Latest news with #PortfolioCommitteeonCooperativeGovernanceandTraditionalAffairs
The Citizen
28-07-2025
- Business
- The Citizen
Treasury experts to intervene as Free State municipalities face audit crisis
In a decisive move to address the dire state of municipal governance in the Free State, Provincial Treasury will begin deploying skilled experts to struggling municipalities across the province. Bloemfontein Courant reports that the intervention, announced by Free State MEC of Finance Moses Ketso Makume, comes after growing concerns over poor audit outcomes revealed in the latest Auditor-General's report. Speaking during the first day of the oversight visit by the Portfolio Committee on Cooperative Governance and Traditional Affairs last Thursday, Makume said the deployment of internal experts is intended to strengthen financial and administrative governance where it is most needed. 'We are obviously concerned by the Auditor-General's report, but it is also an opportunity to improve governance in our municipalities so that they can do what is expected of them – provide services to the people,' said Makume. Not a single municipality in the Free State received a clean audit in the most recent reporting cycle. One of the most troubled municipalities, Nala Local Municipality was singled out for its instability after operating with two CFOs and two speakers simultaneously. This administrative chaos led to community unrest and recurring service delivery protests. In response, Amos Goliath has since been appointed as an administrator to stabilise the institution. Makume emphasised that relying on costly external consultants had failed to produce results, with no municipality achieving a clean audit despite the financial investment. 'We are going to make use of internal capacity to assist our municipalities and lift them out of this rot. This approach will empower local administrations and help save money,' he said. Breaking news at your fingertips… Follow Caxton Network News on Facebook and join our WhatsApp channel. Nuus wat saakmaak. Volg Caxton Netwerk-nuus op Facebook en sluit aan by ons WhatsApp-kanaal. Read original story on
IOL News
17-07-2025
- Politics
- IOL News
Portfolio committee to investigate bribery and audit discrepancies in Maluti-a-Phofung Municipality
The Portfolio Committee on Cooperative Governance and Traditional Affairs is set to demand answers from the Maluti-a-Phofung Local Municipality after allegations of bribery of councillors to skip meetings emerged. Image: Karen Sandison / Independent Media A parliamentary oversight committee will visit the troubled Maluti-a-Phofung Local Municipality to demand answers on a number of concerns, including alleged R5,000 bribery of councillors not to attend meetings and eight consecutive disclaimer audit opinions. The National Assembly's Portfolio Committee on Cooperative Governance and Traditional Affairs, chaired by Dr Zweli Mkhize, is expected to descend on the province for two days next week, and the struggling municipality based in Harrismith in the Free State has indicated that it will answer questions raised by MPs. On June 30, Mkhize wrote to Maluti-a-Phofung's controversial Mayor, Malekula Melato, and Free State Cooperative Governance and Traditional Affairs MEC Saki Mokoena, informing them about its plans to conduct an oversight visit in the municipality to gather information and ensure accountability. Among the matters identified by the portfolio committee requiring forensic investigations are the 'bribing of councillors to the value of R5,000 each to prevent council sittings from forming a quorum' and R5 million spent on the procurement of uniforms while the council was on recess. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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According to Mkhize's letter, Maluti-a-Phofung allegedly paid double the R6m bill to a security company in February and March this year, and Melato has been asked to apprise the portfolio committee on the allegation. The committee is also seeking answers on the eight consecutive disclaimer audit opinions by the Auditor-General South Africa (AGSA) and the AGSA's inability to determine the municipality's reported achievements. 'For example, there was one indicator that related to the much-needed upgrading of six water pump stations. 'The municipality reported that the six water pump stations had been upgraded but could not provide evidence of the achievement,' Mkhize explained. The committee said, based on site visits, the AGSA team confirmed that the municipality did not adequately maintain four of these pump stations, which had totally collapsed and had not been operational for several years. During the oversight visit, Maluti-a-Phofung is expected to provide reasons for the irregularities or transgressions and state the consequence management it exercised against the transgressors in line with relevant legislation and supply specific names and actions taken. The portfolio committee also wants details of the corrective steps taken to rectify the transgressions identified by the AGSA in the 2023/24 financial year. Additionally, the municipality must provide future action it intends to take to prevent recurrence, with target dates and the accounting platforms where the corrections will be monitored, as well as the anticipated actions to be considered should the preventative actions or targets be missed. The municipality's spokesperson, Thabo Khessah, said they were ready to provide the portfolio committee with the answers it requires.
