Auditor-General Terence Nombembe says the root cause for the lack of clean audits in local government is that mayors and councillors do not take their responsibilities or recommendations from his office seriously. Photo: Simphiwe Mbokazi.

The release this week of the auditor-general’s damning general report on local government has exposed an ideological fault line in the ruling ANC alliance with the SACP wanting to scrap all outsourcing by municipalities to private companies and stopping in its tracks all forms of tenders for pals.

The party also took note that 65 percent of the 334 auditees received financially unqualified audits engaged consultants to assist them with “accounting related services and preparation of financial statements”. Unfair or uncompetitive procurement processes were followed at 65 percent of the auditees.

While the general trend of ANC governance has been to foster black economic empowerment through outsourcing key projects to private sector companies at municipal government level, the SACP’s Malesela Maleka has argued that the state should take over all the work of local government.

He highlighted the prevalence of material misstatements in the financial statements submitted for audit. The party also blames the lack of clean audits on collusion between officials and those getting tenders.

Misstatements increased in 2010/11, the last audited financial year which ends at local government level at the end of June, to 91 percent, up from 85 percent the previous year.

The party was also perturbed that of the 127 auditees that received disclaimed, adverse or qualified audit opinions, 29 opinions had regressed from the previous year.

In addition, Auditor-General Terence Nombembe reported that unauthorised, irregular or fruitless and wasteful expenditure was incurred by 86 percent of auditees. At 46 percent of auditees, contracts were awarded to employees, councillors or other state officials.

Only 13 municipalities of 283 were given clean audits. Nombembe said a root cause for the lack of clean audits was that mayors and councillors were not responsive “to the issues identified by the audits and do not take our recommendations seriously”.

He said they were slow in taking up their responsibilities and did not take ownership of their role in implementing key controls. “If this widespread root cause is not addressed, it will continue to weaken the pillars of governance.”

The auditor-general also said at least 73 percent of the auditees showed signs of a general lack of consequences for poor performance. This was evidenced by modified audit opinions remaining the norm. “When officials and political leaders are not held accountable for their actions, the perceptions could be created that such behaviour and its results are acceptable and tolerated.”

While DA leader Helen Zille believes that oversight mechanisms such as setting up of standing committees on public accounts (Scopas) in all municipalities, were the way to go to tighten up financial controls as well as ensuring better delivery and containing costs of services, the SACP believes in municipalities directly providing services to cut out crooked middlemen.

Zille and her Western Cape local government MEC Anton Bredell noted that eight Scopas had been set up of the 30 municipalities in the opposition ruled province. Cape Town had set up one six years ago.

Maleka believed that the problems besetting local government could be blamed squarely on “a legislative and regulatory environment that for all intents and purposes is anti-development and has fed into the tender boom”.

This boom had seen the rise in collusion between officials and companies doing business with municipalities, the party said.

“The SACP is of the view that we need a decisive break with the current neo-liberal framework which in the main has sought to privilege the creation of a private sector, which has often tender to be corrupt, at the expense of community development and the co-operative movement.”

The SACP called for the doing away of tenders and called for services to be delivered “through the state”. This mean that municipalities must create capacity to render services such as garbage collection, infrastructure roll out, road maintenance and building of houses.

The party said the state must be a direct employee instead of sourcing these functions to corrupt contractors whose execution in many cases was extremely slipshod.

“The SACP further calls for the increased support of co-operatives to render services as a direct means to directly empower our people,” the SACP said.