Johannesburg - Public servants occupying senior positions in all municipalities, including the provincial metropolitan councils, should be held accountable for the regression of the audit outcomes of most of the 257 municipalities.
This was the view of Ghitesh Deva, Mazars national head of Internal Audit and Risk Advisory on the local government outcomes report for the 2017/2018 financial year.
He said municipalities that did not receive clean audit opinions should certainly be held accountable for their service delivery failure and potential mismanagement of public funds.
“It’s important to note that the burden to achieve a clean audit opinion is higher than what is required to achieve an unqualified audit, the benchmark that the private sector is measured by,” Deva said.
He said audits of the public and private sectors were against differing legal frameworks - the audits of public sector entities are conducted in accordance with the Public Audit Act of South Africa, while the audits of private sector companies are performed with reference to the Auditing Profession Act.
“Unlike in the private sector, where a company can receive an unqualified audit based on the fair presentation of financial statements, there’s a greater burden to achieve the benchmark of a clean audit report (in public service).
“First, municipalities need to achieve an unqualified audit result on their financial statements. In addition, there must be no findings in respect to their reporting of their service delivery performance objectives against targets they have set at the start of the financial year and, finally, they have to comply with all financial management-related laws,” Deva said.
He said when a municipality did not receive a clean audit opinion, it did not necessarily mean a mismanagement of funds, noting it could also be as a result of something as simple as the financial statements not being submitted on time for auditing or correcting financial statements after submitting them for audit.
“This often happens in the private sector, but has no impact on the audit report. We have to hold our public officials to the highest standards and the auditing criteria set by the AG reflects that. It’s one of the key ways to keep public servants in our municipalities accountable,” he said.
“If we were to look at the private sector, it would be interesting to see how many companies would achieve a clean audit opinion when held to the same framework that the AG uses.”
Deva said the high proportion of municipalities not receiving a clean audit opinion remained a problem and said it was imperative that the reasons should be addressed.