Auditor-General warns municipalities against financial losses

Auditor-General Tsakani Maluleke. Picture: Thobile Mathonsi African News Agency (ANA)

Auditor-General Tsakani Maluleke. Picture: Thobile Mathonsi African News Agency (ANA)

Published May 26, 2023


Auditor-General Tsakani Maluleke says municipalities will need to jack up their internal controls to prevent financial losses.

Maluleke said when new councillors came in after the 2021 local government elections they told them to improve the financial positions of municipalities.

She said they have visited all 257 municipalities and a number of infrastructure projects across the country.

Maluleke, who was briefing the standing committee on the auditor-general on Friday, said when she presents her report on the audit outcomes of municipalities for 2022 she will paint a picture of how the situation may have changed between then and now.

But when she presented her audit report on municipalities last year, she did not mention the issue of irregular expenditure because many municipalities get qualified audit opinions.

In the last few years irregular expenditure has been sitting at around R29 billion.

“When we did our report last year you will notice that we did not talk too much about irregular expenditure. That was quite deliberate because the number of irregular expenditures becomes meaningless because so many municipalities are qualified on the irregular expenditure. They don’t have the discipline to track it properly. The number becomes something we can’t confirm. But the key insight that we shared last year was about the types of controls, the types of irregularities that we receive and the impact that was having. We continue on that trend in the report we issue now,” said Maluleke.

She said they will always use their enforcement tools to get municipalities to stick to the law on financial management issues.

She said this also related to material irregularities in municipalities when there were a number of municipalities and entities that recorded material irregularities.

Maluleke said they applied their enforcement tool in some of the municipalities,

“Last year when we reported to you about how we had talked to you about how we had applied our enforcement tool. We had applied it at 94 auditees and at the time we had already filed 185 material irregularities. One hundred and forty-five (145) of those material irregularities we were able to link to a possible or financial loss of R3.9bn. We don’t believe that’s a full extent of what is lost throughout the system, but that’s certainly what has been found,” said Maluleke.

The auditor-general added that this was something that would get them to discuss the impact of non-compliance with laws and regulations and the impact of lack of internal financial controls.

These needed to be improved to prevent material irregularities amounting to billions of rand.

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