Local government audits regress

Fruitless and wasteful expenditure across the country’s municipalities has risen 71% from the previous year, reaching R1.5-billion, Auditor General Kimi Makwetu revealed on Wednesday.

He was presenting his office’s report on local government audit outcomes for the 2016- 2017 year.

Makwetu revealed a general deterioration in all audit outcomes saying that despite his office’s “constant and insistent advice and caution to those charged with governance and oversight about administrative lapses since 2013, their counsel has largely not been heeded”.

Only 33 out of the country’s 257 municipalities, or 13%, managed to produce quality financial statements and performance reports and receive a clean audit, Makwetu said.

READ MORE: 55 municipalities have been identified as dysfunctional― Mkhize

The extent of irregular expenditure rose from R16.2-billion in the previous year to over R28.3-billion this year. However this was due to increased efforts to identify and transparently report the irregular expenditure.

Around R15-billion of this year’s total was as a result of irregular expenditure incurred in prior years, but only reported in 2016-17.

But the amounts relating to fruitless and wasteful, as well as irregular, expenditure may well be higher.

When it came to irregular expenditure – which relates to non-compliance with legislation in the process leading up to the spending – 53 municipalities were given qualified audits because incomplete information was disclosed. Makwetu’s office could also not audit procurement processes valued at over R1.2-billion due to missing or incomplete documentation.

In the case of fruitless and wasteful expenditure – which could have been avoided if reasonable care was taken – eight municipalities were qualified on the completeness of their disclosure.

Unauthorised expenditure improved slightly however, declining from R13.8-billion in the previous year to R12.6-billion.

It represents spending in excess of a budget, or not in accordance with a budget or grant conditions. But again, this may not represent the true figure as 17 municipalities did not make complete disclosures.

There were a number of reasons for what Makwetu termed the “ lousy” audit results.

READ MORE: The top ten municipal culprits not paying Eskom debt

These included the failure to investigate findings on irregularities in supply chain management and indicators of possible fraud, or improper conduct, which his office had recommended for investigation.

At 61% of the municipalities the council failed to conduct the required investigations into all instances of unauthorised, irregular and fruitless and wasteful expenditure reported in the previous year according to Makwetu.

This represented a 52% regression from the previous year.

He also highlighted the increasingly difficult environment for auditors, characterised by hostile auditees, and the growing contestation of audit findings.

At some of the municipalities and municipal entities under review, pressure was placed on audit teams to change conclusions to avoid negative outcomes, or the disclosure of misspending.

“Leadership should set the tone for accountability,” said Makwetu.

“If audit outcomes are not as desired, energy should be directed to addressing the problem and not to coercing the auditors to change their conclusions.”

But changes to the law to give the Auditor General’s office more teeth are imminent. Chairperson of parliament’s Standing Committee on the Auditor General, Vincent Smith said that the committee has finalised changes to Public Audit Act this week, and its report would be tabled in the National Assembly next week.

The proposed changes will include the power to refer cases of material irregularities to law enforcement agencies for investigation, as well as power to recover money lost as a result of irregularities.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

R1.1-billion land claim “captured”

This story was produced in partnership with Pulitzer Center. Details of the land claim settlement for MalaMala, one...

Lekwa municipality won’t answer questions about why children died in...

Three children are dead. More than a dozen homes have been gutted by fires in the past six months. And, as...

Failure to investigate TRC cases during the Mandela era delayed...

Counsel for late trade unionist Neil Aggett’s family decries the slow pace of instituting an inquest into his death

SANDF colonel accused of swindling colleagues in UN business scam

A senior soldier who is part of South Africa’s peacekeeping missions is accused by her colleagues of swindling them out of of hundreds of thousands of rands in a nonexistent business deal

Press Releases

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.

KZN teacher educators jet off to Columbia University

A group of academics were selected as participants of the programme focused on PhD completion, mobility, supervision capacity development and the generation of high-impact research.

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.