Finance

I was informed of the Supply Chain Management (SCM) governance issues in respect of the Laingsburg Municipality in July 2018.

I have since issued instructions to the Provincial Treasury, to assess the issues of non-compliance raised in line with the mandate encapsulated in section 5 (3) and 4 (a) (i) of the Municipal Finance Management Act (MFMA), which reads as follows: “The provincial treasury must monitor compliance to the MFMA and fulfil its responsibilities in terms of this Act and furthermore enforce compliance with the measures established in terms of Section 216 (1) of the Constitution”.

On the 09 July 2018, the Provincial Treasury requested via written communication to the Acting Municipal Manager, its intent to assess the supply chain management and contract management issues raised with the Minister on the 07 July 2018. The assessment at the Laingsburg Municipality took place on the 6^th – 8^th August 2018.

The Provincial Treasury highlighted a number of SCM governance and contract management issues during the assessment, below is a list of key deficiencies noted in the report: 

1. Supply Chain Management governance: 

1. 1. The Municipality has an approved SCM Policy in place adopted by the    Municipal Council, however the policy needs to be reviewed to          incorporate the current operational needs and latest SCM legislative         prescripts.

 

1. 2. The Municipality’s system of delegations and sub-delegations needs to      be reviewed as a matter of urgency, as the delegations and sub-          delegations, are not aligned to the Municipality’s supply chain         management operational activities and duties.

1. 3. The SCM unit consist of three (3) officials and does not give effect to all        the functions of supply chain management. There are significant    weaknesses in the control environment.

1. 4. Currently the Head: SCM Manager post is vacant, which poses a huge        risk on supply chain management operations, given that the head of SCM plays a pivotal role in terms of the implementation of the supply          chain management processes and procedures as required by the MFMA and SCM Regulations.

2. Contract Management

1. 1. In terms of Section 116 of the MFMA, the Accounting Officer needs to    ensure contract management is enforced effectively within the           Municipality. Concerns were raised from a financial governance         perspective, related to lapses in internal controls within the contract          management system.

3. Way Forward

1. 1. The current report is in draft stage and as soon as it is finalised Provincial           Treasury will provide it to the Municipality.

1. 2. The Municipality will be required to provide progress on the          recommendations made and the Provincial Treasury will evaluate the          progress and identify specific areas that will require further actions.

1. 3. In conclusion, the Provincial Treasury is proposing a governance          workshop within the third quarter of the 2018/19 financial year. The aim           of the workshop is to provide guidance and assistance to the Acting         Municipal Manager and Chief Financial Officer and other Senior           Managers with the governance and internal control deficiencies that        were identified during the assessment.