Parliament’s Standing Committee on Public Accounts (SCOPA) is intervening in several municipalities that have been flagged by the Auditor-General (AG), including Masilonyana Local Municipality in the Free State, following years of financial mismanagement and service delivery failures.
This week, the AG briefed SCOPA on Masilonyana’s audit outcomes for the 2023/24 financial year. The municipality did not submit its financial statements on time and, when it eventually did, it received a disclaimed audit opinion for the fifth consecutive year. The AG cited the poor quality of the financial statements, despite the municipality hiring two financial consultants.
SCOPA Chairperson Mr Songezo Zibi emphasised Parliament’s duty to intervene where there is a failure in governance. “Every municipality in South Africa receives money from the national budget, which is appropriated by Parliament,” Mr Zibi said. “When municipalities fail to meet the Auditor-General’s requirements, the AG refers the matter to the Speaker. SCOPA, as a parliamentary committee, is sent to investigate. This is not about targeting anyone, it’s about ensuring service delivery happens.”
Masilonyana failed to achieve any of its service delivery targets for the 2023/24 financial year. It underspent conditional grants by R174 million and National Treasury withheld R19 million due to slow implementation of projects. Masilonyana has no proper standard operating procedures to govern the method of grant funding utilisation.
Mr Gregory Coetzee, Audit Manager in the AG’s Office, told SCOPA the AG is concerned that the municipality is not financially viable and has not implemented a financial recovery plan nor outlined strategies in the financial statements, as required by the accounting framework.
“National Treasury has repeatedly indicated that Masilonyana Municipality’s budget is not funded. For instance, in the case of indigent consumers, if National Treasury allocates R19 000, the municipality finances R23 000, an amount that is above the stipulated amount. This discrepancy has persisted into the 2024/25 financial year, where National Treasury again advised the municipality to prepare a funded budget, said Mr Coetzee.
In addition, Masilonyana has challenges with its capital expenditure. In the 2022/23 financial year, the budget for water and sewerage infrastructure was only R100, and in 2023/24, there was no clear allocation for this. “Some spending is occurring through conditional grants, which suggests that the actual implementation is not reflected in the budget. This indicates a disconnect between the budget and actual operations because if National Treasury allocates funds for infrastructure, those amounts should be reflected in the budget schedules, but they are not,” Mr Coetzee explained.
The AG also remains concerned about the municipality being in arrears with the water board, ineffective debt collection, significant water losses and fruitless expenditure. “These issues could not be audited properly, particularly water losses, because water-related information was missing from the financial statements. This omission contributed to a limitation of scope in the audit report, especially under service charges, where water income and expenses were not matched as required by the accounting framework,” Mr Coetzee continued.
SCOPA members were concerned about Masilonyana’s dysfunctional financial condition and called for urgent intervention. Mr Chumani Matiwane attributed the dysfunction to the failure of Council and committees to play an effective role in the municipality. Mr Alan Beasly said it is totally unacceptable that the people of Masilonyana have been denied basic service delivery, while Mr David Skhosana said officials at Masilonyana appeared to be skilled at looting public funds.
Mr Zibi said SCOPA is focusing on municipalities for the next few years and has chosen a group of municipalities that are critical in each province. “We are going to get a presentation, formulate a plan on how we are going to deal with those municipalities, send some questions, conduct oversight, call them to Parliament, work with the SIU, work with the Auditor-General to do live audits, so that over time we begin to see the kind of audit outcomes that South Africa expects,” he said.
Mr Zibi said there will be cases where SCOPA will work with provincial authorities, MECs and provincial public accounts committees, in order to get the correct outcomes because the committee cannot cover every municipality. He said Parliament will focus only on a few municipalities and in addition will continue to work with these authorities.
Faith Ndenze
9 May 2025
Arrange a tour