Municipalities incur R26bn in irregular costs

AUDITOR-GENERAL Tsakani Maluleke says municipalities are still incurring irregular expenditure, with an audit showing that R26 billion has been lost because of it.

Maluleke also said there had not been significant improvement in how municipalities managed their finances and added she was alarmed by municipalities that had spent R1 billion on consultants.

Most of those that had spent on consultants were poorly performing municipalities. Maluleke said this money was spent despite municipalities hiring people in the finance department at a cost of R4.5bn.

She said the municipalities had nothing to show for the R1bn spent on consultants as their finances were in a state of disarray.

“The story about consultants is one we have raised over many years,” said Maluleke. “We are also raising a concern that this poor level of financial practices prevails even though there has been a significant investment in functions that should be preparing proper financial statements.”

She said they were worried that municipalities relied on consultants to do basic things in preparing financial statements, but the audits had not improved. One of the things that was lacking was that there was no paper trail, said Maluleke.

“Worryingly, the municipalities that use the consultants the most, and pay them most of the money, are those that end up with adverse or disclaimer audit opinions.”

She said that out of all the municipalities, 27 got clean audits, and that this was an increase from last year. A total of 89 municipalities received unqualified audit opinions.

Maluleke said 66 municipalities had received qualified audit opinions. However, there were 57 outstanding audits, but this had now been scaled down to nine after the A-G's office completed 48 audits by last Thursday.

She said they were, however, concerned about the fact that some municipalities were not able to get their house in order with irregular expenditure.

She said this had been going on for many years, with even the late former auditor-general Kimi Makwetu raising concerns about it.

This was one area that they needed to work on in order to improve their level of financial performance.

Maluleke said they would continue to ensure that municipalities also complied with auditing standards in submitting financial statements.

This was clear when there was no paper trail in some municipalities, with funds remaining unaccounted for.