2nd unqualified Audit Report for Oudtshoorn

THE Greater Oudtshoorn Municipality has received its second consecutive unqualified audit report.
In a statement issued on Tuesday, the municipality indicated that they are proud to announce this audit outcome for the 2019/2020 financial year. The audit outcome was officially announced at a council meeting on Tuesday (30 March).

The municipality improved from an “adverse” opinion in 2014/2015, followed by three consecutive “qualified” opinions to “unqualified” opinions for the 2018/2019 and 2019/2020 financial years.

“To achieve this within the presence and challenges of Covid-19 was no mean task,” said the mayor, Chris Macpherson.

The Auditor-General (AG) expressed the following opinion: In my opinion, the financial statements present fairly, in all material respects, the financial position of the Oudtshoorn Municipality as at 30 June 2020, and its financial performance and cash flows for the year then ended in accordance with the South African Standards of Gene-­rally Recognised Accounting Practice (SA Stan­- dards of GRAP) and the requirements of the Municipal Finance Management Act 56 of 2003 (MFMA) and the Division of Revenue Act 16 of 2019 (Dora).

“The opinion regarding performance management also improved from an adverse opinion to an unqualified opinion for the first time ever,” Macpherson added.

“Although this represents an unqualified audit opinion, there was emphasis placed on certain material findings that prevented the municipality to obtain a clean audit.”

Matters mentioned in the audit report
The main matter that the Auditor-General emphasised in the audit report was the occurrence of “irregular expenditure”.

Irregular expenditure referred to money that was not spent in the manner prescribed by law. According to the Municipal Finance Management Act (MFMA 56/2003) irregular expenditure in relation to a municipality or municipal entity means:
• Expenditure incurred by a municipality or municipal entity in contravention of,or that is not in accordance with a requirement of the MFMA, and which has not been condoned in terms of section 170;

• Expenditure incurred by a municipality or municipal entity in contravention of or that is not in accordance with a requirement of the Municipal Systems Act, and which has not been condoned in terms of that Act;

• Expenditure incurred by a municipality in contravention of or that is not in accordance with a requirement of the Public Office Bearer Act, 1998 (Act No. 20 of 1998); or

• Expenditure incurred by a municipality or municipal entity in contravention of or that is not in accordance with a requirement of the supply chain management policy of the municipality or entity or any of the municipality by-laws giving effect to such policy, and which has not been condoned in terms of such policy or bylaw, but excludes expenditure by a municipality which falls within the definition of “unauthorized expenditure”

In the majority of instances where irregular expenditure was identified, the expenditure was related to non-compliance matters in the supply chain management processes. Addressing these “non-compliance” matters will therefore lead to a clean audit opinion for the municipality.

The meaning of the audit opinions
Clean Audit Outcomes: Financial statements are free from material misstatements and there are no findings on reporting on performance objectives or non-compliance with legislation.

Unqualified Audit Opinions: Financial statements contain no material misstatements. Findings may have been raised on either reporting on predetermined objectives or non-compliance with legislation, or both these aspects.

Qualified Audit Opinions: Financial statements contain material misstatements in specific amounts, or there is insufficient evidence for us to conclude that specific amounts included in the financial statements are not materially misstated.

Adverse audit opinion: Financial statements contain material misstatements that are not confined to specific amounts, or misstatements represents a substantial portion of the financial statements.

Disclaimer of Opinion:
The auditee provided insufficient evidence in the form of documentation on which to base an audit opinion.

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