Home South African Auditor-general flags R5.19 billion in ‘irregular’ losses at municipalities

Auditor-general flags R5.19 billion in ‘irregular’ losses at municipalities

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Auditor-General Tsakani Maluleke has lifted the lid on municipalities that have lost R5.19 billion as a result of material irregularities.

Auditor-General Tsakani Maluleke has expressed concern about material irregularities at municipalities. File picture: Thobile Mathonsi

AUDITOR-General Tsakani Maluleke has lifted the lid on municipalities that have lost R5.19 billion as a result of material irregularities.

Briefing Parliament’s standing committee on the auditor-general, she said there were 268 material irregularities at municipalities across the country.

Many of these were related to suspected fraud or to non-compliance with the law.

Maluleke said the issues that emanated from these irregularities were the same ones identified in municipal audit reports.

She said the Public Audit Act allowed her to look into municipalities that incurred financial losses through material irregularities and to investigate them.

“We have identified, on a cumulative basis, a total of 268 material irregularities. [Many of them] relate to non-compliance or suspected fraud that we identified through our audits. In 194 instances of these material irregularities, we were able to link them to material financial loss. We were then able to estimate a cumulative value of R5.19bn of financial loss,” said Maluleke.

Her office was concerned that the issues that led to these financial losses were the same as those identified in their audit reports.

“The matters that lead to these financial losses are the same matters that we deal with when we audit and we give a normal audit report. We raised concerns about poor controls on goods and services, making sure that the payments are only made when they are due… and there are no duplicate payments.

“We still see instances of duplicate payments, which lead to financial loss. We still see instances of poor procurement processes that don’t comply with the law, leading to unfair and uncompetitive procurement such that we end up with poor value for money,” said Maluleke.

She said municipalities continued to use consultants when they had people doing the same work on a full-time basis.

In the past few years, municipalities have spent billions of rand hiring consultants.

The standing committee on public accounts has also complained about the use of consultants, saying municipalities spend vast amounts of money in hiring them to perform the same functions as their own officials.

Maluleke told committee members on Friday that municipalities continued to fail to keep financial records on how they used their money to procure goods and services.

In 86% of instances, officials acted only after her office had alerted them to material irregularities.

Maluleke said in 61 out of 268 cases, they found there was no appropriate action being taken.

When no action was taken, they put recommendations in their audit report.

“What we now expect is that the mayor, the Municipal Public Accounts Committee, the council, the MEC of Cogta and the legislature will be worried about tracking with the accounting officer on how to implement this recommendation, because it is no longer a recommendation in the management report, it’s now in the audit report,” said Maluleke.

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