Struggling Municipalities spent nearly R700 million on consultants


Auditor-General Kimi Makwetu has expressed concern that over 82% of municipalities and entities  are unable to produce financial statements without  the help of consultants to prepare their financial books.

Speaking at the release of the 2012/13 municipal audit results in Pretoria, Makwetu expressed a concern that the money spent on consultants over and above the municipalities expenditure on skilled employees hired to handle the finances, but the problem was that some of them do not have the minimum required skills.

He said while some municipalities had difficulties recruiting accounting and financial professionals, the use of consultants did not match up to the amount of money spent on them.

He said municipalities spent R695 million on consultants to help them prepare their financial books.

“It’s something we need to look at to determine whether there’s anything that can be done at least to achieve certain value for this significant amount of money, which is spent,” he said.

Five years ago, the government set itself the target of clean audit in government departments and municipalities by 2014. Only 22 municipalities and eight entities, out of 319, got a clean audit.

Cooperative Governance and Traditional Affairs Minister Pravin Gordhan suggested his department would discuss the standard of rigour of auditing that should apply to municipalities of different sizes.

“Clean audit doesn’t exist technically. It’s something that was compounded in South Africa…All we saying is that it was too ambitious to say we will have clean audits by 2014,” Gordhan said.

However, he said government was still committed to ensuring that municipalities comply.

“What we are trying to convey is that there is progress. It could have been better,” he said.

Gordhan said there will be consequences for those who don’t take the opportunity to train and improve their qualifications.

Here are the nine things you need to know about the latest municipal audit results:

1)      The 319 municipalities and entities have a combined expenditure of R268 billion, and R62 billion of that is spent on the wage bill.

2)      The City of Cape Town got a “qualified audit with no findings”—in other words, a clean report.

3)      Sedibeng District Municipality was the only municipality in Gauteng that got a clean audit.

4)      Irregular expenditure made up R11.6 billion of all the money spent

5)      Wastage has increased from R623 million the previous year, to R815 million.

6)      Not a single municipality got a clean audit in Limpopo, North West and the Free State.

7)      59 municipalities and entities got a disclaimer—meaning that their financial books were in such a bad state that the AG could not express an             opinion on their finances.

8)      One municipality has got disclaimers for the past 13 years.

9)      KwaZulu-Natal and the Western Cape showed the most significant improvement compared to the last audit.

By Sabelo Ndlangisa

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