Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698924646129.pdf (South Africa)
STATUS OF MATERIAL IRREGULARITIES IN NATIONAL, PROVINCIAL AND LOCAL GOVERNMENT 15 April 2022 Auditing to build public conﬁdence TABLE OF CONTENTS Introduction ........................................................................................................................................ 2 Local government material irregularities ............................................................................................ 8 Provincial government material irregularities ................................................................................. 105 National government material irregularities .................................................................................... 140 Abbreviations and acronyms used in this report AA AO AG DM LM accounting authority accounting officer auditor-general district municipality local municipality MFMA Municipal Finance Management Act MI MM NEMA NPA NWA PFMA PPPFA PPR SAPS Sars SIU TR material irregularity metropolitan municipality National Environmental Act National Prosecuting Authority National Water Act Public Finance Management Act Preferential Procurement Policy Framework Act Preferential Procurement Regulations South African Police Service South African Revenue Service Special Investigating Unit Treasury Regulations MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 1 Material irregularities in national, provincial and local government: status 15 April 2022 Introduction The responsibilities and duties of accounting officers and authorities are well defined in legislation, underpinned by the basic values and principles governing public administration, as set out in the Constitution of the country.
For many years, our audits have highlighted a systemic failure across government to establish the systems, processes and controls required to make the constitutional and legislative requirements the norm.

Not only are irregularities and the resultant losses, misuse and harm not prevented from happening, but such instances are also not appropriately dealt with when they are identified.
Our mandate has always been to audit and report on these matters so that they can be corrected, but a lack of progress with preventing and dealing with the accountability failures we report on prompted the need for an expansion of our mandate.

The amendments to the Public Audit Act become effective on 1 April 2019.
Rather than being a punitive measure, the amendments are intended to act as a complementary mechanism in the broader public sector accountability value chain by strengthening financial and performance management and instilling the right behaviour in order to prevent MIs and ensure they are appropriately dealt with if they do occur.
The aim of our expanded mandate is to:  promote better accountability  improve the protection of resources  enhance public sector performance and encourage an ethical culture  ultimately, strengthen public sector institutions to better serve citizens.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 2 We are in the third year of implementing the amendments.

In this report, we share the material irregularities identified across all spheres of government and their status at 15 April 2022.
This is the second report we publish on the MI status – our previous report was published on 8 December 2021 and reported on the MI status at 15 October 2021.

The report includes the detail on material irregularities identified and the actions being taken to resolve the MIs – by the AO/AA or through the use of our expanded powers.

The purpose of publishing these reports is to account in a transparent manner for how we have used our expanded mandate.
It further provides oversight bodies, civil society organisations and the general public insight into irregularities that occurred at public sector institutions and the progress or lack of progress with addressing the resultant losses or harm caused.

While this report provides detail about MIs, the insights we gained and the impact being made are not included in this report.
Each sphere of government has different stories on the types of MIs that are prevalent, how the AO/AA responded and the impact achieved through the MI process.

We deal with such information in our general reports.

This MI report is published at the same time as the 2020-21 general report on local government, which includes our reflections on how local government is dealing with the MI process and the impact it is making.
The third report on the MI status will be published together with the 2021-22 general report on national and provincial government later this year.

Overall status By 15 April 2022, we were dealing with 327 material irregularities at various stages in the process.

We estimate the total financial loss of these material irregularities to be R14,7 billion.
Material irregularities identified per sphere of government The MIs on which we notified the AO/AA covered irregularities that resulted in material financial loss, misuse of a material public resource and substantial harm to public sector institutions and the general public.

Nature of material irregularities The graphics that follow show the spread of the 327 MIs across the provinces (local government and provincial government) and for the national government, as well as the nature of these MIs.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 3 Total material irregularities per province and national We recently notified the AOs and AAs of 39 of these MIs, and by 15 April 2022, their responses were not yet due.

Ten MIs were resolved in the prior period.

In this report, we include the detail on the remaining 278 MIs.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 4 Status of the 278 MIs We did not hesitate to use our enforcement mandate if the AO/AA did not take appropriate action.
Actions taken by the AGSA 156 MIs 29 MIs 7 MIs 5 MIs 1 MI Lack of progress by AO/AA in referral for investigation to publiclic body and recommendations 1.

Free State Development Corporation Appropriate actions is being taken to resolve MIs Lack of progress by AO/AA resulting in recommendations issued Recommendations not implemented by AO/AA resulting in remedial action issued Lack of progress by AO/AA resulting in referral for investigation to public body 1.

Ngaka Modiri Molema DM (3) 2.


Human Settlements – FS (2) 3.

Passenger Rail Agency of SA 4.

Department of Defence 1.

Matjhabeng LM 2.

Health – NC 3.

National Treasury 4.

Department of Defence 5.

South African Post Office Limited 11 MIs Resolved MIs 1.

Maluti-A-Phofung LM 2.

Masilonyana LM 3.

Tokologo LM 4.

Govan Mbeki LM 5.

City of Tshwane MM (3) 6.

Msunduzi Municipality 7.

Kai !Garib LM 8.

Joe-Morolong LM 9.

City of Matlosana LM (2) 10.

Ditsobotla LM 11.

Dr Ruth Segomotsi Mompati DM 12.


JB Marks LM 13.

Kgetlengrivier LM 14.

Madibeng LM 15.

Mahikeng LM 16.

Mamusa LM 17.

Ngaka Modiri Molema DM (3) 18.

Ramotshere Moiloa LM 19.

Lekwa Teemane LM 20.

Naledi LM 21.

Department of Health – EC 22.

National Skills Fund 23.

Department of Cooperative Governance 24.

Department of Defence The report is presented per sphere of government.

Included in the report are the 278 MIs to which the AO/AA responded.
The movement from total MIs notified to those reported in the MI report is as follows: MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 5 Sphere of government Local government Provincial government National Total Notified Awaiting response Resolved in prior period Reported in the MI report 185 83 60 327 35 4 0 39 8 2 10 150 70 58 278 MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 6 Local government material irregularities MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 7 Local government material irregularities Limpopo North West Mpumalanga Gauteng Northern Cape Free State KwaZulu-Natal Eastern Cape Western Cape MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 8 EASTERN CAPE (20) Buffalo City MM Chris Hani DM Enoch Mgijima LM King Sabata Dalindyebo LM Ntabankulu LM Intsika Yethu LM Makana LM OR Tambo DM Dr Beyers Naudé LM Inxuba Yethemba LM Nelson Mandela Bay MM Raymond Mhlaba LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 9 Status of MIs (Total: 20) 9 10 1 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action No.
Notified Type MI description Status Status description 1.

24 March 2021 Unbilled revenue The municipality omitted to bill a number of Appropriate Appropriate actions are being taken by the AO.

The AO Buffalo City MM customers for water services rendered during the action is being instituted an investigation into the root causes of this material 2019-20 financial year.

taken to resolve irregularity.


The outcomes of the investigation highlighted a Irregularity: Non-compliance with section 64(2)(b) processes and systems between the municipality’s directorates, of the MFMA and delays in updating systems and registers that linked water Impact: Material financial loss of R9,6 million meters per property.
the MI number of control deficiencies, including a lack of integrated The municipality notified the affected consumers from the 2020- 21 financial year and started to bill them, as per the municipality’s credit control policy.

The AO instituted disciplinary investigations to identify the persons responsible for the material irregularity.

2.
2.

19 October 2021 Inefficient use of The municipality paid a contractor extension of Follow-up or We are determining the most suitable action based on the AO’s Chris Hani DM resources – time cost due to delays caused by the contractor assessment in response.

no/limited with no additional value; therefore, fruitless and process benefit derived wasteful expenditure was incurred.
from money spent Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R20 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 10 3.

31 January 2022 Sars late The municipality did not make payments to Sars by Follow-up or We are evaluating the AO’s response to the newly identified MI.

Dr Beyers Naudé LM payments, the due date, resulting in interest and penalties assessment in resulting in being charged.
process interest and penalties Irregularity: Non-compliance with section 2(1) of the fourth schedule of the Income Tax Act Impact: Material financial loss of R7,1 million Enoch Mgijima LM 4.

31 January 2022 Sars late The municipality did not make PAYE payments to Follow-up or We are evaluating the AO’s response to the newly identified MI.

payments, Sars by the due date, resulting in interest and assessment in resulting in penalties being charged.
process interest and penalties Irregularity: Non-compliance with section 2(1) of the fourth schedule of Income Tax Act Impact: Material financial loss of R1,4 million 5.

24 February 2022 Payment not The department did not make payment to a Follow-up or We are evaluating the AO’s response to the newly identified MI.

made or not service provider for the construction of assessment in made in time, Baccelsfarm Bridge within 30 days, resulting in process resulting in standing time being charged.
interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R1,7 million 6.

24 February 2022 Payment not The municipality did not pay invoices from Eskom Follow-up or We are evaluating the AO’s response to the newly identified MI.

made or not within 30 days, resulting in interest being charged.
assessment in made in time, process resulting in Irregularity: Non-compliance with section 65(2)(e) interest/standing of the MFMA time/penalties Impact: Material financial loss of R6 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 11 7.

16 November Payment for The municipality made payments to a service Follow-up or We are evaluating the AO’s response to the identified MI.
2021 goods or services provider for materials that were not delivered and assessment in not received construction work that was not performed.

process Intsika Yethu LM Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R18 million Inxuba Yethemba LM 8.

27 January 2022 Payment not The municipality did not pay invoices from Eskom Follow-up or We are evaluating the AO’s response to the newly identified MI.
made or not within 30 days, resulting in interest being charged.

assessment in made in time, process resulting in Irregularity: Non-compliance with section 65(2)(e) interest/standing of the MFMA time/penalties Impact: Material financial loss of R11,5 million King Sabata Dalindyebo LM 9.

26 January 2021 Payment not The municipality did not pay invoices from Eskom Appropriate The municipality entered into a payment arrangement with made or not within 30 days, resulting in interest being charged.
action is being Eskom for the payment of the arrear balance.
The AO made in time, taken to resolve committed to ring fencing electricity income to pay only resulting in Irregularity: Non-compliance with section 65(2)(e) the MI electricity expenses starting from 1 July 2021. interest/standing of the MFMA time/penalties Impact: Material financial loss of R4,4 million A cash flow committee was established in August 2021, which is responsible for implementing and monitoring the effectiveness of the cash flow management strategy in pursuit of improving the financial viability of the municipality.
A revenue recovery plan was also implemented from August 2021 and a cost- containment target included in the performance agreements of managers and directors for the 2021-22 financial year.

10.

26 March 2021 Sars late The municipality did not make PAYE payments to Appropriate The municipality applied for remission to have Sars waive the payments, Sars by the due date, resulting in interest and action is being interest and penalties, but Sars has not yet granted this.

resulting in penalties being charged.


taken to resolve the MI MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 12 interest and Irregularity: Non-compliance with section 2(1) of A cash flow committee was established in August 2021, which is penalties the fourth schedule of the Income Tax Act responsible for implementing and monitoring the effectiveness of Impact: Material financial loss of R11 million the cash flow management strategy in pursuit of improving the financial viability of the municipality.
A revenue recovery plan was also implemented from August 2021 and a cost- containment policy included in the performance agreements of managers and directors for the 2021-22 financial year.

11.

11 June 2021 Repeat The municipality did not keep full and proper Appropriate The AO is taking the following actions to address the MI: Makana LM disclaimed audit records of its financial affairs, which resulted in a action is being opinion repeat disclaimed opinion on its financial taken to resolve statements.
The impact was substantial harm to the the MI municipality as its financial position was so poor that it disclosed a material uncertainly regarding its ability to continue operations.

This, in turn, is likely to have an impact on the municipality’s ability to discharge its service-delivery mandate.
Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution  Notified the MEC for local government, MEC for finance and organised local government (Salga) of its financial problems  Prepared a financial recovery plan  Prepared an action plan to address the lack of full and proper records, which included appointing consultants in April 2021 to undertake a full review of the asset register and conditional assessments for assets, and process the necessary corrections and adjustments to the fixed asset register.
The consultants’ duties will also include the transfer of skills  Appointed a manager: revenue with effect from 1 May 2021 after the position had been vacant since February 2018  Commenced with a door-to-door data cleansing and billing confirmation exercise from April 2021, and this project includes obtaining meter readings for both water and electricity  The management has been trained in the new electronic performance management system, Munsoft Performance Assist, which allows the management to upload evidence and documentation when they report on their indicators.
This will prevent the misplacement of documentation.

 Commenced with a preliminary investigation and concluded that there are no officials responsible for the non-compliance with the MFMA.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 13 Nelson Mandela Bay MM 12.
13 December Payment for The municipality paid two contractors in Appropriate An investigation into the matter by the provincial Hawks unit 2019 goods or services December 2018 for the provision of storm-water action is being commenced in January 2020 and the municipality is not received drain cleaning services that were not rendered.

taken to resolve cooperating with the investigation.
The municipality appointed a (Two material irregularities) 1 Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R20,2 million the MI forensic investigator to assist in quantifying the value of the financial loss incurred and in compiling further evidence for submission to the Hawks unit.

On conclusion of the investigation, the AO intends to pursue the recovery of losses incurred and consequence management against the identified responsible official(s).

13.
13 December Unbilled revenue The municipality did not bill revenue from water Appropriate An SLA was signed between the budget and treasury 2019 and sanitation services on a monthly basis for a action is being directorate, the infrastructure and the engineering directorate, number of households in 2018-19. taken to resolve and the Human Settlements Directorate on 7 July 2021 outlining the MI the value chain process between the directorates in respect of Irregularity: Non-compliance with section 64(2)(b) the installation of new water meters, as well as linking them to of the MFMA the billing system.
Impact: Financial loss to be quantified by the AO The AO further plans to ensure that monthly reporting to identify properties without water-related services on the billing system is compiled and sent to the infrastructure and engineering directorate for investigation.

Monthly meetings will be held between the relevant directorates to discuss progress and further action required.

14.
14.

9 December Unbilled revenue The municipality did not charge interest in 2018-19 Resolved An investigation conducted determined that the accounting 2019 on debtors in arrears who had entered into system was not charging interest on the capital portion that is agreements for long-term payment arrangements subject to the arrangement.

The accounting system was with the municipality.

programmed in February 2020 to raise interest monthly.
The Irregularity: Non-compliance with section 64(2)(g) of the MFMA Impact: Material financial loss of R11,2 million municipality has been raising interest on all its interest-bearing, long-term arrangements with effect from February 2020.

The AO tabled a report in the council proposing that the interest not charged in 2018-19 should not be raised retrospectively.

15.
19 May 2021 Unbilled revenue The municipality did not bill revenue from water Appropriate An SLA was signed between the budget and treasury and sanitation services on a monthly basis for a action is being directorate, the infrastructure and engineering directorate and number of households in 2019-20. the human settlements directorates on 7 July 2021 outlining the 1 The discrepancy between the number of MIs in the graph and that in the detail is because two MIs are discussed under MI 12 Nelson Mandela Bay MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 14 Irregularity: Non-compliance with section 64(2)(b) the MI installation of new water meters, as well as linking them to the of the MFMA billing system.
taken to resolve value chain process between the directorates in respect of the Impact: Financial loss to be quantified by the AO The AO further plans to ensure that the following actions are implemented to resolve the material irregularity:  Monthly reporting to identify properties without water-related services on the billing system  Sending the monthly report to the infrastructure and engineering directorate for investigation  The infrastructure and engineering directorate to review their internal business processes relating to the transfer of meter installation information to the billing system.
 Internal audit and risk assurance to include as part of their audit readiness assessment for 2021-22, the review of the internal controls that have been implemented through the SLA and subsequent standard operating procedures between the budget and treasury directorates, the infrastructure and engineering directorate and the human settlements directorate.
 Procurement of additional resources by the infrastructure and engineering directorate to enable the physical verification of water meters on properties and to enable an improved turnaround time.

16.

21 January 2022 Payment not The municipality did not pay the correct pension Appropriate The matter was referred to the council, which referred the Ntabankulu LM made or not fund in terms of a court judgement.
The action is being matter to the municipality’s financial misconduct board for made in time, contributions have since been transferred from the taken to resolve investigation in October 2021.

The investigation is still in progress.

resulting in other pension fund (i.e.

second respondent) to the MI interest/ standing rectify the incorrect payment as per the court time/penalties judgement.

However, the municipality also incurred interest, as payment was not made within 30 days.
The municipality also engaged the services of attorneys to assist in determining the amount of interest due.

The second respondent is liable in terms of the judgement and to assist in recouping those amounts.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 15 Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R5,3 million OR Tambo DM 17.
9 April 2021 Payment for The municipality made payments to Amatola Appropriate The council instituted a forensic investigation into the matter, goods or services Water (an implementing agent for water projects) action is being which was concluded on 17 December 2020.

The report of the not received for goods and services that had not been taken to resolve forensic investigator recommended that the municipality should delivered.
the MI institute disciplinary actions against the officials of the Irregularity: Non-compliance with section 65(2)(1)(a) of the MFMA Impact: Material financial loss of R57 million municipality who facilitated all undue payments without following the due diligence process and/or correct protocols.

The disciplinary processes are currently in progress.
The service level agreement will be signed by the municipality and the implementing agent, stating unequivocally that all payments for invoices from the implementing agent must be based on work done and should clearly demonstrate value for money.

The municipality also reported the matter to the Hawks for criminal investigation.

The investigation is still in progress.

18.


14 January 2022 Payment not The municipality did not pay invoices from Eskom Follow-up or We are evaluating the AO’s response to the newly identified MI.

Raymond Mhlaba LM made or not within 30 days, resulting in interest being charged.

assessment in made in time, resulting in interest/ standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R13,6 million process 19.
14 January 2022 Sars late The municipality did not pay employees’ tax, Follow-up or We are evaluating the AO’s response to the newly identified MI.

payments, which was deducted from employees, over to Sars assessment in resulting in within seven days after the end of the month process interest and during which the amount was deducted.

As a penalties result, penalties and interests were charged.
Irregularity: Non-compliance with section 2(1) of the fourth schedule of the Income Tax Act Impact: Material financial loss of R1,7 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 16 No.

Notified Type MI description Status Status description FREE STATE (14) Letsemeng LM Mafube LM Maluti-A-Phofung LM Mangaung MM Masilonyana LM Matjhabeng LM Ngwathe LM Nketoana LM Setsoto LM Tokologo LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 17 No.
Notified Type MI description Status Status description Status of MIs (Total: 14) 1 8 1 3 0 1 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Letsemeng LM 20.

25 February Payment not The municipality did not pay Eskom invoices for the Appropriate The municipality entered into a repayment agreement with 2021 made or not bulk purchase of electricity within 30 days of receipt action is being Eskom about the Luckhoff account.
A payment plan could not made in time, of the invoice during April 2019 to March 2020, taken to resolve yet be agreed on with Eskom for the remaining towns, as the resulting in resulting in interest being charged.

the MI outstanding balance due was subject to legal proceedings interest / between Eskom and the municipality in the Supreme Court of standing time / Irregularity: Non-compliance with section 65(2)(e) of Appeal.
penalties the MFMA The municipality has undertaken projects to replace all faulty Impact: Material financial loss of R3,7 million electricity and water meters as part of their revenue enhancement strategy.

Contractors for the electricity meters were appointed in July 2020 and in February 2020 for the water meters.

These projects are in progress.

On 30 July 2021, the AO submitted to the municipal public accounts committee (MPAC) a report on fruitless and wasteful expenditure incurred for investigation.
This matter will be dealt with by the MPAC.

Mafube LM 21.

11 June 2021 Repeat The municipality did not keep full and proper records Appropriate The following actions have been taken or are planned to disclaimed audit of its financial affairs, which resulted in a repeat action is being address the MI: opinion disclaimed opinion on its financial statements for taken to resolve  An administrator was appointed by the municipality on 2017-18.
The impact was substantial harm to the the MI 27 January 2020 and a municipal manager was subsequently municipality, as its financial position was so poor that appointed on 1 May 2021.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 18 No.

Notified Type MI description Status Status description it disclosed a material uncertainly regarding its ability  A senior official was suspended on 15 February 2021 due to to continue operations.
This, in turn, is likely to have several maladministration issues identified during previous an impact on the municipality’s ability to discharge audits.

The disciplinary process is still ongoing.

its service-delivery mandate.


 A funding plan for the 2021-22 financial year, which includes activities relating to improved revenue enhancement and Irregularity: Non-compliance with section 62(1)(b) of cost containment, was developed and approved by the the MFMA council on 31 May 2021, and implementation thereof is in Impact: Substantial harm to the public sector progress.

In addition, the AO and Eskom agreed on a institution repayment plan on 21 July 2021.
The AO committed to a payment plan for the amounts due to the pension fund on 22 April 2021.

 The municipality addressed some of the shortcomings with regard to the availability of financial records, which led to the audit outcome for the 2018-19 financial year, as per audit report signed on 30 September 2021, improving from a disclaimer of opinion to a qualified opinion.

The qualified opinion was maintained in the 2019-20 audit report.
The actions taken to address the lack of full and proper records included the following: o The fixed asset register was updated through asset verifications and reconciled with the general ledger and financial statements.

o The reconciliation of bulk purchases as well as the invoices and statements from the Department of Water Affairs were provided for audit purposes.

Maluti-A-Phofung LM 22.


11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO did not take appropriate action to resolve the MI.

disclaimed audit of its financial affairs, which resulted in a repeat opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which 2018 -19.
The impact was substantial harm to the should have been implemented by 14 April 2022: municipality, as its financial position was so poor that MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 19 No.

Notified Type MI description Status Status description it disclosed a material uncertainly regarding its ability  The non-compliance with section 62(1)(b) of the MFMA to continue operations.
This, in turn, is likely to have should be investigated to determine the reasons and an impact on the municipality’s ability to discharge circumstances that led to the non-compliance for the its service-delivery mandate.

purpose of taking appropriate corrective actions and enhancing control weaknesses.
Irregularity: Non-compliance with section 62(1)(b) of  Based on the reasons and circumstances identified, the MFMA appropriate action should be taken to develop and Impact: Substantial harm to public sector institution commence with the implementation of an action plan to address poor record keeping so that full and proper records of the municipality’s financial affairs are kept, in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas, as a minimum: o Complete asset register of all of the municipality’s infrastructure assets and investment property o Billing information and reconciliations to support revenue from service charges o Reconciliation of property rates income with the valuation roll o Register and payment vouchers to support payments made from conditional grant funding, including reconciliations We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the municipality’s financial problems by 14 July 2022.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 20 No.

Notified Type MI description Status Status description We received information about the implementation of recommendations and are currently evaluating the actions taken by the AO to address the MI.

Mangaung MM 23.

8 March 2021 Sars late The municipality understated PAYE for the month of Appropriate Disciplinary action against the official responsible has payments, July 2019, resulting in penalties and interest being action is being commenced.
The responsible official signed an resulting in charged on to the late payment of the under- taken to resolve acknowledgement of receipt of the notice of misconduct on interest and declared amount.

the MI 22 November 2021. penalties A process has been initiated to engage with Sars regarding the Irregularity: Non-compliance with section 2(1) of the possibility of refunding the interest and penalties.

A written fourth schedule of the Income Tax Act submission was made on 29 October 2021 in this regard.
Impact: Material financial loss of R1,7 million A permanent project leader was appointed to process Sars submissions to prevent such non-compliance from recurring.

Masilonyana LM 24.

11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO did not take appropriate action to resolve the MI.
disclaimed audit of its financial affairs, which resulted in a repeat opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which 2017-18.
The impact was substantial harm to the should have been implemented by 13 April 2022: municipality as its financial position was so poor that  The reasons and circumstances behind the non-compliance it disclosed a material uncertainly regarding its ability with section 62(1)(b) of the MFMA should be investigated for to continue operations.
This, in turn, is likely to have the purpose of taking appropriate corrective actions and an impact on the municipality’s ability to discharge improving controls to eliminate weaknesses.

its service-delivery mandate.


 Based on the reasons and circumstances identified, Irregularity: Non-compliance with section 62(1)(b) of implement an action plan to address poor record keeping so the MFMA that full and proper records of the municipality’s financial Impact: Substantial harm to public sector institution affairs are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
appropriate action should be taken to develop and begin to MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 21 No.
Notified Type MI description Status Status description The plan should include anticipated time frames and should address the following key areas as a minimum: o Complete asset register of all of the municipality’s infrastructure assets, including work in progress o Billing information and reconciliations to support revenue from service charges o Register and payment vouchers to support payments made from conditional grant funding, including reconciliations o Payment vouchers, creditor statements and creditor reconciliations for bulk purchases We further recommend that the AO should take appropriate action to develop and begin to implement an action plan to address the municipality’s financial problems, as required by section 135(1) and 135(3)(a) of the MFMA, by 13 July 2022.
The plan should describe the anticipated time frame and milestones to be achieved, and should include as a minimum strategy:  increasing the collection of revenue  optimising costs for bulk purchases  efficiently managing the municipality’s available cash  entering into payment arrangements with major suppliers  repairing and maintaining infrastructure assets.

We are evaluating the actions taken by the AO to address the MI.

25.
25.

5 May 2020 Payment for The municipality paid an estimated R7,2 million Referral The AO could not provide sufficient and appropriate evidence goods or services between April 2017 and June 2019 for the of actions taken in response to being notified of the MI.

The not received construction of an attenuation (flood-protection) actions taken were also considered inadequate.

dam in the Nyakallong storm-water system after it MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 22 Matjhabeng LM No.
Notified Type MI description Status Status description had been certified as complete.

However, a site visit As a result, we referred the MI to the Hawks for investigation in confirmed that the attenuation dam was not June 2021.

The investigation is currently in progress.

constructed, resulting in overpayments on the project.

Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Financial loss to be quantified by the AO 26.
4 May 2020 Payment not The municipality did not pay Eskom invoices for the Appropriate The outstanding balance due to Eskom is currently subject to made or not bulk purchase of electricity within 30 days of receipt action is being legal proceedings between Eskom and the municipality.

made in time, of the invoice during April 2019 – March 2020, taken to resolve Therefore, an agreement could not yet be reached on a resulting in resulting in interest being charged.

the MI payment plan.


interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of The MPAC investigated the fruitless and wasteful expenditure the MFMA relating to the interest incurred and concluded that no person Impact: Material financial loss of R255,5 million can be held responsible for the loss as it was due to the financial position of the municipality and cash flow constraints.

The MPAC investigation report was tabled in council on 29 October 2020.

27.
27.

15 April 2021 Sars late The municipality did not make PAYE payments to Appropriate The municipality engaged with Sars to offset the VAT refund payments, Sars by the due date.

This resulted in penalties and action is being against the PAYE liability, resulting in settlement of the overdue resulting in interest being charged.

taken to resolve account.


interest and the MI penalties Irregularity: Non-compliance with section 2(1) of the The investigation of the fruitless and wasteful expenditure fourth schedule of the Income Tax Act relating to the interest and penalties incurred will be performed Impact: Material financial loss of R2,5 million by the MPAC to determine if any official should be held liable for Ngwathe LM the loss.

28.
28.

24 February Payment not The municipality did not pay Eskom invoices for the Appropriate The municipality is continuously engaging with Eskom to reach a 2021 made or not bulk purchase of electricity within 30 days of receipt action is being mutually accepted payment agreement.

made in time, MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 23 No.
Notified Type MI description Status Status description resulting in of the invoice during April 2019 to March 2020, taken to resolve The MPAC investigated the loss as part of a fruitless and wasteful interest/standing resulting in interest being charged.

the MI expenditure investigation.

The investigation concluded that no time/penalties one was liable but it occurred due to severe cash-flow problems Irregularity: Non-compliance with section 65(2)(e) of at the municipality.
Therefore, the loss could not be recovered the MFMA from anyone.

The council agreed to write off the fruitless and Impact: Material financial loss of R21,6 million wasteful expenditure on 10 December 2020.

29.
29.

24 February Sars late The municipality did not make payments to Sars Resolved The following actions have been taken by the accounting 2021 payments, within seven days after the end of the month during officer to resolve the material irregularity: resulting in which the amounts were deducted or withheld from  The municipality engaged with Sars to waive some of the interest and employees in respect of their liability for normal tax.

interest and penalties previously incurred.


The full outstanding penalties This resulted in interest and penalties being charged amount due to the Sars (after the waiver), was paid in for April 2019 to June 2020.

September 2021.
September 2021.

Irregularity: Non-compliance with section 2(1) of the expenditure incurred, dated 30 November 2020, to the MPAC fourth schedule of the Income Tax Act for investigation who concluded that no person or party Impact: Material financial loss of R4,3 million could be held responsible for the loss.

On 10 December 2020,  The AO submitted a report on fruitless and wasteful the council agreed to write off the fruitless and wasteful expenditure.

Nketoana LM 30.
Nketoana LM 30.

1 February Repeat The municipality did not keep full and proper records Follow-up or We are evaluating the AO’s response to the newly identified MI.

2022 disclaimed audit of its financial affairs, which resulted in a repeat assessment in opinion disclaimed opinion on its financial statements for process 2019-20.

The impact was substantial harm to the municipality, as its financial position was so poor that it disclosed a material uncertainly regarding its ability to continue operations.
This, in turn, is likely to have an impact on the municipality’s ability to discharge its service-delivery mandate.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 24 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution Setsoto LM 31.
30 March 2021 Payment not The municipality did not pay Eskom invoices for the Appropriate The municipality is continuously engaging with Eskom to reach a made or not bulk purchase of electricity within 30 days of receipt action is being mutually agreed-upon payment agreement.

made in time, of the invoice during April 2019 to March 2020, taken to resolve resulting in resulting in interest being charged.
the MI The AO planned to reduce the electricity distribution losses interest/standing through various interventions as part of their revenue time/penalties Irregularity: Non-compliance with section 65(2)(e) of enhancement strategy implemented within the various the MFMA Impact: Material financial loss R2,8 million departments at the municipality.
After the council elected new committee members in January 2022, the investigation of the fruitless and wasteful expenditure incurred will be performed by the MPAC to determine if any official should be held liable for the loss.

32.
32.

30 March 2021 Sars late The municipality did not make PAYE payments to Appropriate The municipality paid the full outstanding amount due to Sars payments, Sars by the due date from April 2019 to June 2020. action is being and is currently in the process of appointing a service provider to resulting in This resulted in interest and penalties being charged.
taken to resolve assist with the recovery of value-added tax and the remission of interest and the MI interest and penalties payable to Sars as part of the revenue- penalties Irregularity: Non-compliance with section 2(1) of the enhancement strategy.
fourth schedule of Income Tax Act Impact: Material financial loss of R2 million After the council elected new committee members in January 2022, the investigation of the fruitless and wasteful expenditure incurred will be performed by the MPAC to determine if any official should be held liable for the loss.

Tokologo LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 25 No.

Notified Type MI description Status Status description 33.
11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO did not take appropriate action to resolve the MI.

disclaimed audit of its financial affairs, which resulted in a repeat opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which 2018 -19.
The impact was substantial harm to the should have been implemented by 14 April 2022: municipality as its financial position was so poor that it disclosed a material uncertainly regarding its ability  The non-compliance with section 62(1)(b) of the MFMA to continue operations.

This, in turn, is likely to have should be investigated to determine the reasons and an impact on the municipality’s ability to discharge circumstances that led to the non-compliance for the its service-delivery mandate.
purpose of taking appropriate corrective actions and enhancing control weaknesses.
Irregularity: Non-compliance with section 62(1)(b) of  Based on the reasons and circumstances, appropriate action the MFMA should be taken to develop and commence with the Impact: Substantial harm to public sector institution implementation of an action plan to address poor record keeping so that full and proper records of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas as a minimum: o Complete the asset register of all of the municipality’s infrastructure assets, including work in progress, as well as payment certificates to support assets purchased o Meter reading records for revenue from service charges.

o Register and payment vouchers to support payments made from conditional grant funding, including reconciliations.
We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 14 July 2022.

The plan should describe the anticipated MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 26 No.
Notified Type MI description Status Status description time frame and milestones to be achieved, and include, as a minimum, strategies to:  increase the collection of revenue  optimise costs in respect of bulk purchases  efficiently manage the available cash of the municipality  enter into payment arrangements with major suppliers.

We received information on the implementation of recommendations and are currently assessing the appropriateness of the actions taken by the AO to address the MI.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 27 No.

Notified Type MI description Status Status description GAUTENG (16) City of Johannesburg MM Merafong City LM City of Tshwane MM West Rand DM Emfuleni LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 28 No.
Notified Type MI description Status Status description Status of MIs (Total: 16) 1 12 0 3 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action City of Johannesburg MM 34.

18 March 2021 Sars late The municipality undercharged employee tax for Appropriate payments, gratuity payments between 2014 and 2017, as it action is being resulting in treated these payments as severance benefit taken to resolve interest and payments.
This resulted in the municipality having to the MI The AO has taken the following action:  Instituted an internal investigation to determine the responsible official(s) who caused the loss.

The report was issued on 30 September 2021 with detailed recommendations penalties pay R9,2 million for the underpayment of employee to be implemented by the AO.

tax and R6,3 million in penalties and interest charged by Sars.
Irregularity: Non-compliance with section 2(1) of the fourth schedule of the Income Tax Act Impact: Material financial loss of R15,5 million  A legal consultant was appointed on 25 October 2021 to confirm the prospects of success on the recoverability of the funds, with a legal opinion issued on 29 November 2021.

Recovery of monies overpaid to current employees is expected to be finalised by 31 January 2022.

Recovery of monies overpaid to former employees is in process.
 The employees who incurred the loss were referred to the disciplinary board and the process is expected to be finalised by April 2022.

 Formal training on employee tax was requested from Sars in October 2021.

35.

15 December Non- Penalty imposed on the municipality for the Appropriate The municipality is still investigating to determine the responsible 2021 compliance, construction of fire station without prior authorisation.

action is being official and consider the recoverability of the loss.
resulting in penalties Irregularity: Non-compliance with section 24(F)(1) of the NEMA Impact: Material financial loss of R2,5 million taken to resolve the MI MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 29 No.

Notified Type MI description Status Status description 36.
11 December Assets not Assets at the Annlin reservoir project were stolen or Appropriate The AO was notified of the material irregularity on 11 December 2019 safeguarded, vandalised in January 2018, as not all reasonable action is being 2019.

The following actions have been taken to resolve the resulting in a loss steps had been taken to safeguard the assets.
taken to resolve material irregularity: City of Tshwane MM Irregularity: Non-compliance with section 63(2)(c) of the MFMA Impact: Material financial loss of R5,5 million the MI  Reported the matter to the South African Police Service for investigation on 11 January 2018 and the investigation was still in progress.

 Installed electronic locks and welded steel doors on access doors to prevent further losses on 9 January 2018.
 The AO had committed to appoint a security company to safeguard assets and prevent further losses by 31 March 2020.

Due to the late appointment of the technical committee and non-availability of the bid evaluation committee members due to covid-19, the AO deployed security personnel from other departments within the municipality to safeguard the assets from 1 February 2021 as an interim measure.

The security tender was advertised and the bid closed on 4 February 2022.
The AO planned to finalise the appointment process by 5 May 2022.
 The matter was referred to the internal forensic services division for investigation on 12 February 2020, which was completed on 26 June 2020; however, it did not cover the following: o Adherence to the assets management policy of the municipality at the time of the incident o Verification and quantification of the financial loss o Whether there was any fraud, corruption or misconduct related to the material irregularity  The second investigation, which was completed on 19 November 2021 by external investigators, could not MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 30 No.
Notified Type MI description Status Status description determine whether the asset management policy and security policy of the municipality had been adhered to at the time of the incident, as these were not submitted to the investigators.

 The AO further committed to develop a policy or guideline, which will inform the municipality of roles and responsibilities relating to security, frequency of monitoring and evaluation activities by 31 March 2022.
As at 15 April 2022, a policy has not yet been developed and the AO indicated that this will be done by 1 July 2022.

37.

17 December Assets not Assets at the Baviaanspoort wastewater treatment Appropriate The following actions have been taken to resolve the material 2019 safeguarded, works were stolen or vandalised in February 2016, as action is being irregularity: resulting in loss not all reasonable steps had been taken to taken to resolve safeguard the assets.
the MI Irregularity: Non-compliance with section 63(2)(c) of the MFMA Impact: Material financial loss of R3,9 million (Recovered loss to date: R0,2 million)  Reported the matter to the South African Police Service for investigation on 10 February 2016.

Two arrests were made on 8 and 11 March 2016.

The perpetrators were sentenced to 12 years and 10 years, respectively.
 Some of the minor assets that were stolen or vandalised were insured and the insurance company reimbursed the municipality R174 716 on 24 February 2017 for the loss.

 Security personnel were increased and all buildings, housing, motor control equipment and electrical transformers were reinforced with grating on 6 September 2019.

 Approved the appointment of a contractor to erect a security fence on 5 December 2019 to prevent further losses.

Erection of the security fence was completed in March 2021.
 The AO had committed to appoint a security company to safeguard assets and prevent further losses by 31 March 2020.

As a result of the late appointment of the technical committee and availability of the bid evaluation committee members due to covid-19, the AO committed to have a security company appointed by 30 June 2021.

However, due MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 31 No.
Notified Type MI description Status Status description to the delay in the finalisation of the budgetary process, the AO deployed security personnel from other departments within the municipality from 1 December 2020 as an interim measure.

The security tender was advertised and the bid closed on 4 February 2022.

The AO plans to finalise the appointment process by 5 May 2022.
 Referred the matter to the internal forensic services division for investigation on 12 February 2020 and the investigation was completed on 26 June 2020.However, it did not cover the following: o Adherence to the assets management policy of the municipality at the time of the incident o Verification and quantification of the financial loss o Whether there was any fraud, corruption or misconduct related to the material irregularity  The second investigation completed on 19 November 2021 by external investigators concluded that the site did not have sufficient controls in place to mitigate theft and vandalism of assets.
Furthermore, the report concluded that there was a lack of monitoring controls relating to the safeguarding of assets.

This was as a result of no security policy and guidelines in place.

 The AO committed to implement the 2following by 31 March 2022. o Develop policy or guidelines that will inform the municipality of roles and responsibilities relating to security, frequency of monitoring and evaluation activities.

o Determine if the security company can be held responsible for the losses incurred.
o Obtain representations from the security company in respect of the theft and vandalism.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 32 No.

Notified Type MI description Status Status description 38.

20 May 2021 Payment not The municipality did not pay rental that became due Recommendations The AO did not take appropriate action to resolve the MI.
As at 15 April 2022, a policy has not yet been developed and the AO indicated that this will be done by 1 July 2022. made or not and payable for Bothongo Plaza, in accordance made in time, with the contract when the lease agreement was resulting in concluded in September 2015. interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R7,1 million We notified the AO of the following recommendations, which should be implemented by 9 June 2022:  The non-compliance with section 65(2)(e) of the MFMA should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Any person(s) liable for the losses should be identified and appropriate action should commence to recover the financial loss.

 Disciplinary action or, when appropriate, criminal proceedings should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

39.
39.

20 May 2021 Payment for The municipality paid salaries to employees between Appropriate A forensic investigation is ongoing to identify officials responsible goods or services November 2019 and October 2020; however, no action is being for payments made without any work having been performed not received work was allocated to these employees and no work taken to resolve and the likelihood of recovering monies paid is currently in was done for the money received.

the MI progress.
the MI progress.

The AO plans to take actions against implicated officials based on the outcomes of the investigation.

Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R88,4 million 40.

5 March 2021 Payment for The municipality paid the pension fund contributions Appropriate The following actions have been taken by the AO: goods or services on 30 August 2019 to an incorrect beneficiary.
This action is being not received was due to the lack of an effective internal control taken to resolve system relating to expenditure management to the MI  The first phase investigation by the internal forensic services unit concluded on 28 February 2020 that unauthorised monitoring software was installed on 70 workstations and MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 33 No.
Notified Type MI description Status Status description confirm banking details and manipulation of recommended that a further investigation be conducted to electronic payment data extracted from the system identify the person responsible for the installation of the Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R53,5 million (Recovered loss to date: R23,1 million) monitoring software over the network.
 The matter was reported to the Hawks in September 2019 and the investigation is still ongoing.

 Criminal charges are being laid against the identified officials, and court proceedings are in process.

 The National Prosecuting Authority recovered an amount of R23 million and paid it over to the municipality on 10 November 2021.
 As from September 2019, internal controls processes were improved to ensure that human resource third-party beneficiaries were created on the banking system and cannot be edited when payments are made.

 The process of awarding a banking tender to allow a host-to- host solution for payments was planned to be finalised by 31 March 2022.

As at 15 April 2022, the tender processes were still ongoing and a finalisation date sill had to be confirmed.
 The AO plans to take action against the implicated officials based on the outcome of the investigations.

41.

25 March 2021 Payment for The municipality paid a contractor on 30 June 2016 Appropriate A forensic investigation conducted by external investigators was goods or services for an informal trading facility at Barolak taxi rank action is being completed on 17 November 2021.

Following the conclusions per not received that was not constructed.
taken to resolve the investigation report, the AO plans to take disciplinary action Irregularity: Non-compliance with section 65(2)(a) of them and the contractor.

the MI against implicated officials and recover the monies paid from the MFMA Impact: Material financial loss of R5 million The municipality is reviewing the report and committed to complete the review by mid-May, with the finalisation date for further actions still to be confirmed.

42.
42.

8 June 2021 Payment for The municipality overpaid three suppliers of fuel due Recommendations The AO did not take appropriate action to resolve the MI.

goods or services to a lack of an effective internal control system not received MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 34 No.
Notified Type MI description Status Status description relating to expenditure management between We notified the AO of the following recommendations, which February 2019 and June 2020. should be implemented by 9 August 2022: Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Financial loss to be quantified by the AO  Appropriate action should be taken to ensure that the investigation into all overpayments is finalised.
 Appropriate action should be taken to recover all financial losses suffered by the municipality from the three suppliers.

 Disciplinary action or, when appropriate, criminal proceedings should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings 43.
8 June 2021 Unbilled revenue The municipality did not charge interest on Recommendations The AO did not take appropriate action to resolve the MI.

outstanding debtor accounts relating to sundry consumer debtors, contrary to the municipal policy and the MFMA between July 2019 and April 2020.
Irregularity: Non-compliance with section 64(2)(g) of the MFMA Impact: Financial loss to be quantified by the AO We notified the AO of the following recommendations, which should be implemented by 9 August 2022:  Quantify the full extent of the interest that should have been charged on sundry debtors in accordance with the credit control and debt collection policy of the municipality.
 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.

 Disciplinary action or, when appropriate, criminal proceedings should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 Appropriate action should be taken to ensure that interest is levied against all sundry debtors in accordance with the municipality’s credit control and debt collection policy, as MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 35 No.

Notified Type MI description Status Status description required by section 64(2)(g) of the MFMA.

This should include interest that was not previously charged in accordance with the policy.

44.
44.

30 November Assets not Assets at Refilwe Manor were stolen or vandalised on Appropriate It was determined through an agreement between the 2021 safeguarded, 8 January 2018, as not all reasonable steps had been action is being municipality and the contractor that the contractor would resulting in loss taken to safeguard the assets.

taken to resolve replace the lost assets, as he was responsible for the loss.
The Irregularity: Non-compliance with section 63(2)(c) of including electrical and mechanical items, are being procured the MI contractor replaced some stolen items and the remaining items, the MFMA at the cost of the contractor.

Impact: Financial loss to be quantified by the AO 45.

15 December Pollution of water The Rooiwal Wastewater Treatment Works has been Follow-up or We are evaluating the AO’s response to the newly identified MI.
2021 sources, resulting operating over capacity with the necessary repairs assessment in in harm to public and maintenance being delayed or not done.

This process resulted in continued spilling and discharge of effluent into the Apies River and Leeuwkraal Dam over a number of years.

The Apies River feeds the Leeuwkop Dam, which is the extraction point of the Temba Water Treatment Plant.
The municipality did not take reasonable measures to prevent pollution or degradation of the environment and water resources from occurring, continuing or recurring, which is likely to cause substantial harm to the communities exposed to and dependent on the contaminated water resources for consumption and farming or agricultural (irrigation) purposes.
Irregularity: Non-compliance with section 28(1) of the NEMA Impact: Substantial harm to the general public MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 36 No.

Notified Type MI description Status Status description 46.

15 December Sars late The municipality did not make payments due to Sars Appropriate The municipality submitted a remission to Sars and is waiting 2021 payments, before the deadline for May 2021 VAT returns, thus action is being feedback from Sars.
Emfuleni LM resulting in incurring penalties.

interest and taken to resolve the MI penalties Irregularity: Non-compliance with section 28(1)(b)(iii) of the Value Added Tax Act Impact: Material financial loss of R1,9 million Merafong City LM 47.

15 December Payment not The municipality did not make payments due to Appropriate The municipality concluded nobody was responsible for the loss.
2021 made or not Eskom within 30 days of the invoice date in 2018-19 action is being In addition, the loss was irrecoverable as it was the result of made in time, and thus incurred interest on the outstanding taken to resolve financial constraints.

The municipality entered into a payment resulting in amounts.

interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Financial loss to be quantified by the AO the MI agreement with Eskom.

48.
48.

15 December Loss of During 2017–18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.

The municipality 2021 investments which was not a registered bank in terms of the action is being received a payment of R3,5 million from the VBS liquidator.

The Banks Act.

taken to resolve Hawks are still investigating the matter and criminal charges the MI have been laid against the identified officials.
Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R52,5 million (Recovered loss to date: R3,5 million) MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 37 No.

Notified Type MI description Status Status description 49.

15 December Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investments which was not a registered bank in terms of the action is being received a payment R5,3 million from the VBS liquidators.

Banks Act.
Banks Act.

taken to resolve The Hawks are still investigating the matter and criminal charges the MI have been laid against the identified officials West Rand DM Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R76,1 million (Recovered loss to date: R5,3 million) MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 38 No.
Notified Type MI description Status Status description KWAZULU-NATAL (31) Abaqulusi LM eThekwini MM Harry Gwala DM Kwa-Dukuza LM Mpofana LM Msunduzi DM Newcastle LM Ugu DM uMzinyathi DM uThukela DM uMkhanyakude DM uThukela water entity MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 39 No.
Notified Type MI description Status Status description Status of MIs (Total: 31) 7 20 3 1 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Abaqulusi LM 50.
6 December Payment not Payments to a service provider were not made Appropriate The investigation of fruitless and wasteful expenditure was done 2021 made or not within 30 days, resulting in interest charges being action is being by the internal audit unit and the report was submitted to the made in time, raised in the 2020-21 period taken to resolve council on 30 June 2021.
The council approved the write-off of resulting in the MI the fruitless and wasteful expenditure relating to the interest, interest/standing Irregularity: Non-compliance with section 65(2)(e) of subject to an investigation by the Special Investigation time/penalties the MFMA Committee.

Impact: Material financial loss of R2,9 million This investigation is still underway.
No further financial loss was incurred, as the debt has been paid in accordance with a settlement agreement between the municipality and the service provider.

51.
51.

6 December Payment not Payments were not made within 30 days to a service Appropriate The investigation of fruitless and wasteful expenditure was done 2021 made or not provider, resulting in interest charges being raised in action is being by the internal audit unit and the report was submitted to made in time, 2020-21 period taken to resolve council on 30 June 2021.
The council approved the write-off of resulting in the MI the fruitless and wasteful expenditure relating to the interest, interest/standing Irregularity: Non-compliance with section 65(2)(e) of subject to an investigation by the Special Investigation time/penalties the MFMA Committee.

Impact: Material financial loss of R1,9 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 This investigation is still underway.
No further financial loss was incurred, as the debt has been paid in accordance with a settlement agreement between the municipality and the service provider.

40 No.

Notified Type MI description Status Status description 52.

18 January Unbilled revenue The municipality did not charge interest on its arrear Appropriate The credit control policy to charge interest was approved by the 2021 debtor accounts for the 2019-20 and 2020-21 action is being council and implemented from January 2022. financial years.
taken to resolve Irregularity: Non-compliance with section 64(2)(g) of of the previous interest not charged still has to be submitted to the MFMA the council for approval, as the municipality cannot charge Impact: Financial loss to be quantified by the AO interest retrospectively.

the MI An item recommending that the council condone the write-off 53.
7 February Unbilled revenue Some consumers were not billed for sewerage Appropriate A data cleansing exercise is underway to establish which 2022 services that had been provided for the period 1 July action is being households must be billed and were not billed previously.

2020 to 30 June 2021. taken to resolve Irregularity: Non-compliance with section 64(2)(e)(i) the MI Additional information is still being awaited in respect of of the MFMA investigations to be performed.
Council intervention is required Impact: Financial loss to be quantified by the AO where meters cannot be installed.

Monthly reconciliations will be performed to identify consumers not being billed on an ongoing basis.

eThekwini MM 54.

24 November Suspected fraud, Payments were made to a service provider for Appropriate The municipality is performing an investigation into this material 2021 resulting in loss consultation services without evidence of services action is being irregularity.
having been received.

taken to resolve the MI Irregularity: Suspected fraud Impact: Financial loss to be quantified by the AO 55.

29 October Procurement The municipality procured tie-on masks at prices Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 non- higher than those recommended.

This procurement assessment in The municipality is performing an investigation into this MI.
compliance, at excessive prices resulted in a financial loss for the process resulting in municipality.

overpricing of procured goods Irregularity: Non-compliance with section 62(1)(a) of and services the MFMA Impact: Material financial loss of R1,9 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 41 No.

Notified Type MI description Status Status description 56.
29 October Procurement The municipality procured N95 masks at prices higher Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 non- than those recommended.

This procurement at assessment in The municipality is performing an investigation into this MI.

compliance, excessive prices resulted in a financial loss for the process resulting in municipality.
overpricing of procured goods Irregularity: Non-compliance with section 62(1)(a) of and services the MFMA Impact: Material financial loss of R1 million 57.

15 December Payment not In April 2019 – March 2020, payment to a service Appropriate Negotiations were held with the supplier.
The council will pay the 2021 made or not provider for security services was not made within 30 action is being outstanding invoices, as the services had been rendered, and made in time, days, resulting in interest charges being raised.

taken to resolve the supplier would issue the council with credit notes relating to resulting in the MI the interest that was previously levied on those invoices.
In this interest/standing Irregularity: Non-compliance with section 65(2)(e) of way, a loss would be prevented.

time/penalties the MFMA Impact: Financial loss to be quantified by the AO In addition, the accounts payable department implemented controls to enable suppliers to query outstanding payments and to monitor that outstanding accounts are settled within 30 days: Harry Gwala DM 58.
15 February Inefficient use of The municipality was charged standing time by a Appropriate The matter has been investigated by an independent firm 2022 resources – contractor for delays incurred during the action is being appointed by the municipality.

The investigation found that the no/limited construction of the Gala Bulk pipeline project.

taken to resolve municipality had overpaid the contractor and that monies had benefit derived the MI to be recovered from the supplier.
This recovery was in process.

from money Irregularity: Non-compliance with section 116(2)(a) of spent the MFMA Furthermore, disciplinary actions would be instituted against the Impact: Financial loss to be quantified by the AO officials responsible.

Kwa-Dukuza LM 59.
Kwa-Dukuza LM 59.

1 March 2022 Assets not The municipality did not ensure that all reasonable Appropriate The municipality is performing an investigation into this material safeguarded, steps had been taken to safeguard the assets, action is being irregularity.

resulting in loss resulting in work-in-progress assets pertaining to taken to resolve Woodmead Transport Node having been vandalised the MI MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 42 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 63(1)(a) of the MFMA Impact: Financial loss to be quantified by the AO Mpofana LM 60.
2 February Payment not The municipality did not make payments due to Appropriate The following steps are planned to address the MI: 2022 made or not Eskom within 30 days of the invoice date and thus action is being  The management was in the process of signing a payment made in time, incurred interest on the outstanding amounts.

taken to resolve plan with Eskom, which will allow the municipality to honour resulting in the MI monthly bills and prevent the further escalation of debts.
interest/standing Irregularity: Non-compliance with section 65(2)(e) of  The management was in the process of correcting all time/penalties the MFMA debtors’ accounts to ensure timeous billing and enforcement Impact: Material financial loss of R17,7 million of credit control policies for maximum debt collection.

