Parliament hearing told that audit crisis in municipalities 'linked to political leadership failures'

IOL News

3 days ago

Left to right: Chairperson of the Standing Committee on Auditor-General, Wouter Wessels, chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs, Dr Zweli Mkhize, and chairperson of the Portfolio Committee on Public Service and Administration, Jan de Villiers.
Image: Ayanda Ndamane/Independent Media
Dr Zweli Mkhize said that the latest audit outcomes presented by the Auditor-General have shown that the financial and governance crisis in municipalities across the country is deepening, and has dire consequences for service delivery and public trust.
Mkhize, chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA), was discussing the local government 2023/24 audit outcomes during the briefing held by the parliamentary Governance Cluster Oversight committees on Monday.
Mkhize was joined by chairperson of the Portfolio Committee on Public Service and Administration, Jan de Villiers, and chairperson of the Standing Committee on Auditor-General, Wouter Wessels.
The briefing comes after Auditor-General Tsakani Maluleke found that only 41 municipalities obtained clean audits in the 2023/24 financial year. Maluleke tabled the 2023/24 general report on the local government audit outcomes in Parliament almost two weeks ago.
'While 59 municipalities have improved their audit outcomes since 2020/21 (the last year of the previous administration), 40 have regressed,' Maluleke said.
The AG's report also showed that 113 municipalities operated with unfunded budgets and 285 material irregularities with an estimated financial loss amounting to R8.7 billion were identified.
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Mkhize said that the integrity and functionality of local government are under immense strain. He said it was unacceptable that, despite municipalities having spent over R1.4 billion on having consultants prepare their financial statements, 59% of those submitted for auditing contained material misstatements.
'It is unacceptable that such exorbitant spending yields so little value. Even more troubling is that many of these municipalities already have permanent staff tasked with performing this work. What we are seeing is not just waste but a failure of systems, leadership and accountability in too many of our municipalities.'
He said that the 113 municipalities currently operating on unfunded budgets are planning expenditures far beyond what they can credibly finance, and that this extreme recklessness.
'It amounts to planning for failure. It undermines infrastructure delivery, which has been identified as a key lever for economic recovery and job creation, and contributes to poor project execution, delays, cost overruns, and, in many cases, substandard workmanship,' Mkhize said.
'As a committee, we believe that the shortage of financial skills at the local government level is at a crisis point. This is not merely a technical shortfall, but it strikes at the heart of municipal functionality and the government's ability to deliver services where they are needed most.'
He said poor audit outcomes are often rooted in failures of political leadership, weak consequence management and a culture of impunity.
Chair of the Portfolio Committee on Cooperative Governance and Traditional Affairs, Dr Zweli Mkhize.
Image: Ayanda Ndamane/Independent Media
Mkhize said the failure by almost 85% of municipalities to meet even the most basic governance standards directly affects communities in areas such as sanitation, roads, housing, and other essential services.
'In parallel, we must urgently tackle issues of procurement irregularities, corruption and fraud. The use of uncompetitive and unfair supply chain processes continues unabated, as is evident from the AG's report. It is alarming that municipalities continue to award contracts to individuals employed in other spheres of government, despite explicit prohibitions in law.'
He explained that Parliament, through the Portfolio Committee on COGTA, will systematically intensify our oversight visits, focusing on the worst-performing municipalities per province and working closely with the executive at all levels to reverse this trajectory.
'As I said before, the committee is no longer interested in excuses. We are calling for performance, consequences, and the prioritisation of quality service delivery to our people.'
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