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Financial consultants cash in at NC municipalities

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NC municipalities regress despite paying consultants millions.

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MUNICIPALITIES in the Northern Cape spent R35 million on consultants for financial reporting services – despite having the necessary staff to do the work.

This is according to the Office of the Auditor-General, which presented the local government audit outcomes for the Northern Cape during a press conference on Wednesday.

Business executive responsible for the Northern Cape, Charles Baloyi, said that only R6 million (16%) of the financial reporting consultant costs were as a result of vacancies in the financial unit of municipalities.

“Only three of the municipalities using consultants showed an improvement in their audit outcomes, while five regressed,” Baloyi pointed out.

He added that a tendency of over-reliance on consultants was noted at some municipalities. “We also noted that consultants were not monitored and their work not reviewed, often due to a lack of capacity in the finance unit. Furthermore, transfer of skills was not prioritised, often because it was not included as a requirement when consultants were appointed, but also often due to the late appointment of consultants.

Baloyi emphasised that “consultants preparing unreliable financial statements due to poor financial information offer no value”.

Reasons given for why consultants were ineffective included auditee ineffectiveness (in nine municipalities), poor project management (in three municipalities), lack of records and documentation (in four municipalities) and consultants did not deliver (in two municipalities).

A total of 90% of the financial statements submitted for auditing included material misstatements in the area in which consultants worked.