FINANCIAL VIABILITY AND MANAGEMENT

The importance of this Key Performance Area is to improve overall financial management in the municipality by developing and implementing prudent financial management policies, procedure and systems. The intended outcome is to see the municipality practicing good financial

management and being accountable on usage of the public funds.

5.2.2.1. Supply Chain Management Introduction

Budget and Treasury Office presents this report in terms of the Supply Chain Management Policy. SCM regulations require that the report on the implementation of the supply chain management policy and systems be submitted on quarterly basis to the council.

The municipal supply chain management was revived; consequently the policy was reviewed and adopted by council. The unit is able to implement Policy even though capacity remains a challenge, systems and processes were improved toward the end of the financial year.

The SCM Policy

The SCM policies are reviewed every financial year.

SCM Unit

The SCM Unit is functional. The appointment of Manager Supply chain and other staff was instrumental in ensuring that the unit is functioning as required by legislation.

BID COMMITTEES

The municipality has established the following Bid Committees:

Bid Specification Committee

 The committee is able to sit before any bid is advertised.

 The committee consists of three officials and chaired by the Director Technical Services.

Bid Evaluation Committee

57 | P a g e

 The committee is not performing as expected due to capacity constraints.

 The committee consists of Three official and chaired by Director Corporate Services Bid Adjudication Committee

 The committee is consists of four officials and chaired by the Chief Financial Officer.

 The committee is able to sit when there are tenders to finalize.

5.2.2.2. DEMAND MANAGEMENT

This is the function which, if well implemented, can bring efficiency and effectiveness on the overall performance of the unit and the entire municipality. The function entails needs analysis and planning for acquisitions to meet the needs of cost centers/user departments.

This function is not performed to the expected level or as required due to lack of dedicated personnel for the function. The impact of this problem is that there is no planning for acquisitions and ultimately emergency procurement activities are escalating and this result in instances non- compliance with the policy and regulations.

5.2.2.3. ACQUISITION MANAGEMENT

The unit processes quotations and generates orders. List of prospective service providers was not updated and a number of entities that have registered no longer have valid information on the database. Goods or Services with a value exceeding R30 000 were not advertised for more than 7 days (This was only implemented from April 2010). Evaluation criteria of the quotations were not always clearly indicated before April 2010. Goods and Services that were supposed to go through competitive bidding process were only procured by means of quotations and orders.

The situation has improved drastically since the appointment of SCM manager.

Stores

The stores were not functioning during the year and records were not kept for movement of stocks.ls.

The value of items kept by the stores has decreased since the previous financial years. The following items have been phased in and kept and regularly managed through the stores system:

o Electrical and o Plumbing material

Assets and fleet

Fleet is still a major challenge due to high maintenance costs, which are mainly caused by age of the fleet and abuse of vehicles and machinery by the users. Comprehensive asset register has not been developed. Bojanala Platinum District Municipality has appointed a service provider to assist the municipality. Movable assets were bar-corded, however no values were attached.

58 | P a g e

Currently there are no full time personnel at the entire component, and the positions have also been included in the proposed structure.

TRAINING OF SCM PRACTITIONERS AND OFFICIALS INVOLVED IN SCM PROCESSES Four Officials in SCM has been trained through the MFMP at North West University.

5.2.2.4. COMPLIANCE WITH MFMA Budget and Treasury Office

Budget and Treasury Office functions were reviewed and aligned to section 80 and 81 of the MFMA

Submission of Annual Financial Statements

 2011-12 Annual Financial Statements were submitted in time to the Office of the Auditor- General.

Submission of the Section 71 Report

 Monthly section 71 reports are submitted, however due to lack of capacity, these reports are submitted timeously.

 The municipality is currently engaging with Financial Management System service providers to enhance reporting modules

Training was done in June 2011 and most of the outstanding reports were submitted

Budget and expenditure Budget and related policies

The municipality has been approving budget and related policies in time. The municipal budget has always been in line with the prescribed reforms. The following are policies approved by the municipality and reviewed on an annual basis;

Grants and Financial Reporting

The municipality is reporting timeously. Usually we submit late because of late closing of the financial system.

Bank Reconciliation

The municipality is doing fairly well with the exceptions. The following are the challenges;

 Unidentified direct deposit.

 Cutoff date [ late billing]

 Cash in transit Payment to Creditors

59 | P a g e

The municipality is not doing relatively well in this regard. We are struggling to pay our creditors in time due to persistent cash flow problems. The municipality is in the process of compiling a financial recovery plan to address the situation.