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Not a single municipality in North West, Free State and Limpopo received a clean audit outcome.
This is according to the 2016-17 local government audit outcome report released by Auditor-General Kimi Makwetu in Parliament on Wednesday morning.
The report was released amid allegations by Makwetu’s office that his officials were being threatened by municipalities when doing their job.
His report came after Parliament on Tuesday approved the amendment of the Auditor-General Act to allow Makwetu’s office to refer municipalities that continuously receive disclaimers and incur irregular expenditure to the Hawks and other law enforcement agencies for investigation.
Makwetu’s office audited 257 municipalities and 21 municipal entities in 2016-17.
Municipalities had decreased from 278 with the amalgamation of some municipalities during 2016 when 37 municipalities were closed down and 16 new municipalities were established.
Makwetu decried lack of consequences against those flouting basic processes that hampered effective municipal governance in the past five years.
“When we released the 2011-12 municipal audit outcomes in August 2013, we highlighted, among others, a lack of decisive leadership to address the lack of accountability ... we reported weaknesses in internal control and the risks that needed attention in local government by providing root causes for audit findings and recommendations to remedy these underlying causes.
"It is now five years later, and we are still faced with the same accountability and governance challenges we had flagged throughout these years.
"There has been no significant positive change towards credible results; instead we are witnessing a reversal in audit outcomes,” Makwetu said.
Only one municipality received a clean audit in Gauteng, while 21 municipalities did so in the Western Cape.
Other provinces performed as follows:
- Two municipalities received a clean audit in Eastern Cape;
- Six municipalities received a clean audit in KwaZulu-Natal;
- Two municipalities received a clean audit in Mpumalanga; and
- One municipality received a clean audit in Northern Cape.
Makwetu’s report indicated that there was a 75% increase in municipal irregular expenditure from R16 billion in 2015-16 to R28 billion in 2016-17.
However he pointed out that municipalities made a significant effort in 2016-17 to identify and transparently report on irregular expenditure incurred in the previous years.
He said this accounted for R15 billion of the total being irregular expenditure incurred in prior years but only identified and reported in 2016-17.
The remaining R13 billion relates to payments or expenses incurred in 2016-17 by the new local government administration, which represented 4% of the local government expenditure budget.
Irregular expenditure includes payments made on contracts irregularly awarded in a previous year if the non-compliance was not investigated and condoned; the payments on these multi-year contracts continue to be viewed and disclosed as irregular expenditure.
Eastern Cape was the leading province to incur irregular expenditure amounting to R13.6 billion in 2016-17 compared with R5.4 billion in the 2015-16 financial year.
Irregular expenditure in other provinces is recorded as follows:
- North West incurred R4.3 billion in 2016-17 compared with R3.2 billion in 2015-16;
- Gauteng incurred R3.7 billion in 2016-17 compared with R1.3 billion in 2015-16;
- KwaZulu-Natal incurred R2.5 billion compared with R2 billion in 2015-16;
- Mpumalanga incurred nearly R2 billion in 2016-17 compared with R1.5 billion in 2915-16;
- Limpopo incurred R1.3 billion in 2016-17 compared with R1.3 billion in 2015-16;
- Free State incurred R675 million in 2016-17 compared with R813 million in 2015-16;
- Northern Cape incurred R261 million in 2016-17 compared with R457 million in 2015-16; and
- Western Cape incurred R173 million in 2016-17 compared with R174 million in 2015-16.
The Auditor-General also identified that interventions were required at all 18 municipalities in the Free State, ten in Eastern Cape, 14 in Northern Cape, 13 in North West, 12 in KwaZulu-Natal, five in Limpopo and Mpumalanga, four in Gauteng and two in Western Cape.
Some of these municipalities were in shambles and in danger of not being able to deliver services.
There were mixed reactions to the audit outcomes.
Cooperative Governance and Traditional Affairs deputy minister Andries Nel said there was work being done at some municipalities but conceded that it would take time to turn around other municipalities.
ANC MP Vincent Smith said Parliament’s move to amend the Auditor-General Act would finally give Makwetu powers to act against culprits at municipalities.