IOL News
09-06-2025
- Business
- IOL News
Parliament hearing told that audit crisis in municipalities 'linked to political leadership failures'
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. Video Player is loading. 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Advertisement Next Stay Close ✕ 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.'
eNCA
03-06-2025
- Business
- eNCA
AG finds troubling decline in municipal finances
JOHANNESBURG - A very small percentage of the country's municipalities (16%) achieved a clean audit. While 39% achieved unqualified audits, a significant majority of these (71 out of 99) still had issues with the quality of their financial statements, indicating underlying weaknesses in financial reporting and controls. More than half of the municipalities (117) received audit outcomes that were not clean or unqualified and, as a result, had to be assisted by the AG to provide proper statements. The AG's findings paint a picture of a municipal landscape struggling with human capital and institutional capacity issues, with the City of Cape Town serving as a beacon of good practice. The AG has expressed concern over the audit outcomes of metropolitan municipalities due to their significant financial and social impact. Metros manage 57% (R350.88 billion) of the national expenditure budget, affecting 46% (8.1 million) of households. They are central to economic activity. Auditor-General's local government report to parliament On May 28, 2025, Auditor-General Tsakani Maluleke presented a briefing to the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA). The briefing focused on the audit outcomes for local government for the 2023-24 financial year, during which the AG provided a detailed overview of the current state of financial management within the country's municipalities. The AG's mission is to strengthen South Africa's democracy by promoting oversight, accountability, and good governance within the public sector through effective auditing, thereby fostering public confidence. The AG has questioned the competence of the financial officers and consultants employed by these municipalities, emphasising a lack of discipline and understanding of fundamental financial management and reporting principles among those responsible for these tasks. While the number of municipalities receiving disclaimers of audit opinion decreased from 28 to 14, the AG believes this is still unacceptable. She says there is an urgent need for further improvement to eradicate such outcomes. Compounding these concerns, seven municipalities obtained adverse audit findings, signifying that their financial statements were considered entirely unreliable. Further compounding the audit findings, 93 municipalities received qualified audit opinions, signifying inaccuracies within their financial statements. The Auditor-General noted that many municipalities are simply unable to publish credible financial statements. Maluleke says this critical inability raises serious questions about the competence of both administrative and political officeholders within these municipalities. The AG's statement points to systemic issues beyond mere oversight errors, suggesting a fundamental lack of skill and adherence to proper financial practices. This directly impacts transparency, accountability, and the ability of these municipalities to effectively manage public funds and serve their communities. Political officeholders In recognition of the fact that effective leadership significantly contributes to positive municipal outcomes, the Auditor-General is currently evaluating the performance of mayors and municipal speakers. Notably, out of 257 municipalities, only three were not audited: Mafube and Maluti a Phofong in the Free State, and Thaba Chweu in Mpumalanga. These exceptions were due to their failure to submit financial statements. A significant number of Free State municipalities are failing to submit their financial statements on time, impacting the quality of the submissions. Provincial leadership, particularly COGTA, is therefore urged to set clear policies for accepting late submissions. Among all metropolitan municipalities, only the City of Cape Town achieved a clean audit. The Auditor-General is particularly concerned about the audit outcomes of these metro municipalities, noting their critical role in managing 57% of the national expenditure budget. This directly impacts around 8.1 million households and the nation's economic activity, as these metros are its very core. Cape Town received a qualified audit, while Ekurhuleni, Johannesburg, and eThekwini obtained unqualified audits. However, Johannesburg did not provide a quality financial statement. Among the metropolitan municipalities, 50% received qualified audits, including Tshwane, Buffalo City, Mangaung, and Nelson Mandela Bay, all experiencing governance stability challenges. Buffalo City has been particularly affected, with vacancies for key positions in electricity and sanitation management persisting for 80 and 24 months, respectively. These metropolitan areas have consistently weakened their institutional arrangements. Given their resources and locations, they should not face difficulties attracting the necessary skills. Furthermore, metropolitan municipalities are failing to budget adequately for proactive infrastructure maintenance. This is despite National Treasury's recommendation that 8% of the existing infrastructure budget be allocated specifically for this purpose. Such insufficient budgeting ultimately leads to poor service delivery, requiring urgent attention from the metros. Explainer: According to the Auditor General, the following is an explanation of each type of Audit outcome: · CLEAN AUDIT OUTCOME: The financial statements are free from material misstatements (in other words, a financially unqualified audit opinion) and there are no material findings on reporting on performance objectives or non-compliance with legislation. · FINANCIALLY UNQUALIFIED AUDIT OPINION: The financial statements contain no material misstatements. Unless we express a clean audit outcome, findings have been raised on either reporting on predetermined objectives or non-compliance with legislation, or both these aspects. · QUALIFIED AUDIT OPINION: The financial statements contain material misstatements in specific amounts, or there is insufficient evidence for us to conclude that specific amounts included in the financial statements are not materially misstated. · ADVERSE AUDIT OPINION: The financial statements contain material misstatements that are not confined to specific amounts or the misstatements represent a substantial portion of the financial statements. · DISCLAIMER OF AUDIT OPINION: The auditee provided insufficient evidence in the form of documentation on which to base an audit opinion. The lack of sufficient evidence is not confined to specific amounts or represents a substantial portion of the information contained in the financial statements. by Nkateko Muloiwa
The Citizen
28-05-2025
- Business
- The Citizen
‘Same story year after year': MPs unhappy as Auditor-General reveals local government audit outcomes
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. ALSO READ: These Gauteng municipalities are lagging behind with their refuse collection bills 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.' READ MORE: Mashatile: How national government is aiming to reform local municipalities 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. READ MORE: Municipalities blow billions in unused grants 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. NOW READ: R100 billion debt: only 10 municipalities honouring their accounts
