The South African Local Government Association (SALGA) has expressed a ‘profound sense of disappointment’ at what it sees as deteriorating levels of accountability in the recent audit outcomes of local government for the period 2019/20.

SALGA reiterates its calls made in the previous 2018/19 municipal audit outcomes for accountability and consequences for any malfeasance in the management of local government finances.

SALGA calls upon on Mayors and Speakers to extract accountability and implement consequence management as empowered by the legislation, as well as National Treasury and Cooperative Governance and Traditional Affairs (COGTA) to exercise powers vested in them in terms of the Municipal Finance Management Act (MFMA).

“It is SALGA’s position that where there are clear actions of fraud and criminality, it is the Mayor’s and the Speaker’s fiduciary duty to refer these matters to law enforcement agencies. SALGA has in the past year succeeded in ensuring that the Municipal Structures Act as amended by Parliament gives powers to Municipal Public Accounts Committees (MPACs), similar to the Standing Committee on Public Accounts (SCOPA), to extract accountability and enforce consequence management,” read the statement.

“This should be done by instituting investigations on fraud and any other acts of criminality. SALGA welcomes the amendment and recommits itself in working closely with MPACs to extract accountability.”

What needs to be done?

Councils must employ competent people and take appropriate steps where officials fail to carry out their responsibilities. Mayors and Speakers must hold the administration accountable and act decisively to implement consequence management and National Treasury and COGTA must implement measures as provided for in the Municipal Finance Management Act (MFMA) to extract accountability.

An analysis of the audit results paints a worrying picture about the state of municipal finances. The number of municipalities receiving unqualified audit outcomes has declined from 147 in 2016/17, 123 in 2017/18, 114 in 2018/19 to 116 in 2019/2020.  Although there is a slight improvement in the number of unqualified audits received by municipalities for the period 2019/20, the AG’s report, however, indicates an overall regression in comparison with the previous years, mainly due to the 57 audits which were not finalised by the cut-off date.

For audits which were finalised by the General Report cut-off date, there is a net improvement in audit outcomes of 30 municipalities with better audit outcomes compared to the prior year, with Limpopo (8 municipalities) and the Eastern Cape (6 municipalities) being the two provinces with the greatest net improvements in municipal audit outcomes compared to the prior year.

The magnitude and severity of the problem identified by the AG calls for decisive action and means that we as SALGA must persistently insist on municipalities to implement consequence management and enforce accountability. 

Pockets of Excellence

However, beneath the surface of the gloomy picture there are pockets of excellence that should never be allowed to wither away under the weight of despair.  It is these pockets of excellence that must be used to draw lessons that can help us turn the tide of decline into a tide of progress.

The AG report shows that of the 200 municipalities that had finalized audits, about half (116) received unqualified audits, of which 27 of them received clean audits. These 27 municipalities are pockets of excellence whose success stories must be celebrated.  These 116 municipalities account for 77% of the overall local government expenditure budget.

This is a clear reflection that even though there are challenges with financial management, Local Government is not completely dysfunctional in financial management if 77% of the Local Government sphere expenditure budget is under the control of Municipalities who have at the very least attained financially unqualified audit opinions.

SALGA would like to applaud and commend municipalities who have been exemplary in managing their finances and who have consistently achieved clean audit outcomes in the four audit cycles that have been completed in the current term of local government as well as those who have attained financially unqualified audit opinions.