A visual gauge of the deplorable state of South Africa…
“If we get each of the players in this ecosystem to operate in a way that is consistent with their duties set out in the Constitution, specified in the Municipal Financial Management Act (MFMA) and detailed in the Municipal Systems Act – if we can get all the actors involved to take responsibility, maybe we can start to set a different tone in government and indeed we can start to strengthen municipalities as public institutions,” the Auditor General said. (LW) Tsakani Maluleke on Wednesday, June 22.
She was speaking to reporters at a discussion hosted by the South African National Publishers Forum on the recent municipal audit report, which was released last week.
The office of the AG published the Results of municipal audits 2020/2021 – who found only 41 municipalities in the country had received favorable audits — Wednesday, June 15, 2022. Its conclusions were based on the financial statements of 230 municipalities and 18 municipal entities.
In 2019/2020, only 32 out of 257 municipalities in South Africa had clean audits. In the last 2020/2021 reporting period, the number of municipal entities to receive clean audits increased to 41 out of 257, or 16%.
“Of the 41 clean audits, most of them are district municipalities and most of them are located in one province, namely the Western Cape. The other provinces are not making significant progress in the transition to cleaner audits,” Maluleke said Wednesday.
The 41 municipal entities that received their own audits are:
- Gauteng (2): Ekurhuleni City Metro, Midvaal.
- Limpopo (1): Waterberg district.
- Mpumalanga (4): Ehlanzeni District, Gert Sibande District, Nkangala District, Steve Tshwete.
- North Cape (5): Frances Baard District, John Taolo Gaetsewe District, Namakwa District, ZF Mgcawu District, Hantam.
- KwaZulu Natal (3): District of King Cetshwayo, uMhlathuze, Okhahlamba.
- Eastern Cape (4): District of Joe Gqabi, Elundini, Senqu, Municipality of Winnie Madikizela-Mandela.
- Western Cape (22): Cape Winelands District, Central Karoo District, Garden Route District, Overberg District, West Coast District, Drakenstein, George, Stellenbosch, Bergriver, Breede Valley, Cape Agulhas, Cederberg, Hessequa, Langeberg, Matzikama, Mossel Bay, Overstrand, Saldanha Bay, Swartland , Theewaterskloof, Witzenberg, Swellendam.
Note: Municipalities and districts (which contain a number of municipalities) are audited separately, so the result of a municipality’s audit does not necessarily correspond to the district to which it belongs.
In the Free State and North West provinces, no municipalities received positive audit results.
“While a clean audit does not confirm that services were provided or that performance was at the desired level, a clean audit is an important confirmation that this institution has in place the key disciplines for sound financial management, good performance management and that it is well placed to fulfill its mandate and do so in a transparent manner,” explained Maluleke.
Commons to Disavowed Opinions
“10% of municipalities – or 25 out of 257 – received a disclaimer, which is the worst result”, according to the AG.
“Disclaimers are totally intolerable, and we’re concerned that too often disclaimers are seen as a technical audit issue. We have struggled this year to demonstrate that this is not the case,” she added.
A disclaimer is the worst audit opinion, with insufficient information, so the AG was unable to form an opinion on the credibility of the statements.
“Municipalities that have moved to ‘best audit results’, in that they have moved out of the disclaimer, point out that once there is a leadership decision for a different tone at the management level, getting out of a disclaimer is not that difficult… And indeed, a waiver of the audit opinion is confirmation of a lack of discipline, a lack of commitment to accountability, transparency and stewardship in terms of running these institutions,” Maluleke explained.
Audit results for South Africa’s eight metros
“While the Eastern Cape now has four municipalities that have received clean audits, they still have their two metros [Buffalo City and Nelson Mandela Bay] qualified,” the AG said.
In Gauteng, Ekurhuleni is the only metro to have received a clean audit.
The remaining subways; City of Cape Town in the Western Cape, eThekwini in KwaZulu-NatalMangaung in the Free State and the City of Johannesburg and the City of Tshwane in Gauteng received the audit results without reservation.
Municipalities in “great crisis”
daily maverick Suné Payne previously reported here that audit results for the year ending June 2021 showed little improvement in the degree of transparency, accountability or performance of local governments, with the AG warning that more than a quarter of the country’s municipalities are on the verge of financial collapse.
read in Daily Maverick: Our municipalities are in a state of disaster; we have one last chance to fix them
Speaking to the media on Wednesday, Maluleke said: “The financial health of municipalities has continued to deteriorate over the past year, with most municipalities reporting concerning statistics regarding their own financial health.
“The most affected provinces in terms of municipal financial health are the Free State, North West, Northern Cape, Gauteng as well as Mpumalanga. The main issue here is that alongside economic and fiscal pressures, the municipalities do not properly manage the little they might have,” she added.
A concern about municipal financial health, Maluleke explained, is that far too many municipalities don’t plan for the maintenance of the infrastructure they have, “so very few of them are spending the standard 8% on maintenance. of municipal infrastructure”.
This means that the infrastructure in place begins to deteriorate over time, which subsequently impacts the ability of municipalities to deliver services and generate revenue, according to Maluleke.
“The financial health, income statements, balance sheets and cash flows of municipalities are in very poor condition and this has a negative impact on the current services provided, but will also have a negative impact on future services if the situation does not is not corrected,” Maluleke said. DM