Lack Of Accountability Fuels ‘Poor Local Gov. Audit Results’ – AGSA

President Cyril Ramaphosa says he supports calls by the President of SALGA to professionalise local government and enhance the training of officials.

The endorsement cames in the wake of the Auditor General’s dismal report, released today, which highlights deteriorating levels of accountability in municipal governance matters.

Only 18 municipalities received a clean audit

The Auditor-General of South Africa (AGSA) Kimi Makwetu said these deteriorating audit outcomes shows that various local government role players have been slow in implementing, and in many instances even disregarded, the audit office’s recommendations.

Makwetu said recommendations made to municipalities will be treated as binding from now on, and a certificate of debt may be issued to those found guilty of irregularities.

The AG audited 257 municipalities and 21 municipal entities for the 2017-18 financial year.

Of the audited municipalities, the audit outcomes of 63 regressed while those of 22 improved.

Irregular expenditure decreased from R29.7 billion to R25.2 billion

Only 18 municipalities managed to produce quality financial statements and performance reports, as well as complying with key legislation, and received a clean audit.

This is a regression from the 33 municipalities that received clean audits in the previous year.

“Not only did the unqualified opinions on the financial statements decrease from 61% to only 51%, but the quality of the financial statements provided to us for auditing was even worse than in the previous year,” Makwetu said.

He said irregular expenditure still remains high, but decreased from R29.7 billion to R25.2 billion after the record highs in the previous year.

“We have consistently cautioned those charged with oversight and governance about administrative lapses that could cripple local government and its ability to deliver services to the citizenry,” Makwetu said further.

Some 45% of the municipalities did not have all the required mechanisms for reporting and investigating transgressions or possible fraud.

Consistently good

The AG found that there were municipalities across the country that were able to consistently achieve a clean audit status, despite being faced with similar challenges as their counterparts.

Twelve of these municipalities are in the Western Cape and include the local municipalities of Swellendam, Witzenberg, Bergrivier, Breede Valley, Cape Agulhas, Cederberg, Hessequa, Matzikama and Overstrand.

Other municipalities that consistently perform well include Senqu (Eastern Cape), Midvaal (Gauteng) and Okhahlamba (Kwazulu-Natal).

“The best practices at these municipalities included stable leadership that is committed to a strong control environment and effective governance,” Makwetu said.

A total of 74% of the municipalities did not adequately follow up allegations of financial and supply chain management misconduct and fraud.

The additional powers of the auditor-general were not applicable at the time the report was compiled.

These amendments introduce the concept of material irregularity in audits performed under the Public Audit Act and possible actions that can be introduced if an irregularity is found.

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