MUNICIPALITIES continue to fail to improve and progress after the auditor-general reported that only 13% which is 34 out of 247 of them received a clean audit.
The report stated that while 45 municipalities improved their audit since 2020-21, 36 of them have even regressed.
This was after the auditor-general Tsakani Maluleke this week tabled the 2022-2023 report on the local government audit outcomes.
Maluleke called on all roleplayers in the accountability ecosystem to work deliberately and with urgency toward a culture of performance, accountability, transparency and institutional integrity to ultimately result in a better life for the people of South Africa.
She said there has been little change and – despite commitments made by roleplayers in the accountability ecosystem for improvement, action has been slow and has had little impact on the lived realities for ordinary citizens.
Maluleke highlighted that 43% of municipalities received unqualified audit opinions on the financial statements with findings on performance reporting and compliance with key legislation.
She added that these municipalities had made little effort to move out of this category, with 77 remaining there since the end of the previous administration’s term.
During the period 2020-2021, 27 municipalities were able to maintain their clean audit status, while 14 achieved a clean audit for the first time and six lost their clean audit status. And 23 municipalities were under administration or provincial intervention which further increased to 33 by February 2022.
In the 2021-2022 period, 33 municipalities received a better audit outcome while 29 had a worse outcome. However, the financial losses of an estimated R479.56 million were recovered.
Although an estimated R924.1 million have been recovered for 2022-2023, Maluleke said the number of municipalities that submitted their financial statements by the legislated date continued to increase from the low submission rate of 81% in 2020-2021 to 91% in 2021-2022 and 94 in 2022-2023.
She said the improvements were due to accounting officers responding positively to material irregularity notifications on this matter as the provincial government supporting municipalities to act on commitments made to submit financial statements on time.
“Financial statements again being submitted late, or not at all, was the main reason for us not completing the 2022-23 audits of 10 municipalities by March 31 2024, which was the cut-off date for this report,” said Maluleke.
She added that poor financial management remained prevalent and that most municipalities lost revenue because they were not billing and collecting due to water and electricity losses as a result of infrastructure neglect. She said these municipalities were also not careful with their spending practices.
She said the municipalities with clean audits, particularly those that have sustained this status over several years, were generally characterised by sound financial and performance management disciplines and performed their functions in accordance with applicable legislation.
She said these municipalities generally manage projects well so that deficiencies are identified and rectified promptly, so that timelines, budgets and quality standards are adhered to.
Maluleke added that when municipalities do not properly manage their performance, finance and infrastructure, it directly affects the delivery of key government projects that were intended to improve the lives of South Africans.
“It hampers the consistent and sustainable delivery of services and infrastructure in the basic areas of water, sanitation, waste management, electricity, housing and roads despite budgeted funds being spent. Deteriorating living conditions and harm caused by polluted water sources and landfill sites are widespread,” she said.
“Wasted money and resources means reduced funding for service delivery priorities and, eventually, a greater burden on taxpayers. The lack of credible reporting on performance and finances weakens not only municipal accountability processes but also the council’s ability to assess the municipality’s performance or to make decisions in response to underachievements,” said Maluleke, adding that these continuing failures in the most critical part of municipal operations are not receiving the necessary attention from the elected leadership.
Meanwhile, the South African Local Government Association (SALGA) has welcomed the report and called municipalities to adopt best practices from best performers with clean audit outcomes, institutionalising controls through digital innovations, and stringent performance management and also cascading it to all officials lower than senior management, councils and the Department of Cooperative Governance to ensure the functionality of oversight structures and continuous capacity building of councillors throughout their term of office.