AG red-flags 95% of municipalities
The local government system is failing citizens dismally, as shown in the report by the auditor-general released yesterday.
The report for 2010-2011 provides bleak insight into financial mismanagement and widespread lack of accountability by local government officials.
Auditor-general Terence Nombembe said a mere 13 - or 5% - of the 283 municipalities in the country had received clean audits.
Despite repeated warnings from his office and its offer of intervention strategies, there had been no improvement in this year's audits compared with those for 2009-2010, he said.
His report has clearly sent shockwaves through the government as Nombembe was flanked at his press conference in Johannesburg by three ministers who spoke about legislation to hold senior municipal officials accountable for negative audits.
Minister in the Presidency Collins Chabane, Finance Minister Pravin Gordhan and Minister of Cooperative Governance Richard Baloyi are to introduce a range of reforms that will be targeted at the third tier of government.
Shockingly, not a single municipality in five provinces - Gauteng, North West, Free State, Northern Cape and Eastern Cape - produced a clean audit.
About 53 municipalities, or 18% of the total, received qualified or bad audits, while 55, or 19%, received disclaimers for failing to provide supporting documentation for their financial statements.
Seven municipalities failed to provide accurate financial statements, while 40 did not submit their financial statements on time.
Other details from the report include:
About 91% of the municipalities depended on consultants to balance their books while they employed staff to do the same job;
Officials in key positions at about 70% of audited municipalities were incompetent;
There was a lack of consequences for officials and political leaders for poor performance and bad actions; and
Mayors and councillors in more than half of all municipalities were to blame for bad audits due to their reluctance to act on the auditor-general's recommendations after previous audits.
Nombembe said over the past three years financial management had degenerated even further, with irregular expenditure - where tender processes and financial management laws were not followed - increasing from R6-billion in 2010 to R10-billion.
Fruitless and wasteful expenditure - where money was spent and goods were not delivered or interest accrued on late payments - amounted to R260-million, up from R253-million in 2010. Unauthorised expenditure - where municipalities overspent on their budgets - remained high at R4.3-billion, compared with R6.3-billion in 2010.
Gordhan said action needed to be taken against officials who mismanaged public finances. The local government system was there to serve citizens.
"If that service is failing, even though you have good systems, then we are not performing well and we are not doing what we are supposed to do in relation to the core function of municipalities, which is to deliver everyday services."
The Treasury would soon create a new unit - assisted by law enforcement agencies - to enforce financial legislation and to impose penalties on officials who failed to comply with the law, Gordhan said.
Chabane said the bad audits should be linked to service delivery: "The critical issue is to understand from our side . to what extent the bad audit reports are related to service-delivery protests and problems in municipalities."
He said it was difficult, under existing legislation, for the national government to act when municipal executives failed to take action against incompetence.
Chabane said his department was piloting a new system where performance of departments would be directly linked to managers and principals at national, provincial and municipal levels.