‘Same story year after year': MPs unhappy as Auditor-General reveals local government audit outcomes

The Citizen

28-05-2025

Municipalities continue to rely heavily on consultants, with 215 municipalities spending R1.47 billion on their services.
Auditor-General Tsakani Maluleke in Parliament on 28 May 2025. Picture: X / @GovernanceClus1
Auditor-General Tsakani Maluleke has delivered a stark assessment of local government finances, revealing that only 16% of South Africa's 257 municipalities achieved clean audit outcomes.
Maluleke presented the findings on Wednesday to Parliament's Portfolio Committee on Cooperative Governance and Traditional Affairs, outlining the 2023/2024 financial year audit results for local government.
Auditor-General presents local government audit outcomes
Maluleke reported that the trend of poor audit outcomes continues, with only 41 municipalities receiving clean audits. Of these, 25 municipalities have managed to sustain their clean audit status every year since the 2020/21 financial year.
A clean audit indicates that a municipality's financial statements and performance report are transparent and credible, accurately reflecting its financial position and progress against targets.
While 59 municipalities have improved their audit outcomes over the past five years, 40 have regressed.
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Maluleke said there were 10 audits outstanding from the 2022/23 financial year.
Nine of these were delayed due to late or missing financial statements, and one was delayed during the audit process.
'Unfortunately, there's still a tendency amongst a number of municipalities to miss that submission deadline,' Maluleke said.
Of the 10 outstanding audits, seven have since been completed.
'There are three audits that are still outstanding because the submissions have not yet been completed.'
She noted some progress in timely submissions in provinces such as the North West but identified the Free State as a persistent problem area.
'The [Free State] provincial legislature and provincial executive really need to take some bold action to ensure that the situation is addressed.'
Disclaimers and adverse opinions remain a concern
Maluleke highlighted a decline in disclaimed audit opinions since the 2021 local government elections, with the number now standing at 14.
'We have spoken about how undesirable and intolerable a disclaimer audit opinion is, especially when somebody is looking after public funds.'
A disclaimer outcome means the auditor-general was unable to express an opinion due to a lack of reliable financial information.
There were also seven adverse audit outcomes.
'Adverse audit opinions is when we say that the financial statements are wrong [and] we do not believe they can be relied upon.'
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In addition, 35% of municipalities received qualified audit opinions.
'That's a big component of municipalities that are unable to publish credible financial statements,' Maluleke told the committee.
She expressed concern over both administrative and political leadership at municipalities.
'When you go to so many municipalities that have not yet got the capability to compile credible financial statements, it raises a number of critical questions around the competence of the people in the administration. But equally competence and discipline around the people in the political leadership.
'There should be no mayor that allows a situation where year on year, there are qualified financial statements emerging out of his/her administration.'
Maluleke said while most municipalities have chief financial officers (CFOs) with the necessary skills, it was concerning that local government expenditure budgets are being managed by municipalities that are unable to produce accurate financial statements.'
Unqualified opinions
Maluleke reported that 99 municipalities (39%) received unqualified audit opinions with findings related to performance and compliance.
However, she cautioned against seeing this as a success.
'The challenge here is that if a municipality is unable to deal with performance reporting and compliance, it tells you that you do not have the capability that you need for that municipality to predictable do what they are supposed to do with the money in their hands.'
An unqualified audit opinion means the financial statements are free of material misstatements and considered reliable.
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However, many municipalities only achieved this after correcting significant errors during the audit, which is an unsustainable practice.
According to the Auditor-General's report, only 63 municipalities (26%) would have received unqualified audit opinions in 2023/2024, rather than the 140 (57%) that eventually did.
Furthermore, the report revealed that municipalities continue to rely heavily on consultants, with 215 municipalities spending R1.47 billion on their services – yet 59% of the submitted financial statements still contained material misstatements in areas handled by those consultants.
Municipalities still rely too much on consultants, says @AuditorGen_SA Members hear that 215 municipalities paid R1.47bn for consultants yet 59% of financial statements submitted included material misstatements in work done by consultants. — Governance-Cluster (@GovernanceClus1) May 28, 2025
MPs demand accountability
Members of Parliament (MPs) expressed frustration over the lack of progress.
'For us, it's just as bad because we hear the same story year after year, and it's very unfortunate for the residents of South Africa,' Democratic Alliance (DA) MP Anna van Zyl.
African National Congress MP Dikeledi Direko agreed.
'Why are we still having the same problems each and every year?' she asked.
Several MPs voiced concern over the absence of consequences for repeated failures.
While other MPs raised concerns about the lack of consequence management, the committee's chairperson, Zweli Mkhize, shared an example from a visit to Free State's Maluti-a-Phofung Local Municipality.
He said MPs were surprised to discover that the same CFO and finance team remained in place, despite the municipality receiving disclaimer audit outcomes for four consecutive years.
'It was very strange for us,' Mkhize said.
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