Auditor General, Kimi Makwetu.
Makwetu recently released the 2015/16 Local Government Audit Outcomes Report, and based on it, said accountability in the management of municipal affairs was of utmost importance. “…it starts with appropriate planning focused on the needs of citizens, instituting appropriate internal control and supervision that will ensure proper financial and performance management,” he said. He encouraged municipal leaders to monitor budgets and ensure that performance targets are achieved, and that there are consequences for mismanagement and non-performance. “If basic principles of accountability built around a central theme of strong internal control and good governance are in place, municipalities should be well geared to live up to the expectations of the communities that they serve,” Makwetu said. He said the limited improvement in audit outcomes over the past year showed that accountability for these important functions was not as strong as it should be. The report showed that there was limited improvement in the audit outcomes of municipalities with about 15% of municipalities improving, about 13% regressing and 67% remaining unchanged. The audit outcomes of 263 municipalities and a summary of the key audit outcomes of 51 municipal entities are included in the latest general report. “In total, about 40 municipalities (82%) with clean audit opinions in the previous financial year (2014-15) obtained this outcome again in the year under review (2015/16),” the report read. Makwetu said this was an encouraging sign that improvements at these municipalities are sustainable.
Clean audits
His report also showed that the provinces with the highest proportion of municipalities with clean audit opinions in 2015/16 were the Western Cape with 80% of its municipalities, followed by KwaZulu-Natal with 18% of its municipalities, and the Eastern Cape with 16%. “The Western Cape continued setting the pace by increasing their clean audit opinions from 73% to 80% of their municipalities,” he said.
Momentum in audit outcomes
Makwetu said audit outcomes of municipalities in the Eastern Cape, Limpopo and Mpumalanga showed momentum in the right direction, with the Eastern Cape showing the greatest improvement. He said improvements in Limpopo were as a result of increased focus to resolve audit findings in response to a strong stance taken by the premier that steps will be taken against municipal managers if audit outcomes are poor. In Mpumalanga, Makwetu said strong leadership, accountability and good human resource management at an increased number of municipalities had the desired effect. “We commend the leadership in these provinces for decisively acting on and implementing our previous years’ audit recommendations,” he said. “We urge them to maintain this promising momentum.”
Losing clean audit status
Makwetu said it was unfortunate that about 14 municipalities lost their clean audit status, while only nine moved into this category resulting in an overall decrease in municipalities with clean audit opinions. “Metros and district municipalities should be leading by example in the local government spheres, yet only one metro, the City of Cape Town, and 14 district municipalities (32% of all district municipalities) received clean audit opinions.” The report showed that although Gauteng continued to perform well and was the only province where 100% of its municipalities received unqualified audit opinions on their financial statements, only Midvaal municipality could hold onto its clean audit status. The report further revealed that not paying sufficient attention to supply chain management and performance reporting led to three municipalities losing their clean audit status of the previous year.
