This is a claim made by the South African Institute of Chartered Accountants (Saica).
Several KwaZulu-Natal municipalities have been placed under administration and financial management has been highlighted as a problem area.
In a media statement, Saica called on councillors to ensure that individuals with the right skills are appointed to these positions and that those who need training receive it.
It said chief financial officers (CFOs) were responsible for the effective financial management of institutions, including exercising sound budgeting and budgetary control practices and timely production of financial reports.
IFP leader Blessed Gwala said the situation was the result of the ANC’s cadre deployment policy.
“We have said that the cadre deployment policy will not pay any dividends and the people of KwaZulu-Natal will end up suffering.”
Highlighting the necessary competency levels, Saica said that in all municipalities and entities that have annual budgets below R500 million, the CFO should at least have a bachelor’s degree or a relevant qualification registered on the National Qualifications Framework at NQF level 7 with a minimum of 360 credits.
A minimum of five years’ experience is required at middle management level municipalities.
In entities with annual budgets equal to or above R500m, the CFO must have at least NQF level 7 in accounting, finance or economics or be a chartered accountant (SA).
A minimum of seven years’ experience at senior and middle management level, of which at least two years must be at senior management level, is required.
The organisation said KZN was found to be lagging in achieving these targets. The province has 54 municipalities and 41 CFOs, and only 11 of the CFOs meet the minimum requirements.
Nationally, Saica found there were 257 municipalities, 218 had chief financial officers and only 79 met the minimum competency requirements. It said such a challenge had the potential to negatively impact on effective financial management of municipalities.
Said Saica project director Natashia Soopal: “Only 36.2% of CFOs appointed at municipalities met the minimum competency level and 63.8% of municipalities who had CFOs appointed as at August 30, 2018 were not complying with the Municipal Finance Management Act in terms of the competency levels.
“The Auditor-General has over the years identified that one of the root causes for poor audit outcomes in both the Public Finance Management Act and MFMA audits is key officials lacking appropriate competencies.”
Local government expert Mike Sutcliffe said the issue of competency as highlighted by Saica was complex and should be treated with caution as such bodies often knew little about municipalities.
He said the CFO was a critical member of the administration. “The CFO is the most senior (second only to the city manager) of the officials because of the role they play.
“They have to make sure that the organisation complies with literally hundreds of regulations.”