The Western Cape office of the auditor-general has warned that municipalities in the province need to be held to greater accountability – or face a further regression of clean audit outcomes.
Speaking to IOL, the auditor-general’s Sharonne Adams said clean audits had decreased to 70% from 80% in the 2015/2016 period, the quality of financial statements had decreased from 96% to 89%, and there had been a decline in quality performance reports.
“During the 2015/2016 period, we urged the political and administrative leadership to strive to improve accountability, good governance and consequence management to attain and improve clean administration,” she said.
She added that the overall regression can be attributed to some municipalities not taking recommendations seriously as well as not demonstrating the required levels of accountability and governance.
“Notwithstanding the provincial leadership’s continued commitments every year, we are disappointed that our message on risk and recommendations was not given the attention it warranted, which contributed to the regression in 2016/2017,” she said.
“Three municipalities lost their clean audit status, namely the City of Cape Town, Bitou and Eden District.”
Adams added that all three were also plagued by political instability in the past year which was likely responsible for the decline in governance.
Despite its recent issues, the Western Cape is still the best performing province when it comes to clean audits, as the country as a whole continues to battle with irregular spending.
According to the latest auditor-general report released in May, irregular spending by South Africa’s municipalities surged 75% to a record R28.4 billion ($2.2 billion) in the 2017 fiscal year.
Of the 257 municipalities reviewed only 33 received a clean audit. In addition, the audit outcomes of 45 municipalities regressed while only 16 improved, the Auditor-General said.
Not only did the unqualified opinions on the financial statements decrease to 61% from 68%, but the financial statements provided to for auditing ‘were even worse than in the previous year’, with only 22% of councils able to provide statements ‘without material misstatements’, it said.
No municipality in the Free State, Limpopo and North West provinces received clean audits, while material non-compliance with key legislation was evident in 86% of the councils – the highest percentage since 2012-13.