Maluleke: WC has the highest number of local govt clean audits

Auditor General Tsakani Maluleke on Wednesday said the number of clean audits at the country’s 257 municipalities had gone down from 33 to just 27.

FILE: Auditor General (AG) Tsakani Maluleke. Picture: @AuditorGen_SA/Twitter

JOHANNESBURG - The Western Cape has the highest number of local government clean audits with 14 out of a total 27.

But the province still has four outstanding audits while the Free State and North West don;t have a single clean audit.

Auditor General Tsakani Maluleke on Wednesday said the number of clean audits at the country’s 257 municipalities had gone down from 33 to just 27.

Maluleke said the poor state of financial and performance management in local government, as shown by the latest audit outcomes, resulted in material financial losses at some municipalities and substantial harm to their ability to deliver on their mandate.

A glance shows that besides the Western Cape, the highest number of clean audits per province is only three.

Ninety-six municipalities have outcomes that are unqualified with findings, while 80 are qualified with findings.

But Maluleke said disclaimed opinions, 22 in total, were the worst audit opinion municipalities could get as it meant they could not provide her with evidence for most amounts and disclosures in their financial statements.

The highest disclaimed opinions - which is four - are in Eastern Cape, followed by North West and KwaZulu-Natal with three each and Mpumalanga, the Northern Cape and Limpopo, which have one disclaimed opinion each.

The Auditor General said she could not express an opinion on the credibility of these financial statements or determine what had been done with the funds they received for the year.

'MATERIAL IRREGULARITIES'

The Auditor General has revealed municipalities lost R2 billion due to something called “material irregularities”.

Nearly half of that money was wasted on paying interest and penalties because they don’t pay suppliers like Eskom on time.

The latest audit outcomes also show R285.9 million was paid for goods and services that were never delivered.

Maluleke said because of these and other losses, she expanded the definition of material irregularities further by also considering the harm caused to a municipality by persistent lack of proper documents and records.

And now the number of municipalities where she implemented the "material irregularity process" have increased six-fold from nine in the 2018-2019 financial year to 57 in the latest audit.

The material irregularity process is the extended mandate that gives the Auditor General the power to present material irregularities to relevant public bodies for further investigation, take binding remedial action for failure to implement recommendations for material irregularities or issue a certificate of debt for failure to implement remedial action if financial loss was involved.

Maluleke said the prevalence of municipalities with disclaimed opinions compelled her to expand this definition.

She found 96 material irregularities with an estimated financial loss of R2 billion of taxpayers’ money. They include R979 million wasted by paying interest in penalties to Eskom, waterboard lenders and suppliers who are not paid on time.

The Mogalakwena Municipality in Limpopo paid R13 million to a contractor to build the Moshate Stadium, but that never happened and similar payments for work, and never done elsewhere, amounts to R289 million.

Municipalities lost R182 million in revenue that was never billed and R129 million in debts that were not recovered.

When it comes to investments and assets that were not saved, R382 million extra of your money was squandered.

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