Parliament, Wednesday, 28 August 2024 – The Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) received a briefing from the Office of the Auditor-General of South Africa (AGSA), led by Auditor-General Ms Tsakani Maluleke, on the 2022/23 local government audit outcomes yesterday.
The report highlighted municipalities that had regressed from the green zone of clean audit results, while others moved from red and yellow zones of disclaimer audit results. It also highlighted those municipalities that failed to submit key auditing information such as financial statements resulting in the municipality not being audited, and some municipalities submitted the required documents very late. The report covered 254 municipalities.
In delivering the overall audit outcomes, the AG said that some municipalities have regressed in the period under review. She emphasised the importance of active participation from role-players in the accountability ecosystem, including municipal officials and municipal managers, municipal council and council committees, and provincial and national legislatures.
Four municipalities received clean audit outcomes in the Eastern Cape, one in Gauteng, four in KwaZulu-Natal, two in Mpumalanga, three in Northern Cape, and 20 in the Western Cape. No municipalities in Free State, Limpopo and North West provinces received clean audits.
Of the 34 municipalities with clean audit opinions, 30 of them are repeat clean audits. These municipalities have preventative controls and adhere to supply chain management and other controls, the Auditor-General said. The report indicated 360 material irregularities (including non-compliance and suspected fraud) with an estimated collective value of R7.34 billion in the audited financial year. Only R924 million was protected through, for example, recovery of financial loss or in the process of being recovered.
The committee commended the AGSA for their effort but pointed out that the protected amounts are far less than the material loss. The committee encouraged AGSA to use the additional powers that have been assigned to it to force municipalities to limit financial losses and improve audit outcomes.
The committee has asked the Department of COGTA, which was led by the Minister, Mr Velenkosini Hlabisa, for a plan of action to address the situation outlined by the Auditor-General. The plan must include measures to eliminate repeat disclaimers and repeat offenders and should also address the inappropriate use of consultants. It should also address the problem of political interference, introduce measures to assist municipalities on the use of their conditional and other grants and include consequence management measures. A report on the criminal investigations into unauthorised amounts identified in the report should also be tabled with the portfolio committee in the near future.
The committee Chairperson, Dr Zweli Mkhize, said there is a need for decisive action and consequences to ensure improvement so that the committee does not ask the same questions about the next audit report. Dr Mkhize noted that good governance remains a prerequisite for good service delivery and addressing public discontent. Furthermore, it is disappointing to observe that metros and district councils achieve similarly poor audit outcomes as the weaker, smaller municipalities, despite having access to better skills and other resources.
In addition, the committee urged the department to focus on the AG’s concerns about the negative effects of growing political instability and inter- and intra-party conflict on municipalities’ performance. Minister Hlabisa assured the committee that the department will have answers to all the committee’s questions and report on action taken when it next appears before the committee.
The Minister also noted that the Government of National Unity has prioritised local government and will establish an interministerial committee composed of key ministries led by the Department of COGTA to oversee the turnaround of municipalities. This strategy will be shared with the committee, he said.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, DR ZWELI MKHIZE.
For media inquiries or interviews with the Chairperson, please contact the committee’s Media Officer:
Name: Mava Lukani (Mr)
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E-mail: mlukani@parliament.gov.za
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