61.

1 April 2021 Unbilled revenue The municipality did not recognise revenue earned Recommendations The AO did not take appropriate action to resolve the MI.
Management prepared a financial recovery plan with the assistance of the provincial treasury.

Msunduzi DM from landfill sites, as the weighbridge digitiser at the municipal landfill site had been out of order for six months in 2019-20.

Vehicles entering the site were not weighed and, therefore, there was no record of tonnage deposited.
We notified the AO of the following recommendations, which had to be implemented by 29 April 2022:  The non-compliance should be investigated to determine if any official might committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.

The Irregularity: Non-compliance with section 4(2)(e)(i) of financial loss should be quantified.
the MFMA Impact: Material financial loss of R3,9 million  Disciplinary action or, when appropriate, criminal proceedings had to be taken against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 43 No.

Notified Type MI description Status Status description 62.
3 May 2021 Unbilled revenue The municipality failed to collect revenue from a Appropriate An independent expert has been appointed to conduct a  Any person(s) liable for the losses should be identified and appropriate action should commence to recover the financial loss.

service provider for the disposal of timber in terms of action is being verification of the plantation.

the service level agreement.


taken to resolve Irregularity: Non-compliance with section 64(2)(a) of service provider for total management of the municipal forestry the MI A tender notice was issued for the appointment of a suitable the MFMA plantation.

Impact: Material financial loss of R13,6 million The recovery of the financial loss from the supplier was in process.

63.
63.

15 April 2021 Payment for The municipality made salary payments from Appropriate The municipality’s internal audit unit conducted a forensic goods or services December 2016 to July 2019 to an employee who action is being investigation, which was tabled in the council.

not received never reported for duty since their appointment taken to resolve date.

The municipality received no services in return the MI The recovery of the financial loss from the employee was in for the payments made.

process.
process.

Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Material financial loss of R1,7 million Newcastle LM 64.
26 February Sars late The municipality did not make PAYE payments to Appropriate The AO committed to ensure that the payments to Sars are 2021 payments, Sars by the due date, and thus incurred interest and action is being made within the required time frame and to strengthen controls resulting in penalties in 2019-20. taken to resolve over creditors, including performing monthly reconciliations.
interest and the MI Payments to Sars have since been made on time and no penalties Irregularity: Non-compliance with section 2(1) of the material interest has been incurred.

fourth schedule of the Income Tax Act Impact: Material financial loss of R1,5 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 44 No.

Notified Type MI description Status Status description 65.
14 April 2021 Payment to The municipality did not timeously remove Appropriate The AO committed to strengthen controls to prevent the ineligible terminated employees from the human resources action is being occurrence of salary overpayments on termination and to beneficiaries and payroll systems.
This resulted in employees taken to resolve investigate and report the findings and recommendations to the receiving salary payments although they were no the MI council for possible recovery, write-off or condonation.

longer in the employ of the municipality.


Irregularity: Non-compliance with section 65(2)(a) of investigate unauthorised, irregular, and fruitless and wasteful the MFMA expenditure for 2017-18 to 2020-21 as per a council resolution Impact: Financial loss to be quantified by the AO taken on 3 March 2021.

The internal audit reported the On 9 August 2021, the AO engaged the internal audit unit to outcomes of the investigation on 13 September 2021.
The AO planned to take the necessary actions based on the outcomes of the report and the council resolutions.

66.

26 February Payment not The municipality did not make payments due to Resolved The AO committed to strengthen controls over creditors, to 2021 made or not Eskom within 30 days of the invoice date in 2019-20, prioritise third-party payments and do monthly reconciliations.

made in time, resulting in interest being charged.


resulting in The AO entered into a debt repayment agreement with Eskom interest/standing Irregularity: Non-compliance with section 65(2)(e) of on 15 July 2020, which suspended future interest charges.

The time/penalties the MFMA municipality prioritised the Eskom account and ensured that Impact: Material financial loss of R2,4 million payments were made on time to prevent any further material financial losses.
On 25 August 2021, the AO presented the quarterly report on the implementation of the budget for 30 June 2021 to the council, confirming that the municipality had been experiencing cash flow challenges and that no official could be held liable for the financial loss.

67.
67.

26 February Sars late The municipality did not make VAT payments due to Resolved The AO committed to strengthen controls over creditors, to 2021 payments, Sars by the due date and thus incurred interest and prioritise third-party payments and to do monthly reconciliations.
resulting in penalties for 2019-20. interest and penalties MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 The municipality prioritised the Sars account and ensured that submission is made on time to prevent any further material 45 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with section 28(1) of the financial loss.
Third-party payments are now made within the Value Added Tax Act required time frames, with zero interest and penalties charged Impact: Material financial loss of R8,3 million by Sars.

On 25 August 2021, the AO presented the quarterly report on the implementation of the budget for 30 June 2021 to the council, confirming that the municipality had been experiencing cash flow challenges and that no official could be held liable for the financial loss.

Ugu DM 68.
Ugu DM 68.

17 January Payment not The municipality did not make payments due to the Follow-up or We are evaluating the AO’s response to the newly identified MI.

2022 made or not Umgeni Water Board within 30 days of the invoice assessment in made in time, date and thus incurred interest on the outstanding process resulting in amounts.

interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R2,2 million uMkhanyakude DM 69.
28 March 2021 Assets not Unused water pipes were not appropriately Appropriate The AO committed to safeguard the assets by implementing the safeguarded, safeguarded, resulting in the impairment of the action is being following measures: resulting in loss water pipes stock in 2019-20. taken to resolve • Obtain a quotation for the proper storage of the steel pipes to the MI reduce and/or eliminate the deterioration of the steel pipes.
The non-compliance is likely to result in a material • Conduct an assessment of the best options to prevent further financial loss, as the pipes are unusable due to the losses, which will include selling the pipes and identifying future poor storage conditions, as confirmed during projects where these pipes will be used.

engagements with both management and an audit The resolution of the MI is delayed by instability in the AO expert.

position.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 46 No.
Notified Type MI description Status Status description Irregularity: Non-compliance section 63(1)(a) and 63(2)(c) of the MFMA Impact: Financial loss to be quantified by the AO 70.
22 April 2021 Payment for The municipality accepted and paid invoices to Appropriate The AO committed to conduct an investigation through the goods or services suppliers related to covid-19 infrastructure projects action is being internal audit unit to determine if the goods and services were not received during 2020 without confirming whether the goods taken to resolve received, to assist with the recovery of monies paid where assets paid for had been received (there was no evidence the MI could be located and to determine if any individual(s) should be that the goods had been received before payment held accountable.
The resolution of the MI was delayed by was made).

instability in the AO position.

Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Financial loss to be quantified by the AO 71.

29 April 2021 Assets not A contractor moved municipal assets off site in Appropriate The AO committed to appoint a legal firm to assist in the safeguarded, September 2019 on termination of their services with action is being recovery of the goods from the supplier.
The resolution of the MI resulting in loss the municipality.

The assets were still recorded as taken to resolve was delayed by instability in the AO position work in progress and included in the work-in-progress the MI register of the municipality at the end of the 2019-20 financial year, without any attempt to recover the said assets or report the unlawful removal of the assets by the contractor to the SAPS.
Irregularity: Non-compliance with section 63(1)(a) and 63(2)(c) of the MFMA Impact: Financial loss to be quantified by the AO 72.

29 April 2021 Assets not Prepaid water meters held as inventory were Appropriate The AO committed to assess the remaining water meters for safeguarded, impaired in 2019-20 as a result of poor storage action is being usability and to determine the most feasible option; i.e.
whether resulting in loss conditions and a poor system of internal control over taken to resolve to sell the water meters or use them in current projects.

The stock.

These meters lost their economic value or the MI resolution of the MI was delayed by instability in the AO position.

service, resulting in a financial loss for the municipality.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 47 No.
Notified Type MI description Status Status description Irregularity: Non-compliance section 63(1)(a) and 63(2)(c) of the MFMA Impact: Material financial loss of R9 million 73.

28 March 2021 Payment not The municipality failed to ensure that payments due Follow-up or We are evaluating the AO’s response to the identified MI.

The made or not to a supplier were made within 30 days of the assessment in delay was caused by instability in the AO position.

made in time, invoice date.


process resulting in interest/standing time/penalties The municipality then entered into an acknowledgement of debt and undertook to pay the supplier the outstanding amount over 36 instalments, at an interest rate of 5% per annum.

The municipality thus incurred interest on the outstanding amount of R1,2 million for 2019-20, with a further R0,4 million in interest still to be incurred over the remainder of the settlement period.
Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Financial loss to be quantified by the AO 74.

28 March 2021 Unbilled revenue The municipality did not bill a substantial number of Follow-up or We are evaluating the AO’s response to the identified MI.

The customers for services rendered during 2019-20. assessment in delay was caused by instability in the AO position.
Furthermore, the municipality did not bill consumers process using average billing for the months where actual monthly meter readings were not done.

Irregularity: Non-compliance with section 64(2)(b) of the MFMA Impact: Financial loss to be quantified by the AO 75.

9 April 2021 Debt not No steps were taken to collect long-outstanding Follow-up or We are evaluating the AO’s response to the identified MI.

The recovered debts due to the municipality.


assessment in delay was caused by instability in the AO position.

Irregularity: Non-compliance with section 62(1)(f)(iii) process of the MFMA Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 48 No.

Notified Type MI description Status Status description 76.

29 April 2021 Assets not The municipality wrote off infrastructure assets that Follow-up or We are evaluating the AO’s response to the identified MI.
The safeguarded, had been paid for in prior years but could not be assessment in delay was caused by instability in the AO position.

resulting in loss verified anymore, due to an ineffective system of process control over municipal assets.

Irregularity: Non-compliance with section 63(1)(a) and 63(2)(c) of the MFMA Impact: Financial loss to be quantified by the AO uMzinyathi DM 77.
7 June 2021 Repeat The municipality did not keep full and proper records Appropriate The following actions have been undertaken or committed to by disclaimed audit of its financial affairs, which resulted in a repeat action is being the AO to address the MI: opinion disclaimed opinion on its financial statements for taken to resolve  A service provider was appointed to assist with the asset 2020-21.
The impact was substantial harm to the the MI register and relevant asset schedules, which will allow a municipality, as its financial position was so poor that transfer of skills and ensure that these documents are it disclosed a material uncertainly regarding its ability maintained annually.

to continue operations.

This, in turn, is likely to have  A water losses policy has been developed.
an impact on the municipality’s ability to discharge  A process of monthly reconciliations and daily reporting on its service-delivery mandate.

Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution water and chemical inventory will be implemented, and regular monitoring and oversight maintained on these processes.

 Formalisation and implementation of the debt impairment policy, which had been in draft.
The AO also committed to continue putting effort into internal capacity building over record keeping and internal controls, instead of over reliance on external service providers.

78.
78.

21 April 2021 Unbilled revenue The municipality did not charge interest on its arrear Resolved The error was adequately corrected by charging interest on debtor accounts for January 2020. those accounts that were erroneously omitted and correctly Irregularity: Non-compliance with section 64(2)(g) of the MFMA Impact: Material financial loss of R2,6 million accounting for the prior period error in the financial statements.
The debtors systems was updated to keep track of the formal MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 49 No.

Notified Type MI description Status Status description (Recovered loss to date: R2,6 million).

payment arrangements/agreements with customers who have overdue accounts to ensure monthly interests is charged to the correct customers and there are no omissions.

uThukela DM 79.
uThukela DM 79.

31 March 2021 Payment not The municipality did not pay Umgeni Water for the Appropriate The municipality submitted a request to Umgeni Water to have made or not bulk purchase of water within 30 days of receipt of action is being the interest written off.
Umgeni Water indicated that they would made in time, an invoice, resulting in interest on its outstanding taken to resolve submit the issue of writing off the interest to their board for resulting in accounts in 2019-20. the MI consideration.
interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Financial loss to be quantified by the AO uThukela water entity There was still no final payment arrangement in place and the municipality was servicing the debt with monthly payments.

80.
80.

25 January Payment not The municipal entity did not pay the Department of Appropriate The AA is engaging with the municipalities responsible for these 2022 made or not Water and Sanitation within 30 days of receipt of the action is being unpaid amounts and proposed a payment plan for each of the made in time, invoice date and thus incurred interest on the taken to resolve municipalities.

resulting in outstanding amounts.


the MI interest/standing time/penalties Irregularity: Non-compliance with section 99(2)(b) of the MFMA Impact: Material financial loss of R29,9 million The AA further engaged the Department of Water and Sanitation on the matter in order to start paying some of the outstanding debt, as the entity has not been making payments for the debt in the past.

The entity started to make some payments towards the outstanding debts since October 2021.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 50 No.

Notified Type MI description Status Status description LIMPOPO (9) Collins Chabane LM Greater Giyani LM Lepelle-Nkumpi LM Ephraim Mogale LM Makhado LM Vhembe DM Fetakgomo Tubatse LM Mogalakwena LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 51 No.
Notified Type MI description Status Status description Status of MIs (Total: 9) 0 9 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Collins Chabane LM 81.

4 November Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investment which was not a registered bank in terms of the action is being received a payment of R8,6 million from the VBS liquidators.

Banks Act.

taken to resolve Irregularity: Non-compliance with municipal in the matter, including the AO and the CFO who were investment regulation 6(c) suspended and subsequently resigned from the municipality.
The Impact: Material financial loss of R122 million disciplinary proceedings of the AO were concluded in February the MI Certain officials were disciplined in respect of their involvement (Recovered loss to date: R8,6 million) 2021.

To prevent recurrence, the municipality reviewed and amended their policies.

They also intend to establish an Investment committee to monitor investment activities of the municipality.

Ephraim Mogale DM 82.


8 December Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.

The municipality 2021 investment which was not a registered bank in terms of the action is being received a payment of R6,1 million from the VBS liquidators.

Banks Act.

taken to resolve the MI Implicated officials were disciplined and subsequently resigned.
Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R87 million (Recovered loss to date: R6,1 million) To prevent recurrence, the municipality reviewed and amended their policies.

They also intend to establish an Investment committee to monitor investment activities of the municipality.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 52 No.

Notified Type MI description Status Status description 83.
25 November Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.

The municipality 2021 investments which was not a registered bank in terms of the action is being received a payment of R16,1 million from the VBS liquidators.

Fetakgomo Tubatse LM Banks Act.

taken to resolve Irregularity: Non-compliance with municipal including the AO and CFO, for their involvement in this matter investment regulation 6(c) and they subsequently resigned.
the MI Disciplinary processes were initiated against certain officials, Impact: Material financial loss of R245 million (Recovered loss to date: R16,1 million) A comprehensive cash management and investment policy was developed and approved by the council to prevent recurrence.

Greater Giyani LM 84.

9 December Loss of During 2017-08, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investment which was not a registered bank in terms of the action is being received a payment of R10,7 million from the VBS liquidators.

Banks Act.

taken to resolve Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R159 million (Recovered loss to date: R10,7 million) Makhado LM the MI Disciplinary processes were initiated against certain officials for their involvement in this matter.
On conclusion of the disciplinary process, one official was dismissed while another resigned prior to the disciplinary hearing.

A comprehensive cash management and investment policy was reviewed and approved by the council to prevent recurrence.

85.

10 December Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investment which was not a registered bank in terms of the action is being received a payment of R4,4 million from the VBS liquidators.

Banks Act.
Banks Act.

taken to resolve Irregularity: Non-compliance with municipal investment regulation 6(c) MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 the MI The AO's contract expired prior to the VBS investigation and the CFO resigned to join another municipality before the disciplinary process took place; therefore, the council had no power to discipline them.

53 No.
53 No.

Notified Type MI description Status Status description Impact: Material financial loss of R63 million (Recovered loss to date: R4,4 million) A comprehensive cash management and investment policy was reviewed and approved by the council to prevent recurrence, and the municipality now only invests with banks registered in terms of the Banks Act.

Mogalakwena LM 86.
Mogalakwena LM 86.

14 December Payment for The municipality made payments of R13,3 million to a Appropriate The AO instituted a preliminary investigation into the matter on 2019 goods or services contractor for construction work not delivered at the action is being 12 February 2020.

The preliminary investigation revealed that two not received Moshate Stadium on a R38,8 million contract taken to resolve officials were directly involved.
The municipality issued letters of awarded in March 2016. the MI suspension in May 2020 for the duration of the investigation.

Irregularity: Non-compliance with section 65(2)(a) of The formal investigation was concluded in August 2020, which the MFMA identified the responsible officials and recommended that they Impact: Material financial loss of R13,3 million be charged for financial misconduct.
The two officials implicated have both resigned in the process of disciplinary actions which had commenced in March 2021.

As a result, the disciplinary proceedings were withdrawn.

The recovery process has commenced through the court.

87.

30 November Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investment which was not a registered bank in terms of the action is being received a payment of R10,5 million from the VBS liquidators.

Banks Act.

taken to resolve Lepelle-Nkumpi LM Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R155 million (Recovered loss to date: R10,5 million) the MI Implicated officials were charged by the municipality but they resigned before their disciplinary processes could be concluded.
A comprehensive cash management and investment policy was reviewed and approved by the council to prevent recurrence.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 54 No.

Notified Type MI description Status Status description 88.

19 October Loss of During 2017-18, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investments which was not a registered bank in terms of the action is being received a payment of R22 million from the VBS liquidators.

Vhembe DM Banks Act.

taken to resolve the MI Disciplinary steps were taken against the AO and CFO and both Irregularity: Non-compliance with municipal their services were terminated.
investment regulation 6(c) Impact: Material financial loss of R316 million A comprehensive cash management and investment policy was (Recovered loss to date: R22 million) reviewed and approved by the council to prevent recurrence.

89.
89.

2 August 2021 Unbilled revenue The municipality did not bill a significant number of Appropriate The municipality entered into an agreement with the DBSA in customers for services rendered, as meters were not action is being terms of which the DBSA would assist with a revenue read for the purposes of revenue billing on a monthly taken to resolve enhancement strategy, which would focus on database basis.
This resulted in a significant number of the MI cleansing, tariff review and structuring thereof, along with an accounts being without variables to enable audit of water meters.

The agreement was signed on 19 April estimations.

The municipality then estimated 2021. consumption for the affected consumers to be zero.
Irregularity: Non-compliance with section 64(2)(b) of submissions received in respect of revenue enhancement the MFMA support was underway and would be followed in the Impact: Financial loss to be quantified by the AO appointment of the successful service provider to undertake the The DBSA confirmed that the evaluation of the tender revenue enhancement process.

It was envisaged that the appointment of the successful service provider would be finalised by the end of January 2022.
The revenue enhancement support from the DBSA will be implemented over a period of 18 months.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 55 No.

Notified Type MI description Status Status description MPUMALANGA (13) Bushbuck Ridge LM Emalahleni LM Thaba Chweu LM City of Mbombela LM Govan Mbeki LM Dr JS Moroka LM Lekwa LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 56 No.
Notified Type MI description Status Status description Status of MIs (Total: 13) 10 1 1 1 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action 90.

28 October Payment for Payment was made to a service provider for the Follow-up or We are evaluating the AO’s response to the identified MI.
2021 goods or services paving of internal streets and delivery of materials in assessment in not received December 2018 without evidence of the work process Bushbuck Ridge LM having been performed and materials having been delivered.

Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Financial loss to be quantified by the AO City of Mbombela LM 91.
21 April 2021 Payment not The municipality did not pay Eskom in 2019-20 within Follow-up or We are evaluating the AO’s response to the identified MI.

The made or not 30 days of receiving the relevant invoice or assessment in delay was caused by the late submission of implementation made in time, statement, resulting in interest being charged process information supporting the AO’s response, which has since been resulting in received.
interest/standing Irregularity: Non-compliance with section 65(2)(e) of time/penalties the MFMA Impact: Material financial loss of R31,3 million 92.

21 April 2021 Payment not In 2019-20, the municipality did not pay a service Follow-up or We are evaluating the AO’s response to the identified MI.
The made or not provider for the provision of water services within 30 assessment in delay was caused by the late submission of implementation made in time, days of receiving the relevant invoice or statement, process information supporting the AO’s response, which has since been resulting in resulting in interest being charged received.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 57 No.
Notified Type MI description Status Status description interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R1,1 million Dr JS Moroka LM 93.

4 October 2021 Repeat The municipality did not keep full and proper records Follow-up or We are evaluating the AO’s response to the identified MI.
disclaimed audit of its financial affairs, which resulted in a repeat assessment in opinion disclaimed opinion on its financial statements for process 2018-19 and 2019-20.

The impact was substantial harm to the municipality as its financial position was so poor that it disclosed a material uncertainly regarding its ability to continue operations.

This, in turn, is likely to have an impact on the municipality’s ability to discharge its service-delivery mandate.
Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution Emalahleni LM 94.

15 April 2021 Payment not In 2019-20, the municipality did not pay Eskom within Follow-up or We are evaluating the AO’s response to the identified MI.

The made or not 30 days of receiving the relevant invoice or assessment in delay was caused by the late submission of the implementation made in time, statement, resulting in interest being charged.
process information supporting the AO’s response, which has since been resulting in interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R332 million received.

95.

4 June 2021 Payment not In 2019-20, the municipality did not pay the Follow-up or We are evaluating the AO’s response to the identified MI.
The made or not Department of Water and Sanitation within 30 days assessment in delay was caused by late submission of implementation made in time, of the invoice date, resulting in interest being process information supporting the AO’s response, which has since been resulting in charged.

received.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 58 No.
Notified Type MI description Status Status description interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R8,7 million 96.

8 December Procurement A contract for updating and maintaining the Follow-up or We are evaluating the AO’s response to the identified MI.
2021 non- immovable asset register was awarded in February assessment in compliance, 2020 to a bidder who did not score the highest points process resulting in in the evaluation process, resulting in higher prices supplier not being paid.

delivering on contract Irregularity: Non-compliance with PPR 4(2) Impact: Financial loss to be quantified by the AO 97.
14 July 2021 Payment not In 2019-20, the municipality did not pay a municipal Resolved The AO engaged with the supplier who waived the interest made or not supplier within 30 days of the invoice date and thus charged on outstanding debt.

An investigation into the matter made in time, incurred interest on the outstanding amounts due.

found no official liable and, consequently, the MI was resolved.
resulting in interest/standing Irregularity: Non-compliance with section 65(2)(e) of time/penalties the MFMA Impact: Material financial loss of R8,9 million 98.

13 July 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.
opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which Govan Mbeki LM 2018-19 and 2019-20.

The impact was substantial should be implemented by 15 December 2022: harm to the municipality as its financial position was  The non-compliance with section 62(1)(b) of the MFMA so poor that it disclosed a material uncertainly should be investigated to determine the reasons and regarding its ability to continue operations.
This, in circumstances that led to the non-compliance for the turn, is likely to have an impact on the municipality’s purpose of taking appropriate corrective actions and to ability to discharge its service-delivery mandate.

address control weaknesses.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 59 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 62(1)(b) of action should be taken to develop and commence with the MFMA the implementation of the action plan to address poor Impact: Substantial harm to public sector institution record keeping so that full and proper records of the  Based on the reasons and circumstances, appropriate financial affairs of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key area as a minimum: o Payment vouchers, creditor statements and creditor reconciliations for purchases.

o The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received.
We further recommended that the AO should take appropriate action to commence with the implementation of the action plan of the strategies below, to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by the same date:     Increase the collection of revenue Efficiently manage the available resources of the municipality Repair and maintain infrastructure assets Negotiate reasonable payment arrangements with suppliers.
The above time frames for the implementation of the recommendations will run concurrently and the AO was requested to provide a progress report on the implementation of the recommendation by 30 August 2022.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 60 No.

Notified Type MI description Status Status description 99.

8 April 2021 Payment not In 2019-20, the municipality did not pay Rand Water Follow-up or We are evaluating the AO’s response to the identified MI.
The made or not for water utilities within 30 days of receiving the assessment in delay was caused by instability in the AO position.

made in time, relevant invoice or statement, resulting in interest process resulting in being charged.

interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R12,8 million 100.
8 April 2021 Payment not In 2019-20, the municipality did not pay Eskom within Follow-up or We are evaluating the AO’s response to the identified MI.

The made or not 30 days of receiving an invoice or statement, assessment in delay was caused by instability in the AO position.

made in time, resulting in interest being charged process resulting in interest/standing Irregularity: Non-compliance with section 65(2)(e) of time/penalties the MFMA Impact: Material financial loss of R161 million Lekwa LM 101.
11 June 2021 Repeat The municipality did not keep full and proper records Follow-up or We are evaluating the AO’s response to the identified MI.

disclaimed audit of its financial affairs, which resulted in a repeat assessment in opinion disclaimed opinion on its financial statements for process 2018-19 and 2019-20.

The impact was substantial harm to the municipality as its financial position was so poor that it disclosed a material uncertainly regarding its ability to continue operations.
This, in turn, is likely to have an impact on the municipality’s ability to discharge its service-delivery mandate.

Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 61 No.

Notified Type MI description Status Status description Thaba Chweu LM 102.
22 April 2021 Payment not The municipality did not pay Eskom within 30 days of Appropriate The MPAC investigated the fruitless and wasteful expenditure made or not receiving the relevant invoice or statement.

action is being and concluded that no official was liable for the irregularity.
made in time, taken to resolve Based on the report, the council approved the write-off of the resulting in Irregularity: Non-compliance with section 65(2)(e) of the MI fruitless and wasteful expenditure for 2019-20. interest/standing the MFMA time/penalties Impact: Material financial loss of R38,1 million The AO committed to continue to ensure full implementation of the debt control and credit policy, prepaid meter audits and replacement of faulty meters.
The AO committed to ensure that there is a review of indigent customers so that only customers who qualify are included to prevent further losses from being incurred by the municipality.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 62 No.

