Durban - Any hopes that KwaZulu-Natal municipalities would achieve a totally clean audit next year were dashed yesterday when the auditor-general announced that the number of municipalities which had clean audits in the province had declined from five in the 2010/11 financial year to one in 2011/12.
Last year the province, with 61 municipalities, was given a pat on the back by Auditor-General Terence Nombembe for having the most municipalities with clean audits in the country.
This raised hopes that KZN would meet the target of a totally clean audit set for next year.
The MEC for Co-operative Governance and Traditional Affairs, Nomusa Dube, described the drastic regression in audit outcomes as “regrettable”.
In all, there was an overall regression of 15 audit opinions in the recent audit outcomes.
In the 2010/11 financial year, 47 municipalities received unqualified opinions with matters of emphasis, but this time only 45 received such audits. An unqualified opinion is when there are matters which raise “red flags”.
Worse still, in 2010/11, only one municipality received a disclaimer (the worst audit opinion), but this time seven municipalities were handed disclaimers.
A disclaimer is given when a lack of appropriate audit evidence prevents the auditor from forming an opinion about the correctness of the financial statements.
There was one improvement from 2010/11 when the province had one municipality with an adverse audit but this time no municipality received such an audit. An adverse audit is an audit that is not “clean” and indicates the evidence obtained by the auditors does not support the figures in the statements.
The only municipality that received a clean audit was uMtshezi, in Estcourt.
The four given clean audits in 2010/11 were uMdoni in Scottburgh, Richmond, eMadlangeni and Umzinyathi District (around Dundee) which all regressed to unqualified opinions with matters of emphasis.
Ethical indiscipline resulting in irregular expenditure was blamed as the main factor for regression.
Among other causes was that 80 percent of councillors were elected only in 2011. Also, 19 municipalities had acting, consulting or month-to-month chief financial officers and vacancies at the end of the audit period in September.
It was also found a number of municipalities, governed by political coalitions after there were no clear winners in the 2011 local government elections, were suffering from political instability which created financial instability and delayed the filling of key posts.
To deal with some of these problems, the department was rolling out a comprehensive training programme in all 61 municipalities, and 865 councillors were being trained.