Question

discuss the obligations of municipalities and its accounting officers with regards to unauthorised, irregular as well as fruitless and wasteful expenditure, as prescribed by Municipal Finance Management Act 56 of 2003.

Answer 1

Fruitless and wasteful expenditure refers to expenditure that was made in vain and could have been avoided had reasonable care been taken. Such expenditure includes interest, the payment of inflated prices, and the cost of litigation that could have been avoided.

Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act, the Municipal Systems Act, and the Public Office Bearers Act or is in contravention of the Municipality‟ supply chain management policy. Irregular expenditure is actually expenditure that is in violation of some or other procedural/legislative requirement as specified in the MFMA.

All officials and councilors must always act cautiously when spending public money and ensure that they abide by the public and accountability principles which are to promote “efficient, economic and effective use of resources and the attainment of value for money”. Fruitless and wasteful expenditure is expenditure that was made in vain and would have been avoided had reasonable care been exercised. This type of expenditure is incurred where no value for money is received for expenditure or the use of resources. No particular expenditure is explicitly identified by the MFMA as fruitless and wasteful. Expenditure incurred that has been budgeted for (authorized) and was not regarded as irregular expenditure could be classified as fruitless and wasteful expenditure.