By Auditor-General (AG) Tsakani Maluleke on Tuesday, 27 August, called on all role players in the accountability ecosystem to “work deliberately and with urgency” towards a culture of performance, accountability, transparency and institutional integrity to ultimately result in a better life for the people of South Africa.
She emphasised that those with direct control over service delivery should act within their mandate and play a greater role in improving institutional performance and the living conditions of citizens. The AG made this clarion call taking into consideration that the audit outcomes are not showing meaningful improvement.
The AG released the 2022-23 consolidated general report on the local government audit outcomes. The report includes insights from audits of municipalities and their entities, and shares information, statistics and stories on the state of local government in the second year of the sixth administration.
“In our previous report, we reported on weaknesses in service delivery planning, reporting and achievement; failing municipal infrastructure; and the increasing pressure on local government finances due to a lack of careful spending, compounded by councils not paying sufficient attention to these matters.
The report also showcased the good work done at municipalities with clean audits; highlighted the eight metros for increased attention; and called for action to eradicate disclaimed audit opinions due to the harm that these municipalities’ lack of transparency and accountability causes their residents.
“We urged elected representatives to intensify their action towards instilling a culture of performance, transparency and institutional integrity, and to be accountable to the communities they serve,” the AG continued.
Maluleke stated that this year’s report builds on these previous messages and call to action.
Local government is instrumental in providing communities with essential services such as clean water, proper sanitation, reliable electricity, effective waste management, and well-maintained roads and municipal infrastructure.
Good governance is key to ensuring these services are provided effectively. In this context, the AG welcomes the tone set by the President during the opening of Parliament and national government’s decision to prioritise local government.
This is a significant and encouraging development that we must all welcome, rolling up our sleeves and effectively playing our part as stakeholders in the local government accountability ecosystem.
The AG reported that, overall, there has been little change and – despite commitments made by role players in the accountability ecosystem for improvement – “action has been too slow and has had little impact on the lived realities of ordinary South Africans”.
She added that the trend of poor audit outcomes in local government continued, with only 34 municipalities (13%) obtaining clean audits, and no meaningful improvement over the first two years of the administration’s term.
“While 45 municipalities have improved their audit outcomes since 2020-21 (the last year of the previous administration’s term), 36 have regressed”, said Maluleke.
She highlighted that the most prevalent audit outcome was an unqualified audit opinion on the financial statements with findings on performance reporting and/or compliance with key legislation. She also expressed concern that these municipalities had made little effort to move out of this category, with 77 remaining there since the end of the previous administration’s term.
Maluleke said that municipalities with clean audits, particularly those that have sustained this status over several years, are generally characterised by sound financial and performance management disciplines and perform their functions in accordance with applicable legislation.
“They generally manage projects well so that deficiencies are identified and rectified promptly and so that timelines, budgets and quality standards are adhered to. The well-functioning control environment and good systems present at these municipalities form a solid foundation from which councils can prioritise further improving the performance and service delivery of their municipalities.”
She added that the few municipalities (30) that maintained their clean audit status continue to be an example of what is possible, and encouraged the eight municipalities that lost their status to swiftly address the root causes of the regressions so that they can achieve a clean audit once again. She further called on the municipalities who obtained unqualified with findings audit opinion to also work very hard to achieve a clean audit and not be comfortable in that state.
The AG noted that local government’s inability to comply with legislation when conducting its operations remained the biggest obstacle for municipalities, with 86% receiving material compliance findings, regressing slightly from 85% in the previous year and 83% in 2020-21.
She added that, on the positive side, there were fewer municipalities with disclaimed audit opinions, which is the worst possible audit outcome. Over the administrative term, 18 municipalities, mostly in KwaZulu-Natal, Mpumalanga and North West, have moved out of this category.
Fourteen municipalities received disclaimed opinions in 2022-23, including two municipalities whose audits were finalised after 31 March 2024, which was the cut-off date for this report. The AG commended the support provided by the provincial government to municipalities in the 6th administration and called for it to be sustained in the 7th administration as this support demonstrated positive signs of improvement.
