Auditor-General Kimi Makwetu

Johannesburg - Just 30 municipalities and entities got clean audits for 2012 while nearly twice that got audit disclaimers.

This was announced by Auditor-General Kimi Makwetu on Wednesday morning.

The audits also noted R21.61bn in unauthorised, irregular, fruitless and wasteful expenditure among the municipalities and their entities nationally.

Although the clean audits were just 9 percent of the 319 audits carried out, it’s better than the year before when just 5 percent got clean audits. A clean or unqualified audit is the best audit result.

The audits are for the 2012/13 financial year (the year ending June 30, 2013).

Among the 30 with clean audits, “13 have sustained this achievement since 2011/12,” said Makwetu.

He said that group had demonstrated “impeccable levels of discipline and oversight” in their financial management and operational activities.

“At these auditees, the breakdown of controls is easily detected and corrected timeously,” said Makwetu.

“Such environments are characterised by readily available documentation.

“Most importantly, they have accountable managers and leaders who are able to provide explanations and additional evidence in support of the transactions they are reporting on. They also have the support of strong oversight by mayors and councils that back the efforts of municipal managers and chief financial officers.”

At the other end of the scale, 59 of those audited got audit disclaimers.

This is the worst opinion from the AG, and means there wasn’t enough documentation for the AG to form an opinion.

“The auditor is, inevitably, unable to conclude on any of the assertions that are made by management on the financial statements of the auditee,” said Makwetu.

“Anything could have happened to the financial resources entrusted upon the auditee and the auditor has significant uncertainty about the financial statements, and thus unable to express an opinion on whether the financial statements can be relied upon,” he said.

Makwetu said 261 auditees or 82 percent were unable to produce financial statements that were free of material misstatements, with 110 of them (35 percent) receiving financially unqualified opinions only because they corrected all the material misstatements identified during the audit process.

This was despite the auditees spending R695 million on consultants to help prepare their financial statements for the audits.

The AG found R21.61bn in unauthorised, irregular, fruitless and wasteful expenditure, up from R20.056bn the year before.

There was R9.195bn in unauthorised expenditure, slightly better than the previous year’s R10.11bn.

There was R11.6bn in irregular spending, worse than the previous year’s R9.232bn. This included R8bn on goods and services bought without going through proper procurement processes and R3.6bn without supporting documentation.

There was R815 million in fruitless and wasteful expenditure, compared to R623m the year before.

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The Star