Curbing councils’ losses
AUDITOR-GENERAL: SOLUTIONS TO FINANCIAL MISMANAGEMENT
Starts with municipal manager presenting council with plan of execution for all projects.
The 2018-2019 municipal audit report by Auditor-General Kimi Makwetu has again put the gross financial mismanagement at the bulk of South Africa’s municipalities into the spotlight.
Titled Not Much to go Around, yet not the Right Hands at the Till, it reveals that only 21 municipalities received a clean audit while irregular expenditure increased to R32 billion.
At the heart of this, said Makwetu, was a lack of basic systems of accountability, skilled personnel to carry out transactions, leadership oversight to prevent financial losses and performance management systems for employees.
Speaking to Organisation Undoing Tax Abuse chief executive Wayne Duvenage in a webinar on Wednesday, Makwetu suggested how local government could begin to turn the ship around to ensure better audit outcomes and better service delivery.
In terms of the Municipal Finance Management Act, municipal managers are the accounting officers and thus have the highest level of administrative responsibility. By law, they are required to put in a system of internal controls to narrow any opportunity for abuse of public resources.
Makwetu recommended that, as a start, municipal managers should present the council with a plan of execution for all the projects the municipality will be engaged in that will require the council’s support and involvement. But council members will need to be made aware that they are not responsible for deciding which companies be awarded contracts to carry out those activities.
“It restores the authority of that particular council chamber because they then cannot turn around and say ‘we were not aware of how these things were going to be done’ and ‘we were not involved in the supply chain’.”
As a second step, Makwetu said he would get the council to sign for the development of a preventative controls framework that would be assigned to all managers in the municipality. “What you are doing is saying [that] should there be any finances which are lost, then they probably would have slipped through your preventative controls,” he said.
Another layer of preventative authority lies with the council, which is legally entitled to receive quarterly reports on the progress of the various activities of the municipality. Makwetu said council members need to insist these are tabled before them.