GET YOUR HOUSE IN ORDER: Auditor-general Terence Nombembe found a net loss of R59.7m in the Metsimaholo municipality’s records. PICTURE: GALLO IMAGES
The Metsimaholo local municipality could find itself in trouble if it does not get its finances and financial reporting in order.
This comes after some uncertainty has been cast over the municipality’s ability to operate as a going concern, and also because the municipality misstated its finances by million in its 2011-2012 financial statement. Auditor-general Terrence Nombembe said in his latest report on the municipality that there was doubt on the ability of the authority to operate as a going concern, meaning it could face liquidation.
This was revealed in the AG’s report on that municipality currently under scrutiny by the select committee on public accounts (Scopa) meetings of the Free State legislature.
In the report, Nombembe said the consolidated statements and separate financial performance, and the consolidated cash flow statement in the annual report indicate that the municipality incurred a net loss of R59.7m and a net cash outflow of R27.5m during the 2011-2012 financial year.
“These conditions, along with other matters as set forth in the note 44 to the consolidated financial statements, indicate the existence of an uncertainty that may cast doubt on the municipality’s ability to operate as a going concern,” Nombembe said.
But the authority’s problems do not end there, according to the report.
It states that the full extent of the irregular expenditure of R157.4m is still under investigation.
Nombembe said the consolidated statements as a whole were materially misstated by millions.
The report says the employee-related costs were overstated by R2.8m to R158.4m while general expenses of R64m were understated by R1.5m.
The municipality also overstated the trade and receivables by R2.8m and the value-added tax was understated by R3.4m.