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Unauthorised Expenditure at Eden DM – Response to George Herald Article

With reference to a news article “George and Eden way over budget,” published in the George Herald on Thursday, 29 September 2016, page 14, the Eden District Municipality responds as follows:

“The properties of Eden District Municipality were revalued during the 2014/2015 financial year by independent valuators that were appointed.  Impairment losses of    R244 million had to be processed against the value of the properties, as the market values of the properties, as per the latest valuations performed, decreased significantly since the previous valuation that was performed.

Impairments on investment properties (land) was R85 million, impairments on investment properties (buildings) was R619 000 and the impairment loss on Land and Buildings (property, plant and equipment) was R159 million, thus the total impairment loss of R244 million was processed in the statement of financial performance, under the expenditure line items, resulting in the unauthorised expenditure. With the compilation of the budget and adjustment budget for 2014/2015 in January 2015, it was not foreseen that the property value would decrease with R244 million and thus no provision on the budget was made for the impairment loss, thus resulting in the unauthorised expenditure.

Please take note that the unauthorised expenditure was not due to payments processed, but merely a financial year-end book entry, to ensure that the assets are reflected at the correct values in the financial statements and fairly represents the assets and liabilities at year-end, which is presented to the office of the Auditor-General for audit purposes.

This item has been tabled before the Financial Services Portfolio Committee, the Audit and Performance Audit Committee, as well as Council. Council approved the write-off of the unauthorised expenditure in June 2016.”

For more clarity on the above matter, contact:
Ms Louise Hoek – Chief Financial Officer – Financial Services Department
E-mail: louise@edendm.co.za / Tel: 044 803 1449

Mr Godfrey Louw – Municipal Manager
E-mail: mm@edendm.co.za / Tel: 044-803 1445

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