Notified Type MI description Status Status description NORTHERN CAPE (7) Emthanjeni LM Ga-Segonyana LM Joe-Morolong LM Kai !Garib LM !Kheis LM Sol Plaatje LM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 63 No.
Notified Type MI description Status Status description Status of MIs (Total: 7) 1 4 0 2 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Emthanjeni LM 103.
7 June 2021 Payment not The municipality did not pay Eskom accounts within Appropriate An investigation performed concluded that no party/official made or not 30 days of receipt of an invoice or statement, action is being could be held accountable since cash flow constraints (mainly made in time, resulting in interest on its outstanding accounts.

taken to resolve caused by low recoverability), resulting in interest being incurred.
resulting in the MI A plan was implemented in an effort to improve the financial interest/standing Irregularity: Non-compliance with section 65(2)(e) of position of the municipality.

time/penalties the MFMA Impact: Material financial loss of R5,8 millions A repayment agreement was signed with Eskom and agreed arrangements have been honoured by the municipality.

104.
104.

24 November Suspected fraud, Internal controls were overridden by an employee Appropriate The AO reported the MI to the Hawks who are currently 2021 resulting in loss who fraudulently processed payments intended for action is being investigating it.

The suspected employee who made payments suppliers to his own bank account.

taken to resolve to himself is no longer in the employ of the municipality; hence, the MI no disciplinary action could be taken against him.
Irregularity: Suspected fraud Impact: Financial loss to be quantified by the AO Ga-Segonyana LM 105.

7 June 2021 Payment not The municipality did not pay Eskom accounts within Appropriate An investigation performed concluded that no party/official made or not 30 days of receipt of an invoice or statement, action is being could be held accountable since cash flow constraints (mainly made in time, resulting in interest on its outstanding accounts.
taken to resolve caused by low recoverability) resulted in interest being incurred.

resulting in the MI A plan was implemented in an effort to improve the financial interest/standing Irregularity: Non-compliance with section 65(2)(e) of position of the municipality.

time/penalties the MFMA MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 64 No.
Notified Type MI description Status Status description Impact: Material financial loss of R2,1 million A repayment agreement was signed with Eskom and agreed arrangements have been honoured by the municipality.

106.

22 October Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the 2021 disclaimed audit of its financial affairs, which resulted in a repeat MI.
opinion disclaimed opinion on its financial statements for We included the following recommendations in the 2020-21 Joe-Morolong LM 2019-20.

The impact was substantial harm to the audit report, which should be implemented by 30 June 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


 Appropriate action should be taken to develop and Irregularity: Non-compliance with section 62(1)(b) of commence with the implementation of an action plan to the MFMA address poor record keeping so that full and proper records Impact: Substantial harm to public sector institution of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated time frames and should address the following key areas as a minimum: o Complete asset register of all of the municipality’s infrastructure assets, including work in progress and information for assets that have been fully depreciated but are still in use o Billing information and reconciliations to support revenue from service charges o Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 65 No.

Notified Type MI description Status Status description and services paid for were received, including payments made from conditional grant funding.
We further recommended that the AO should take appropriate action to develop and commence with the implementation of the action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 30 September 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  repair and maintain infrastructure assets.

107.

11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.
opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which Kai !Garib LM 2019-20.

The impact was substantial harm to the should be implemented by 9 September 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.
addressing control weaknesses Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 66 No.
Notified Type MI description Status Status description time frames and address the following key areas as a minimum: o Complete asset register of all of the municipality’s infrastructure assets, including work in progress and information for assets that have been fully depreciated but are still in use o o Billing information and reconciliations to support revenue from service charges Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received, including payments made from conditional grant funding.

We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 9 September 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment arrangements with major suppliers  optimise costs in respect of bulk purchases  repair and maintain infrastructure assets.

The above time frames for the implementation of the recommendations will run concurrently.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 67 No.

Notified Type MI description Status Status description 108.

11 June 2021 Repeat The municipality did not keep full and proper records Appropriate The AO developed an action plan to address the lack of record disclaimed audit of its financial affairs, which resulted in a repeat action is being keeping.

opinion disclaimed opinion on its financial statements for taken to resolve !Kheis LM 2019-20.
The impact was substantial harm to the the MI The municipality approached the National Treasury who assisted municipality as its financial position was so poor that with the preparation of a financial recovery plan that was it disclosed a material uncertainly regarding its ability provided to the municipality (focused on billing, budgeting and to continue operations.
This, in turn, is likely to have expenditure management) and is in the process of being an impact on the municipality’s ability to discharge implemented.

its service-delivery mandate.

Irregularity: Non-compliance with section 62(1)(b) of investigations are ongoing.

An independent investigator was appointed and internal the MFMA Impact: Substantial harm to public sector institution Sol Plaatje LM 109.
8 September Payment not The municipality did not pay its accounts within 30 Follow-up or We are evaluating the AO’s response to the identified MI.

The 2021 made or not days of receipt of an invoice or statement, resulting assessment in assessment has been delayed by instability in the AO position.

made in time, in interest on its outstanding accounts.
process resulting in interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R5,6 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 68 No.
Notified Type MI description Status Status description NORTH WEST (38) City of Matlosana LM Lekwa Teemane LM Maquassi Hills LM Ditsobotla LM JB Marks LM Kgetlengrivier LM Madibeng LM Mahikeng LM Mamusa LM Moretele LM Naledi LM Ngaka Modiri Molema DM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 69 No.
Notified Type MI description Status Status description Status of MIs (Total: 38) 10 10 0 15 0 0 3 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action City of Matlosana LM 110.

22 February Payment not The municipality did not pay Eskom within 30 days, Recommendations The AO failed to implement the planned actions to resolve the 2021 made or not resulting in interest being charged from April 2019 to MI.
made in time, March 2020. resulting in interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R46,2 million We notified the AO of the following recommendations, which should be implemented by 1 March 2023:  Appropriate action should be taken to enhance the existing financial plan and to commence with the implementation of the revised financial plan to address the financial problems of the municipality that are preventing it from paying Eskom within 30 days, as required by section 65(2)(e) of the MFMA.
The revised financial plan should include realistic time frames and milestones to be achieved and include, as a minimum, strategies to: o o o increase revenue increase the collection of revenue efficiently manage the available resources of the municipality to optimise costs o reduce water distribution losses MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 70 No.
Notified Type MI description Status Status description o negotiate a reasonable payment arrangement with Eskom and properly budget for the amounts to be paid.

111.

22 February Payment not The municipality did not pay the Midvaal Water Recommendations The AO failed to implement the planned actions to resolve the 2021 made or not Company for water service provided within 30 days, MI.

made in time, resulting in interest being charged from April 2019 to resulting in March 2020.
We notified the AO of the following recommendations, which interest/standing time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R35,6 million should be implemented by 1 March 2023:  Appropriate action should be taken to enhance the existing financial plan and to commence with the implementation of the revised financial plan to address the financial problems of the municipality that are preventing it from paying Midvaal within 30 days, as required by section 65(2)(e) of the MFMA.
The revised financial plan should include realistic timeframes and milestones to be achieved and include as a minimum strategies: o o o o o increase revenue increase the collection of revenue efficiently manage the available resources of the municipality to optimise costs reduce water distribution losses negotiate a reasonable payment arrangement with Midvaal and properly budget for the amounts to be paid.

112.
112.

31 March 2021 Debt not Money owed to the municipality by the fresh Appropriate An internal investigation in the matter was concluded in April recovered produce market from 2017-18 was not collected, action is being 2021 and, subsequently, disciplinary steps were initiated against resulting in a financial loss.

taken to resolve 10 officials.

Six of these disciplinary cases were still in progress.

the MI MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 71 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 65(2)(f) of The municipality also instructed the attorneys to initiate legal the MFMA action to recover the losses, which was still in progress.

Impact: Material financial loss of R43,3 million The municipality referred the matter to the Hawks.

This investigation was still underway.

Ditsobotla LM 113.
Ditsobotla LM 113.

11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.

opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which 2019-20.
The impact was substantial harm to the should be implemented by 9 June 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas, as a minimum: o Complete asset register of all of the municipality’s infrastructure assets, including work in progress and information for assets that have been fully depreciated but are still in use o Billing information and reconciliations to support revenue from service charges o Reconciliations of all bank accounts of the municipality MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 72 No.
Notified Type MI description Status Status description o Payment vouchers, creditor statements and creditor reconciliations for purchases.

The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received.
We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 9 September 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include, as a minimum, strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment arrangements with major suppliers  repair and maintain infrastructure assets  optimise costs in respect of bulk purchases.

The above time frames for the implementation of the recommendations will run concurrently.

114.
114.

3 March 2021 Loss of During 2018, the municipality invested with VBS, Appropriate A claim was lodged with the liquidators.

The municipality investments which was not a registered bank in terms of the action is being received a payment of R10,5 million from the VBS liquidators.

Dr Ruth Segomatsi Mompati DM Banks Act.


taken to resolve the MI Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R150 million (Recovered loss to date: R10,5 million) An investigation was undertaken and responsible officials identified.

Certain officials were disciplined in respect of their involvement in the matter, including the suspended AO, where disciplinary proceedings were also finalised during December 2021, and the contract was terminated.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 73 No.

Notified Type MI description Status Status description 115.

8 December Procurement The municipality awarded a tender in the 2019-20 Follow-up or We are determining the most suitable action based on the AO’s 2021 non- financial year for VAT recovery services, wherein a assessment in response compliance, percentage-based commission fee would be paid to process resulting in the supplier for VAT refunds.
A bidder that quoted a overpricing of commission fee percentage that was lower than procured goods that of the winning supplier was incorrectly and services disqualified at the functionality stage, despite having submitted the required information.

The municipality would have paid a lower commission fee for total VAT refund had the functionality criteria been correctly applied during the bidding process.

Irregularity: Non-compliance with PPR 5(7) Impact: Financial loss to be quantified by the AO 116.
7 July 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.

opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which 2019-20.
The impact was substantial harm to the should be implemented by 30 April 2022: municipality, as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution  Based on the reasons and circumstances, appropriate action should be taken to develop and commence with the implementation of an action plan to address poor record keeping so that full and proper records of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas as a minimum: MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 74 No.
Notified Type MI description Status Status description o Complete asset register of all of the municipality’s infrastructure assets, including work in progress, as well as information for assets that have been fully depreciated but are still in use o Billing information and reconciliations to support revenue from service charges o Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received o Formalise agreements with local municipalities for the provisioning of basic water services We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 31 July 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  Increase the collection of revenue  Optimise costs in respect of bulk purchases  Efficiently manage the available resources of the municipality  Enter into payment arrangements with major suppliers  Repair and maintain infrastructure assets The above time frames for the implementation of the recommendations will run concurrently.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 75 No.

Notified Type MI description Status Status description 117.

29 March 2022 Inefficient use of The municipality did not adequately plan and Follow-up or We are evaluating the AO’s response to the identified newly JB Marks LM resources – budget for the construction of a flood line canal in assessment in identified MI.

no/limited Ikageng extension 11 phases 1 and 2.


The consulting process benefit derived engineers and a contractor were appointed in April from money 2015 and November 2016, respectively, before spent funding was secured and the budget finalised.

Due to insufficient funds, the project was abandoned for a period of almost three years between July 2017 and June 2020.

The work that was done up to July 2017 deteriorated to a state that it required all the work to be redone.
Irregularity: Non-compliance with section 62(1)(a) of the MFMA Impact: Financial loss to be quantified by the AO 118.

23 March 2021 Assets not The municipality did not adequately safeguard Recommendations The AO failed to implement the planned actions to resolve the safeguarded, assets.

Buildings that form part of two sport MI.


resulting in loss complexes were severely vandalised and the We notified the AO of the following recommendations, which municipality needed to impair these buildings in should be implemented by 10 May 2022: 2019-20 as per the applicable accounting standards.
 Reasonable steps should be taken to safeguard these assets Irregularity: Non-compliance with section 63(2)(c) of the MFMA Impact: Material financial loss of R5 million of the municipality from any further losses, as required by section 63(1)(a) of the MFMA, read with section 63(2)(c) of the MFMA.

 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Disciplinary action or, when appropriate, criminal proceedings should commence against any official who has allegedly committed an act of financial misconduct or an MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 76 No.

Notified Type MI description Status Status description offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 Appropriate action should be taken to recover the financial loss suffered, through any applicable insurance policies, which may be in place at the municipality, alternatively, if the financial loss is not recovered in full then, any person(s) liable for the losses should be identified and appropriate action should commence to recover the remaining financial loss.
 If it appears that the municipality suffered the financial loss through criminal acts or possible criminal acts or omission, this should be reported to the South African Police Service, as required by section 32(6)(b) of the MFMA.

119.

5 July 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.
opinion disclaimed opinion on its financial statements for We notified the AO of the following recommendations, which Kgetlengrivier LM 2018-19.

The impact was substantial harm to the should be implemented by 1 May 2022: municipality, as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution  Based on the reasons and circumstances, appropriate action should be taken to develop and commence with the implementation of an action plan to address poor record keeping so that full and proper records of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 77 No.
Notified Type MI description Status Status description time frames and address the following key areas as a minimum: o Billing information and reconciliations to support revenue from service charges o Consumer debtor reconciliations (including age analysis) of all amounts owed to the municipality o Creditors reconciliations of amounts due by the municipality to third parties o Reconciliations of all bank accounts in the name of the municipality o Complete asset register of all the municipality’s property, plant and equipment We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 1 August 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  implement the debt collection policy and increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment arrangements with major suppliers  fund routine maintenance as well as urgent repairs of infrastructure assets.

The above time frames for the implementation of the recommendation will run concurrently.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 78 No.

Notified Type MI description Status Status description 120.

11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.

opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which Lekwa Teemane LM 2019-20.
The impact was substantial harm to the should be implemented by 30 April 2022: municipality, as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas, as a minimum: o Billing information and reconciliations to support revenue from service charges o Consumer debtor reconciliations (including age analysis) of all amounts owed to the municipality o Creditors reconciliations of amounts due by the municipality to third parties o Detailed records of water and electricity purchases and sales to quantify the extent and reason for distribution losses We further recommended that the AO should take appropriate action to develop and commence with the implementation of MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 79 No.
Notified Type MI description Status Status description an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 31 July 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  implement the debt collection policy and increase the collection of revenue  efficiently manage the available resources of the municipality  fund routine maintenance as well as urgent repairs of infrastructure assets.

The above time frames for the implementation of the recommendations will run concurrently.

121.
121.

24 March 2021 Loss of During 2018, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.

The municipality investments which was not a registered bank in terms of the action is being received a payment of R2,1 million from the VBS liquidators Madibeng LM Banks Act.

taken to resolve which amounts to.

the MI The AO opened a case with the SAPS in 2018.


Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R31,2 million (Recovered loss to date: R2,1 million) The municipality initiated disciplinary processes against officials who were involved in making the investments.

Some of the officials are on suspension.

122.


19 April 2021 Payment not The municipality did not pay Eskom for the bulk Appropriate A court ordered that the municipality settle the outstanding made or not purchase of electricity within 30 days of receiving the action is being amounts with Eskom.

The municipality complied and made the made in time, invoice in September and December 2019, resulting taken to resolve required payments stated in the court order.
resulting in in interest being charged on the outstanding the MI interest/standing amounts.

time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA The Eskom account is currently up to date with no outstanding balance, and, therefore, the municipality is no longer incurring interest on this account.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 80 No.
Notified Type MI description Status Status description Impact: Material financial loss of R3,5 million When the fruitless and wasteful expenditure was incurred, the municipality did not have sufficient funds to pay Eskom.

The AO submitted reports to the municipal public accounts committee to determine whether any individual could be held liable for the interest incurred by the municipality, considering they had insufficient funds at the time.
The recovery of interest is pending the response of the committee.

123.

11 October Payment not The municipality did not pay the Department of Follow-up or We are determining the most suitable action based on the AO’s 2021 made or not Water and Sanitation (DWS) for bulk purchase of assessment in response.

made in time, water within 30 days of receiving the relevant invoice process resulting in or statement.
This resulted in interest being charged interest/standing on the 31 August 2019 and 29 February 2020 invoices.

time/penalties Irregularity: Non-compliance with section 65(2)(e) of the MFMA Impact: Material financial loss of R2,7 million 124.

8 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.
opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which 2019-20.

The impact was substantial harm to the should be implemented by 4 May 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.
Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by section MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 81 No.
Notified Type MI description Status Status description 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas, as a minimum: o Complete records of distribution losses relating to water and electricity o Billing information and reconciliations to support revenue from service charges o Reconciliations of the bank accounts o Clearing of suspense accounts o Complete records of all procurement processes o Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received.

We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 4 August 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include, as a minimum, strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment agreements with major suppliers.

The above time frames for the implementation of the recommendations will run concurrently.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 82 No.

Notified Type MI description Status Status description 125.
24 February Payment not The municipality did not make repayments on a loan Recommendations The AO did not take appropriate action to resolve the MI.

Mahikeng LM 2021 made or not agreement in June 2019, December 2019 and June made in time, 2020, resulting in penalty interest charged.
resulting in interest/standing Irregularity: Non-compliance with section 65(2)(e) of time/penalties the MFMA Impact: Financial loss to be quantified by the AO We notified the AO of the following recommendations, which should have been implemented by 28 February 2022:  Appropriate action should be taken to commence with the council investigation to determine if the financial loss should be recovered from any person(s) liable for the fruitless and wasteful expenditure, as required by section 32(2)(b) of the MFMA.
 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.

 Disciplinary or, when appropriate, criminal proceedings should commence against any official who has allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
The AO's response on the implementation of the recommendations was received on 28 February 2022.

The AO has not implemented the recommendations as the implementation of the recommendations is subject to the municipality complying with the settlement agreement, which determines that if the loan is settled in line with the settlement agreement (by December 2022), the interest will not be due and payable.
We will follow up after January 2023 whether the loan was repaid in accordance with the settlement agreement.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 83 No.

Notified Type MI description Status Status description 126.

24 February Loss of During 2018, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.
The municipality 2021 investments which was not a registered bank in terms of the action is being received a payment of R5,9 million from the VBS liquidators.

taken to resolve the MI An investigation and disciplinary action, including the dismissal of the previous AO, took place.

Banks Act.

Irregularity: Non-compliance with municipal investment regulation 6(c) Impact: Material financial loss of R83,4 million (Recovered loss to date: R5,9 million) Mamusa LM 127.
11 June 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions to resolve the disclaimed audit of its financial affairs, which resulted in a repeat MI.

opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which 2019-20.
The impact was substantial harm to the should be implemented by 22 May 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA should it disclosed a material uncertainly regarding its ability be investigated to determine the reasons and circumstances to continue operations.
This, in turn, is likely to have that led to the non-compliance for the purpose of taking an impact on the municipality’s ability to discharge appropriate corrective actions and addressing control its service-delivery mandate.

weaknesses.
Irregularity: Non-compliance with section 62(1)(b) of the MFMA  Based on the reasons and circumstances, appropriate action should be taken to develop and commence with the implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 of the municipality are kept in accordance with any prescribed norms and standards, as required by section 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas, as a minimum: o A valuation roll that includes all properties and consumers o Complete records and reconciliations of all consumers that were billed for services, including meter readings taken for all consumers 84 No.
Notified Type MI description Status Status description o Complete asset register of all of the municipality’s infrastructure assets, property, plant and equipment, including work in progress and information for assets that have been fully depreciated but are still in use o Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received o Detailed records of water and electricity purchases and sales to quantify the extent and reason for distribution losses We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 22 August 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  implement the debt collection policy and increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment arrangements with major suppliers  fund routine maintenance as well as urgent repairs to infrastructure assets  replace all damaged water meters.
The above time frames for the implementation of the recommendations will run concurrently.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 85 No.

Notified Type MI description Status Status description 128.
11 June 2021 Repeat The municipality did not keep full and proper records Appropriate An investigation into the matter was completed on disclaimed audit of its financial affairs, which resulted in a repeat action is being 31 December 2021 and the municipality prepared a financial opinion disclaimed opinion on its financial statements of taken to resolve recovery plan and action plan by 18 May and 31 August 2021, 2019-20.

The impact was substantial harm to the the MI respectively.
Maquassi Hills LM municipality as its financial position was so poor that it disclosed a material uncertainly regarding its ability to continue operations.

This, in turn, is likely to have an impact on the municipality’s ability to discharge its service-delivery mandate.

Irregularity: Non-compliance with section 62(1)(b) of the MFMA Impact: Substantial harm to public sector institution Moretele LM The AO committed to implement the action and financial recovery plans by 30 June 2022.
Implementation of these plans is in progress and will be assessed during the next audit.

129.

26 November 2021 Loss of investments During 2018, the municipality invested with VBS, Appropriate A claim was lodged with the VBS liquidators.

The municipality which was not a registered bank in terms of the action is being received a payment of R3,5 million from the VBS liquidators.

Banks Act.
Banks Act.

taken to resolve the MI The financial disciplinary board did an investigation and Irregularity: Non-compliance with municipal reported to the council.

The AO had a disciplinary hearing and investment regulation 6(c) pleaded guilty, upon which a three-month salary fine and a final Impact: Material financial loss of R50,7 million written warning were imposed on him.

The MM resigned in (Recovered loss to date: R3,5 million) August 2021.
The matter was also investigated by the Hawks and the claims are currently at the Polokwane High Court.

It was also elevated from a financial misconduct case to a criminal act.

The municipality is awaiting the outcome of this case (case still ongoing).

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 86 No.

Notified Type MI description Status Status description 130.
22 September 2021 Repeat disclaimed audit opinion The municipality did not keep full and proper records Recommendations The AO did not take appropriate action to resolve the MI.

of its financial affairs, which resulted in a repeat Naledi LM disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which 2019-20.
The impact was substantial harm to the should be implemented by 16 May 2022: municipality as its financial position was so poor that  The non-compliance with section 62(1)(b) of the MFMA it disclosed a material uncertainly regarding its ability should be investigated to determine the reasons and to continue operations.
This, in turn, is likely to have circumstances that led to the non-compliance for the an impact on the municipality’s ability to discharge purpose of taking appropriate corrective actions and its service-delivery mandate.

addressing control weaknesses.


Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of an action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas as a minimum: o Complete asset register of all of the municipality’s infrastructure assets, property, plant and equipment, including work in progress and information for assets that have been fully depreciated but are still in use; o Billing information and reconciliations to support revenue from service charges o Reconciliation of property rates income to the valuation roll o Payment vouchers, creditor statements and creditor reconciliations for purchases.
The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received, including payments made from conditional grant funding 87 MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 No.

Notified Type MI description Status Status description o Reconciliations of all bank accounts in the name of the municipality.
We further recommended that the AO should take appropriate action to develop and commence with the implementation of an action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 15 August 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include, as a minimum, strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  enter into payment arrangements with major suppliers.

The above time frames for the implementation of the recommendations will run concurrently.

131.
14 November Payment for The municipality failed to monitor a contract for Remedial actions We included recommendations in the 2019-20 audit report, 2019 goods or services construction work to the municipal office building which the AO was required to implement by 1 October 2021. not received and gatehouse, resulting in a contract extension that Based on the information provided by the AO and the follow-up included items already paid for as part of the original work we performed, we concluded that the recommendations contract.
The original contract was awarded in 2012- were not implemented adequately.

Ngaka Modiri Molema DM 13 and the said extension was done in March 2019.

Irregularity: Non-compliance with section 116(2)(b) of the MFMA Impact: Financial loss to be quantified by the AO On 9 December 2021, the auditor-general issued a directive to the AO to determine the amount of the financial loss and recover such loss or make progress with the recovery of the loss from the responsible person(s) by 11 April 2022.
In addition, the auditor-general notified the AO of the following remedial actions to address the MI, which should have been implemented by the same date: MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 88 No.

Notified Type MI description Status Status description  The investigation into the non-compliance must be completed.
 The investigation must identify any person(s) that must be held liable for the losses suffered and any official(s) that might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Disciplinary or, when appropriate, criminal proceeding must commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

 If it appears that the municipality suffered the financial loss through fraud, it must be reported to the South African Police Service, as required by section 32(6)(b) of the MFMA.
The AO reported that progress has been made with the investigation being performed by the appointed legal firm, but delays were experienced with its finalisation.

We granted the AO extension until 1 August to finalise the investigation and take the required actions based on the outcome of the investigation.

132.
132.

28 November Payment for The municipality overpaid a supplier appointed in Remedial actions We included recommendations in the 2019-20 audit report, 2019 goods or services June 2018 for water-tankering services to which the AO was required to implement by 18 November 2021. not received communities for the period 2018 to 2020.
This was Based on the information provided by the AO and the follow-up due to a lack of an effective system of expenditure work we performed, we concluded that the recommendations control to ensure that claims were based on actual were not implemented adequately.

kilometres travelled and services provided.


Irregularity: Non-compliance with section 65(2)(a) of the MFMA Impact: Financial loss to be quantified by the AO On 9 December 2021, the auditor-general issued a directive to the AO to determine the amount of the financial loss and recover such loss or make progress with the recovery of the loss from the responsible person(s) by 11 April 2022.

In addition, she MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 89 No.
Notified Type MI description Status Status description notified the AO of the following remedial actions to address the MI, which should have been implemented by the same date:  The investigation into the non-compliance must be completed.

 The investigation must identify any person(s) that must be held liable for the losses suffered and any official(s) that might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Evidence must be provided on the reasonable steps taken to implement a system of expenditure control, as required by section 65(2)(a) of the MFMA, to prevent further losses through over-invoicing for the provision of water tankering services.
 Disciplinary or, when appropriate, criminal proceeding must commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

 If it appears that the municipality suffered the financial loss through fraud, it must be reported to the South African Police Service, as required by section 32(6)(b) of the MFMA.
The AO reported that progress has been made with the investigation being performed by the appointed legal firm, but delays were experienced with its finalisation.

