{"id":412443,"date":"2020-07-01T12:37:24","date_gmt":"2020-07-01T10:37:24","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=412443"},"modified":"2020-07-01T12:37:24","modified_gmt":"2020-07-01T10:37:24","slug":"irregular-spending-at-south-african-municipalities-hits-r32-billion-heres-what-theyre-wasting-money-on","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/412443\/irregular-spending-at-south-african-municipalities-hits-r32-billion-heres-what-theyre-wasting-money-on\/","title":{"rendered":"Irregular spending at South African municipalities hits R32 billion – here’s what they’re wasting money on"},"content":{"rendered":"

Auditor-general (AG), Kimi Makwetu, has released the latest municipal audit results<\/a>, showing an overall regression in auditing outcomes for the 2018-19 financial year.<\/p>\n

In the report, Makwetu paints an undesirable picture of billions of rand in funds allocated to municipalities being managed \u201cin ways that are contrary to the prescripts and recognised accounting disciplines\u201d.<\/p>\n

He strongly cautioned that these administrative and governance lapses \u201cmake for very weak accountability and the consequent exposure to abuse of the public purse\u201d.<\/p>\n

Among the findings of an overall decline in the quality of municipal financial records, and a general regression in terms of management, the audit report also highlighted an alarming increase in irregular, unauthorised and wasteful expenditure.<\/p>\n

According to Makwetu, irregular expenditure increased to R32.06 billion from the R25.2 billion reported last year.<\/p>\n

This includes the irregular expenditure (R10.60 billion) of those municipalities of which the audits were completed after the cut-off date for the report (31 January) as well as the unaudited amounts disclosed in the financial statements of the municipalities whose audits were still outstanding.<\/p>\n

However, the auditor-general warned that the amount could be even higher, as 55% of the municipalities were qualified because the amount they disclosed was incomplete and\/or they disclosed that they had incurred irregular expenditure but that the full amount was not known.<\/p>\n

In addition, R360 million worth of contracts could not be audited due to missing or incomplete information.<\/p>\n

“Municipalities have a poor track record of dealing with irregular expenditure and ensuring accountability. As a result, the year-end balance of irregular expenditure that had accumulated over many years and had not been dealt with (through recovery, condonement or write-off) stood at R65.59 billion,” he said.<\/p>\n

The AG started identifying material irregularities at select municipalities in the 2019\/19 period, in terms of his enhanced powers that came into effect in April last year.<\/p>\n

Here, he identified three broad categories of irregularities, which could have been prevented with simple checks in place.<\/p>\n

These are:<\/p>\n