Unauthorised expenditure amounted to R836 million while irregular and fruitless expenditure rose to R184 million in the Northern Cape.
SOL PLAATJE Municipality is the top contributor of irregular expenditure in the Northern Cape, with R258 million out of the total irregular expenditure in the Province of R810 million.
Auditor-General Tsakani Maluleke, who tabled the consolidated general report on the local government audit outcomes for the 2019/20 financial year, said that three municipalities in the Province failed to pay Eskom on time, resulting in interest being charged on their accounts.
The Province is in arrears to Eskom and the water boards to the tune of R1.2 billion.
Gamagara (R135 million) and Hantam (R59 million) municipalities, together with Sol Plaatje, made up the top three contributors of irregular expenditure.
Unauthorised expenditure amounted to R836 million while irregular and fruitless expenditure rose to R184 million in the Northern Cape.
It was stated that three municipalities suffered a financial loss of R121 million
A total of 17 municipalities spent R99 million on hiring financial consultants.
Maluleke said that the increase in the cost of using consultants to prepare financial statements and update asset registers was concerning.
“The Province is not receiving a return on investment, as 82 percent of municipalities that used consultants had material misstatements in the area of the consultants’ responsibility.
“In addition, 10 out of 17 municipalities (59 percent) that used consultants still had either a disclaimed or a qualified opinion.”
She said all 17 municipalities indicated that the reason for hiring consultants was a lack of skills.
“Both provincial and municipal oversight thus need to take cognisance of the critical need to employ skilled individuals at municipalities across the Province.”
Emthanjeni Municipality owes its creditors R95 880 042 while cash available at year-end amounts to R208 475.
!Kheis and Kai !Garib municipalities received disclaimers.
Maluleke believed that the revival of the operation clean audit committee, driven by the premier, had improved audit outcomes throughout the Province.
“Where municipalities implemented consequences and are holding their officials accountable, audit outcomes improved and a clean audit status was maintained. However, the Province still has a long way to go in implementing strong accountability at the rest of the municipalities.”
She added that municipalities in the Northern Cape were still typified by a poor state of internal controls.
“The prevention and detection of irregular expenditure continues to be a key aspect that accounting officers should pay particular attention to. Almost all municipalities were plagued by findings on non-compliance and we are particularly worried about the fact that 85 percent of municipalities had findings on the quality of financial statements submitted for auditing.”
Maluleke said that six municipalities achieved unqualified opinions only because they corrected all misstatements identified during the audit.
“Additionally, we raised findings on supply chain management in all our audits. The financial health of municipalities in the Province remains in a dire state, with more than half being in a vulnerable financial position. More than half are also operating with an unfunded budget, meaning that they commit more than they can generate in revenue and, as a result, fail to pay their creditors.”
She stated that the adoption of unfunded budgets not only posed an imminent threat to the sustainability of municipalities, but also affected their ability to deliver services.
Maluleke said that Frances Baard, John Taolo Gaetsewe and ZF Mgcawu district municipalities obtained clean audits.
“A clean audit is merely a building block towards good service delivery and should not be seen as a measure of how well services are being delivered.”
