Despite the province emerging as the country’s top performing province and municipalities in the 2016/2017 audit outcomes, the auditor-general’s office has warned of a steady decline in clean outcomes due to a number of problems at municipal level which mainly stem from accountability issues and failures to implement recommendations.
Twenty-one out of 30 municipalities in the province received clean audits for their 2016/17 financial year. Two audits remain outstanding and four municipalities received unqualified audit reports.
The auditor-general’s Sharonne Adams said clean audits had decreased to 70% from 80% in the 2015/2016 period, the quality of financial statements had decreased from 96% to 89% and there had been a decline in quality performance reports.
“During the 2015/2016 period, we urged the political and administrative leadership to strive to improve accountability, good governance and consequence management to attain and improve clean administration,” she said.
“Notwithstanding the provincial leadership’s continued commitments every year, we are disappointed that our message on risk and recommendations was not given the attention it warranted, which contributed to the regression in 2016/2017.
“The overall regression can be attributed to some municipalities not taking our messages and recommendations seriously as well as not demonstrating the required levels of accountability and governance.
“Three municipalities lost their clean audit status, namely the City of Cape Town, Bitou and Eden District.”
All three have been plagued by political instability in the past year.
The DA lost Bitou to an ANC coalition, Eden District, which includes Knysna, saw its speaker resign to become of mayor in the Knysna municipality against the DA’s wishes and the City of Cape Town has just wrapped up its drawn-out battle with Mayor Patricia de Lille.
According to the auditor-general’s report, the City of Cape Town and Eden District were two of the three main contributors to irregular expenditure, with the former standing at R47 million and the latter at R32m, with the total amount standing at R173m in the province, a slight decrease from the previous term’s R174m.
“R163m related to non-compliance with supply chain management (SCM) regulations and 98% of these SCM-related irregular expenditure involved current-year transgressions and these transgressions can be isolated to unjustifiable deviations, (which include) extension of contracts without the necessary approvals and non-compliance with local content prescripts,” Adams said.
She added that the audit outcomes also indicated that recommendations made by her office last year to improve accountability and audit outcomes had not been adhered to.
“It is evidenced by the findings from our audits that attention (was) not being paid to audit actions plans.”
She said the reasons for accountability failure included a lack of understanding of the SCM prescripts, unfilled vacancies, and political instability in municipal manager and chief financial officer positions as a result of the 2016 elections.
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