/ 26 June 2019

Financial state of municipalities has worsened — AG

Makwetu also raised concerns about the challenges that auditing teams face when they conduct their work.
Makwetu also raised concerns about the challenges that auditing teams face when they conduct their work. (David Harrison/M&G)

The financial state of municipalities across the country continues to worsen said Auditor General (AG) Kimi Makwetu on Wednesday. He was speaking at a media briefing on the release of the 2017-2018 financial year general report on the audit results of municipalities.

“Audit results show an overall decline… this undesirable state of deteriorating audit outcomes shows that various local government role players have been slow in implementing, and in many instances, even disregarded the audit offices recommendations,” Makwetu said.

A total of 257 municipalities were audited. The number of clean audits in municipalities declined from 14% in the previous financial year to 8%. Only 18 municipalities had a clean audit with the highest number, 12, being in the Western Cape. Gauteng, Mpumalanga, Kwazulu-Natal and the Northern Cape each have one municipality with a clean audit. The Eastern Cape had two.

“We have consistently cautioned those charged with oversight and governance about administrative lapses that could cripple local government and its ability to deliver services to the citizenry,” Makwetu said.

The irregular expenditure in municipalities amounted to R21.2-billion, an improvement from the 2016-2017 year where irregular expenditure was R27.7-billion.

Before going into the details of the report, Makwetu emphasised that the outcomes of the report were compiled before the Public Audit Amendment Act was signed into law in November 2018. This audit report was compiled for the financial year ending June 2018.

The groundbreaking legislation gives the AG new powers to act on corruption and the abuse of public money so going forward, the AG’s office will have the ability to issue binding recommendations audits conducted on or after March 31 2019.

The new Act gives the AG the authority to refer irregular materials to relevant public bodies for investigation, take binding remedial action for municipalities that fail to implement audit recommendations and issue a debt certificate where recommendations were not implemented and a financial loss was incurred.

READ MORE: After years of barking, the AG gets teeth

Makwetu also raised concerns about the challenges that auditing teams face when they conduct their work.

“The audit environment became more hostile with increased contestation of audit findings and pushbacks whereby our audit processes and the motives of our audit teams were questioned. Instances of threats to and intimidation of our auditors were also experienced in most of the provinces,” he explained.

According to Makwetu, major reasons for the outcomes of this report are that many municipalities have vacancies and instabilities in key positions and the leadership of municipalities were unable to instil discipline and implement corrective action against officials flouting processes. 

Read the full report here:

Integrated Annual Report 2017-18 Annual Report by Mail and Guardian on Scribd