Latest news with #PortfolioCommitteeonCooperativeGovernanceandTraditionalAffairs
eNCA
4 days ago
- 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
Zawya
25-04-2025
- Politics
- Zawya
Cooperative Governance and Traditional Affairs (COGTA) Committee Commends Cultural, Religious and Linguistics (CRL) Rights Commission for Efforts to Safeguard Cultural, Religious and Linguistic Rights
The Portfolio Committee on Cooperative Governance and Traditional Affairs on Friday reaffirmed its support for the Cultural, Religious and Linguistics (CRL) Rights Commission's efforts to safeguard these rights. The committee received briefings from the CRL Rights Commission and the Municipal Demarcation Board (MDB) on their strategic and annual performance plans. The MDB's mandate includes, among other things, the delimitation of municipal wards after consulting the Independent Electoral Commission. Committee Chairperson Dr Zweli Mkhize acknowledged the commission's role in addressing harmful practices performed under the guise of religion. He also encouraged the commission in its ongoing efforts to confront psychological, physical and sexual abuse linked to such cases. 'While we respect religious freedom in South Africa, these rights must be exercised in line with constitutional protections and human dignity,' he said. The commission's briefing follows the recent Eastern Cape High Court judgement, which cleared Nigerian pastor Timothy Omotoso of all charges, including sexual assault and human trafficking. Welcoming the commission's presentation, the Chairperson reaffirmed the importance of the commission's work in protecting the rights of cultural, religious and linguistic communities and the crucial role this plays in nation-building and social cohesion. The committee noted the challenges impacting the commission's work, particularly budget constraints. It was encouraged by ongoing efforts to recognise and develop historically marginalised languages, such as SePulana (a language spoken by the Mapulana people in Limpopo and Mpumalanga) and isiMpondo (spoken by the AmaMphondo people in the Eastern Cape). The committee also welcomed the continued focus on customary initiation practices and ensuring they conform to constitutional principles. The Chairperson stressed that there should be zero tolerance for illegal schools, mutilation, or loss of life in exercising this traditional custom. 'There can be no acceptable number when it comes to mutilations or fatalities. Our goal must be zero in all respects. There is no acceptable threshold for such harms,' he said, stressing the need for stronger oversight, awareness and community education. The committee also welcomed the shift in focus of the commission's referral and oversight systems that now ensure matters brought before it are addressed, even when other departments are involved. Previously, the commission would refer matters to relevant departments. Meanwhile, while welcoming the MDB's presentation, the committee expressed concerns about the practicalities and impact municipal boundary determinations may have on communities. Highlighting that communities are often built on relationships and shared access to services, the Chairperson cautioned the Board against only relying on legal frameworks when making boundary determinations that may split communities and social networks. 'The MDB must be sensitive to avoid dividing a settled cohesive community into different wards, municipalities, districts, and sometimes provinces as this practice may disrupt social stability and access to social amenities and centres for service delivery.' Moreover, the committee sought concrete evidence of public consultation during demarcation. Members also called on the MDB to be more responsive to dissatisfaction in affected communities and asked for evidence that public education initiatives helped build public trust in the demarcation process. Noting the budget constraints, the committee urged the MDB to build its institutional capacity and not solely rely on municipalities to do its work at the local level. Distributed by APO Group on behalf of Republic of South Africa: The Parliament.