We granted the AO extension until 1 August to finalise the investigation and take the required actions based on the outcome of the investigation.

133.
133.

9 December Assets not The municipality wrote off (disposed of) assets in Remedial actions We included recommendations in the 2019-20 audit report 2019 safeguarded, 2018-19 as a result of infrastructure and movable which the AO was required to implement by 1 October 2021. resulting in loss assets that could not be located during an asset Based on the information provided by the AO and the follow-up MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 90 No.
Notified Type MI description Status Status description verification and were presumed to have been work we performed, we concluded that the recommendations stolen, due to a lack of an internal control system to were not implemented adequately.

safeguard assets.
safeguard assets.

Irregularity: Non-compliance with section 63(2)(c) of the MFMA Impact: Financial loss to be quantified by the AO On 9 December 2021, the auditor-general issued a directive to the AO to determine the amount of the financial loss and recover such loss or make progress with the recovery of the loss from the responsible person(s) by 1 June 2022.
In addition, the auditor-general notified the AO of the following remedial actions to address the MI, which should be implemented by the same date:  The asset verification and the investigation into the non- compliance must be completed.

 The investigation must identify any person(s) that must be held liable for the losses suffered and any official(s) that might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Reasonable steps must be taken to safeguard the assets of the municipality from any further losses, as required by section 63(1)(a) of the MFMA and evidence of this provided.

 Disciplinary or, when appropriate, criminal proceeding(s) must commence against any official(s) who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 If it appears that the municipality suffered the financial loss through theft, it must be reported to the South African Police Service, as required by section 32(6)(b) of the MFMA.

134.

29 March 2021 Payment for The municipality made payments for security services Recommendations The AO failed to implement the planned actions.
goods or services in 2020-21 without adequate measures being in not received place to ensure that the services provided had We notified the AO of the following recommendations, which should be implemented by 27 April 2022: MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 91 No.

Notified Type MI description Status Status description actually been rendered before payment was  The financial loss in the form of overpayments should be approved and processed.
quantified and appropriate action should commence to recover the loss from the supplier.

Irregularity: Non-compliance with section 65(2)(a) of  A system of expenditure control should be implemented, as the MFMA required by section 65(2)(a) of the MFMA, for the provision of Impact: Financial loss to be quantified by the AO security services and to prevent payments for services not received.
 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.

 Disciplinary or, when appropriate, criminal proceedings should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 If it appears that the municipality suffered the financial loss through criminal acts or possible criminal acts or omission, this should be reported to the SAPS, as required by section 32(6)(b) of the MFMA.

The AO reported that progress has been made with the investigation being performed by the appointed legal firm, but delays were experienced with its finalisation.
We granted the AO extension until 1 August to finalise the investigation and take the required actions based on the outcome of the investigation.

135.

14 April 2021 Payment for The municipality paid claims from a supplier of Recommendations The AO failed to implement the planned actions.

goods or services sewerage-tankering services in 2018 without ensuring not received that the services had actually been rendered and that the claims were based on actual kilometres travelled.
This resulted in an overpayment to the supplier.

We notified the AO of the following recommendations, which should be implemented by 26 April 2022: MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 92 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with section 65(2)(a) of quantified, and appropriate action should commence to the MFMA recover the loss from the supplier.
Impact: Financial loss to be quantified by the AO  A system of expenditure control should be implemented, as  The financial loss in the form of overpayments should be required by section 65(2)(a) of the MFMA, for the provision of sanitation services and to prevent the over-invoicing of kilometres and hours.

 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.
 Disciplinary or, when appropriate, criminal proceedings, should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 If it appears that the municipality suffered the financial loss through criminal acts or possible criminal acts or omission, this should be reported to the SAPS, as required by section 32(6)(b) of the MFMA.

The AO reported that progress has been made with the investigation being performed by the appointed legal firm, but delays were experienced with its finalisation.
We granted the AO extension until 1 August to finalise the investigation and take the required actions based on the outcome of the investigation.

136.

14 December Assets not The municipality did not maintain a system of internal Recommendations The AO failed to implement the planned actions.

2020 safeguarded, control to safeguard assets during 2019-20, which resulting in loss resulted in assets being written off because they were either stolen or vandalised.
We notified the AO of the following recommendations, which should be implemented by 1 June 2022:  The asset verification and investigation process should be completed and the financial loss quantified.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 93 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 63(2)(c) of  Any person(s) liable for the losses should be identified and the MFMA appropriate action should commence to recover the Impact: Financial loss to be quantified by the AO financial loss.

 Reasonable steps should be taken to safeguard municipal assets from any further losses, as required by section 63(1)(a) and 63(2)(c) of the MFMA.
 The non-compliance should be investigated to determine if any official might have committed an act of financial misconduct or an offence in terms of chapter 15 of the MFMA.

 Disciplinary or, when appropriate, criminal proceedings should commence against any official who allegedly committed an act of financial misconduct or an offence, as required by section 62(1)(e) of the MFMA and in the manner prescribed by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
 If it is determined that the municipality suffered the financial loss through theft, this should be reported to the SAPS, as required by section 32(6)(b) of the MFMA.

137 17 August 2021 Uneconomical The municipality appointed a supplier for the repairs Follow-up or We are determining the most suitable action based on the AO’s procurement, of Boikhutsong Pump Station project, which included assessment in response.

resulting in the procurement of four generator sets.
The AO process overpricing of failed to ensure that the generators were procured goods and at market-related prices.

services procured Irregularity: Non-compliance with section 62(1)(a) of the MFMA Impact: Financial loss to be quantified by the AO 138.

15 October Procurement In March 2020, the municipality made an Follow-up or We are determining the most suitable action based on the AO’s 2021 non- emergency procurement of generators.

This assessment in response.


compliance, deviation was due to poor planning, as the existing process resulting in contract was ending in February 2020.

As a result, the overpricing of competitive bidding process was not followed and MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 94 No.

Notified Type MI description Status Status description procured goods the generators were not procured at market-related and services prices.
Irregularity: Non-compliance with SCM regulation 19(a) Impact: Financial loss to be quantified by the AO 139.

9 March 2022 Procurement The municipality made an emergency procurement Follow-up or We are evaluating the AO’s response to the newly identified MI.

non- to appoint two new service providers to supply water assessment in compliance, services materials and tools.

This deviation was due process resulting in to poor planning, as the existing contract was overpricing of ending in February 2020.
As a result, the competitive procured goods bidding process was not followed to assess market- and services related prices from different suppliers.

Irregularity: Non-compliance with SCM regulation 19(a) Impact: Financial loss to be quantified by the AO 140.

1 December Assets not The municipality did not maintain a system of internal Follow-up or We are evaluating the AO’s response to the newly identified MI.
2021 safeguarded, control to safeguard assets during 2020 -21, which assessment in resulting in loss resulted in assets being written off because they process The municipality is busy with an investigation into the missing assets, which is expected to be completed by June 2022. were either stolen or vandalised.

Irregularity: Non-compliance with section 63(2)(c) of the MFMA Impact: Financial loss to be quantified by the AO 141.
14 December Pollution of water The Coligny Wastewater Treatment Works (including Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 sources, resulting its pump station) has not been operational for more assessment in in harm to public than 18 months due to no electricity at the newly process refurbished plant and pump station (construction during 2019-20).
This resulted in continued spilling of raw/untreated sewage into the stream/river MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 95 No.

Notified Type MI description Status Status description adjacent to the inlet and pump station and its extended watercourse.
The municipality did not take reasonable measures to prevent pollution or degradation of the environment and water resources from occurring, continuing or recurring, which is likely to cause substantial harm to the communities exposed to and dependent on the contaminated water resources for domestic, farming or agricultural (irrigation) purposes.

Irregularity: Non-compliance with section 28(1) of the NEMA and section 19(1) of the National Water Act Impact: Substantial harm to the general public 142.
14 December Pollution of water The Itsoseng Wastewater Treatment Works was totally Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 sources, resulting vandalised and collapsed.

Despite some assessment in in harm to public refurbishment that commenced in 2021, the plant process has not been operational for several years.
This resulted in continued spilling and discharge of raw/untreated sewage into the adjacent environment and farmland, including the groundwater and streams.

The municipality did not take reasonable measures to prevent pollution or degradation of the environment and water resources from occurring, continuing or recurring, which is likely to cause substantial harm to the communities exposed to and dependent on the contaminated water resources.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 96 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 28(1) of the NEMA and section 19(1) of the National Water Act Impact: Substantial harm to the general public 143.

14 December Pollution of water The Lichtenburg/Blydeville Wastewater Treatment Follow-up or We are evaluating the AO’s response to the identified MI.
2021 sources, resulting Works was not operational for several years due to assessment in in harm to public the system being completely clogged and process machinery and equipment being non-functional.

This resulted in continued spilling and discharge of raw/untreated sewage into the adjacent wetland/stream, and its extended watercourse before and at the plant.
The municipality did not take reasonable measures to prevent pollution or degradation of the environment and water resources from occurring, continuing or recurring, which is likely to cause substantial harm to the communities exposed to and dependent on the contaminated water resources or domestic, farming or agricultural (irrigation) purposes.
Irregularity: Non-compliance with section 28(1) of the NEMA and section 19(1) of the National Water Act Impact: Substantial harm to the general public Ramotshere Moiloa LM 144.

25 August 2021 Repeat The municipality did not keep full and proper records Recommendations The AO failed to implement the planned actions.

disclaimed audit of its financial affairs, which resulted in a repeat opinion disclaimed opinion on its financial statements for 2019-20.
The impact was substantial harm to the municipality, as its financial position was so poor that it disclosed a material uncertainly regarding its ability We notified the AO of the following recommendations, which should be implemented by 8 June 2022:  The non-compliance with section 62(1)(b) of the MFMA should be investigated to determine the reasons and circumstances MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 97 No.

Notified Type MI description Status Status description to continue operations.
This, in turn, is likely to have that led to the non-compliance for the purpose of taking an impact on the municipality’s ability to discharge appropriate corrective actions and addressing control its service-delivery mandate.

weaknesses.
weaknesses.

Irregularity: Non-compliance with section 62(1)(b) of should be taken to develop and commence with the the MFMA implementation of the action plan to address poor record Impact: Substantial harm to public sector institution keeping so that full and proper records of the financial affairs  Based on the reasons and circumstances, appropriate action of the municipality are kept in accordance with any prescribed norms and standards, as required by 62(1)(b) of the MFMA.
The plan should include anticipated time frames and address the following key areas as a minimum: o maintain complete records of infrastructure assets o billing information and reconciliations to support revenue from service charges o reconciliations of all bank accounts of the municipality o payment vouchers, creditor statements and creditor reconciliations for purchases.

The expenditure incurred should be supported by sufficient evidence that goods and services paid for were received.
We further recommended that the AO should take appropriate action to develop and commence with the implementation of the action plan to address the financial problems of the municipality, as required by section 135(1) and 135(3)(a) of the MFMA, by 8 September 2022.
The plan should describe the anticipated time frame and milestones to be achieved and include as a minimum strategies to:  increase the collection of revenue  efficiently manage the available resources of the municipality  repair and maintain infrastructure assets.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 98 No.

Notified Type MI description Status Status description The above time frames for the implementation of the recommendations will run concurrently.

Rustenburg LM 145.
Rustenburg LM 145.

16 March 2021 Sars late The municipality incurred penalties on the late Appropriate The AO completed the investigation to determine the payments, submission of value-added tax returns relating to the action is being responsible person, applicable consequence and whether the resulting in November 2019 return.

taken to resolve money is recoverable.

The investigation report was referred to interest and the MI the MPAC during September 2021 for consideration.
The MPAC penalties Irregularity: Non-compliance with section 28 of the has not yet dealt with the matter.

However, it was determined Value Added Tax Act that no official was responsible for the loss.

Impact: Material financial loss of R2,3 million 146.
22 November Procurement The municipality entered into a contract for the Appropriate An investigation was completed and disciplinary steps have 2021 non- provision of automated fleet and fuel management action is being been taken against the chair of the bid evaluation committee compliance, solutions during June 2018.

In July 2018, the original taken to resolve and the deputy chief financial officer.
The chair of the resulting in scope of the work was extended and new services the MI evaluation bid committee, deputy CFO and the AO responsible overpricing of were added to the scope of the services that were for concluding the contract resigned.

Based on a high court procured goods not part of the original tender and the competitive order, the contract with the service provider was terminated and services bidding process, and had a higher than market- during August 2019 to prevent further financial loss.
related price.

Irregularity: Non-compliance with SCM regulation and criminal investigations are in process.

The AO also requested 19(a) National Treasury to conduct a forensic investigation, which is in Impact: Financial loss to be quantified by the AO process.

During August 2019, the AO referred the matter to the Hawks 147.
8 December Uneconomical The municipality entered into a contract for the Appropriate An investigation was completed and disciplinary steps have 2021 procurement provision of automated fleet and fuel management action is being been taken against the chair of the bid evaluation committee resulting in solutions during June 2018.

Several items included in taken to resolve and the deputy chief financial officer.
The chair of the overpricing of the original tender were procured at prices above the MI evaluation bid committee, the deputy CFO and the AO goods and reasonable market values.

responsible for concluding the contract resigned.

Based on a The municipality also started with legal action against the supplier to recover payments from the supplier.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 99 No.
Notified Type MI description Status Status description services procured Irregularity: Non-compliance with section 62(1)(a) of high court order, the contract with the service provider was the MFMA terminated during August 2019 to prevent further financial loss.

Impact: Financial loss to be quantified by the AO During August 2019, the AO referred the matter to the Hawks and criminal investigations are in process.
The AO also requested the National Treasury to conduct a forensic investigation, which is in process.

The municipality also started with legal action against the supplier to recover payments from the supplier.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 100 No.

Notified Type MI description Status Status description WESTERN CAPE (2) City of Cape Town MM MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 101 No.
Notified Type MI description Status Status description Status of MIs (Total: 2) 0 2 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action City of Cape Town MM 148.
17 May 2020 Payment for Contractors used for the repair of plumbing and Appropriate The AO appointed a forensic investigator on 8 June 2021 to goods or services installation of water management devices billed for action is being quantify the full extent of the loss as well as the parties not received items that were not included on the job cards, taken to resolve responsible for the loss.

The investigation was completed in resulting in overpayments during 2017 to 2020. the MI March 2022.
Irregularity: Non-compliance with section 78(1)(a) of the MFMA Impact: Financial loss to be quantified by the AO The investigation took longer than initially anticipated because of the volume of documentation involved, as some documents were not in digital format, which could not be analysed electronically and the different service providers’ documentation was not standardised, which had an impact on the time needed for the analysis.
The AO provided the investigation report and planned further steps to be taken on 15 March 2022.

We are assessing the actions taken by the AO to address the MI, inclusive of a detailed review of the investigation report.

149.
149.

17 May 2020 Payment for The municipality paid for more standby teams during Appropriate The AO appointed a forensic investigator on 8 June 2021 to goods or services 2017 to 2020 than necessary for the repair of action is being quantify the full extent of the loss as well as the parties not received plumbing and installation of water management taken to resolve responsible for the loss.
The investigation was completed in devices, as account demand trends and historical the MI March 2022. data were not taken into account when calculating the number of teams needed.

The investigation took longer than initially anticipated because of the volume of documentation involved, as some documents MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 102 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 78(1)(b) of were not in digital format, which could not be analysed the MFMA electronically, and the different service providers’ Impact: Financial loss to be quantified by the AO documentation were not standardised, which had an impact on the time needed for the analysis.

The AO provided the investigation report and planned further steps to be taken on 15 March 2022.
We are assessing the actions taken by the AO to address the MI, inclusive of a detailed review of the investigation report.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 103 Provincial government material irregularities MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 104 Provincial government material irregularities No.
Notified Type MI description Status Status description EASTERN CAPE (15) Status of MIs (Total: 15) 1 13 0 1 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Coega Development Corporation 1.

8 October 2021 Suspected fraud, An employee at Coega’s skills development Appropriate action is The AA investigated the allegations.
The employee was dismissed resulting in loss centre created fictitious students on the system being taken to resolve and the matter was reported to the SAPS.

and facilitated the transfer of stipends into his the MI own bank account.

This took place from 2013 to February 2021.

Irregularity: Suspected fraud Impact: Financial loss to be quantified by the AA Education The AA lodged an insurance claim for the loss.
The internal controls relating to the capturing, review and approval of new students on the system were reviewed to address the deficiencies identified.

2.

3 August 2020 Payment for goods or The department made payments in 2019-20 and Appropriate action is The AO conducted an investigation, which identified two services not received 2020-21 for a school furniture refurbishment being taken to resolve responsible officials.

Disciplinary processes against these officials service that was not rendered.
This was due to a the MI are in progress.

lack of effective controls for approving and processing payments, as the payments were not approved by the department’s project managers.

A written communication was sent to the supplier requesting that all the outstanding furniture be delivered by 31 August 2021.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 105 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with TR 8.1.1 commercial crimes unit in December 2020.
The investigation is in Impact: Financial loss to be quantified by the AO process.

The matter was reported to the SAPS and the Mthatha 3.
22 July 2021 Payment not made or Payments to a contractor for maintenance and Appropriate action is The following actions are currently being implemented by the AO not made in time, construction projects at the Sijoka early being taken to resolve to address the MI: resulting in childhood development centre and the the MI interest/standing Chebenca P farm school were not made within time/penalties 30 days, resulting in interest being charged.
Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial of R3,6 million  Internal controls in payment process were improved to ensure timeous processing and payment of invoices.

 Requested and received additional funding in the form of an overdraft of R1,4 billion from the provincial treasury between 2019-20 and 2020-21to address the issue of non-payment of suppliers due to a shortfall on the grants and a lack of other funding to meet commitments.

4.
4.

22 July 2021 Payment not made or A payment to a supplier responsible for Appropriate action is The following actions are currently being implemented by the AO not made in time, renovating and redeveloping the Healdtown being taken to resolve to address the MI: resulting in school campus was not made within 30 days.

the MI  Internal controls in the payment process were improved to interest/standing This led to the supplier instituting legal ensure timeous processing and payment of invoices.
time/penalties proceedings against the department and  Requested and received additional funding in the form of an charging interest.

overdraft of R1,4 billion from the provincial treasury between 2019-20 and 2020-21 to address the issue of non-payments of Irregularity: Non-compliance with TR 8.2.3 suppliers due to a shortfall on the grants and lack of other Impact: Material financial loss of R1,3 million funding to meet commitments.

5.
5.

22 July 2021 Payment not made or The department did not pay a service provider Appropriate action is The following actions are currently being implemented by the not made in time, responsible for a document management being taken to resolve department: resulting in centre project within 30 days, resulting in interest the MI  Internal controls in the payment process were improved to interest/standing being charged.

time/penalties ensure timeous processing and payment of invoices.
 Requested and received additional funding in the form of an Irregularity: Non-compliance with TR 8.2.3 overdraft of R1,4 billion from the provincial treasury between Impact: Material financial loss of R2,7 million 2019-20 and 2020-21to address the issue of non-payments of suppliers due to a shortfall on the grants and a lack of other funding to meet commitments.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 106 No.

Notified Type MI description Status Status description 6.
26 July 2021 Payment for goods or The department made payments in Appropriate action is The AO instituted an investigation into the matter, which identified services not received December 2020 to a supplier for manufacturing being taken to resolve the responsible official who should be held accountable for the and delivering school furniture but the goods the MI financial loss.

The responsible official was suspended.

were not delivered.
were not delivered.

Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R1,5 million A criminal fraud case has been opened against the supplier.

The state attorney was requested to recover the monies.

The matter was reported to the Hawks.

7.

9 September Payment for goods or The covid-19 presidential fund was used contrary Appropriate action is An investigation has been conducted by the internal audit 2021 services not received to its intended purpose.
The non-compliance being taken to resolve division of the department.

Based on the outcome of the investigation, the department is taking steps to recover the monies from the implicated schools.

included: the MI  double payment of presidential fund educators  payment of educators already paid by the department and also paid from the presidential fund  payment of non-teaching staff  payments to the youth for more than the set amounts.
Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R3,8 million 8.

1 October 2021 Payment not made or The department did not make payment to a Appropriate action is The AO is implementing the following actions: not made in time, service provider for construction services within being taken to resolve resulting in 30 days, resulting in standing time being the MI interest/standing charged.
time/penalties Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss of R1,4 million  Internal controls in payment process were improved to ensure timeous processing and payment of invoices.

 Requested and received additional funding in the form of an overdraft of R1,4 billion from the provincial treasury between 2019-20 and 2020-21to address the issue of non-payments of suppliers due to a shortfall on the grants and lack of other funding to meet commitments.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 107 No.

Notified Type MI description Status Status description Health 9.

31 August 2021 Payment not made or The department did not pay a contractor within Recommendations The AO did not take appropriate action to resolve the MI.

not made in time, the required 30 days.

The supplier left the site resulting in and charged the department for standing time.
We notified the AO of the following recommendations, which interest/standing should be implemented by 4 November 2022: time/penalties Irregularity: Non-compliance with TR 8.2.3  The fruitless and wasteful expenditure incurred in respect of the Impact: Material financial loss of R3,6 million extension of time claims should be investigated and the financial loss incurred should be quantified, in accordance with the applicable Instruction Note(s) issued by the National Treasury dealing with fruitless and wasteful expenditure.
 The investigation should determine the reasons and circumstances that led to the extension of time claims for the purpose of developing and implementing an action plan to address control weaknesses.

 Effective and appropriate disciplinary steps should be initiated without undue delay, against any official that the investigation found to be responsible, as required by section 38(1)(h) of the PFMA and in accordance with treasury regulation 9.1.3.

4.
4.

 Appropriate action should be taken to determine whether the responsible official is liable by law for the losses suffered by the department for the purpose of recovery, as required by treasury regulations 9.1.4 and 12.7.1.

5.

 Appropriate action should be taken to ensure that the cash flow requirements of all projects, including the cash flow requirements of implementing agents, are included in the annual budget and adjustment budget of the department.

10.
10.

30 October 2020 Procurement non- A contract for housing units valued at R30,9 Appropriate action is The AO applied to the High Court for this contract to be set aside.
compliance, resulting million was awarded to a bidder who did not being taken to resolve The High Court heard the matter and confirmed that there had in overpricing of score the highest points in the evaluation the MI been an irregularity, but did not issue an order to cancel the MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 108 Human Settlements No.

Notified Type MI description Status Status description procured goods and process, resulting in higher prices being paid, as contract.
The High Court concluded that the department could services the cost of units from the appointed bidder was continue with the contract.

higher than that of the bidder scoring the highest points.

Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Financial loss to be quantified by the AO The AO initiated a conduct review to identify the responsible officials and is currently implementing consequence management against the officials based on the outcomes of the review.

11.
11.

30 October 2020 Procurement non- A contract for housing units valued at R16,8 Appropriate action is The AO applied to the High Court for this contract to be set aside.
compliance, resulting million was awarded to a bidder who did not being taken to resolve The High Court heard the matter and confirmed that there had in overpricing of score the highest points in the evaluation the MI been an irregularity, but did not issue an order to cancel the procured goods and process, resulting in higher prices being paid, as contract.

The High Court concluded that the department could services the cost of units from the appointed bidder was continue with the contract.
higher than that of the bidder scoring the highest points.

Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Financial loss to be quantified by the AO The AO initiated a conduct review to identify the responsible officials and is currently implementing consequence management against the officials based on the outcomes of the review.

12.
12.

30 October 2020 Procurement non- A contract for housing units valued at R21,4 Appropriate action is The AO applied to the High Court for this contract to be set aside.
compliance, resulting million was awarded to a bidder who did not being taken to resolve The High Court heard the matter and confirmed that there had in overpricing of score the highest points in the evaluation the MI been an irregularity, but did not issue an order to cancel the procured goods and process, resulting in higher prices being paid, as contract.

The High Court concluded that the department could services the cost of units from the appointed bidder was continue with the contract.
higher than that of the bidder scoring the highest points.

Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Financial loss to be quantified by the AO The AO initiated a conduct review to identify the responsible officials and is currently implementing consequence management against the officials based on the outcomes of the review.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 109 No.

Notified Type MI description Status Status description Transport 13.
7 July 2020 Assets not A construction grader was stolen in July 2019 Appropriate action is The theft was reported to the SAPS in July 2019.

The SAPS is in the safeguarded, resulting from the premises of a community member, being taken to resolve process of recovering the grader as it had been found in Lesotho.

in loss having been left there with the keys and the MI operator tag inside the vehicle.
Irregularity: Non-compliance with section 38(1)(d) of the PFMA Impact: Material financial loss of R1,5 million The departmental investigation committee concluded an investigation in August 2020.

The AO instituted disciplinary action in February 2021 with the intention of concluding it by July 2021.

However, this process was still in progress by the end of September 2021.

14.
14.

21 October 2020 Payment for goods or Payments were made in November 2016 and Appropriate action is A letter of demand and a summons were served on the supplier services not received February 2017 for a fire truck that the being taken to resolve in November 2020.

However, the supplier had gone into business department had not received.

the MI rescue in October 2017 and the company was taken over by new Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R3,1 million owners.
The AO is currently waiting for a legal opinion from the state attorney pertaining to the prospects of recovery from the new owner.

Disciplinary actions were taken from July 2018 to April 2020 against the responsible officials.

The outcome of the disciplinary process resulted in the following:  The chief director involved was demoted.

 Lower-level staff involved were docked a month’s salary.

15.
15.

15 October 2021 Payment for goods or The department paid a contractor for the Follow-up or We are evaluating the AO's response to the identified MI.

services not received upgrading of Road DR08589 located between assessment in process Additional evidence and information were requested which are Elitheni coalmine and the R56 without evidence being evaluated.

of work having been performed.


Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R13,1 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 110 No.

