SA municipalities wasted R815 million last year

Only 9% of municipalities and municipal entities achieved clean audits in the 2012/2013 audit review, Auditor General Kimi Makwetu said on Wednesday.

However, this compared to 5% in the previous year.

Of 319 audits, 22 municipalities and eight municipal entities had unqualified audits with no findings, otherwise known as clean audits.

The Auditor General also highlighted an alarming spike in fruitless and wasteful expenditure across SA municipalities in 2012/13 – up R192 million to R815 million, from R623 million in 2011/12, according to eNCA.

Fruitless and wasteful expenditure is money that was spent in vain.

Irregular expenditure increased by R2.2 billion in 2012/13, up to R11.6 billion from R9.3 billion in 2011/12.

Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, the requirements of any applicable legislation.

Of the 30 clean audits, 13 had sustained this distinction from the 2011/2012 audit.

Makwetu praised those that achieved clean audits, saying their accountable management and leadership meant they could provide additional evidence to support their financial statements.

“We commend the Western Cape and KwaZulu-Natal provinces for already tracking double digits in the [clean audit] category.”

On the other end of the spectrum, 18%, or 59 of those audited, received disclaimed audit opinions – the worst finding the AG could make.

These municipalities or entities could not provide credible financial statements that could be relied on in the audit.

“Anything could have happened to the financial resources entrusted upon the auditee and the auditor had significant uncertainty about the financial statements, and thus unable to express an opinion on whether the financial statements can be relied upon,” Makwetu said.

In the category of unqualified with findings, 138 auditees or 41%, were found to have credible presentations of financial statements.

“With findings”, however, indicated that there were cases where the requisite processes were not followed. This cast some doubt on the transparency of the municipal activities.

Makwetu warned those that fell into this category not to become complacent.

“When auditees start to conduct public business according to their own defined rules… poor governance becomes inevitable.”

A quarter of the audits were returned with qualified opinions. This meant there were elements that the municipalities or entities could not adequately account for, and elements of their financial statements were unreliable.

Two percent, or eight auditees, received adverse audit opinions, where an extreme lack of accountability was evident in financial statements.

(With Sapa)

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SA municipalities wasted R815 million last year