Municipalities “improve” to 2% clean audits

Financial management at South Africa’s municipalities is in a sorry state indeed if only six out of 247 local governments in the country receive clean bills of health from the auditor-general and it can be hailed an improvement. Minister of Co-operative Governance Sicelo Shiceka, however, said that although this figure was deterring, he was confident the department would achieve its goal of having a completely clear audit report by 2014 as part of the Operation Clean Audit Programme.

With the current dominant coverage of the Fifa Soccer World Cup by local newspapers, the announcement last Friday by Shiceka and Auditor-General Terence Nombembe in Pretoria, that only six municipalities of the 247 audited for the 2008/09 financial year showed a clean report, went by almost unnoticed - except for news bulletins by the SABC.

The most significant shortfall identified was the sometimes complete lack of supporting documentation for payments made by the municipalities. Shiceka said this made it nearly impossible for the auditor-general to track payments and to determine whether these payments were made on projects relevant to the department.

This lack of a paper trail further opened up the department to widespread corruption and little accountability.
Expanding on a theme he mooted a week earlier, when news about the appalling audit report began emerging, Shiceka said that local government operations - and how managers do their jobs - would not be the same after a draft delivery agreement has been signed. “When people have not met their targets, you look at the issue of bonuses, you look at what has not been done; and then, depending on the reasons given, you look at what steps to take as corrective measures,” he said.

At the time, he added that any decision to punish those who failed to deliver would be thoroughly investigated before a final decision was made. “We want to use these measures to say, 'now the government is doing things differently'.”

On Friday, using stronger rhetoric, Shiceko said that non-performing municipal executives who do not deliver, will face the axe. He added that a big problem was that municipal mangers were not being held accountable and that there was no quality control within municipal structures. The only way to address this was to develop training programmes for managers to streamline the process.

Meanwhile, Nombembe said one of the problems last year was that too few municipalities had submitted their report. Of the 283 municipalities, only 247 had submitted their report on time. Those reports that were submitted, however, were fraught with irregularities.

But Shiceka said that there had been a marked increase in municipalities which had financially qualified reports.

While visiting various councils countrywide, the minister had seen a renewed interest and commitment to fix loopholes, he said.

Shiceka admitted, however, that his department faced the dilemma of whether to fill critical roles now or to wait for next year’s local elections before making any final decisions.

The report found that 92% of municipalities did not fully comply with regulatory requirements; while 90% of the information was not useful, not reliable or not received.

The worst audit opinions were revealed to be the Northern Cape, Free State and the Eastern Cape.

The department has introduced e-governance - an online way of ensuring financial information is kept up to date, and which will help the auditor-general to collate information at the end of the financial year, minimising the need to wait for underperforming municipalities to deliver their report on time.

Nombembe said, however, that there has been an improvement in municipal audit outcomes from 2004 to the current financial year. "Overall, there has been a distinct improvement in audit outcomes from 2004 and 2005 to the current financial year," he said at a joint media briefing with Minister Shiceka in Pretoria. Nombembe was presenting the national municipal audit outcomes for the 2008/09 financial year.

He further pledged to assist municipalities toward clean audits by 2014 - according to the government's target - and stressed the need to intensify efforts by all spheres of government.

The auditor-general attributed the improvement to the involvement of officials - including premiers, mayors, MECs and councillors - in the work of municipal managers. "Where political leadership has shown keen interest and got involved in key operations of their municipalities, implemented and monitored remedial action plans, the results have been encouragingly positive."

His office had developed a tracking system that would alert mayors and their administrations about leadership, governance and financial management which could lead to an unfavourable audit result. "The system will flag areas of concern, which can then be discussed with the municipal leadership routinely throughout the year before audits are finalised," said Nombembe.

"This way, municipalities will be able to timeously develop remedial action plans that will steer them towards clean audits."

The audits of 36 municipalities and eight entities were outstanding by 8 March this year because either financial statements had not been submitted, or they were submitted after the legislated deadline, or as a result of the auditor-general's internal quality assurance and monitoring processes.

Financially unqualified audit outcomes improved by 15% from 131 to 151. "The most notable improvements were in KwaZulu-Natal and Gauteng," said Nombembe.

On average, 92% of municipalities and municipal entities had not complied fully with the regulatory requirements.

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Comments (2)

• |2010-06-22 11:54:43 J Graaff  - Names of Municipalities
  Would it not have been fantastic motivative to have published the names of the 6 municiplaities that received the clean audits???? They and their management would surely have felt being recognised????
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• |2010-06-28 06:06:42 Irene Reid  - How do we hold our elected municipality to account
  One of the most frustrating things that the ratepayer or resident of a municiplaoty experience ona daily basis is the total powerless ness of one's position as a ratepayer. We have no emchanism of engagement withthe council, are ignored if we attempt correspndence by email, letter or phone, and thus no one is hlding the council accountable for their actions. Our only recourse is witholding or payments which in itslefl is fraught with difficulties.How do get open, honest engagement going in our municipality?
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