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West Coast District Municipality, with its head office in Moorreesburg, has maintained a clean audit status for 12 years.
- Overwhelmingly, municipal financing and financial reporting remain in a dire state, the Auditor-General’s newly published assessment of their 2021/22 accounts shows.
- Only 38 municipalities maintained clean audits.
- But the AG also highlighted progress at some struggling municipalities.
- For more financial news, go to the News24 Business front page.
Overall, the state of municipal finances and their financial reporting remains dire, as the Auditor-General’s newly published assessment of their 2021/22 accounts shows. But some municipalities continue to shine and others are slowly making process in some areas.
In a single year, municipalities saw more than R30 billion in irregular expenditure. Alarmingly, contracts and tenders worth almost R2.5 billion were awarded to state officials at 134 municipalities.
Meanwhile, the financial state of 29% of the 241 audited municipalities was so dire there is significant doubt about their ability to operate. These municipalities included City of Tshwane and Mangaung metro – which together represent 10% of the total local government budget. They are supposed to deliver services to 9% of South Africa’s households.
Also, more than a fifth of municipalities don’t have a chief financial officer.
One measure that improved was the number of municipalities that submitted their financial statements on time – from 81% in the previous year to 91% in 2021/22.
Some 38 municipalities also continued to receive clean audit opinions, which means their financial statements and performance reports were deemed transparent and credible.
Municipalities with clean audit status (and number of years with clean audit status)
“The municipalities that maintained their clean audit status continue to be an example of what is possible,” said Auditor-General Tsakani Maluleke.
The AG commended a number of municipalities in her report:
- Midvaal Local Municipality in Gauteng, which had a clean audit for the ninth consecutive year, achieved 89% of its basic service delivery targets.
The municipality has rigorous community participation in the drafting of its performance plans and community needs are considered. Funding is directed appropriately due to sound budgeting principles and basic service delivery targets are met. Its municipal area is characterised by proper road infrastructure, clean sidewalks and safe walkways, a clean community pool, and well-maintained water and sanitation infrastructure. The municipality is largely able to collect its consumer debt as residents are willing to pay their municipal bills in recognition of the services they receive.
- Hantam Local Municipality in the Northern Cape achieved 79% of its basic service delivery targets due to strong financial controls and senior management driving a culture of accountability, governance and performance, the AG said.
The municipality is able to provide quality services to the surrounding communities despite its limited resources. Road infrastructure is maintained and informal settlements are provided with water and sanitation services. The municipality has a robust public participation process that affords residents the opportunity to provide inputs into the municipality’s performance plans. Budgets are aligned to the strategic objectives of the municipality, which also considers informal households.
- City of Ekurhuleni delivered on 77% of its basic service targets.
The metro prioritises problems highlighted during public participation processes. For example, in response to the community raising concerns relating to flooding caused by dilapidated infrastructure, the metro included this matter in its performance plan and delivered on its commitments by building 26 stormwater systems against the target of 17.
- Chris Hani District Municipality in the Eastern Cape was commended for improving its audit outcome, thanks in part to the appointment of a new chief financial officer and the timely appointment of consultants.
- Bela-Bela Local Municipality in Limpopo was also singled out for improved audit outcomes – which the AG credits to “the local mayor’s involvement in the audit process coupled with the premier’s message of zero tolerance towards negative audit outcomes”.
This increased attention and pressure on the municipality to improve created a sense of urgency for management to follow a more focused and diligent approach to improving financial management practices and internal controls.
- Greater Taung Local Municipality in the North West improved its reporting because the municipality effectively used the consultants appointed for asset management.
The AG also commended the provincial government in KwaZulu-Natal for helping two municipalities with disclaimed audit opinions to improve. The provincial government appointed experts who helped the Inkosi Langalibalele Local Municipality and the Nquthu Local Municipality with drawing up and implementing audit action plans.
The Matjhabeng Local Municipality in the Free State was praised for appointing qualified financial staff to prepare financial statements in-house without using consultants, which helped to reduce the municipality’s overall consultant costs by almost R9 million.
The AG also reported that Setsoto Local Municipality (Free State), Ugu District Municipality (KwaZulu-Natal), Dr Beyers Naudé Local Municipality (Eastern Cape) and Merafong City Local Municipality (Gauteng) – all municipalities with large outstanding bad debts – were entering into debt and repayment agreements with essential service providers, which will lower their future interest charges and improved controls to prioritise paying essential service providers.
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