The Audit Risk Committee (ARC) has warned that the eThekwini Municipality should improve information technology systems, monitor fuel contracts, improve clinics, read water meters, and address infrastructure management. 

The ARC report for the first quarter, from July 2025 to September 30, 2025, was debated at an eThekwini Full Council meeting on Thursday.   

ARC Chairperson Siboniso Shabalala highlighted that 93 audit findings remained unresolved.

Of these, 21 findings were noted to be over 180 days overdue. He acknowledged that the tracking mechanisms are in place across various municipal structures.

Shabalala emphasised the importance of strengthened leadership oversight, noting that the persistence of these matters may compromise the internal control environment.

He further drew attention to the Auditor-General’s (AG) regularity audit period, and urged the leadership to focus on matters raised by the AG to ensure that appropriate mitigating measures are implemented.

Key issues highlighted by ARC are:  

• The need for significant improvements in information technology governance to prevent unauthorised access to information and potential fraudulent activities.
• The need for improvements in control design and the implementation of controls to achieve compliance requirements and ensure the consistent attainment of objectives. 

Areas identified as being impacted by inadequate control design included:

• The fuel contract, where ineffective controls exist to test fuel quality for contamination, and insufficient monitoring of contractual compliance by service providers.
• Non-compliance by some clinics with certain components of the National Health Standards.
• Significant weaknesses in the Road Infrastructure Management Directorate’s performance management, budgeting, and financial reporting processes, including poorly designed Key Performance Indicators (KPI) that focus on outputs rather than efficiency.
• A persistent trend of water and electricity meters being unread for extended periods.

Shabalala noted that the municipality adheres to the Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) principle, with only six of the 93 KPIs not aligned with this principle.

While the municipality received an unqualified audit opinion, which was commended, concerns were raised regarding matters highlighted by the AGSA, including: 

• Material irregularities; 
• Inadequate implementation of consequence management, particularly in relation to significant unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE);
• Non-Revenue Water challenges;
• infrastructure risks associated with wastewater treatment works; and
• The prevalence of repeat audit findings. 

In relation to the Durban Marine Theme Park, concerns were raised regarding financial instability contributing to operational inefficiencies.

It was noted that delays in council decisions regarding a suitable operational model were impacting the sustainability of the entity.

Regarding the Inkosi Albert Luthuli International Convention Centre (ICC), Shabalala emphasised the need for improved collaboration between ICC management and the Internal Audit Directorate to prevent information discrepancies and ensure the submission of an agreed report to the Audit Committee.

“Repeat findings place the municipality at risk of a deterioration in its audit opinion, non-achievement of Integrated Development Plan objectives, and broader sustainability challenges,” he said. 

It was also emphasised that management responses should focus more decisively on matters of emphasis raised by the AG.

The eThekwini Finance Committee intends to have a dedicated session to focus specifically on matters raised by the AGSA and to develop detailed, time-bound action plans. 

zaiul.dawood@inl.co.za

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