Third Special Report

Covid-19municipal relief funding (CMRF) 27 SPENDING ON PPE The spending of covid-19 funding on PPE up to 31 December 2020 amounted to R389 million. This represents 22% of the total spending for the 43 selectedmunicipalities. PREVENTATIVE CONTROLS SPECIFIC TO PPE NOT IMPLEMENTED Preventive controls, such as segregated duties and the physical protection of PPE items, are used to prevent a loss or error fromoccurring. These controls are typically integrated into a process so that they are continually applied. Both the Municipal Finance Management Act and National Treasury circulars also requiredmunicipalities to implement these controls. We identified the following weaknesses in the control environment: Inadequate PPE needs analysis and demand planning To informprocurement decisions, municipalities needed to estimate the types and quantities of PPE that will be required and also put plans and processes in place to ensure that the required PPE items were obtained at the right price, time, place, quantity and quality. At 17 of the 33municipalities (52%), we were not providedwith any evidence of documented PPE needs analyses and/or demand plans, indicating that an important control measure tomonitor whether the correct quantities and types of PPE were procuredwas not in place. This led to instances wheremunicipalities procured either insufficient or excess PPE. Recommendation We acknowledge that the state of emergency placed undue pressure onmunicipalities to acquire PPE items instantly, given the shortage experienced in the environment. However, we encouragemanagement to conduct a basic PPE needs analysis, without compromising their response to the emergency caused by covid-19, to ensure that the correct type of PPE is timeously and continuously available to all user departments in accordance with their specific needs. The forecast method and key inputs (number of municipal workers, municipal healthcare workers, municipal buildings and services) should be specified. Municipalities should track the procurement of PPE against a formal, approved covid-19 PPE procurement plan. Management should ensure that a senior municipal official signs off source information, informing future PPE procurement needs, as accurate and reliable prior to the procurement process. Inadequate controls and stockmanagement systems to account for andmanage PPE stock Municipal storage facilities require effective stock management processes to ensure that municipal officials account for stock received and distributed. The stock management processes help to prevent theft and to ensure that if damaged PPE stock is identified, the relevant supplier is identified and notified so that they can replace the damaged stock or refund the municipal office. We noted that 29 of the 33 municipalities (88%) did not have adequate controls and stock management systems in place at their main PPE stores to ensure that the PPE stock that was ordered, received, stored and issued to user departments was formally recorded and accounted for by themunicipality. Some of thesemunicipalities had no controls and systems in place, while others had controls and systems that were found to be ineffective. We identified the following examples of shortcomings in themunicipal controls and systems environment:  The receipt of PPE fromsuppliers and the issuing of PPE to users in different departments within themunicipality were not captured on individual stock cards. Stock cards allow for themovement of individual PPE items to be captured and provide an indication of the PPE that is available at themunicipality at any given point in time. Stock cards also allow for low-quantity PPE items to be easily identified so that they can be reordered early enough to avoid potential PPE stock-outs.