Nelspruit - Paying for work not done, poor budgeting practices, ineffective financial management and a lack of sustainable revenue strategies are among the many findings of the Auditor-General in Mpumalanga municipalities.
In her summarised report regarding municipalities for the 2021/2022 financial year, Auditor-General Tsakani Maluleke said that while 90% of the municipalities were still struggling to get the basic financial disciplines right, communities’ social and economic demands were rapidly evolving.
As a result of perennial poor financial management in the province, irregular expenditure has continued to rise, with municipalities racking up R2.08 billion in 2021/22, compared to R1.26 billion in the previous period.
The AG said the figure could be higher.
“This amount could be even higher as 10 municipalities (50%) were either qualified on their irregular expenditure disclosure or were still investigating such expenditure to determine its full extent.
“The irregular expenditure closing balance also remains high at R6.44 billion because of significant delays by councils and municipal public accounts committees when it comes to investigating and dealing with prior-year irregular expenditure,” it was noted in the report.
The AG also found that the lack of skills and capacity in most municipalities resulted in consultants becoming a permanent feature in financial reporting processes.
“We issued three material irregularities on the ineffective use of consultants at three municipalities.
“The total investment in financial reporting, including salaries of finance officials and consultant costs, was R941.3 million, compared to R832 million in the previous year,” she noted.
Most municipalities were found to be flouting the procurement laws of the country that require all invoices to be paid within 30 days.
As a result, they are incurring penalties worth millions of rands.
“Debt has grown from R9.51 billion to R13.45 billion, with municipalities taking an average of 456 days to pay their suppliers – earning interest and penalties of R835 million.
“We have notified municipal managers of four material irregularities relating to this matter - three for paying suppliers late and one for not submitting value-added tax returns to the South African Revenue Service on time,” reads the report.
Zooming into the performances of individual municipalities, the AG noted that the troubled Msukaligwa (Ermelo) local municipality was not even bothered about the quality of water provided to residents.
“Most municipalities also failed to meet their targets and some overspent on their budgets despite not achieving all their goals.
“For example, Thaba Chweu Local Municipality spent 104% of its budget but achieved only 29% of its basic services and infrastructure development targets.
“Some municipalities further excluded critical performance indicators from their performance reports, such as Msukaligwa Local Municipality, which did not include an indicator on the quality of drinking water and did thus not plan any resources to meet community needs in this regard,” the AG noted.
Msukaligwa also had a water loss of 76% – the highest in the province.
Furthermore, municipalities are said to have overspent on their grants, but there was nothing to show for the money used.
“Municipalities spent most of the grants they received without delivering the required infrastructure on time and at the correct quality due to project deficiencies, such as poor planning, monitoring, and budget control.
“This resulted in municipalities paying for work that was not done, projects being delayed, and projects being delivered with defects.
“Some municipalities underspent their grant funding significantly, depriving residents of services for which funds had been earmarked, such as clean drinking water.”
Despite all these irregularities, the AG said municipalities were not acting fast enough to address them.
“Municipalities took little to no action on some of these material irregularities, and we included recommendations in the audit reports for five of them and referred one to a public body for investigation.
“The responses we receive to our material irregularity notifications are not always adequate or sufficiently supported by credible information to allow the swift conclusion of actions taken or planned.”
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