Notified Type MI description Status Status description FREE STATE (8) Status of MIs (Total: 8) 3 1 1 0 1 0 2 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Education 16.
16 August 2021 Sars late payments, Employee taxes on leave gratuities and pro rata Resolved The AO investigated the loss and determined that no official resulting in interest bonuses paid to retiring employees were not should be held liable for the loss.

and penalties withheld and paid to Sars for the 2013 to 2016 tax periods.

The department applied for a tax directive instead and incorrectly stated on the application forms that the payments were in lieu of severance benefits payable upon retirement.
The matter was concluded by Sars on the final audited assessment dated 13 June 2017.

The department paid the interest and penalties to Sars on 9 July 2020.

Irregularity: Non-compliance with section 2(1) of the fourth schedule of the Income Tax Act Impact: Material financial loss of R55,4 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 111 No.

Notified Type MI description Status Status description 17.
23 October 2020 Debt not recovered A service provider appointed for electricity billing Recommendations The AO did not take appropriate action to resolve the MI.

and collection did not pay over all the money and referral The matter was referred to the Hawks for investigation on collected between April 2019 and March 2020, 15 November 2021.

The investigation is ongoing.

Free State Development Corporation amounting to R32,6 million.
The total accumulative closing balance of the receivable due by the service provider at 31 March 2021 amounted to R109,2 million.

Effective and appropriate steps were not taken to collect the outstanding amounts from the service provider.

The service provider was placed under voluntary liquidation in May 2020.
Irregularity: Non-compliance with section 51(1)(b)(i) of the PFMA We also notified the AO of the following recommendations, which should have been implemented by 31 March 2022:  Appropriate action should be taken to investigate the non- compliance, in order to determine if any official should be held responsible.

 Effective and appropriate disciplinary steps should commence against any official that the investigation found to be responsible, as required by section 51(1)(e) of the PFMA.
 In addition, I am in the process of referring the material irregularity to a public body for investigation as provided for in Impact: Financial loss to be quantified by the AA section 5(1A) of the PAA.

We are currently assessing the response of the AO to determine if the recommendations were adequately implemented.

18.
18.

Payment for goods The entity paid for the replacement of a Appropriate action is The AA committed to investigate the matter to be able to take 14 October 2021 and services not transformer at one of its residential properties; being taken to resolve the necessary corrective action and to identify if any officials received however, no proof could be obtained that the the MI should be held responsible.

transformer had actually been received.


Irregularity: Non-compliance with section 57(a) of the PFMA Impact: Financial loss to be quantified by the AA The AA indicated that due to financial constraints, investigators could not be appointed directly by the entity and assistance was requested from the provincial treasury.
The SIU also received allegations regarding this matter and requested documentation from the Free State Development Corporation in a letter dated 3 March 2022 to assess if it will be within their mandate to investigate the matter.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 112 No.

Notified Type MI description Status Status description Health 19.

15 December Payment for goods The department made payments for work not Follow-up or We are evaluating the AO's response to the newly identified MI.
2021 or services not delivered on the contract for the renovations and assessment in process Additional evidence and information were requested, which are received repairs of workshops, garages, laundry, mortuary, being evaluated.

pharmacy and kitchen at the National Hospital.

Irregularity: Non-compliance with section 45(a) of the PFMA Impact: Financial loss to be quantified by the AO 20.
15 December Payment for goods The department made payments for work not Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 or services not delivered on the contract for the renovations and assessment in process received repairs of the doctor’s residence and outpatient building at the National Hospital.

Irregularity: Non-compliance with section 45(a) of the PFMA Impact: Financial loss to be quantified by the AO Human Settlements 21.
12 July 2019 Payment for goods From 2014-15 to 2016-17, a contractor was paid Remedial action We included recommendations in the 2019-20 audit report, which or services not for the development of community residential the AO was required to implement by 28 July 2021.

Based on the received units in Thabong, which were not completed.

A information provided by the AO and the follow-up work we new contractor had to be appointed to performed, we concluded that the recommendations were not complete the work.
implemented adequately.

Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R20,2 million The AG notified the AO of the following remedial actions to address the MI, which should have been implemented by 30 April 2022:  Effective and appropriate steps must be taken to ensure the timely recovery of the financial loss.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 113 No.
Notified Type MI description Status Status description  Appropriate action must be taken to investigate the non- compliance in order to determine if any official/s should be held responsible.

; and  Effective and appropriate disciplinary steps must commence against any official(s) that the investigation finds to be responsible, as required by section 38(1)(h) of the PFMA.

We are currently assessing response by the AO to determine if the remedial actions were adequately implemented.

22.
22.

12 July 2019 Payment for goods The department made payments in 2018-19 on Remedial actions We included recommendations in the 2019-20 audit report, which or services not duplicate claims submitted by a supplier on the the AO was required to implement by 28 July 2021.

Based on the received Kroonstad 350 housing project.

information provided by the AO and the follow-up work we Irregularity: Non-compliance with TR 8.1.1 implemented adequately.
performed, we concluded that the recommendations were not Impact: Material financial loss of R6,6 million The AG notified the AO of the following remedial actions to address the MI, which should have been implemented by 28 February 2022:  Appropriate action must be taken to investigate the non- compliance in order to determine if any official(s) should be held liable for the losses suffered by the department.
 If it is determined that the department suffered the financial loss through criminal acts or possible criminal acts or omission, this must be reported to the SAPS, as required by treasury regulation 12.5.1.

 Effective and appropriate disciplinary steps must commence against any official/s that the investigation found to be responsible, as required by section 3.8(1)(h) of the PFMA.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 114 No.
Notified Type MI description Status Status description  Effective and appropriate steps must be taken to monitor the recovery process of the financial loss through the Office of the State Attorney.

The AO reported that progress has been made with the implementation of the remedial action but delays were experienced with its finalisation.

We granted the AO an extension until 30 April to take required actions.
We are currently assessing the response of the AO to determine if the remedial actions were adequately implemented.

23.

15 October 2021 Inefficient use of The department paid a supplier for standing time Follow-up or We are determining the most suitable action based on the AO’s resources – during the covid-19 lockdown period, even assessment in process response.

no/limited benefit though the department had no contractual derived from money obligation to make such payments.
spent Irregularity: Non-compliance with section 45(b) of the PFMA Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 115 No.

Notified Type MI description Status Status description GAUTENG (8) Status of MIs (Total: 8) 4 4 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Education 24.
13 October 2021 Uneconomical Procurement of decontamination, fogging, Appropriate The AO appointed an accounting firm to perform an investigation to procurement resulting disinfection and deep cleaning services of action is being be finalised by 30 April 2022 in order to determine the responsible in overpricing of educational facilities in 2020-21 at excessive taken to resolve officials, take disciplinary steps and recover financial losses (where goods and services prices.

procured the MI applicable).


Irregularity: Non-compliance with section 38(1)(b) of the PFMA Impact: Financial loss to be quantified by the AO Health 25.
24 June 2019 Procurement non- The department awarded a contract for Appropriate Based on the outcomes of a departmental investigation finalised in compliance, resulting information technology infrastructure in March action is being September 2018, the AO had concluded the disciplinary steps in overpricing of 2015 without inviting competitive bids, resulting taken to resolve against the two officials and all were found guilty.
procured goods and in a financial loss, as cheaper alternatives were the MI services available.

Irregularity: Non-compliance with TR 16A6.1 Impact: Material financial loss of R148,9 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 The state attorney is still considering whether civil claims can be instituted against the implicated officials, and the National Prosecuting Authority is considering possible criminal charges against the implicated officials.
The contract ended during the 2020-21 financial year.

116 No.

Notified Type MI description Status Status description 26.
31 August 2021 Payment not made or The department did not pay medical claims Appropriate The AO embarked on a legislative drafting project during 2021 to not made in time, within 30 days from the court judgement in 2019- action is being draft the Gauteng Medical Litigation and Mediation Bill intended to resulting in 20, which resulted in interest on the late taken to resolve reduce the medial claims burden.

A meeting was held with the interest/standing payments.
the MI Gauteng Provincial Treasury on 17 September 2021, where they time/penalties indicated that it was incumbent on the department making provision Irregularity: Non-compliance with TR 8.2.3 in its budget for the payment of final court orders, which must be Impact: Material financial loss of R1,5 million done for 2022-23 financial year allocation.

27.

15 October 2021 Uneconomical Procurement of masks in 2020-21 at excessive Follow-up or We are evaluating the AO’s response to the identified MI.
Additional procurement, resulting prices in overpricing of assessment in evidence and information were requested and are being evaluated.

process goods and services Irregularity: Non-compliance with national procured treasury instruction note 5 of 2020/21 Impact: Financial loss to be quantified by the AO 28.

15 October 2021 Uneconomical Procurement of sanitisers in 2020-21 at excessive Follow-up or We are evaluating the AO’s response to the identified MI.
Additional procurement, resulting prices in overpricing of assessment in evidence and information were requested and are being evaluated.

process goods and services Irregularity: Non-compliance with national procured treasury instruction note 8 of 2019/20 Impact: Financial loss to be quantified by the AO Human Settlements 29.
7 September Payment for goods or A payment was made to the incorrect Appropriate A criminal case was opened against the contractor in November 2020 services not received contractor in October 2019 because effective action is being 2019.

The contractor was arrested and subsequently released on bail internal controls were not in place for approving taken to resolve in September 2020. and processing payments.
the MI Irregularity: Non-compliance with TR 8.1.1 A forfeiture application by the asset forfeiture unit within the NPA was served on the contractor on 9 March 2020 and an order was MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 117 No.

Notified Type MI description Status Status description Impact: Material financial loss of R2,5 million obtained on 25 March 2020 to preserve some of the funds.

A vehicle was also seized and sold with the approval of the NPA.
An investigation into the cause of the breakdown in controls was conducted and the outcomes were approved in April 2021.

The investigation identified four officials as responsible.

A disciplinary hearing was held for one of the four officials.

The disciplinary hearings for the remaining employees were expected to have been finalised by end-October 2021.

These have been delayed due to postponements requested by either the representative or the officials because of the covid-19 lockdown.

30.
30.

15 October 2021 Payment not made or Interest on late settlement of court judgements Follow-up or We are evaluating the AO’s response to the identified MI.

Additional not made in time, between October 2016 and November 2017 assessment in information was requested, which is being evaluated.

resulting in process interest/standing Irregularity: Non-compliance with TR 8.2.3 time/penalties Impact: Financial loss to be quantified by the AO 31.
15 October 2021 Uneconomical The department entered into a contract for the Follow-up or We are evaluating the AO’s response to the identified MI.

Additional expenditure due to provision of temporary residential units and assessment in information was requested, which is being evaluated.

excessive rental portable toilets without evidence that a fair process instead of procurement process was followed in awarding procurement of the contract.
The contract did not state an expiry date, resulting in an evergreen contract.

This resulted in excessive rental costs.

Irregularity: Non-compliance with section 38(1)(b) of the PFMA Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 118 No.
Notified Type MI description Status Status description KWAZULU-NATAL (7) Status of MIs (Total: 7) 1 5 1 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Education 32.
11 December Sars late payments, The department paid penalties and interest Appropriate The AO is in the process of developing an electronic system that 2020 resulting in interest relating to the late payment of employee taxes action is being would assist in timeously alerting these related processes.

and penalties for temporary teachers.

The pay-as-you-earn taken to resolve The AO is engaging with Sars on the payments to be made.
tax withheld from employees in 2017 was only the MI paid over with the employee tax reconciliations Actions will be taken from the 2022 tax year against any official for 2019-20. whose action or negligence leads to fruitless and wasteful expenditure through interest and penalties.

The responsible person Irregularity: Non-compliance with section 2(1) of has not yet been identified.

the fourth schedule of the Income Tax Act Impact: Material financial loss of R6,7 million 33.
30 September Payment for goods or Employees who had left the employment of the Appropriate The AO has since developed standard operating procedures, which 2021AQQW services not received department were not removed from the human action is being are being implemented to avoid late termination of services of staff resources and payroll systems on time.

This taken to resolve exiting the system.

resulted in salary payments to persons who were the MI no longer in the employment of the department.
Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO Warning letters have been issued to the officials found responsible.

The AO appointed debt collectors and implemented its debt management policy to recover these financial losses.

District workshops have been held with staff responsible for processing staff terminations.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 119 No.
Notified Type MI description Status Status description An electronic system is being procured and will be implemented to fast track the flow of termination documentation from places of origin (schools) to the point of processing (districts).

Health 34.
Health 34.

12 February 2021 Uneconomical In March 2020, 40 000 units of 1-litre sanitiser Appropriate The matter was investigated by the SIU and an acknowledgement of procurement, resulting were procured at prices higher than those action is being debt was signed with the service provider.

An amount of R500 000 of in overpricing of permissible at the time.
The department paid taken to resolve the R1,3 million has since been recovered by the SIU from the supplier goods and services R143 per litre against the set price of R110,40 per the MI and is pending a transfer to the department.

procured litre.

The procurement at excessive prices resulted in a financial loss for the department.

Consequence management was implemented, as warning letters were issued to the responsible officials.
Irregularity: Non-compliance with paragraph 3.7.6(ii) of national treasury instruction note 8 of 2019-20 Impact: Material financial loss of R1,3 million (Recovered loss to date: R500 000) 35.
25 June 2019 Procurement non- Contracts for radiology equipment were Resolved The AO opted to not recover the loss from the responsible officials compliance, resulting awarded in September 2017 to bidders who did because the actions were not considered unjust or malicious, but in overpricing of not score the highest points in the evaluation caused by the incorrect understanding and application of the procured goods and process, resulting in higher prices being paid, as PPPFA.
services the cost of equipment from the appointed bidders was higher than that of the bidders scoring the highest points.

The AO improved the internal controls surrounding the awarding of multiple bidders.

Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Material financial loss of R2,8 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 120 No.

Notified Type MI description Status Status description Transport 36.
1 October 2021 Payment made was The department incorrectly paid claims Follow-up or We are evaluating the AO’s response to the identified MI.

Additional not in line with submitted by a consultant that were based on assessment in evidence and information were requested which are being contract budgeted infrastructure expenditure, whereas process evaluated.

the bid-pricing document required claims to be priced based on percentages of actual infrastructure expenditure incurred.
This resulted in overpayments to the consultant.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO 37.

8 October 2021 Uneconomical The department awarded a tender for Appropriate The AO appointed a service provider to investigate the contract procurement, resulting providing professional consultancy services to all action is being expenditure in overpricing of area offices in the province for a period of three taken to resolve goods and services years.
The contract was not awarded by the MI procured appropriate application of the bid evaluation process and requirements.

Irregularity: Non-compliance with paragraph 6(5) and 7(1) of the PPR Impact: Financial loss to be quantified by the AO 38.

8 October 2021 Inefficient use of The department paid a contractor for standing Appropriate The matter is currently under investigation by the SIU.
The AO will take resources – no/limited time after suspending a project that had to action is being further action pending the outcome of the investigation.

benefit derived from commence on 8 June 2019, as the department taken to resolve money spent did not have an approved environmental the MI management plan as required at the date of commencement.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 121 No.
Notified Type MI description Status Status description Irregularity: Non-compliance with section 38(1)(a)(i) of the PFMA Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 122 No.

Notified Type MI description Status Status description LIMPOPO (2) Status of MIs (Total: 2) 1 1 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Health 39.
20 July 2020 Inefficient use of The department made lease payments from Appropriate action The AO instituted an investigation in July 2020 and issued an resources – May 2015 to February 2020 at the Pietersburg is being taken to investigative report in March 2021.

The investigation was delayed due no/limited Hospital for radiology equipment that was not resolve the MI to the complexity of the matter and the covid-19 pandemic.

benefit derived licensed for use due to safety concerns.
from money spent Irregularity: Non-compliance with section 38(1)(b) Disciplinary processes against seven officials identified as responsible are still in progress.

of the PFMA The trauma room was deep cleaned to address environmental Impact: Material financial loss of R3,7 million challenges.

The equipment was tested for quality and relicensed by the Radiation Control Board in June 2021.
The AO renegotiated the extension of the contract with the supplier, from the initial 24 months for one piece of equipment to 12 months for all six pieces of equipment at no cost, to recover the financial loss incurred.

The free-use contract will run from July 2021 up to June 2022.

This was formalised through a written contract in September 2021.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 123 No.
Notified Type MI description Status Status description To prevent re-occurrence, the hospital committed to enhance due diligence prior to the processing of payments by ensuring that end users understand the impact of completing and signing off the goods received voucher.

Training will be undertaken afforded to all end users regarding the project and contract management.

Public Works, Roads and Infrastructure 40.


4 March 2021 Procurement The department awarded a three-year road Follow-up or In June 2021, the AO requested a forensic investigation into this matter non- maintenance contract in September 2018 to a assessment in by the SIU.

A secondment agreement was signed with the SIU in August compliance, bidder who did not score the highest points in the process 2021 and the investigation was set to start on 1 September 2021, with a resulting in evaluation process.
This resulted in higher prices planned completion date of 31 October 2021.

However, the SIU was overpricing of being paid, as the contract value of the unable to conclude the investigation due to limitations imposed by the procured goods appointed bidder was higher than the bid amount auditee.

We are determining the most suitable action based on the and services of the bidder who scored the highest points.

AO’s response and actions.


Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Material financial of R1,6 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 124 No.

Notified Type MI description Status Status description MPUMALANGA (6) Status of MIs (Total: 6) 4 2 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Community Safety, Security and Liaison 41.
4 October 2021 Receipts not The department did not ensure that they have an Appropriate action The investigation to this matter is currently underway by the SAPS.

Once recorded/ appropriate process in place to reconcile bank is being taken to the investigation is concluded, we will evaluate further actions taken deposited deposits with receipts captured on the financial resolve the MI by the AO.

system during the period 2016 to 2019.


This resulted in a loss of revenue to the department because receipts from regional authorities for licenses issued were not deposited in the department’s bank account.

Irregularity: Non-compliance with TR 7.2.1 Impact: Financial loss to be quantified by the AO Education 42.

14 October 2021 Payment for The department made overpayments during 2016 Follow-up or We are evaluating the AO’s response to the identified MI.
A substantial goods or services -2019 for students studying in Russia.

This was due assessment in amount of information has been provided, which are being evaluated.

not received to a lack of adequate internal control measures process to ensure that overpayments are prevented, or detected and corrected.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 125 No.
Notified Type MI description Status Status description 43.

8 December Payment for The department made payments to service Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 goods or services providers for the provision of food supplies at assessment in not received schools during April, May, June and July 2020 for process more learners than enrolled at some schools.
Irregularity: Non-compliance with section 38(1)(a)(i) of the PFMA Impact: Financial loss to be quantified by the AO Health 44.

6 October 2021 Suspected Fictitious payments were made for infrastructure Appropriate action The AO is taking appropriate action and the matter is with the SAPS.

Fraud, resulting in maintenance in February 2021 for which no goods is being taken to Once the investigation is concluded, we will evaluate further actions loss and services were received.

resolve the MI taken by the AO.


Irregularity: Suspected fraud Impact: Financial loss to be quantified by the AO Mpumalanga Economic Growth Agency 45.

9 December Payment for The public entity paid a service provider for Follow-up or We are evaluating the AO’s response to the identified MI.

2021 goods or services management fees for the implementation of the assessment in not received Government Nutrition Programme without process services having been rendered.
Irregularity: Non-compliance with section 57(b) of the PFMA Impact: Financial loss to be quantified by the AO Public Works 46.

17 November Payment for The department overpaid a service provider for Follow-up or We are evaluating the AO’s response to the identified MI.

2021 goods or services the rehabilitation of 11,8 km of road D3930 from assessment in not received process MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 126 No.
Notified Type MI description Status Status description Acornhoek and Hluvukani in the Bohlabela Region of the Mpumalanga province.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 127 No.
Notified Type MI description Status Status description NORTH WEST (18) Status of MIs (Total: 18) 1 17 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Community Safety and Transport Management 47.
15 July 2019 Procurement Through participating in a contract of the Free Appropriate action An investigation determined that the former AO was responsible for the non- State Department of Police, Roads and Transport, is being taken to non-compliance.

The Office of the Premier is responsible for further compliance, a R35 million contract was awarded to a supplier resolve the MI action but the process is being delayed.
resulting in for learner driver training and a capacitation supplier not programme in October 2015.

The department did delivering on this without complying with the legislative contract requirements for such participation as it procured beyond the scope of the original contract.

As a competitive bidding process was not followed, the ability of the supplier to deliver the services was not assessed.

A prepayment was made to the supplier in November 2015 for which services have not been received to date.
Irregularity: Non-compliance with TR 16A6.6 Impact: Material financial loss of R21,3 million A criminal case was opened with the Hawks in 2017 and the investigation was concluded.

Based on the investigation report, the director of public prosecutions in North West declined criminal prosecution.

A civil claim for the recovery of the loss was instituted against the supplier in September 2017.

The litigation process is currently underway.

48.


15 July 2019 Procurement The department directly paid scholar transport Appropriate action The SIU extended the scope of an investigation into a previous scholar non- suppliers in 2017-18 and 2018-19 without following is being taken to transport tender to the current scholar transport matter.

The compliance, a procurement process.

The price paid for scholar resolve the MI MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 128 No.
Notified Type MI description Status Status description resulting in transport was significantly higher than the market investigation is still in process.

The AO plans to take further action based overpricing of price.

procured goods and Irregularity: Non-compliance with TR 16A6.1 services Impact: Financial loss to be quantified by the AO on the outcome of the SIU investigation once completed.

The National Treasury instituted a forensic investigation, which was finalised in February 2020.
The AO received the report in September 2020 and is in the process of implementing the recommendations.

The AO also referred the matter to the premier’s office to determine further actions against the former AO.

A judgement was issued in the High Court in December 2019 to set aside the contract, following which a new tender was advertised in April 2021.

49.
49.

15 July 2019 Payment for Effective internal controls were not in place for Appropriate action The AO commissioned route verifications through the provincial internal goods or approving and processing payments to scholar is being taken to audit unit.

Because of these verifications, payments made to suppliers services not transport suppliers in 2017-18 and 2018-19, resolve the MI from October 2019 were based on actual verified kilometres.
The rate received resulting in some suppliers being paid for services per kilometre was also adjusted to the correct bus capacities.

not delivered.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO The SIU extended the scope of an investigation into a previous scholar transport tender to the current scholar transport matter.

The investigation is still in process.

The AO plans to take further action based on the outcome of the SIU investigation once completed.
50.

13 February 2020 Payment for The department awarded a contract amounting Appropriate action The contract was terminated in June 2018 and no further payments goods or to R407 million in March 2015 for the introduction is being taken to were made.

services not of scheduled flights to Mahikeng and Pilanesberg resolve the MI received airports.

The payments made in relation to this contract included flight subsidies, route marketing services and other costs relating to the operations of these airports.
The department had already spent R203 million on this contract in previous years; however, no effective internal controls were in place for Two criminal cases were opened: one with the SAPS in 2017 and one with the Hawks in May 2020.

The AO regularly follows up the status of the investigation with the Hawks.

Currently, the investigation is still in progress.

The AO also approached the National Treasury in September 2019 to investigate the matter.
As a result, the National Treasury commissioned MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 129 No.

Notified Type MI description Status Status description approving and processing these payments, an external forensic investigation in October 2019.

This forensic resulting in suppliers being paid for services not investigation is still in progress.

delivered.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO 51.
1 March 2021 Payment The department overpaid a bus service company Appropriate action All claims paid from September 2020 were based on the contracted made was not in 2019 and 2020 due to escalations applied that is being taken to formula and therefore no further overpayments were made after this in line with were contradictory to those specified in the resolve the MI date.

contract contract.
contract contract.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO The AO appointed an external investigator to investigate and quantify the overpayments.

The investigation was finalised in October 2021 and the investigative report was submitted to the AO.
After conclusion of the investigation, the operator, through their lawyers, declared a dispute on the amount reported as being owed and submitted a counter claim for annual adjustments that were not implemented.

The AO is in the process of appointing consultants to investigate the counter claim and analyse the payments.

52.

24 February 2022 Payment for Appropriate internal procedures and controls Follow-up or We are evaluating the AO’s response to the newly identified MI.
Education goods or were not in place to identify differences in the assessment in services not claims for professional services rendered during process received the construction of Lykso primary school.

This resulted in overpayments to the supplier during 2015 and 2016.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 130 No.

Notified Type MI description Status Status description Health 53.
18 September 2020 Payment not The department did not honour contractual Appropriate action The internal infrastructure unit conducted a preliminary investigation made or not obligations on two projects (Excelsius Nursing is being taken to and confirmed that there was a financial loss, and recommended that made in time, College – phase 1 and Jouberton Community resolve the MI an independent investigator be appointed.
The independent resulting in Health Centre) as they did not pay the investigator was appointed and the investigation has subsequently interest/standin contractors timeously, which resulted in interest been finalised.

The disciplinary processes have commenced.

g being charged in June 2020. time/penalties Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss of R5,5 million.

54.
54.

29 September 2020 Payment for The department paid a contractor appointed on Appropriate action The AO appointed an investigator in August 2020 to look into the goods or the Mmabatho Nursing College – phase 1 project is being taken to matter.

The investigation concluded that there had been a services not in advance during March 2016, which was before resolve the MI prepayment.

The disciplinary processes have commenced and steps received the related services were rendered.
This are being taken to recover the financial loss.

prepayment was not provided for in the contract between the department and the contractor.

Irregularity: Non-compliance with TR 15.10.1.2(c) Impact: Financial loss to be quantified by the AO 55.
29 September 2020 Procurement During the evaluation of bidders for a R10,3 million Appropriate action An investigation was concluded in June 2021 and it was non- contract for the servicing, repair and is being taken to recommended that the AO seek a legal opinion prior to initiating the compliance, maintenance of equipment for three years from resolve the MI process to recover the loss and take action, as the implicated official resulting in August 2019 to July 2022, a supplier was had resigned.
overpricing of incorrectly disqualified at the functionality stage.

procured Had this bidder not been disqualified, they could goods and have won the award, as the bid of the services disqualified supplier was lower than that of the winning supplier.

