A-G Tsakani Maluleke also said 110 municipalities received unqualified audit opinions with findings, 90 garnered qualified audits and six obtained adverse findings.
Only municipalities out of the 257 have obtained clean audits, according to Auditor-General Tsakani Maluleke, who told Parliament on Tuesday of the need to urgently professionalise and build the capacity of the local government sphere.
Her consolidated report on audit outcomes of local government for the 2022/23 year once again paints a bleak picture of the state of the country’s municipalities.
“We are going backward in terms of the number of clean audits that are being delivered within the local government system. We are further behind than where we began with this particular administration,” she said.
Maluleke also said 110 municipalities received unqualified audit opinions with findings, 90 garnered qualified audits and six obtained adverse findings.
She noted that there was a reduction in the number of disclaimers.
“When we started with this administration, we had 28 and now it is 14.”
At least three municipalities had incomplete audits due to delays in one, and two others have not submitted financial statements.
She said that although her recommendation would sound familiar and not surprising to anyone, the root causes in managing finances in municipalities remained the same.
“It is important that there be attention to professionalising local government and to capacitating the local government. It is crucial there be people of competence, people of good ethical posture, people of conscientious attention to their duties and people who will do what they are supposed to do and be willing to be held accountable for it,” she said.
Maluleke also said it was imperative to build a culture that was characterised by ethics and accountability, something she said should apply to those in the administration, political leaders and different spheres beyond the local government.
“If we don’t do that, we are going to continue to see weakened institutions at local government level, we are going to see ongoing degradation of service delivery and we are going to see ongoing diminishing trust between municipalities and the people that they serve.”
The auditor-general noted an improvement in the rate of submission of financial statements.
“This was an issue we raised two years ago when the submission rate had fallen to 83%. Since then there has been significant support and attention paid to by provincial governments and legislatures to get municipalities to submit financial statements.
“We have seen gradual improvement in the submission rate to what it is now 94%,” she said.
Maluleke also said they found that municipalities spent R3.43 billion (9%) on infrastructure grants from the national government and some used the funds inconsistently with their intended purposes.
“When they do spend on infrastructure, it is spent poorly.”
Poor financial management remained prevalent, with municipalities losing revenue because they were not billing and collecting revenue, and because of water and electricity losses resulting from infrastructure neglect.
“Municipalities were also not careful with their spending practices. The main reasons for the continuing financial losses and waste were poor payment practices, uncompetitive and uneconomical procurement practices, limited value and benefit received for money spent, and weaknesses in project management.
“Unfunded budgets and high unauthorised expenditure clearly show the weaknesses in financial planning. As a result, the financial health of municipalities remains weak,” she said.
There was also an ongoing reliance on the use of consultants to compile financial statements.
The amount recorded in 2022/23 was reduced to R1.35bn compared with R1.63bn spent in the previous financial year.
“For the first time in 11 years we tracked this, this number moves in the right direction,” she said.
Maluleke picked up 360 material irregularities that resulted in financial loss estimated at R7.35bn.
Her office has managed to prevent R924m in losses upon issuing notices to accounting officers using her powers.
“In terms of resource protection, R261m has come back to the respective municipalities; R218m financial loss has been prevented and R444m financial losses are being recovered. That is a total of R924m being protected as a result of the A-G using these powers of enforcement,” she said.
EFF MP Hlengiwe Mkhaliphi complained that only a handful of councils had obtained clean audits.
“We can’t have 257 municipalities but only 34 (get clean audits),” she said.
“I know from 2020–21, we had 41. Unfortunately, we are not going forward. We are going backwards,” Mkhaliphi said.
uMkhonto weSizwe Party’s Visvin Reddy said the report by Maluleke was a wake-up call and a reminder that things could not continue as business as usual.
“Our people deserve better. It is our duty that the local government delivers on its promises,” Reddy said.
Co-operative governance and traditional affairs (Cogta) portfolio committee chairperson Zweli Mkhize said they needed a local government sphere that was able to deliver services in a manner that will satisfy the people.
He also said they wanted a plan from the department detailing how they intended to change the deteriorating situation, especially dealing with the repeat disclaimer municipalities. Cogta Minister Velenkosini Hlabisa undertook to come back to brief the committee on the matters raised by Mkhize.
Cape Times