The financial year 2020/21 saw little improvement in the performance of the country’s local government sphere, says Auditor-General (AG) Tsakani Maluleke.
The year saw only 41 of the 257 municipalities receive clean audits. Maluleke on Wednesday presented the consolidated general report on local government audit outcomes for the financial year.
Addressing reporters, the AG decried the lack of improvement in the status of transparency, accountability, performance and integrity of local government.
She said: “Throughout the tenure of the fourth administration of local government, we’ve not seen an improvement. If you compare from five years ago, there were 33 clean audits. This time, it’s around 41 — so not much movement in the right direction.”
The AG said it was important to note that among the 41 were predominantly district municipalities, one metro, very few local municipalities, a handful of municipal entities, and small number of intermediate cities.
Municipalities and entities with the largest budgets were not adequately represented in the 41, she said.
In the financial year under review, Maluleke said her office has observed a worrying trend of municipalities not submitting financials and late submissions, which is a violation of relevant laws.
“Five years ago, 90% of municipalities would submit their financials on time for audit. Now we’re sitting at 82% that do so on time. There is a number of provinces where this is a struggle, specifically the Free State, North West and Northern Cape,” she said.
She said the AGSA is putting measures in place to curb the emerging phenomenon.
A breakdown of the audit finding reveals that 25 audits with disclaimer opinions- were issued by the AG in the financial year. This is a slight improvement from the previous year’s 33.
The office, Maluleke said, issued four adverse opinions and 78 qualified audit opinions.
A total of 100 municipalities received unqualified opinions,.
“But within the 100, those municipalities still struggle with financial management practices. They struggle with compliance issues, particularly insofar as procurement is concerned. They largely ignore performance information, which is a problem because that often results in poor service delivery on an ongoing basis.
The AG said years of ignoring audit findings and weakening accountability have had the result of weakening institutions.
A provincial breakdown of the audit outocomes paints a grim picture, with no clean audits recorded in the North West and Free State.
While only two Gauteng municipalities received clean audits, the Eastern Cape recorded only four.
At 22, the Western Cape had the highest number of municipalities with clean audits.
Northern Cape, Mpumalanga, KwaZulu-Natal and Limpopo, respectively, achieved clean audits in five, four, three and one municipality.
Material irregularities (MIs)
Following the expansion of its audit mandate in 2020, Maluleke said the AGSA recorded a number of notable successes.
“We issued MIs on matters relating to actual or potential financial loss, as well as those causing substantial harm to institutions and their entities, and those causing substantial harm to communities.
For 81% of these matters, municipalities had not taken any action until we issued the MI notifications to them,” she said.
During the financial year, the AG issued MIs against repeatedly disclaimed municipalities.
“These MIs were causing substantial harm to the institutions. Since then, our impact has been felt, with firm actions having been taken.
We noted that investigations have been performed or were underway to determine the root causes for the lack of records, registers and reconciliations.
“Accounting officers have now developed action plans – or are in the process of doing so – to address the root causes, and financial recovery plans are receiving attention from municipalities, national government and provincial government,” she said.