Questions Raised Over R5.5bn From SA’s 'Worst-Run' Municipalities

Questions Raised Over R5.5bn From SA’s 'Worst-Run' Municipalities

  • Auditor General (AG) has released the findings of an oversight conducted into the financials of the country's worst-run municipalities
  • Speaking to MP's at Parliament's Standing Committee on Public Accounts (Scopa), Maluleke indicated that local government finances and accounting disciplines have continued to deteriorate
  • The AG also questioned what may have happened to R5.5 billion in funds that flowed through 22 of South Africa's worst-run municipalities in a year

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Auditor General (AG) Tsakani Maluleke has released the findings of the oversight which was conducted into more than 200 municipalities whose audits were completed about two months ago.

Maluleke was speaking at a briefing of MPs during Parliament's Standing Committee on Public Accounts (Scopa) on Tuesday. In light of the revelations, the lingering question over what happened to about R5.5 billion in funds that flowed through 22 of South Africa's worst-run municipalities in a year is left needing an answer.

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Auditor General, AG, Tsakani Maluleke, Municipalities, Free State, Consultants, Audit
The Auditor General Tsakani Maluleke has questioned an amount of R5.5bn which went missing from SA's worst-run municipalities. Images: Freddy Mavunda, Twitter/ @tsakanimspice.
Source: UGC
"This means that the vast majority of auditees did not have the critical disciplines, weekly, monthly quarterly, bi-annual disciplines for preparing and presenting quality financial reports.
"They then rely on the audit process to compile financials to fix the mistakes that the auditors find in the audit process," said Maluleke.

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Maluleke added that local government finances and accounting disciplines have continued to deteriorate. According to TimesLIVE, the AG raised concerns about the use of consultants by municipalities who employ finance people who don't have the requisite skills.

“This is an area that we have raised before and we highlighted the perils that go with over-reliance that goes with using consultants. There is nothing wrong with looking for external experts to help to deal with aspects of compiling financials.
However, if year-on-year, the municipality relies on consultants to put basic financial statements together, then we are concerned. In this year we found that R1 billion was spent on consultants that helped municipalities compile financial statements for audit.”

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Is the worst still yet to come?

Maluleke conceded that the true state of affairs may be worse as her office was unable to complete many audits for the Free State province. Many of the province's municipalities either submitted information too late or simply didn't send anything at all to the AG, according to a News24 report.

The AG also told Parliament that at least 10 municipalities spent a total of R105 million on outside consultants in an attempt to get their books up to date. Reports suggested that Maluleke did not name the ten municipalities at Tuesday's briefing but will be releasing her full report in due course.

"That's really, on average, R10 million apiece for consultants to compile financials, and yet, at the end of the audit period, we were unable to offer any audit opinion on those financials," said Maluleke.

Only 20 out of 257 SA's municipalities get clean audits

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Service delivery protests could be on the rise after deputy AG Tsakani Maluleke disclosed that only 8 per cent of municipalities around South Africa received a clean audit for the 2018/19 financial year.

Briefly News reported last year that South Africa has an astounding 257 municipalities, meaning only 20 are financially clean while 237 are in the woods.

The terrible news, which summarises the long series of service delivery protests in the country, was briefed to members of the National Council of Provinces.

"The total revenue achieved by municipalities was R226 billion. This excludes equitable share and conditional revenue grants of R43 billion," said Maluleke.

Poor communities such as townships are already bleeding from inadequate service delivery woes and a revenue increase for services they aren't receiving would further cripple their pockets.

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Source: Briefly.co.za

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