Irregularity: Non-compliance with PPR 5(7) Impact: Financial loss to be quantified by the AO The AO referred the matter to the state attorney in August 2021 for civil recovery from the previous employee.
MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 131 No.

Notified Type MI description Status Status description 56.

29 September 2021 Inefficient use The department made two payments linked to Appropriate action The AO appointed an investigator in July 2020 to look into the matter of resources – the extension of time on the Excelsius Nursing is being taken to and the investigation has subsequently been finalised.
The disciplinary no/limited College project in 2019-20 and 2020-21 without resolve the MI processes have commenced.

benefit derived approval.

from money spent Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO 57.

29 September 2021 Inefficient use The department made payments to the Appropriate action The AO appointed an investigator in October 2020.
The investigation of resources – contractor of the Jouberton Community Health is being taken to recommended that the overpayment be recovered from the parties no/limited Centre project during 2019, which were above resolve the MI involved.

The AO commenced with the recovery, indicating that the benefit derived the approved extension-of-time amount, resulting funds can only be recouped once the final account has been done.

from money in overpayments.


The final account will be done when the last two payments have been spent approved, which is expected to be 15 May 2022.

Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO 58.
8 February 2021 Inefficient use A contract was entered into for the maintenance Appropriate action An investigation into the MI was completed in May 2021 and revealed of resources – of medical equipment from November 2016 to is being taken to that the suspended CFO was responsible and consequence no/limited October 2020 with a provision that the resolve the MI management should be implemented.
The disciplinary case against benefit derived department had to confirm whether prices for the suspended CFO is still ongoing and charges will be added once from money each transaction were market related.

This the current disciplinary process is finalised.

spent allowed the department to engage another service provider, irrespective of the contract, if prices were not market related.

The department did not follow this process and, therefore, did not pay the market-related cost for the service.
Irregularity: Non-compliance with section 38(1)(b) of the PFMA Impact: Financial loss to be quantified by the AO In view of the seriousness of the findings, the AO handed the matter over to the Hawks in June 2021 for criminal investigation and recovery, as recommended in the investigation report.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 132 No.

Notified Type MI description Status Status description 59.
15 October 2021 Payment not The department did not pay suppliers timeously in Appropriate action The AO instituted a preliminary investigation; however, the AO made or not 2020, resulting in interest being charged.

is being taken to indicated that the investigation did not identify the responsible officials Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss of R13,8 million resolve the MI and further investigation needs to be performed on the payments made to this supplier.
It is anticipated that the investigation will be completed in August 2022. made in time, resulting in interest/standin g time/penalties 60.

15 October 2021 Debt not The department did not apply the requirements of Appropriate action The AO agreed that the correct process was not followed to write off recovered the revenue and debt management policy is being taken to the debt and management resolved to write back the patient fees.
before writing off accrued revenue patient debt resolve the MI for the 2020-21 financial year.

Irregularity: Non-compliance with TR11.4.1 Impact: Financial loss to be quantified by the AO 61.

15 December 2021 Under- The department did not ensure that the Appropriate action The AO indicated that 14 of the 16 units in the facility have utilisation of a Jouberton Community Health Centre was fully is being taken to subsequently been opened and are currently operational.
material public utilised for its intended purpose.

The project was resolve the MI resource completed in July 2019, but the first patient was only admitted to the maternity ward two years later, in May 2021.
By September 2021, still only nine of the 18 units of the facility were fully utilised, including only three medical units for providing medical services and the others, administrative or support units to the hospital Key units such as the theatre, emergency room and crisis control, were observed to be equipped but vacant with most equipment still packaged and unutilised.
Irregularity: Non-compliance with TR10.1.2 Impact: Misuse of a material public resource Site visit on 10 March 2022 confirmed that all units, except for the theatre and crisis centre, have subsequently been opened.

However, the facility is not operating at full capacity mainly due to staff shortages.

Management indicated that the review of the staff structure for the facility is underway and will be finalised in May 2022.
Recruitment of the positions envisaged in the new staff structure will commence from June 2022.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 133 No.

Notified Type MI description Status Status description Public Works and Roads 62.

29 September 2020 Payment not The department did not honour contractual Appropriate action A preliminary investigation was completed in May 2021.
It was found made or not obligations by paying a contractor timeously, is being taken to that the standing time was incorrectly paid to the contractor.

On made in time, which resulted in standing time and interest being resolve the MI 20 August 2021, the process to recover the retention monies from the resulting in charged on the late payments during 2019. contractor commenced.

The contractor challenged the process and interest/standin took legal action.
The department instructed the state attorney to g Irregularity: Non-compliance with TR 8.2.3 defend the matter.

Litigation is still in process.

time/penalties Impact: Material financial loss of R3,5 million 63.

26 August 2021 Payment for The department made a payment in March 2017 Appropriate action The department investigated the matter and the investigation was goods or for various projects to fix roads and bridges is being taken to concluded in 2021.
The investigation confirmed that the value of services not damaged by floods in the province.

The payment resolve the MI services not rendered in relation to the prepayment amounted to R46,4 received was made prior to any goods being received or million.

Former HoD and director for roads have since been dismissed.

any services being rendered.

The matter has been handed over to the state attorney for civil recovery from the supplier.
Irregularity: Non-compliance with TR 15.10.1.2(c) Impact: Material financial loss of R46,4 million 64.

26 August 2021 Procurement The department appointed a contractor for the Appropriate action The AO instituted an investigation that was planned to be completed non- patching and resealing of a road during 2019.

A is being taken to by 31 March 2022.


A follow-up letter was sent requesting progress on compliance, bid from one of the bidders was incorrectly resolve the MI the investigation and we are awaiting a response.

resulting in disqualified on the basis that the bidder did not overpricing of have the required CIDB grading.

The winning procured bidder quoted the department an amount that is goods and higher than the incorrectly disqualified supplier services who would have won the bid.
Irregularity: Non-compliance with section 2(1)(f) of the PPPFA Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 134 No.

Notified Type MI description Status Status description NORTHERN CAPE (5) Status of MIs (Total: 5) 3 1 0 0 0 1 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action 65.
28 February 2022 Payment for The department made overpayments to a Follow-up or We are evaluating the AO’s response to the newly identified MI.

Agriculture goods or services contractor for construction work in 2019-20. assessment in not received process Irregularity: Non-compliance with section 45(a) of the PFMA Impact: Material financial loss of R1,4 million Health 66.
18 July 2019 Procurement The department awarded a three-year contract for Referral The AO did not agree that there had been non-compliance in the non- medical waste collection in November 2018 to a procurement process.

compliance, supplier based on criteria applied in the evaluation resulting in process that were different from those in the original overpricing of bidding invitation.

The value of the contract was procured goods R4,3 million per month.
We referred the matter to the National Treasury in October 2019 for investigation.

The investigation was completed at the end of February 2022 and outcome was received in April 2022.

The National Treasury concluded that further investigation of specific identified and services The non-compliance is likely to result in a material aspects will be required and referred those to the Hawks for further financial loss, as the fixed monthly pricing awarded investigation.
to the supplier was significantly higher than the variable costing pricing included in the original bidding invitation.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 135 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with TR 16A3.2(a) Impact: Financial loss to be quantified by the AO 67.
17 July 2019 Payment for The department entered into a radiology services Appropriate action The case was referred by the AO to the Hawks on 20 January 2021. goods or services contract from November 2013, which was is being taken to The outcome of the investigation is still awaited.

We will follow up on not received subsequently extended multiple times.

The contract resolve the MI the progress during the 2021-22 audit cycle.
contained a mathematical error that resulted in overpayments, due to a lack of effective internal controls for processing and approving payments.
The identified overpayments related to the following periods:  April 2014 to March 2015 (first contract extension)  October 2018 to September 2019 (no signed extension contract) As part of the radiology services contract, the department made payments for mammogram services even though the hospital where the services were rendered did not have a mammogram machine.
The identified overpayments related to the following periods:  April 2014 to March 2015 (first contract extension)  October 2015 to September 2018 (third contract extension) Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO 68.
11 October 2021 Payment not Payment was not made within 30 days to a service Follow-up or We are determining the most suitable action based on the AO’s made or not provider pertaining to laboratory services accounts, assessment in response.

made in time, resulting in interest being charged in 2020-21. process MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 resulting in 136 No.
Notified Type MI description Status Status description interest/standing Irregularity: Non-compliance with TR 8.2.3 time/penalties Impact: Financial loss to be quantified by the AO 69.

11 October 2021 Payment not The department did not pay the supplier within 30 Follow-up or We are determining the most suitable action based on the AO’s made or not days, resulting in interest being charged in 2020-21. assessment in response.
made in time, process resulting in Irregularity: Non-compliance with TR 8.2.3 interest/standing Impact: Financial loss to be quantified by the AO time/penalties MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 137 No.

Notified Type MI description Status Status description WESTERN CAPE (1) Status of MIs (Total: 1) 1 0 0 0 0 0 0 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action Human Settlements 70.
24 November Payment to During 2012 to 2021, the evaluation criteria per the Follow-up or We are evaluating the AO’s response to the newly identified MI.

2021 ineligible housing code was incorrectly applied for the assessment in beneficiaries or Finance Linked Individual Subsidy Paid; i.e.

The FLISP process over allocation housing subsidy.

This resulted in payment of subsidies to eligible to invalid beneficiaries or over payment of subsidies beneficiaries to valid beneficiaries.
Irregularity: Non-compliance with section 45(a) of the PFMA and part 3 of the National Housing Code of 2009 Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 138 National government material irregularities MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 139 National government material irregularities NATIONAL (58 MIs) 11 36 3 3 0 3 2 Follow-up or assessment in process Appropriate action Resolved Recommendations Recommendations and referral Referral Remedial action No.
Notified Type MI description Status Status description BASIC EDUCATION PORTFOLIO Department of Basic Education 1.

1 July 2021 Payment for Learner material was distributed to volunteer educators Appropriate action is The departmental investigation committee concluded goods or for learners who did not qualify to be on the Kha Ri being taken to resolve an investigation into the matter during 2016-17. services not Guide programme due to deficiencies in learner MI received registration processes.
Irregularity: Non-compliance with section 38(1)(a)(i) of the PFMA Impact: Financial loss to be quantified by the AO Disciplinary action was instituted against the officials responsible in October 2016 and part of the financial loss had already been recovered during 2017-18.

The matter was referred to the Hawks in 2017-18 to investigate and recover the remaining financial loss.

The Hawks subsequently referred the matter to the NPA for prosecution.
The prosecutor requested additional information from the Hawks; this process is currently underway.

2.

1 July 2021 Payment not Payment was not made to a service provider within 30 Appropriate action is Investigation by the AO is in progress.

made or not days for a construction project in the Eastern Cape, being taken to resolve made in time, resulting in interest charges being raised in March 2019 MI resulting in and June 2019.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 140 No.
Notified Type MI description Status Status description interest/standing time/penalties Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss of R7 million 3.

1 September Payment not Payment was not made to a contractor within 30 days Appropriate action is Investigation by the AO is in progress.
2021 made or not for a construction project in the Eastern Cape, resulting being taken to resolve made in time, in the withdrawal of the contractor from the site and MI resulting2 in the cancellation of the contractual agreements.

The interest/standing contractor claimed for damages due to the time/penalties cancellation of the contract and the loss of unutilised damaged material on site.

Interest was also being charged on the late payments.
Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss to be quantified by the AO 4.

1 July 2021 Payment for Payment was made to a service provider of bulk Appropriate action is The AO confirmed the financial loss amount recovered goods or materials on 31 March 2017 for which the department being taken to resolve and an assessment for more potential financial loss services not did not receive an equivalent value of materials.
The MI assessment is still in progress received service provider acknowledged this debt on 13 April 2021.

Irregularity: Non-compliance with TR 15.10.1.2(c) Impact: Financial loss to be quantified by the AO MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 141 No.

Notified Type MI description Status Status description COMMUNICATIONS PORTFOLIO South African Broadcasting Corporation 5.
7 July 2020 Procurement A contract for security services was awarded in Appropriate action is An investigation by the AA was concluded in October non- August 2017 to a bidder who did not score the highest being taken to resolve 2020. compliance, points in the evaluation process, resulting in higher MI resulting in prices being paid.
overpricing of procured goods Irregularity: Non-compliance with section 2(1)(f) of the and services PPPFA Impact: Material financial loss of R2,3 million South African Post Office (Sapo) The SIU and SABC are taking legal action, which is in process.

The board agrees with the SIU’s final report and that follow-up steps for consequence management will be instituted once the court case has been finalised.

6.
6.

12 November Inefficient use of Sapo was awarded the contract for the administration Referral The matter was referred to the Hawks for investigation 2020 resources – no / and processing of the payment of South African Social on 15 November 2021.

The investigation is ongoing and limited benefit Security Agency grants through its then Postbank the AGSA receives regular progress feedback on the derived from division in 2018.

They were required to procure and investigation.


money spent implement an integrated grants payment system for this purpose.

The system was not properly implemented and secured, resulting in the issuer master key for the bank cards of grant beneficiaries being compromised and fraudulent transactions taking place, which is likely to result in material financial losses.
Irregularity: Non-compliance with section 51(1)(a)(i) of the PFMA Impact: Material financial loss of R158 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 142 No.

Notified Type MI description Status Status description 7.
15 February Inefficient use of Postbank failed to implement effective controls on the Follow-up or We are evaluating the AA’s response to this re-issued Postbank 2022 resources – card management and South African Social Security assessment in process no/limited Agency beneficiary payment system.

This resulted in benefit derived cards being susceptible to fraud or used to perpetuate from money fraud.
spent Irregularity: Non-compliance with section 51(1)(a)(i) of the PFMA Impact: Material financial loss of R13,6 million MI at the Postbank, which was previously issued to SAPO before separation of the two entities.

8.

15 February Inefficient use of Cards that were lost because of a lack of internal Follow-up or We are evaluating the AA’s response to this re-issued 2022 resources – controls were written off.
Future losses are also likely to assessment in process no/limited occur, as appropriate internal controls are not yet in MI at the Postbank, which was previously issued to Sapo before separation of the two entities.

benefit derived place.

from money spent Irregularity: Non-compliance with section 51(1)(a)(i) of the PFMA Impact: Material financial loss of R68,8 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 143 No.
Notified Type MI description Status Status description COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS PORTFOLIO Department of Cooperative Governance 9.

13 August Payment for Payments were made in 2018-19 to non-qualifying Recommendations The AO had initially failed to implement appropriate 2019 goods or government employees as part of the Community Work action to resolve the MI.

services not Programme due to ineffective internal controls for received approving and processing payments.
Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO We included the following recommendations in the 2020-21 audit report, which should have been implemented by 31 January 2022:  The financial loss relating to non-qualifying participants should be appropriately and accurately quantified.

 Appropriate action should be taken to recover the financial losses suffered by the department.
 If it is determined that the department suffered financial losses through criminal acts, possible criminal acts or omission, this should be reported to the SAPS.

 Appropriate and proactive internal controls should be implemented to prevent payments to non- qualifying government employees through validating participants and removing non-qualifying government employees from the database.
 Government employees who confirmed that they have unduly benefitted from the programme should be reported to their employer and the Department of Public Service and Administration.

 Effective and appropriate disciplinary steps should be taken against any official that the investigation finds to be responsible.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 144 No.
Notified Type MI description Status Status description We established during our follow up on the implementation of the recommendation that additional time would be required for its full implementation.

The implementation date was extended to 1 July 2022.

10.
10.

13 August Payment for Payments were made in advance to implementing Appropriate action The investigation conducted by the AO with the 2019 goods or agents, without evidence of goods and services having is being taken to implementing agents cleared a significant portion of services not been received due to ineffective internal controls for resolve MI the financial loss.

The investigation of the remaining received approving and processing payments.
unresolved balance is in the finalisation stage and will Irregularity: Non-compliance with TR 8.1.1 six officials found to be responsible were suspended in Impact: Financial loss to be quantified by the AO November 2020 and are still on suspension.

be concluded as part of the close-up procedures.

The 11.
The 11.

26 August Payment for Project management fees were paid to implementing Appropriate action The following actions have been taken to resolve the 2019 goods or agents of the Contract Work Programme from April 2018 is being taken to material irregularity: services not to March 2021, without evidence of goods and services resolve MI received having been received due to ineffective internal controls for approving and processing payments.
Irregularity: Non-compliance with TR 8.1.1 Impact: Financial loss to be quantified by the AO  An investigation was concluded in October 2020.

Six officials found to be responsible were suspended in November 2020 and are still on suspension.

 The contracts of the implementing agents ended in September 2021.
The department would only then have been able to determine the project management fees paid versus the amount payable to the implementing agents, taking into account the retention fees and any project management fees not supported in the determination.

Subsequent to the closeout procedures, overpayments (if any) will be deducted from the retention fees.

12.
12.

24 July 2019 Payment for An incorrect grant payment was made to a supplier in Appropriate action In 2019-20, the Hawks, the state attorney and the SIU goods or July and August 2018 due to ineffective internal controls is being taken to took the incorrectly paid supplier to court to recover the services not for approving and processing payments.

The resolve MI financial loss; these proceedings are currently still in received department was unable to recover all the money from process.

the supplier.
the supplier.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 145 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with TR 8.1.1 The AO tasked the internal audit unit with conducting Impact: Material financial loss of R103 million (loss an investigation to identify responsible officials, which recovered of R4,8 million) was completed in 2020-21.

Disciplinary action was taken against five of the six officials identified as responsible.
Except for one case, disciplinary hearings were conducted and consequences instituted.

13.

13 August Payment for Payments were made in 2018-19 to deceased Appropriate action In October 2019, the AO appointed a service provider 2019 goods or participants in the Community Work Programme due to is being taken to to perform an investigation, which was concluded in services not ineffective internal controls for approving and processing resolve MI October 2020.
Deceased participants and participants received payments.

with incorrect ID numbers were removed from the Community Work Programme Management Information Irregularity: Non-compliance with TR 8.1.1 System or recaptured with the correct ID numbers.

Impact: Financial loss to be quantified by the AO The financial losses relating to deceased participants have been quantified, and would be, recovered from the non-profit organisations after their contracts had ended in September 2021.
The recovery will be done after all documentation had been submitted and close- out procedures performed.

The six officials found to be responsible for the MI are still suspended.

DEFENCE AND MILITARY VETERANS PORTFOLIO Department of Defence 14.

18 July 2019 Procurement In February 2017, the department awarded a contract Remedial actions The AO failed to make adequate progress with the non- for inventory and asset management for a period of five implementation of the recommendations.
On 18 August compliance, years, starting in March 2017.

The department did not 2021, the AG issued a directive to the AO to determine resulting in comply with the requirements of the PPPFA in awarding the amount of the financial loss and recover such loss or overpricing of this contract because it did not award the entire make progress with the recovery of the loss from the MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 146 No.
Notified Type MI description Status Status description procured goods contract to the bidder who scored the highest points in responsible person(s) by 18 November 2021.

In addition, and services the evaluation process.


The non-compliance is likely to result in a material financial loss, as the contract was awarded to two she notified the AO of the following remedial actions to address the MI, which should be implemented by the same date: bidders on a 50-50 basis at an increased price of R922  Effective and appropriate disciplinary steps must be million for the same scope of work.
This resulted in an taken against any civilian official found to be increase of R250,6 million to the project cost.

The responsible by the investigation, and appropriate contract came to an end during the 2021-22 financial action must be taken to determine whether any year and the department spent a total amount of R616,9 such person is liable for the losses suffered by the million.

department for the purpose of recovery.


 Steps must be taken to ensure that the chief of the Irregularity: Non-compliance with section 2(1)(f) of the South African National Defence Force takes the PPPFA same actions against any military command officials Impact: Financial loss to be quantified by the AO found to be responsible by the investigation.

If the required action is not taken, the AO must promptly notify the executive authority of such failure.
The responses on the implementation of the remedial action were received on 8 and 23 November 2021.

The outcome of the assessment is being considered by the AGSA structures.

15.
15.

11 August Procurement In July 2019, the department awarded a contract worth Referral In November 2020, the AO completed an investigation 2020 non- R13,9 million for the supply and delivery of fuel to a and disagreed that there was non-compliance with compliance, supplier using evaluation criteria that differed from those legislation in awarding this contract.

resulting in stipulated in the original request for quotations.
The latter overpricing of stipulated that the award would be made to a bidder procured goods with a lower price, but the department indicated that and services they rotated suppliers and used an average price as evaluation criterion to award this contract.

The mode of transport was also changed after the award, which resulted in a further price increase.

The MI was referred to the Hawks on 15 November 2021.

The investigation is currently in progress.


MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 147 No.

Notified Type MI description Status Status description The awarding of the contract using different criteria resulted in non-compliance with the TR, which requires the supply chain management process to be fair, transparent, competitive and cost-effective.

The non- compliance caused a material financial loss of R2,6 million due to a higher price being paid for fuel.
Irregularity: Non-compliance with TR 16A.3.2(a) Impact: Material financial loss of R2,6 million 16.

11 August Inefficient use of The department made a lease payment from 2015-16 to Recommendations The AO did not take appropriate action.

2020 resources – 2019-20 for unoccupied office buildings.
no/limited benefit derived Irregularity: Non-compliance with section 45(b) of the from money PFMA spent Impact: Material financial loss of R108,3 million The following recommendations for implementation by 11 November 2021 were included in the 2020-21 audit report:  The financial loss should be quantified and the officials responsible for the financial loss identified, in accordance with the applicable National Treasury Instruction Notes dealing with fruitless and wasteful expenditure.
 Effective and appropriate disciplinary steps should commence against any civilian official that the investigation finds to be responsible.

 Effective and appropriate disciplinary steps should commence against any military command official that the investigation finds to be responsible.

 Appropriate action should be taken to determine whether the responsible official(s) is/are liable by law for the losses suffered by the department for the purpose of recovery.
The AO’s response was received on 8 and 23 November 2021.

We are in the final stages of determining the most MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 148 No.

Notified Type MI description Status Status description 17.

15 July 2021 Uneconomical The department procured 1 000 infrared thermometers in Follow-up or We are evaluating the AO’s response to the identified suitable actions based on the response of the AO on the implementation of the recommendations.
procurement, April 2020 at prices higher than those recommended assessment in MI.

resulting in (R3 984,75 as opposed to R2 727,86 each).

This process overpricing of procurement at excessive prices resulted in a financial goods and loss for the department.

services procured Irregularity: Non-compliance with national treasury instruction note 8 of 2019-20 (annexure A, table 2) Impact: Financial loss to be quantified by the AO 18.
13 August Inefficient use of The department imported 970 895 vials of the Follow-up or The investigation by the Ministerial Task Team (MTT) was 2021 resources – unregistered drug Heberon at an estimated cost of assessment in concluded and the report was tabled in January 2022. no/limited R260,6 million from a Cuban supplier without approval process The department returned all the drugs to Cuba.
During benefit derived from the South African Health Products Regulatory April 2022, the minister indicated that she had instructed from money Authority (Sahpra).

spent Sahpra authorised the use of 10 vials of Heberon on a single patient but rejected the department’s bulk stock application in October 2020.

Sahpra granted no further approvals.


The outstanding approvals, together with the approaching expiry dates, will most likely result in the department not administering some or all of the remaining drugs.
Irregularity: Non-compliance with regulation 6.2 of the General Regulations (R859 of 2017) issued under the Medicines and Controlled Substances Act Impact: Financial loss to be quantified by the AO the chief of the South African National Defence Force to implement consequence management as recommended in the MTT report.

The process to recover the financial loss has not yet commenced.
The appropriateness of the actions taken and planned by the AO is currently being assessed MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 149 No.

Notified Type MI description Status Status description EMPLOYMENT AND LABOUR PORTFOLIO Compensation Fund (CF) 19.

21 July 2021 Payment for An overpayment was made to a medical service Follow-up or We are evaluating the AA’s response to the identified goods or provider between August 2014 and April 2017 due to a assessment in MI.
services not lack of effective internal controls around approving and process received processing payments to medical service providers.

An arrangement was made with the service provider to repay the amount but they did not honour the agreement in full.

Irregularity: Non-compliance with section 51(1)(a)(i) of the PFMA Impact: Financial loss of R7,8 million (financial loss recovered: R5 million) 20.
10 Payment not The fund failed to pay medical invoices within 75 days as Follow-up or We are evaluating the AA’s response to the identified September made or not ordered by the court, resulting in interest being charged.

assessment in MI.

2021 made in time process resulting in Irregularity: Non-compliance with section 51(a)(i) of the interest / PFMA standing time / Impact: Material financial loss to be quantified by the AA penalties MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 150 No.
Notified Type MI description Status Status description ENVIRONMENTAL, FORESTRY AND FISHERIES PORTFOLIO Komatiland Forests 21.

18 August Non- The provisions of the Income Tax Act were incorrectly Appropriate action The AA initiated an investigation into the matter.

The 2021 compliance, applied in the calculation of the basic amount for the is being taken to investigation is ongoing.

resulting in 2018 assessment year.


This resulted in Sars levying resolve the MI penalties penalties, as the provisional tax payable was incorrect.

Irregularity: Non-compliance with section 19(1)(c) and (d)(ii) the fourth schedule of Income Tax Act, Impact: Material financial loss to be quantified by the AA MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 151 No.

Notified Type MI description Status Status description FINANCE PORTFOLIO National Treasury 22.
13 May 2021 Inefficient use of Payments were made for software licences and annual Referral The AG approved the referral of the MI to the SIU for resources – technical support and maintenance, which related to further investigation.

The matter was referred in January no/limited the Integrated Financial Management System (IFMS), 2022 and will from part of the investigation for which a benefit derived which is not operational.
Care was not taken to ensure proclamation had already been issued by the from money that the expenditure incurred was aligned to the president.

spent implemented IFMS project.

Irregularity: Non-compliance with section 38(1)(b) of the PFMA Impact: Material financial loss of R336 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 152 No.

