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Municipalities still wasteful, but some compliance emerges as Auditor-General cracks whip.
Authorities who would ordinarily ignore the findings of the Auditor-General are beginning to comply as they fear punitive action, which includes criminal charges and the obligation to personally pay back misused funds.
This is according to Auditor-General Tsakani Maluleke following the release of the 2020/21 consolidated general report on local government audit outcomes. The report includes municipal audit outcomes spanning five years.
Maluleke said there had not been much resistance from authorities following the amended Public Audit Act, which gives her office powers to investigate material irregularities and act against those responsible for irregular, unauthorised and wasteful expenditure. The act came into effect on April 1 2019.
Those likely to be held accountable by the act include ministers, MECs, mayors and councillors.
Maluleke said:
She wants officials to not only deal with fewer transactions, but also set up controls to prevent future problems.
Maluleke said threats and intimidation of her staff members had not been so bad lately, but her office was not becoming complacent.
She said:
She advised municipal officials to resist political pressure to flout procurement processes.
“They may be employees in a particular municipality, but they too are citizens and if they are allowing themselves to be tainted to do things which they should not, they must understand that they are flouting their own legal requirements in terms of how they ought to conduct themselves.
“[If officials give in to pressure], they are causing damage to institutions that are supposed to serve them as citizens, and also to future generations.”
Effect of material Irregularities
Despite concerted efforts to help municipalities curb the misuse of funds, Maluleke said their calls had been unheeded by some councils.
The Auditor-General’s report reveals that the balance of irregular expenditure that had accumulated over many years and had not been dealt with at the end of 2020/21 totalled R119.7 billion. Unauthorised expenditure stood at R86.46 billion, while fruitless and wasteful expenditure amounted to R11.04 billion.
For example, the report said, little had been done by councils to investigate an irregular expenditure balance of R110.18 billion, incurred in 2019/20 alone, at the end of 2020/21, despite the fact that the Municipal Finance Management Act required such a probe.
READ: State institutions are pushing back on negative audit findings
Maluleke’s office audited 78 municipalities to establish whether action had been taken by councils against misconduct and fraud. Of the audited municipalities, 51% were found to have instituted investigations, but these had taken longer than three months to complete; 14% did not investigate the allegations; and 5% neither imposed sanctions nor implemented recommendations based on completed investigations.
The report said possible fraud was identified in 128 municipalities in 2019/20. It was recommended to those municipalities’ management to conduct a timeous probe and put a stop to further activities, and to allow criminal investigations to follow. However, these investigations were not finalised.
. Tshwane, where assets worth R3.9 million were stolen and vandalised at the Baviaanspoort waste water treatment plant. The municipality has since recovered R174 716 and the police arrested perpetrators, who were prosecuted and sentenced; and
. Nelson Mandela Bay, where millions were lost due to failure to bill customers. The municipality was also not charging interest on outstanding debts regarding customers who had entered into long-term payment arrangements, resulting in R11.2 million in losses in 2018/19. The municipality is now instituting correct billing and charging interest.
The Auditor-General had to issue material irregularities in 2020/21 against municipalities that were serial receivers of disclaimer audit opinions (the worst performers).
Mamusa Mess
One such serial disclaimer audit opinion recipient is Mamusa Local Municipality in North West.
The municipality received disclaimer outcomes five times over a five-year period. It is also among those listed as having financial health concerns.
READ: Mamusa municipality service delivery problems show
Municipalities such as Mamusa, the report said, accounted for 28% of the country’s municipalities in dire financial positions, and there were significant doubts whether they would be able to continue operating in the near future.
When City Press attempted to find out more about the municipality, its website was down.
The municipality’s acting manager, Tshepo Bloem, said they owed service providers.
He said the poor outcomes were a result of, among other things, the torching of municipal headquarters in 2017, which had resulted in the loss of server records and documents key to the audit process.
This also caused the shortage of office space and filing storage space.
In the past, Bloem said, the municipality had made abrupt changes with regard to senior managers, resulting in the breakdown of accountability.
READ: New councils must now 'walk the talk' - Auditor-General
General instability in the political arm of the entity has also been cited as a contributor to many reports that were key to ensuring that accountability was not being processed by the council.
Ray of hope
Despite many negative outcomes, there were municipalities that were praised by Maluleke for obtaining consecutive clean audits in the past five years. They include the Cape Winelands District Municipality and the West Coast District Municipality in the Western Cape, and the Eastern Cape’s Senqu Local Municipality.
Cape Winelands is the second-largest centre of economic activity in the Western Cape. Its spokesperson, Jo-Anne Otto, said they had, in fact, obtained eight consecutive clean audit outcomes.
The municipality has maintained its clean audit status because political leaders are not involved in the day-to-day administration of the municipality, she said.
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