The general report on local government audit outcomes is not improving and the unfortunate reality is that it is the citizens who are at the receiving end, who continue to experience poor service delivery.
The Auditor General, Tsakani Maluleke released the Municipal Finance Management Act (MFMA) 2021 – 2022 report on Wednesday, 15 June 2022 which again reflected a bleak financial and accounting status for South African municipalities and the citizens.
The Report: reveals that only 61 municipalities out of the total of 257 had a better audit outcome in 2020-21 than in 2016-17, with 56 showing a worse audit outcome. Some municipalities had managed to improve their outcomes, only to regress again in later years. While it is encouraging that a number of municipalities receiving clean audits has increased slightly, the number is still less than 20% of the total municipal budget.
From the 41 municipalities, 27 were able to maintain a clean audit status over the five-year term of the previous administration. In addition, 14 achieved a clean audit for the first time, but six lost their clean audit status over the five-year period.
Russel Morena, Chief Executive Officer for the Southern African Institute of Government Auditors (SAIGA) says the latest Audit Report on Local Government Audit Outcomes shows a lack of improvement in municipal outcomes which is an indictment on the entire local government accountability ecosystem that failed to act on the lack of improvement.
Morena says the report is a perfect example of the lack of skills by local government leaders. He says that the irregular expenditure could have been prevented with the up-skilling of local government leaders and implementation of proper financial systems and controls in municipalities.
Morena says: “Our view is that the leadership in municipalities must take decisive action to enforce accountability and unambiguous consequence management across the board for the municipality to restore credibility.
However, Morena says that as much they are disappointed with the report in terms of the deteriorating quality of governance and accountability as well as consequence management, they welcome the report and applaud the municipalities that provided credible financial statements because they are pockets of excellence.
The municipalities that provided credible financial statements, Morena says are a perfect example of the fact that good and sound financial statements can actually be achieved in an event where we employ the right people in positions that can actually put together credible financial statements and account for the transactions that are undertaken.
“As SAIGA we remain resolute in the stance that our public structures must maintain a low tolerance for financial transgressions or transgressions of any kind as that ensures a smoother running of the country in all respects.
“Public officials are entrusted with the public resources to serve the citizens of this country. Municipalities are mandated to deliver quality services to the people. It is crucial to note that there is a need for proper financial systems and controls in our local government. Irregular expenditure can be minimised with proper skills and competencies in the structures of our local government,” says Morena.
To address some of the challenges faced by the municipalities, for the second year running conference:, SAIGA will host its annual conference from the 14th to 15th September 2022. The conference, which is sponsored by the South African Institute of Professional Accountants (SAIPA), under the theme “Step up to the Mark”, will host several key speakers who will deliver keynote addresses, master classes, presentations as well as take part in panel discussions on matters concerning financial, accounting and auditing in the public sector.
Morena, says that this year’s theme is a step up to the previous conference themed “Citizens Come First”, which aimed to strengthen capacity building in the public sector and assist in providing clean governance and quality service delivery that leads to happy citizens.
He says: “This year, our call to action to the auditing and accounting professionals is to up their standard. It is also a call to the professionals and professional organisations in the auditing and accounting field to act and carry their responsibilities and duties with integrity, objectivity, professionalism, due care and confidentiality.”
Shahied Daniels, Chief Executive Officer of the South African Institute of Professional Accountants said: “Accountancy professionals underscore the work done by auditors, thus it is important for SAIPA to support this initiative by SAIGA. This year’s conference theme also resonates with our own focus of enabling the accountancy profession so that it can bolster the economy.”