AG Maluleke: Public officials not doing enough to stop financial mismanagement

Auditor-General Tsakane Maluleke delivered the local government audit outcomes for the 2020/2021 financial year on Wednesday.

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

JOHANNESBURG - The Auditor-General Tsakane Maluleke said that the latest audit outcomes on the country’s municipalities and their entities showed that public representatives and senior officials were not doing enough to stop financial mismanagement.

Maluleke delivered the local government audit outcomes for the 2020/2021 financial year on Wednesday.

She highlighted that there had been no improvement in terms of accountability in municipalities since 2016.

Only 41 out of South Africa’s 247 municipalities received clean audit outcomes for the 2020/2021 financial year.

Auditor-General Tsakane Maluleke: "In the overwhelming majority of instances, municipalities pay little attention to planning for service delivery, monitoring the execution of service delivery projects and programmes and reporting on what they've done with the funds that are allocated to them."

She said that her office had struggled to link expenditure by municipalities with service delivery.

She said that the latest poor audit outcomes were an indictment on the entire local government accountability eco-system, including mayors, municipal managers and even provincial co-operative governance departments.

The Auditor-General also flagged a heavy dependence on consultants by municipalities and their entities as cause for concern.

She highlighted that municipalities had spent R5.31 billion on financial reporting consultants over the past five years without building internal capacity to master credible financial reporting.

The Auditor-General said that South African municipalities spent on average R10.41 billion on internal finance units but they still hired external contractors.

"Only 25% of municipalities have got credible financial management practices in place and this despite the fact that they have people employed, CFOs in place," Maluleke said.

She said that between 2016 and last year, 70% of South Africa’s municipalities used external consultants to prepare financial statements.

In the 2020/2021 financial year alone, the country’s 247 municipalities spent R1.26 billion on consultants.

Maluleke said that the expected benefits of using external contractors had not always been apparent and in fact, 121 municipalities submitted records with material misstatements despite having used consultants.