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IOL News
6 days ago
- Business
- IOL News
A-G highlights stagnation in municipal audit outcomes
Auditor-General Tsakani Maluleke says while 59 municipalities have improved their audit outcomes since 2020/21, 40 have regressed in the 2023/24 financial year. Image: Supplied Auditor-General Tsakani Maluleke has found that the trend of poor audit outcomes continued in local government, with only 41 municipalities obtaining clean audits in the 2023/24 financial year. 'While 59 municipalities have improved their audit outcomes since 2020/21 (the last year of the previous administration), 40 have regressed,' said Maluleke. She tabled the 2023/24 general report on the local government audit outcomes in Parliament on Wednesday. Maluleke also said the most prevalent audit outcome in 2023/24 was an unqualified audit opinion with findings on performance information and/or compliance, received by 99 municipalities. 'While the audit opinion on the financial statements of these municipalities may be unqualified (unmodified), meaning that their published financial statements are credible, the material findings on performance information mean that their performance reports are not credible, while the material findings on compliance signal continued disregard for legislation or significant lapses in control. 'These 99 municipalities could easily lose their unqualified status if they do not address the remaining challenges in their control environment.' 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. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Of the 99 municipalities that received unqualified audit opinions, 71 failed to submit quality financial statements and relied on the audit process to correct the errors identified by the auditors. Of the eight metros, four received unqualified audit opinions, after only three submitted quality financial statements for audit. Maluleke said municipalities continued to spend significant financial resources on hiring consultants to assist them in preparing financial statements for audit. 'In 2023/2024, 219 municipalities spent a combined R1.47 billion on financial reporting consultants, with 130 of these municipalities still submitting financial statements that had errors in the areas where consultants did work, indicating that the spending was not effective. 'We included a similar message on the ineffective use of financial reporting consultants in our 2013/14 general report. Little has changed in the decade since then.' Maluleke added that 25 municipalities have sustained their clean audit status every year since at least 2020/21 and encouraged those that lost their status to swiftly address the root causes of the regressions so that they can achieve a clean audit once again. However, the report showed that 13 municipalities did not submit their financial statements for auditing by the legislated date. Seven of the affected municipalities, of which five are in the Free State, habitually disregard the legislated requirement and submit their financial statements late every year or do not submit them at all. 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. 'We also identified 79 material irregularities that were causing substantial harm to local government accountability processes and financial health, and a further 80 material irregularities that were causing substantial harm to the public due to action or inaction by municipalities, most of which related to pollution of water sources (56) and mismanagement of landfill sites (20).' She observed that the number of material irregularities increased every year. 'The material irregularities process is not having the desired impact in local government, due largely to instability in accounting officer positions; a slow response by accounting officers to our notifications, recommendations, and remedial action; prolonged investigations or delays in concluding criminal proceedings; and delays in disciplining officials. 'Where we escalate the non-responsiveness to mayors and provincial government leaders, it is rare for them to act or for their actions to have a significant impact.' The A-G also called on local government to use its remaining year in office to provide effective and efficient governance and service delivery to improve the lives of Africans. Maluleke noted with concern that action has been too slow and has had little impact on the lived realities of South Africans, despite the commitment made when she called them to work with urgency to overhaul the local government.
The Citizen
6 days ago
- 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
IOL News
6 days ago
- Business
- IOL News
Auditor-General highlights stagnation in municipal audit outcomes
Auditor-General Tsakani Maluleke says while 59 municipalities have improved their audit outcomes since 2020/21, 40 have regressed in the 2023/24 financial year. Image: Supplied Auditor-General Tsakani Maluleke has found that the trend of poor audit outcomes continued in local government, with only 41 municipalities obtaining clean audits in the 2023/24 financial year. 'While 59 municipalities have improved their audit outcomes since 2020/21 (the last year of the previous administration), 40 have regressed,' said Maluleke. She commented when she tabled the 2023/24 general report on the local government audit outcomes in Parliament on Wednesday. Maluleke also said the most prevalent audit outcome in 2023/24 was an unqualified audit opinion with findings on performance information and/or compliance, received by 99 municipalities. 'While the audit opinion on the financial statements of these municipalities may be unqualified (unmodified), meaning that their published financial statements are credible, the material findings on performance information mean that their performance reports are not credible, while the material findings on compliance signal continued disregard for legislation or significant lapses in control. 'These 99 municipalities could easily lose their unqualified status if they do not address the remaining challenges in their control environment.' 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. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Of the 99 municipalities that received unqualified audit opinions, 71 failed to submit quality financial statements and relied on the audit process to correct the errors identified by the auditors. Of the eight metros, four received unqualified audit opinions, after only three submitted quality financial statements for audit. Maluleke said municipalities continued to spend significant financial resources on hiring consultants to assist them in preparing financial statements for audit. 'In 2023/2024, 219 municipalities spent a combined R1.47 billion on financial reporting consultants, with 130 of these municipalities still submitting financial statements that had errors in the areas where consultants did work, indicating that the spending was not effective. 'We included a similar message on the ineffective use of financial reporting consultants in our 2013/14 general report. Little has changed in the decade since then.' Maluleke added that 25 municipalities have sustained their clean audit status every year since at least 2020/21 and encouraged those that lost their status to swiftly address the root causes of the regressions so that they can achieve a clean audit once again. However, the report showed that 13 municipalities did not submit their financial statements for auditing by the legislated date. Seven of the affected municipalities, of which five are in the Free State, habitually disregard the legislated requirement and submit their financial statements late every year or do not submit them at all. 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. 'We also identified 79 material irregularities that were causing substantial harm to local government accountability processes and financial health, and a further 80 material irregularities that were causing substantial harm to the public due to action or inaction by municipalities, most of which related to pollution of water sources (56) and mismanagement of landfill sites(20).' She observed that the number of material irregularities increased every year. 'The material irregularities process is not having the desired impact in local government, due largely to instability in accounting officer positions; a slow response by accounting officers to our notifications, recommendations, and remedial action; prolonged investigations or delays in concluding criminal proceedings; and delays in disciplining officials. 'Where we escalate the non-responsiveness to mayors and provincial government leaders, it is rare for them to act or for their actions to have a significant impact.' The A-G also called on the local government to use its remaining year in office to provide effective and efficient governance and service delivery to improve the lives of Africans. Maluleke noted with concern that action has been too slow and has had little impact on the lived realities of South Africans, despite the commitment made when she called them to work with urgency to overhaul the local government.
