Staff Reporter
Almost half of the municipalities in the Free State have either not accounted for the manner in which they used their budgets in the 2018-19 or they did it poorly, Auditor-General (AG) Kimi Makwetu has revealed.
Releasing the audit outcomes for local government entities for the period 2018-19 in Pretoria today, Makwetu said 10 municipalities in the Free State did not submit financial statements on time while three received disclaimers.
The province has 19 local municipalities and five district municipalities.
“The audit outcomes in the province continued to regress for the third consecutive year,” Makwetu said in the report, titled “Not much to go around, yet not the right hands at the till”.
“Ten municipalities did not submit financial statements on time – even more than in prior years, which resulted in eight audits not having been completed by the time of the AG’s general report. Additionally, three municipalities received disclaimed opinions,” he said.
No municipality in the Free State got a clean audit and, like the previous year, only three got unqualified audit outcomes with findings.
A clean audit or an unqualified audit without findings relates to financial statements that are free from material misstatements, have no material findings on the annual performance report and no material findings on non-compliance with key legislation.
There was a drop in the number of municipalities that got qualified audit outcomes with findings from 15 last year to nine for the 2018-19 period.
The outstanding audits jumped from two to eight.
Makwetu said financial statements from some municipalities were done so poorly that they could not be trusted.
“The outcomes were characterised by a lack of basic financial discipline, an unwillingness to comply with legislation and a general disregard for internal controls and accountability,” he pointed out.
The province’s irregular expenditure totalled R1.4 billion and a further R341.6 million in irregular expenditure was identified in audits finalised on time.
He said the province spent a total of R46 million on consultants to assist with financial reporting, but this had little impact on the quality of financial statements submitted for auditing.
Of that amount, R17 million was spent by municipalities whose audits had not been finalised by the cut-off date of the report.
“The lack of skills transfer from consultants to municipalities was evident by some officials not even being able to provide the most basic of financial information without the help of a consultant,” the AG said.
Makwetu expressed concern that billions of rand allocated to municipalities across the country were being managed in ways contrary to the prescripts and recognised accounting disciplines.
He strongly cautioned that these administrative and governance lapses “make for very weak accountability and the consequent exposure to abuse of the public purse”.
Elaborating the theme for his report, Makwetu said services are rendered and goods are delivered to consumers in all municipalities with the expectation that they will pay for them.
But according to the AG, “there has been a growing trend of established businesses across the chain showing signs of a diminishing ability to pay for these services, or completely refusing to pay”.
He said individuals and households also feel the same pressures and are not forthcoming with payments for consumed goods and services.
Makwetu said, on average, almost 60 percent of the revenue shown in the books will never find its way into the bank accounts of municipalities.
More to follow . . .