current financial year, Mogale City will comply with the requirements of GAMAP / GRAP 17 for the first time, a financial reporting requirement that deals specifically with tangible and intangible assets, having these on register, and the cost of maintenance and depreciation of these over time, among other things.
The City’s asset register, which includes all infrastructure assets, was completed in June this year with the help of experts in the field, Mahuma confirms.
Mogale City will also be one of only three municipalities in Gauteng to benefit from the roll-out of a cash flow management pilot project initiated by the South African Institute of Chartered Accountants (SAICA). The other two municipalities are Nokeng and Lesedi.
The cash flow tool will be “plugged into” a computer monitor and will be able to track the flow of cash coming in and out of the system, Leon Kaplan, the project leader at SAICA, confirmed earlier in the month at the Gauteng Finance Indaba, held at Thaba Ya Batswana eco lodge in Johannesburg.
He indicated that one of the biggest challenges for municipalities was to manage their actual cash intake against spending, with municipalities often spending what was authorised in their budgets, not what they actually had in hand.
SAICA is a service provider with the Siyenza Manje project, an initiative of the Development Bank of Southern Africa aimed at helping municipalities with hands-on support in capacity building, financial management and reporting, civil engineering and technical aspects, among others. Specialists in these fields assist municipalities in an advisory role, and services are free of charge.
In Mogale City, the SAICA specialists are helping in the fields of auditing and governance; financial management and reporting; debtor management and revenue enhancement; and capacity building.
Mahuma is confident that Mogale City is on the right track, particularly with its cash flow management, which is dealt with “very meticulously”. But challenges remain. Although the City is expecting an unqualified report, the auditor-general has highlighted some matters of emphasis, among these, underspending on its capital budget.
“We must make sure whatever we get, we spend.”
Other areas that will need attention are full compliance with sections of the Municipal Finance Management Act, with the 2008 annual report not compliant and the handling of litigation and how best to deal with this as a financial liability to the City, Mahuma says.
“These are some of the challenges to look out for, but also to sustain the City’s income and keep the people [capacity] that we have built up.”
Mahuma started his career as an accountant at Mafikeng after he graduated from Fort Hare University in 1984. In 1996, he became the chief financial officer of this municipality before moving to Marefong in 1998. He has been with Mogale City as the chief financial officer since 2006.
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