Third Special Report

Covid-19municipal relief funding (CMRF) 45 Inadequate needs analysis and demand planning for water infrastructure/water tanks projects In order tomaximise the value of the projects to supply water, a reasonable needs assessment was required to demonstrate that all intended installation areas would have adequate infrastructure/tanks and that the beneficiaries would have adequate water supply. Without the required needs analysis information, it was not possible to confirm the adequacy of the installation for each location. During some of our site visits, we identified instances where water tanks were not in use. The lack of an adequate needs assessment also results in insufficient water supply for vulnerable communities. We noted that 11 of the 21 municipalities (52%) either did not performa needs analysis or the needs analysis document submitted for auditing had limited information. As an example, at uMkhanyakude District, we found that when the needs assessment to install water tanks for the respective communities was performed, it did not include or demonstrate an estimate of the average annual daily demand. As a result, the storage capacity required to ensure 100% supply of water for certain hours could not be proven. Additionally, the needs assessment lacked evidence that certain items, as directed by the Council for Scientific and Industrial Research (CSIR) Guidelines for human settlement planning and design (red book) for standpipe-based reticulation, had been considered, whichmeant that the needs assessment of the water infrastructure project did not conform to the CSIR guidelines. Recommendation Municipalities should conduct a reasonable needs analysis of all areas to ensure that water supply through water tank installations is sufficient for the community’s current and future needs. The needs analysis should comply with the CSIR Guidelines for human settlement planning and design (red book) in order tomeet the needs of the community. KEY AUDIT FINDINGS AND OBSERVATIONS Excessive/inflated prices paid for goods and services relating to covid-19 Municipalities are required to procure goods and/or services, including infrastructure-related items, in compliance with the Municipal Finance Management Act. The Act indicates that accounting officers, senior managers and any other officials that are exercising financial management responsibilitiesmust take all reasonable steps to ensure that the financial and other resources of themunicipalities are used effectively, efficiently and economically. At onemunicipality and onemunicipal entity of another municipality of the sevenmunicipalities selected for auditing, we identified that goods and services related to covid-19 infrastructure were procured fromsuppliers at prices that were considered to be inflated, which led to an estimated excessive amount of R38 568 703 being incurred at these auditees. The excessive prices paid for these items indicates that the goods were not procured economically and that municipalities could have purchased additional covid-19 infrastructure-related items if themoney had been spent more wisely. City of Cape TownMetro Themunicipality did not ensure that the cost to establish the Strandfontein temporary shelter was reasonable and cost- effective. The municipality only obtained a quote fromone supplier for R18 101 235 per month. This included R11 657 150 for six marquee tents with wooden floors accommodating 500 people each, equating to R1,9million per tent. This was significantly higher than quotes themunicipality received for marquee tents at other temporary shelter sites, namely the Wingfield shelter (R425 000 per tent) and the Culemborg shelter (R282 500 per tent). The Strandfontein shelter was operational for a 46-day period and the city spent R23 314 296 for themarquee tents over this period, compared to costs of R5 100 000 and R5 085 000 for theWingfield and Culemborg shelters, respectively, over the same period. We estimate that