Business Day

Municipali­ties ‘too reliant on consultant­s’

- Khulekani Magubane Parliament­ary Writer magubanek@businessli­ve.co.za

Municipali­ties’ spending on consultant­s has not let up, even as many of the 263 councils across SA spend beyond their revenue.

More alarming is that just over a quarter of the municipali­ties audited were assisted with their financial reporting by consultant­s, although this is a decrease from 29% in 2014-15 to 26% in 2015-16.

Another 11% of the municipali­ties that received assistance from a consultant were given disclaimer­s or adverse findings.

On Wednesday AuditorGen­eral Kimi Makwetu highlighte­d that municipali­ties spent up to R3.5bn on consultanc­y services. Such dependence on consultant­s has been an Achilles heel for many years. This also speaks to the difficulty municipali­ties experience in getting specialise­d management and accounting skills and keeping them for the long term.

A total of 230 of the 263 councils used consultant­s of one form or another.

According to the auditorgen­eral’s consolidat­ed municipal audit outcomes report, municipali­ties spent R838m on financial support services, R71m of which was paid by provincial treasuries as well as cooperativ­e governance department­s.

“The number of municipali­ties assisted by consultant­s had slightly decreased from the previous year and the consultant­s’ costs had increased by only 2%. The use of consultant­s’ services was most common in Limpopo, the Northern Cape and North West municipali­ties,” said the report.

Deputy Minister of Cooperativ­e Governance Andries Nel said local government in SA was still young and the outcomes reflected an improvemen­t.

Municipal IQ economist Karen Heese said she believed the auditor-general was flagging poor financial controls around issues such as debtor management which undermine the sustainabi­lity of municipali­ties.

“Net deficits, therefore, do not reflect productive expenditur­e but suggest poor financial management – this is a concern to anyone living in the 65% of councils flagged by the auditorgen­eral as being in poor financial health,” said Heese.

 ?? Makgatho ?? Watch out: Auditor-General Kimi Makwetu says municipali­ties spent up to R3.5bn on consultanc­y services./Puxley
Makgatho Watch out: Auditor-General Kimi Makwetu says municipali­ties spent up to R3.5bn on consultanc­y services./Puxley

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