This was revealed by Dorothy Khunou, the deputy business executive in the Auditor-General’s Gauteng office, when she appeared before the standing committee on public accounts in the provincial legislature on Tuesday.
Councillors, particularly members of the municipal public accounts committee, also attended.
Khunou was giving the two public accounts committee members a presentation on the state of finance management of the local municipalities from 2013 until last year.
Over this period, the AG found it was only the DA-run Midvaal Local Municipality in the Vaal that consistently managed to obtain clean audits.
Khunou said municipalities were failing to comply with supply chain management procedures, which led to failure to curb unauthorised expenditure, irregular, fruitless and wasteful expenditure, and affected the quality of submitted financial statements.
“This was owing to the slow response, diverted leadership attention, owing to the elections and lack of urgency by the administrative leadership to address compliance findings,” she said. “As highlighted in the previous year, non-compliance with legislation remained the major obstacle.”
Khunou also said irregular expenditure remained high at R1.5 billion - the same amount compared to 2015. She said municipalities managed to detect only 18% of the irregular expenditure.
“The three metros were the highest contributors to irregular expenditure, accounting for R976 million (65%). The administrative leadership should be held accountable for strengthening the controls necessary to adhere to supply chain management (SCM) prescripts.
“SCM officials should also be further trained on the application of SCM regulation 36, which is often incorrectly applied across the local government sphere,” she said.
A similar regression was also found in municipal entities. In Joburg, Pikitup and the Johannesburg Roads Agency regressed.
Khunou said the regression of the two entities was owing to “material non-compliance with legislation, particularly in respect of material misstatements in the financial statements and inadequate contract management”.
She also pointed out that the various municipalities were having difficulty in collecting debt from municipal consumers for basic services. Municipalities should focus on improving debt-collection processes and spending to ensure that they were still able to provide essential services to the citizens, Khunou said.
The AG also pointed out several deficiencies in the water infrastructure plans of several municipalities.
“There were also no approved water infrastructure maintenance policies at three municipalities (City of Joburg, City of Tshwane and Lesedi Local Municipality in Heidelberg). These weaknesses could have an adverse impact on these municipalities’ ability to deliver key basic services,” Khunou said.
The AG officials told the public accounts committee members that because of the deficiencies in the municipalities, they would conduct quarterly visits to help them deal with financial controls and reporting ahead of the final audit outcomes.
“The level of assurance provided regressed across the majority of role-players. Senior management’s slow response to implementing internal control disciplines and vacancies in key positions were the root cause of municipalities not achieving a clean audit,” said Khunou.
“Municipal managers should take ownership of the audit outcomes by holding senior management accountable to ensure compliance with legislation.”