Auditor General warns that 92% of municipalities are in trouble
By Antoinette Slabbert on MoneyWeb – While the number of municipalities with clean audits has increased by 14 to 54 in the 2014/15 financial year, the financial health of 92% of the country’s 278 municipalities remains concerning or requires intervention, the Auditor General Kimi Makwetu found.
Makwetu announced the consolidated report on audit outcomes for local government in Pretoria on Wednesday, which paints a picture of improving financial reporting, but deteriorating financial management. The report is based on audit reports for the financial year ended 30 June 2015. It also gave an overview of the trends over last five years, which constitutes the term of the current elected councils.
A total of 109 municipalities (40%) got an unqualified report with findings, 76 (28%) a qualified report with findings, 4 an adverse report and 29 (10%) a disclaimer. The audit reports of six municipalities (2%) were outstanding.
The improved reporting seems to be largely the result of changes made to the financial statements during the audit process.
Makwetu said while 59% of municipalities received unqualified audit reports (with and without findings), only 26% “would have achieved an unqualified audit opinion had we (his office) not identified the misstatements and allowed them to make corrections.”
The use of consultants did not necessarily ensure fewer misstatements in the financial statements that were submitted. “We found that at 105 municipalities (42%), the financial statements submitted for auditing included material misstatements in the areas in which consultants did work, which meant the misstatements were identified and corrected by the audit process and not by the consultant. This remains a concern regarding the effective use of these consultants,” he said.
During the reporting period 88% of all municipalities, that is a total of 240, incurred R14.7 billion of irregular expenditure. That means that they spent money without following the applicable laws.
It is more than double the amount incurred in 2010/11 and shows an increase of about R3 billion from the previous financial year.
