AG Report | No clean audits for Free State municipalities again, top contributors to irregular expenditure!

While several municipalities across the country have achieved clean audits for 2020/2021 municipal audit outcomes, it doesn’t rain but it pours in the underperforming Free State province, as seven municipalities in the province have again failed to score clean audits, five times in a row.

Auditor General Tsakani Maluleke, has on Wednesday released a batch of audit outcomes, comprising of audit reports from 257 municipalities from the local government sphere.

Maluleke came with guns blazing, lambasting local municipalities for their failure to take care of municipal finances and employing qualifying candidates to their respective positions.

Although there has been improvement from this year with 41 out of 257 municipalities scoring clean audits, Maluleke stressed that it is still a long route for embattled municipalities.

“Five years ago there were 33 clean audits out of 257 municipalities, by 2021, and despite repeated warnings and recommendations, just 41 municipalities boasted clean audits, and most of these are district municipalities,” said  exasperated Maluleke during the briefing.

“Only 25% of municipalities submitted their documentation on time, in comparison with 80% during the 2016/2017 reporting period. 

“There’s not much movement in the right direction,” she said.

Despite their failure to get clear audits, Maluleke stressed that there’s no improvement in the Free State municipalities, as they failed to submit their documentation on time.

Maluleke said AG’s unit based in the province, were welcomed with a backslash from various municipalities in the province.

“In the Free State, the AG’s office has had to seek help from relevant councils and provincial leadership over the seven non-submissions, but their response was ineffective,” she addressed.

Briefing media, Maluleke said these municipalities are on a deteriorating state, and they are on the brink of collapse.

“The Free State continues to deteriorate in the face of inaction by the political and admin leadership.

“None of the municipalities in the Free State had a clean audit, this is an issue that has persisted over the last five years.

“There is a culture of late and non-submission, and the metro (Mangaung) is unqualified but has major management and governance problems, which lead to service delivery collapse and that metro is under administration,” she said

Maluleke said service delivery issues in these municipalities are triggered by mismanagement of funds.

Free State municipalities are bedeviled with potholes, sewage spillages, power cuts, unbearable water supply and infrastructure backlogs.

Another Chapter nine institution, Human Rights Commission has previously reported that it received several cases from concerned residents and civil societies.

It announced that, it will embark on a provincial investigative enquiry into service delivery issues.

Matjhabeng’s scandalous ‘overnight’ Nyakallong Stormwater project

Auditor General red-flagged Matjhabeng’s Nyakallong Stormwater project, which was never constructed.

“Matjhabeng (Free State) paid an estimated R7,2 million between April 2017 and June 2019 for the construction of an attenuation (flood-protection) dam on the Nyakallong Stormwater system after it had been certified as complete,” said Maluleke.

“However, a site visit by our team confirmed that the attenuation dam had not been built, resulting in overpayments on the project. The matter was referred to the Hawks for investigation in June 2021,” she added.

Highlights from the Auditor-General’s report:

• National government financed municipalities through ‘equitable share’ distributions of R80.26 billion and conditional grants of R46.21 billion. Own revenue from municipalities amounted to R304.56 billion.
• 64% of municipal debt is not recoverable. At 80 municipalities, more than 80% cannot be recovered. The debt collection period of 124 municipalities was more than 90 days overdue.
• Salaries and wages paid to municipal staff, including councillors, was R113.7 billion, which is 60% of recoverable revenue and equity share allocation from national government.
• Creditors were greater than available cash at yearend in 47% of municipalities. The average creditor payment period is 240 days.
• 166 municipalities (64%) incurred unauthorised expenditure totalling R20.45 billion