The Southern African Institute of Government Auditors (SAIGA) has described the latest general report on local government audit outcomes – which shows that local government finances have reached R26-billion in irregular expenditure in the 2019-20 financial year – as shocking.
Auditor-General Tsakani Maluleke released the MFMA 2019-20 report on 30 June 2021, making it clear that irregular expenditure and a lack of financial controls has become a common occurrence in municipalities.
SAIGA president Philip Rakgwale says that the R26-billion in irregular expenditure could have been prevented with proper financial systems and controls in municipalities.
According to the report, out of the 257 municipalities, only 27 received clean audits, a decrease from the previous year report. Fewer than a quarter of municipalities could provide the Auditor General of South Africa (AGSA) with quality performance reports to audit. The unfortunate truth is that it is the citizens who are at the receiving end of poor service delivery, Rakgwale says.
“As SAIGA we remain resolute in the stance that our public structures must maintain a low tolerance for financial transgressions or transgressions of any kind as that ensures a smoother running of the country in all respects.
“Public officials are entrusted with the public resources to serve the citizens of this country. Municipalities are mandated to deliver quality service to the people. It is crucial to note that there is a need for proper financial systems and controls in our local government. Irregular expenditure can be minimised with proper skills and competencies in the structures of our local government.
“Our role as SAIGA is to serve the public interest by strengthening capacity building in the public sector. I believe that clean governance and quality service delivery leads to a happy citizenry,” says Rakgwale.
According to the AGSA media release the municipalities’ performance reporting was even worse than their financial reporting. Due to lack of required documentation from municipalities the AG was unable to audit contracts worth R1,43-billion. The AG also observed that municipalities do not implement consequence management, hence the cumulative amount of irregular expenditure not dealt with, stood at R79,22-billion at the year-end.
Another rising concern is the poor-quality financial statements submitted by the municipalities. A total of 72% municipalities submitted poor quality financial statements for auditing. This raises a question of accountability and transparency since financial statements are meant to be used to inform financial decisions. Municipalities in North West, Free State and Limpopo submitted the poorest quality financial statements.
SAIGA CEO Russel Morena comments: “There is a growing need for ethical and accountable leaders not only within the local government but in other areas of the state. As the primary representatives of Registered Government Auditor (RGA) professionals in the public sector, SAIGA develops and maintains diligent and ethical public sector officials and thereby promoting clean governance.”
Morena shares that it is important to maintain a balanced and fair depiction of the state of the public sector. As such, SAIGA applauds the municipalities that have maintained the clean audit status over the four-year period. They are Senqu in the Eastern Cape, Midvaal in Gauteng, Okhahlamba in KwaZulu-Natal, and Witzenberg, Cape Agulhas, Cape Winelands District and Overstrand in the Western Cape.