Good news in municipal audits
THE number of municipalities which received clean audits increased from 13 to 54 in the last five financial years, Auditor-General Kimi Makwetu revealed yesterday.
Releasing the 2014/15 audit outcomes, Makwetu said this number shot up to 72 if the 18 municipal entities with clean audits were included.
While 13 percent of municipalities regressed in terms of audit outcomes, 34 percent stayed stagnant, according to the report on the audit outcomes of local government.
The percentage of municipalities with adverse audit findings and disclaimers saw a notable drop from 30 percent in 2010/11 to 11 percent in 2014/15.
“Municipalities in the red, we are pleased to say, are slowly becoming a thing of the past,” Makwetu said.
He explained that some of the contributors to the improved audit outcomes included the filling of key vacancies with competent people, municipal leaders who “showed courage in dealing with transgressions and poor performance”, and municipal managers who followed through on plans to improve audit outcomes.
The total expenditure budget for municipalities in 2014/15 was R347 billion.
“We are reporting that of the R347bn, the ones that achieved clean audits represented a total expenditure of R134bn, which translates to 39 percent of this amount, while those with unqualified opinions represent another R143bn, which is the equivalent of 41 percent.”
“The adverse (findings) and disclaimers which had receded over time represent a mere six percent of the total budget,” said Makwetu.
The provinces with the highest percentage of municipalities with clean audits were the Western Cape at 73 percent, Gauteng at 33 percent and KwaZulu-Natal at 30 percent. However, there were still municipalities in these provinces with poor performance, notably the Central Karoo, West Rand and Umkhanyakude districts.
The Eastern Cape, Free State and Mpumalanga were listed as provinces “starting to emerge from many years of negative audit outcomes”, while the North West, Limpopo and Northern Cape were “classified as providing disappointing outcomes”.
An over-reliance on consultants was highlighted as a concern, with Makwetu saying urgent steps needed to be taken to curb the increasing spend on outside service providers to prepare financial statements.
Makwetu’s office identified some other troublesome spots for urgent attention. This included a rise in irregular, unauthorised and wasteful expenditure.
Irregular expenditure amounted to R14.75bn, mostly due to municipalities not following the rules governing the procurement of goods and services.
“Through the audits, we have been able to satisfy ourselves that to the extent of R10bn of that R14.75bn, we were able to trace, even though procedures relating to supplychain management were not completely observed, but those goods and services that were bought were received.”
Makwetu’s team also assessed the financial health of municipalities and found 92 percent of them “either concerning or required intervention”.