Notified Type MI description Status Status description HIGHER EDUCATION, SCIENCE AND TECHNOLOGY PORTFOLIO National Skills Fund (NSF) 23.
6 August Payment for The NSF entered into a project funding agreement with Recommendations The AA failed to implement the planned actions to 2021 goods or an academy for a learnership programme from July 2017 resolve the MI.

services not to June 2018, at a contracted amount of R84,2 million.
We notified the AA of the following recommendations, received A change request was made, resulting in a subsequent which should be implemented by 2 December 2022: change in the contract amount and an extension of the  Appropriate action should be taken to finalise the contract period to March 2021.
In the process, the NSF investigation into the non-compliance with section approved and paid for three credits that had already 57(b) of the PFMA in order to determine the been included in the original modules as additional circumstances that led to the non-compliance for modules.

the purpose of taking appropriate corrective actions and to address control weaknesses.

Irregularity: Non-compliance with section 57(b) of the  The financial loss relating to the duplicated modules PFMA should be quantified.
Impact: Material financial loss of R3,2 million  Appropriate action should commence to recover the financial loss.

The recovery process should not be unduly delayed.

 Effective and appropriate disciplinary steps should be initiated, without undue delay, against any official that the investigation found to be responsible, as required by section 51(1)(e) of the PFMA.

24.
24.

15 October Payment made The NSFAS disbursed tuition fees and allowances to Appropriate action The AA enlisted capacity to assist with the resolution of 2020 was not in line students from 2017-18 of more than the maximum is being taken to all scenarios where over-disbursements occurred and with contract amounts stipulated in the written agreements with the resolve MI issued all new contracts for signature by 31 August 2022.
National Student Financial Aid Scheme (NSFAS) students, as a result of ineffective controls.

In some cases, the amounts in the agreements were incorrect, while in MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 153 No.

Notified Type MI description Status Status description other cases, the disbursed amounts were more than the total cost of study for the students.
The non-compliance is likely to result in a material financial loss if the overpayments are not recovered from the students and tertiary institutions.

Irregularity: Non-compliance with section 51(1)(a)(i) of the PFMA Impact: Financial loss to be quantified by the AA 25.

4 November Debt not Tertiary institutions (universities as well as technical and Appropriate action A service provider was appointed to assist with 2020 recovered vocational education and training colleges, i.e.
TVETs) is being taken to reconciling the data from NSFAS and that of the owe the NSFAS money due to students deregistering or resolve MI institutions at student level for the 2017, 2018, 2019 and being awarded bursaries by other donors and thus not 2020 academic years (the closeout project).

The service provider finalised the debtor’s circularisation process and closeout project reconciliations for the 2017 to 2020 academic years and engagements to finalise exceptions are currently underway.
using the NSFAS’s funding, or due to disbursements exceeding the students’ total cost of study.

As most of the institutions have not been following the processes for declaring amounts owing to the NSFAS since 2017, the scheme did not record and collect these amounts.

The non-compliance is likely to result in a material financial loss if the debt is not recovered from the institutions.

Irregularity: Non-compliance with section 51(1)(c) of the PFMA Impact: Financial loss to be quantified by the AA 26.
4 November Unbilled In terms of the NSFAS’s policy, interest on student loans is Appropriate action The AA enlisted a service provider to investigate the 2020 revenue supposed to be charged one year after students is being taken to root causes, calculate the estimated interest loss and graduate or leave the tertiary institution.

The NSFAS did resolve MI carry out a phased-in approach to correct the relevant not have up-to-date information on the status of students, records.
This process is currently in progress.

resulting in loan recipients who are no longer studying MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 154 No.

Notified Type MI description Status Status description continuing to be recognised as students for many years The AA is planning to incorporate the interest correction without interest being charged on their loans.
into the loan book system and communicate the Irregularity: Non-compliance with section 51(1)(b)(i) of the additional interest added to their accounts.

updated statements to those debtors who had PFMA Impact: Financial loss to be quantified by the AA The loan book system will be corrected to resume charging interest on outstanding loans, after the interest correction for the past periods to prevent continuing financial loss.

Since 2018, the NSFAS is no longer issuing student loans.

27.
27.

16 Inefficient use SITA overpaid a service provider for software asset Appropriate action The AA is in the process of taking legal action.

The September of resources – management services rendered to SITA clients.

In terms of is being taken to progress with the actions taken will be monitored.
2021 no / limited the memorandum of agreement signed in November resolve MI State information Technology Agency (SITA) benefit derived 2017, SITA had to remunerate the service provider for from money service fees set out per the agreement for software spent licences.

SITA paid the service provider for 31 898 licences in excess of the 2 500 licences deployed by SITA and its clients.

Irregularity: Non-compliance with section 57(b) of the PFMA Impact: Material financial loss of R12,1 million 28.
16 Payment for In March 2019, SITA entered into a contract with a service Appropriate action The AA is in the process of taking legal action.

The September goods or provider to assist with a stakeholder engagement event.

is being taken to progress of the actions taken will be monitored.

2021 services not An advance payment was subsequently made in April resolve MI received 2019.

Both the contract and the payment were done In addition, the AA has taken disciplinary actions against officials identified.
without the appropriate approval.

The contract further indicated the amount to be paid as a donation and no services were received for the money spent.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 155 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with section 57(a) of the PFMA Impact: Material financial loss of R1,5 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 156 No.
Notified Type MI description Status Status description HUMAN SETTLEMENTS, WATER AND SANITATION PORTFOLIO Department of Water and Sanitation 29.

17 July 2019 Payment for Payments were made in 2018-19 to a consulting firm for Appropriate action Based on an investigation concluded in July 2018, the goods or financial management services without evidence of is being taken to AO undertook the following actions: services not work having been performed.
resolve MI received Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R17,9 million  Opened a criminal case with the SAPS in July 2018.

 Initiated disciplinary procedures in October 2018 against the officials involved.

 The officials resigned but one official joined another department.

A request was submitted to that department in June 2020 to continue with the disciplinary process.
 In November 2018, a summons was filed with the high court to declare the contract invalid and recover losses in.

The application to declare the contract invalid has since been withdrawn as it was no longer relevant, but court proceedings to recover the financial loss continue.

The defendant instituted a counterclaim against the department as part of the court proceedings.

The action to be taken by the accounting officer is dependent on the outcome of the court case.
The court case is still in progress.

 Internal control measures to enhance the monitoring of the performance of service providers were implemented.

30.

17 March Procurement A service provider who had not submitted an Resolved The AA commissioned two independent investigations 2021 non- original/certified B-BBEE certificate was incorrectly into the contract.
These findings determined that there compliance, awarded points for having met this provision and was were control weaknesses but no persons could be MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 157 Umgeni Water Board (KZN) No.

Notified Type MI description Status Status description resulting in awarded the contract.

This resulted in higher prices found to have caused any loss and there is no overpricing of being paid as the bidder who would have scored the continued financial loss on the contract.
procured goods highest points had quoted a lower price than the and services appointed service provider.

Irregularity: Non-compliance with PPR 10(2) Impact: Material financial loss of R3,5 million 31.

3 December Payment for Payments were made to a supplier for social facilitation Follow-up or We are evaluating the AA’s response to the identified 2021 goods or services, without proof that the services had been assessment in MI.

services not delivered.


received process Irregularity: Non-compliance with section 57(b) of the PFMA Impact: Financial loss to be quantified by the AA 32.

3 December Payment for Lease payments were made in 2017 based on the Appropriate action An investigation to determine the root cause and 2021 goods or incorrect size of the land.

The payments were made is being taken to provide recommendations of appropriate steps was services not based on the lease agreement which stated 12,5 resolve MI conducted.
The recommendations are now being received hectares of land, while the actual size of the land was implemented through the office of the chief executive only 1,5 hectares.

and the board.

Irregularity: Non-compliance with section 57(b) of the The matter has further been handed to the legal PFMA section to advise and assist with the recovery process.

Impact: Financial loss to be quantified by the AA 33.
31 January Payment for Payments were made to incorrect suppliers and on Follow-up or We are evaluating the AO’s response to the newly 2022 goods or invalid invoices for services not received.

assessment in identified MI.

services not process received Irregularity: Non-compliance with section 57(b) of the PFMA Impact: Financial loss to be quantified by the AA MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 158 No.

Notified Type MI description Status Status description 34.
18 July 2019 Unbilled Customers were not billed for water usage for a number Resolved An investigation completed in February 2021 identified revenue of years.

significant control weaknesses as the cause of the MI.
Water Trading Entity Irregularity: Non-compliance with TR 7.2.1 Impact: Material financial loss of R346 million The AO requested written responses from the officials employed in the billing division of the entity at the time when the non-compliance occurred who are still in the employ of the entity.

The officials made written representations by 31 March 2021.
The AO evaluated the representations in line with the outcome of the investigation performed by the Department of Water and Sanitation’s internal risk management unit.

After evaluation of the written representation, no officials were found to be responsible for non-billing.

As the previous acting chief financial officer and acting director-general are no longer in the employ of the entity, disciplinary action cannot be taken against them.
A chief director: revenue management was appointed in June 2021 to provide oversight of the billing process.

A chief director: water use licence operation was also appointed.

In addition, staff members responsible for billing customers received on-the-job training.

An effective records management system was put in place.

Follow-ups were done with customers to confirm the accuracy and completeness of information submitted for registration on the entity’s systems.
This enabled the issuing of water user licences and the ability to bill the customers.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 159 No.
Notified Type MI description Status Status description 35 18 July 2019 Payment not An advance payment was not made to a service Appropriate action An investigation was completed in June 2020 and the made or not provider, as required by the contract – the court found in is being taken to officials responsible for incurring fruitless and wasteful made in time, favour of the service provider and ordered the entity to resolve MI expenditure were identified.
The accounting officer billed the customers previously recognised as accrued revenue.

resulting in pay interest.

interest/standing time/penalties Irregularity: Non-compliance with TR 8.2.3 Impact: Material financial loss of R2,2 million The AO requested legal advice, which confirmed in December 2020 that the losses could be recovered from the identified officials.

Recovery letters requesting payment of the losses suffered within 30 days were sent to the three implicated former employees in May 2021.
Responses to the claim letters were received from legal representatives of two of the three former officials, who requested access to information and to be afforded the opportunity to make their representations.

The AO approved an extension of the investigation to be performed by risk and compliance management, in collaboration with legal services, to consider representations from the former officials.
The accounting officer indicated that the expected date of completion of the investigation is 31 May 2022.

36.

8 December Inefficient use The entity did not pay time- and cost-related charges Appropriate action The AO committed to appoint a professional service 2021 of resources – (standing time and fixed-related charges) to a is being taken to provider who will conduct an investigation into the no/limited contractor when the construction project of the resolve MI material irregularity.
The investigation is expected to be benefit derived Hazelmere Dam was put on hold in January 2018 due to finalised on 30 April 2022. from money delays in the procurement process.

spent Irregularity: Non-compliance with section 38(1)(b) of the PFMA Impact: Material financial loss of R28,8 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 160 No.

Notified Type MI description Status Status description PUBLIC ENTERPRISES PORTFOLIO Transnet 37.
4 August Procurement A tender for the leasing of equipment was advertised in Appropriate action An independent investigation was performed and the 2021 non- July 2019.

The contract was not awarded to bidders who is being taken to report finalised on 29 March 2022.

The AA undertook to compliance, scored the highest points.

resolve MI monitor the recommendations of the investigation resulting in report.
overpricing of Irregularity: Non-compliance with section 2(1)(f) of the procured goods PPPFA and services Impact: Material financial loss of R29,4 million 38.

4 August Procurement The entity contracted a supplier for the leasing of Appropriate action An independent investigation was performed and the 2021 non- equipment at higher prices and a higher contract value.

is being taken to report finalised on 29 March 2022.
The AA undertook to compliance, This overpayment was made since the inception of the resolve MI monitor the implementation of the recommendations of resulting in contract in January 2020. the investigation report.

overpricing of procured goods Irregularity: Non-compliance with section 57(b) of the and services PFMA Impact: Material financial loss of R1,7 million.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 161 No.
Notified Type MI description Status Status description PUBLIC WORKS AND INFRASTRUCTURE PORTFOLIO Department of Public Works and Infrastructure 39.

3 September Payment made The prices charged on the invoices for three state events Resolved Appropriate actions were taken to address the MI.
2020 was not in line from July 2018 to November 2018 differed from the prices Disciplinary actions were taken and the financial loss is with contract quoted on the pricing schedule submitted by the in the process of recovery.

supplier during the tender process.

Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R0,8 million 40.

3 September Payment made Expenditure on state funerals between May 2018 and Appropriate action The investigation by the AO was finalised in March 2019.
2020 was not in line December 2018 exceeded the contract amount, and is being taken to with contract the services paid for differed from those provided for in resolve MI the contracts.

Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R9,1 million The department’s executive authority, together with the acting AO and the executive authority in the Office of the Presidency, is proceeding with disciplinary action against the officials responsible.
This process has been prolonged by litigation levelled by the implicated officials against the department.

The department implemented segregation of duties within the procurement and payment processes to reduce the possibility of circumventing policies and legislation.

The AO opened a criminal case with the SAPS against the service provider and notified the supplier of the intention to prohibit the supplier from doing business with the state.
The service provider requested a three- month extension to submit their representations in response to the notification.

The matter is in progress with the restriction committee.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 162 No.

Notified Type MI description Status Status description An investigation by the SIU commenced in 2021, with the aim to institute a civil claim against the supplier based on the outcome of the investigation.

The contract with the supplier was terminated in 2019-20.

41.
13 November Procurement Competitive bidding processes were not followed to Appropriate action The public works and infrastructure minister requested 2020 non- appoint contractors and consultant for the Beitbridge is being taken to an investigation by the governance, risk and control compliance, borderline infrastructure project in March 2020. resolve MI unit of the department, assisted by seconded members Property Management Trading Entity resulting in overpricing of procured goods and services This is likely to result in material financial losses, as market- related prices were not secured.
Irregularity: Non-compliance with TR 16A3.2(a) Impact: Financial loss to be quantified by the AO from the SIU, which commenced in April 2020 and concluded in July 2020.

In November 2020, the SIU instituted legal action against suppliers with the Special Tribunal, which held a trial from 4 to 8 October 2021 concerning this matter.

The parties are awaiting the outcome of the court hearing.

The National Treasury placed both companies under restriction on 21 September 2021 for a period of 10 years.
Disciplinary action against responsible officials is also in progress.

42.
13 November Procurement Establishment costs were incorrectly included in the bill of Appropriate action The public works and infrastructure minister requested 2020 non- quantities pertaining to the Beitbridge borderline is being taken to an investigation by the governance, risk and control compliance, infrastructure project in March 2020, due to ineffective resolve MI unit of the department, assisted by seconded members resulting in internal controls to prevent the inclusion and payment from the SIU, which commenced in April 2020 and overpricing of thereof.
procured goods concluded in July 2020.

In November 2020, the SIU instituted legal action against suppliers with the Special and services Irregularity: Non-compliance with TR 8.1.1 Tribunal, which held a trial from 4 to 8 October 2021 Impact: Material financial loss of R1,1 million concerning this matter.

The parties are awaiting the outcome of the court hearing.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 163 No.
Notified Type MI description Status Status description The National Treasury placed both companies under restriction on 21 September 2021 for a period of 10 years.

Disciplinary action against responsible officials is also in progress.

43.

26 August Assets not Boilers at Leeuwkop Prison were not appropriately Follow-up or We are evaluating the AO’s response to the identified 2021 safeguarded, safeguarded during construction, resulting in them being assessment in MI.
resulting in loss damaged due to exposure to severe weather process conditions.

The previous AO disagreed with the MI in the response provided.

However, on 11 April 2022, a new acting AO Irregularity: Non-compliance with TR 10.1.1(a) was appointed and an engagement is being arranged Impact: Financial loss to be quantified by the AO with him to confirm concurrence with the response that was submitted by his predecessor.

44.
44.

27 August Payment made Between October 2017 and March 2019, payments Appropriate action The AO appointed a firm to, among other things, 2021 was not in line made on the lease of office accommodation and is being taken to investigate and assist with the verification of data with contract parking were higher than those provided for in the resolve MI correctness against lease agreements.

The mentioned renewed lease agreement.


investigation will also identify responsible officials, after Irregularity: Non-compliance with TR 8.1.1 Impact: Material financial loss of R11 million which consequence management will be implemented.

Some of the lease payments between April and November 2021 were withheld, which resulted in a reduction in the overpayments to the landlord.

45.
45.

15 October Payment made The construction of the Mamelodi magistrate’s court Appropriate action The AO sent a letter to the principal agent requesting 2021 was not in line project has been significantly delayed and the is being taken to an explanation of payments made.

Based on the with contract expenditure incurred to date exceeds the initial contract resolve MI response to the aforementioned letter, a letter was amount.
The practical completion date of the contract issued to the principal agent on 17 November 2021 has been extended and PMTE has been approving the initiating the recovery process for the identified financial contract extensions with adjustments to the contract loss.

value that were based on the approved claims that resulted from civil unrest, riots, strikes and lockouts.

This Three responsible officials, who processed payments, was not in line with the contract.
were issued with letters on 17 November 2021 to explain their action.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 164 No.

Notified Type MI description Status Status description Irregularity: Non-compliance with section 45(a) of the PFMA Impact: Financial loss to be quantified by the AO Independent Development Trust 46.
28 March SARS late On numerous occasions from March 2020 until October Follow-up or We are evaluating the AA’s response to the newly 2022 payments, 2022, VAT returns were submitted late by the public assessment in identified MI.

resulting in entity, which resulted in penalties being charged by Sars.

process interest and penalties Irregularity: Non-compliance with section 28(1) of the Value Added Tax Act Impact: Material financial loss of R1,3 million MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 165 .
No.

Notified Type MI description Status Status description SOCIAL DEVELOPMENT PORTFOLIO South African Social Security Agency (Sassa) 47.

23 August Payment for In April 2018, Sassa incorrectly paid a service provider Appropriate action The liquidation process of the supplier is still ongoing.

2021 goods or who was not entitled to the social assistance fees billed.
is being taken to Sassa, through the National Treasury, appointed a firm services not A letter of demand and summons was issued; however, resolve MI to investigate whether any current or former officials received the service provider is currently under liquidation.

should be held liable, and once the liquidation process Irregularity: Non-compliance with section 50(1)(a) & (b) may possibly be recovered from those officials who can of the PFMA be held liable by law.

The investigation is still in progress.


is finalised, any funds not recovered from liquidation Impact: Material financial loss of R74,8 million 48.

4 October Payment for During 2014, Sassa made a payment to a service Appropriate action The liquidation process of the supplier is still ongoing.

2021 goods or provider that was appointed to administer grant is being taken to Sassa, through the National Treasury, appointed a firm services not payments at the time.
The payment was made as part of resolve MI to investigate whether any current or former officials received a variation to the service level agreement with the should be held liable, and once the liquidation process service provider; however, the variation was not is finalised, any funds not recovered from the liquidation necessary, as the additional services had already been may possibly be recovered from those officials that can covered by the existing agreement.

be held liable by law.


The investigation is still in progress.

A court order was issued to repay the money with interest; however, the service provider is currently under liquidation.

Irregularity: Non-compliance with section 50(1)(c) of the PFMA Impact: Material financial loss of R316,4 million 49.
4 October Payment of Payments were made to ineligible individuals due to Follow-up or We are determining the most suitable action based on 2021 ineligible inadequate internal controls to perform validations and assessment in the AA’s response.

beneficiaries prevent payments being made to persons who were not process MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 166 No.

Notified Type MI description Status Status description entitled to the Social Relief for Distress (SRD) covid R350 grant.
Irregularity: Non-compliance with section 50(1)(a)(1) of the PFMA Impact: Financial loss to be quantified by the AA MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 167 No.

Notified Type MI description Status Status description TRANSPORT PORTFOLIO Passenger Rail Agency of South Africa (Prasa) 50.
17 July 2019 Procurement Multiple instances of non-compliance in the Remedial actions As little action had been taken to address the MI, the non- procurement process for locomotives in July 2012 2018-19 audit report included recommendations that compliance, resulted in the contract being unfairly awarded.
A should have been implemented by 31 March 2020. resulting in prepayment of R2,6 billion was made to the supplier, but supplier not Prasa derived no value, as the locomotives were not fit delivering on for purpose.

The supplier applied for liquidation in contract December 2018, making recovery of the financial loss unlikely and resulting in R2,2 billion in debt owed by the supplier to Prasa being impaired in 2018-19.
The investigation by the board in 2015 resulted in the matter being referred to the Hawks for investigation and the contract being set aside by the court in May 2019.

The second phase of the investigation into implicated officials is still in progress.
Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA Impact: Material financial loss of R2,2 billion Delays were experienced with the implementation of the recommendations due to changes at AA level and the lockdown measures implemented in response to covid-19.

As a result, we granted the new AA extension for the implementation of the recommendations.
To implement the recommendations, Prasa requested the SIU to assist with the finalisation of the investigation into the MI through the secondment of resources for six months.

The recommendations were not implemented appropriately as the SIU report did not address the purpose of the investigation, namely to identify the responsible officials for disciplinary action.

In addition, the AA’s response did not indicate what specific actions would be taken and by when, based on the SIU’s report.
On 15 September 2021, the auditor-general notified the AA of the following remedial actions that must be implemented by 15 December 2021:  Appropriate action must be taken to determine the role of the individual bid evaluation and bid adjudication committee members in the appointment of the supplier.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 168 No.
Notified Type MI description Status Status description  Appropriate action must be taken to identify any other employees who were either actively or passively involved in the appointment of the supplier.

 Effective and appropriate disciplinary steps must commence against the individual bid evaluation and bid adjudication committee members and any other employees found to be responsible.
During our assessment of the response received on the implementation of the remedial action, we established that additional time would be required for its full implementation.

The implementation date was extended to 31 July 2022.

51.
51.

17 July 2019 Procurement Competitive bidding processes were not followed to Appropriate action The SIU completed the investigation and non- appoint contractors for general overhaul and upgrade is being taken to recommended appropriate consequence compliance, services – first awarded before 2008 and extended resolve MI management to be implemented.
Actions in this regard resulting in multiple times without following competitive bidding by the AO were initially supposed to have been overpricing of processes.

procured goods completed by December 2021; however, the matter is currently with external parties, e.g.

the National Treasury and services This is likely to result in material financial losses, as market- and legal experts, to ensure processes are legal and related prices were not secured.

appropriate.
appropriate.

Therefore, the delays are not within the control of the Prasa board.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA Impact: Financial loss to be quantified by the AA 52.

17 July 2019 Procurement Non-compliance with supply chain management Appropriate action The investigation done by the SIU was completed and it non- legislation led to an unfair procurement process for a is being taken to was confirmed that there was no material financial loss.
compliance, new signalling system in the Western Cape in July 2012. resolve MI The AA is in the process of implementing the resulting in The value of the contract awarded was also higher than recommendations of the investigation.

overpricing of what had been approved.

MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 169 No.
Notified Type MI description Status Status description procured goods This is likely to result in material financial losses, as a fair and services and transparent process was not followed and there was no justification for the contract value exceeding the approved amount.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA 53.
18 July 2019 Procurement Competitive bidding processes were not followed to Appropriate action The investigation done by the SIU was completed and it non- appoint contractors for the provision of bus services in is being taken to was confirmed that there was no material financial loss.
compliance, the Western Cape – first awarded in 2005 and extended resolve MI The AA is in the process of implementing the resulting in multiple times without following competitive bidding recommendations of the investigation.

overpricing of processes.

procured goods and services This is likely to result in material financial losses, as market- related prices were not secured.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA 54.
18 July 2019 Procurement Competitive bidding processes were not followed to Appropriate action The investigation done by the SIU was completed and it non- appoint contractors for the provision of surveillance is being taken to was confirmed that there was no material financial loss.
compliance, services (drones) in February 2018. resolve MI The AA is in the process of implementing the resulting in overpricing of procured goods and services This is likely to result in material financial losses, as market- related prices were not secured and the contract was extended without the required approvals.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA recommendations of the investigation.

55.
55.

18 July 2019 Procurement Competitive bidding processes were not followed for the Appropriate action The investigation done by the SIU was completed and it non- repair, supply and delivery of signalling equipment in July is being taken to was confirmed that there was no material financial loss.

compliance, 2018.

The value of the contract awarded was also higher resolve MI The AA is in the process of implementing the resulting in than what had been approved.

recommendations of the investigation.


overpricing of MATERIAL IRREGULARITIES STATUS AT 15 APRIL 2022 170 No.

Notified Type MI description Status Status description procured goods This is likely to result in material financial losses, as market- and services related prices were not secured.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA 56.
11 July 2019 Procurement A contract for the control of vegetation was awarded in Appropriate action The investigation done by the SIU was completed and it non- August 2018 to a bidder who did not score the highest is being taken to was confirmed that there was no material financial loss.

compliance, points in the evaluation process, resulting in higher prices resolve MI The AA is in the process of implementing the resulting in being paid.
overpricing of procured goods Irregularity: Non-compliance with section 51(1)(a)(iii) of and services the PFMA recommendations of the investigation.

57.

18 July 2019 Procurement Competitive bidding processes were not followed in Appropriate action The investigation done by the SIU was completed and it non- awarding a contract for repairing or replacing signalling is being taken to was confirmed that there was no material financial loss.

compliance, equipment in July 2018.


The value of the contract resolve MI The AA is in the process of implementing the resulting in awarded was also higher than what had been recommendations of the investigation.

overpricing of approved.

procured goods and services This is likely to result in material financial losses, as market- related prices were not secured.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA 58.
18 July 2019 Procurement Competitive bidding processes were not followed to Appropriate action The investigation done by the SIU was completed and it non- appoint contractors for the provision of security services is being taken to was confirmed that there was no material financial loss.
compliance, in February 2018. resolve MI The AA is in the process of implementing the resulting in overpricing of procured goods and services This is likely to result in material financial losses, as market- related prices were not secured and the contract was extended without the required approvals.

Irregularity: Non-compliance with section 51(1)(a)(iii) of the PFMA recommendations of the investigation.
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