Auditor-general warns W Cape on expenditure

IRREGULAR expenditure has increased to R2 billion in municipalities across the Western Cape despite the province recording the highest number of clean audits.

While Auditor-General (AG) Kimi Makwethu praised the province for its continued clean governance practices, he highlighted the need to be on the lookout for regressions in audit outcomes in some municipalities in the Central Karoo and Garden Route districts.

Thirteen of the 30 municipalities received a clean audit outcome, eight of which had retained this status from the previous year. The province also saw a 93% rate of municipalities that recorded financially unqualified opinions on their financial statements.

According to Makwethu, failures by 55% of municipalities to comply with legislation, procurement and contract management played a major role in increasing irregular expenditure from R680 million to R2.7bn.

The three biggest contributors to irregular expenditure in the province include the City of Cape Town at R950m, George with R621m and Oudtshoorn municipality at R170m. Two of all three DA-governed municipalities have been plagued by political instabilities in council, with George suspending its municipal manager

Trevor Botha on several occasions last year and its mayor earlier this year. Oudtshoorn also saw its mayor, Colan Sylvester, resign following disciplinary action from his own party.

“One of the main reasons for irregular expenditure was improper contract management resulting from inadequate systems to monitor expenditure on, and expiration of, contracts. Overall, debt-collection periods exceeding 30 days have deteriorated mainly due to the overall socio-economic conditions,” read the report.

For the City of Cape Town, inadequacies around contract management were highlighted as a concern for the AG, who stipulated in his report how the metro’s systems were not designed to monitor expenditure on contracts, and how contract management failures also affected the metro’s ability to deliver housing projects, leading to R1.3bn being underspent.

For Beaufort West, an ANC-run coalition government which is one of the only two municipalities to receive a qualified outcome with findings, the AG’s report links the results to an overall lack of accountability and no action being taken by the council mayor and municipal manager. The municipality’s financial reports are said to tell a story of a municipality whose ability to continue operating is uncertain.

In the audit report, the municipality has an overdraft of R12.9m, up from R7.8m last year.