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‘NC municipalities making little progress

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“It is probable that a large portion of irregular expenditure may be uncovered and still be disclosed in the future,”

Picture: Soraya Crowie

ACCOUNTABILITY continues to fail in local government and it points to glaring lapses in oversight, leadership and governance.

This is according the Auditor-General of South Africa’s (AGSA) office in the Northern Cape, which revealed that the Province’s 2016/17 municipal audit outcomes reflect little progress when compared to the previous year.

These provincial results follow last month’s announcement of the consolidated local government outcomes by Auditor-General Kimi Makwetu, with spokesperson for the provincial office, Charles Baloyi, yesterday stating that the latest provincial overview proved comparatively stagnant.

Only three percent of the municipalities returned a clean audit, compared to seven percent for the 2015/2016 period, while less than half provided quality financial statements.

A majority of 83 percent of municipalities’ audit outcomes stagnated with Baloyi pointing out yesterday that the fact that the results of 52 percent of municipalities were modified (either qualified or disclaimed) was confirmation that management at most municipalities still failed to grasp the importance of accountability as a tool to ensure good governance.

“The local government audit indicates that audit outcomes will not improve to the desired level unless leadership sets the right tone for accountability,” he explained, adding that recent years had seen AGSA place emphasis on the importance of accountability in the management of municipal affairs, starting with appropriate planning and focussed on the needs of the public before instituting internal controls to ensure proper monitoring of finances and performance.

Efforts

However, these efforts appear to have been futile exercises with Baloyi saying that, at most municipalities, basic controls had not been implemented, contributing to the stagnation.

In total, 31 municipalities were audited while the late submission of financial reports from the Kai !Garib, Kgatelopele, Phokwane, Renosterberg, Tsantsabane and Ubuntu municipalities prevented their inclusion from the report.

The only municipality in the Northern Cape to receive a clean audit in the 2016/17 financial year was the ZF Mgcawu district, a record it retained for the sixth consecutive year.

Kamiesberg improved from qualified to unqualified findings over this period while Ga-Segonyana was the only other local municipality to improve on its 2015/16 audit.

Baloyi said that during the review period, only ZF Mgcawu had submitted quality financial statements that required no adjustments, although 12 municipalities (48 percent) managed to obtain an unqualified audit.

This was attributed to the fact that most municipalities relied heavily on external auditors to identify misstatements in their financial records with R70 million spent on consultants for financial reporting, nearly double the amount spent during the previous financial year.

“Worryingly, the financial statements of 54 percent of the 24 municipalities that used consultants were still disclaimed or qualified.”

Among others, the Frances Baard District Municipality regressed from unqualified with no findings to qualified with findings, while Gamagara went from unqualified with no findings to qualified.

There was a significant decrease, from R457 million to R261 million, in irregular expenditure, 97 percent of which resulted from non-compliance with supply chain management regulations.

However, despite the decrease in the total amount, four out of five municipalities in the Northern Cape incurred such expenses while 14 others are still investigating the full extent of their irregular expenditure.

“It is probable that a large portion of irregular expenditure may be uncovered and still be disclosed in the future,” he added.

However, according to Baloyi, of greatest concern to AGSA in the Province was that calls from this office for stricter consequences and greater accountability appeared to be falling on deaf ears.

“We reported material non-compliance with legislation dealing with consequences at 68 percent of the municipalities. This lack of consequences is also evident in municipalities again not paying sufficient attention to the findings on supply chain management and the indicators of possible fraud or improper conduct that we reported and recommended for investigation.

“During the year under review, municipalities wrote off or condoned irregular expenditure amounting to R110 million.

“The fact that there was only one insignificant instance where irregular expenditure was recovered from the liable person, indicates that investigations are either not taking place or aren’t rigorous enough to resolve the significant balance recorded in the Province.

“This lack of accountability and consequence management was consistently reported in previous years but no progress has been made in this regard.”