Poor audit results spark accountability measures

The government was developing mechanisms to ensure municipal officials involved in tender corruption and irregular spending were brought to book, he said.

"We are going to require the law enforcement agencies to come to the party.

"All of us can make findings here but it is the law enforcement agencies that must be able to prepare a case, and the prosecuting authorities must be able to prosecute the case," Gordhan said.

"It is in those circumstances that we can now say there are consequences for not operating according to the law. At the moment consequences are not there. When the consequences are not there, then a level of impunity begins to develop."

He was commenting on a recent report on local government finances in which auditor general Terence Nombembe found irregularities in municipal tender processes were still a problem.

Nombembe said the Treasury was beginning to establish a procurement office – announced in February – to oversee issues relating to tender processes.

According to his report, only 5% of municipalities obtained clean audit reports in the financial year 2010/2011.

Missing deadline
Procurement to the value of R3.5-billion could not be audited because municipalities had not provided the required information or documentation.

In 46% of the audited municipalities, contracts were awarded to employees, councillors, and other state officials. A total of 65% of municipalities used unfair or uncompetitive procurement processes.

Nombembe said there were errors in information about finances, skills shortages, and service delivery.

"About 91% of municipalities employ consultants in areas where they have people employed to do the job.

"There is also the area of IT and controls, where the bulk of information at local government is housed and the controls to access and security of that information are very important."

Unqualified reports
None of the municipalities in the Eastern Cape, Free State, Gauteng, Northern Cape and North West received clean audit reports.

None of the country's metros received clean audits, with financial statements not submitted in time for auditing by 13% of municipalities.

Nombembe was excited that six municipalities had joined the clean audit category, taking the number to 13. These were in KwaZulu-Natal, Limpopo, Mpumalanga, and the Western Cape.

He said 45% of the municipalities obtained unqualified audit reports and needed the help of auditors.

Co-operative Governance and Traditional Affairs Minister Richard Baloyi welcomed the report and commended those municipalities with clean audits. He said it was of grave concern that some municipalities had failed to provide financial statements on time.

Procurement irregularities
"In that situation you are depriving us of an opportunity where we would know as to what is it that is happening and assess the situation," he said.

Baloyi said his department had already made efforts to improve staff shortages within municipalities and to address procurement irregularities.

Western Cape Premier Helen Zille said the number of municipalities with clean audits was "concerning".

She said the Constitution required all provinces and national government to strengthen municipalities, and that the Western Cape had taken steps to monitor budget performance and improve accountability in its municipalities.

She said problems were exacerbated by overly complex municipal laws. Certain regulations needed to be amended or scrapped, but the national government had so far been deaf to her pleas. – Sapa

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