Audits in North West reflect ‘a worsening culture of (un)accountability in the province’
Not a single municipality in North West is financially stable. Questions are being raised on whether the province’s municipalities will be able to continue operating as they do not have enough to cover their expenditure and owe more than they have.
Despite year-on-year improvements, the audit outcomes of North West (NW) municipalities have remained largely stagnant over the last five years. None of the 22 municipalities in the province received a clean audit in the Auditor-General’s latest outcomes.
According to Auditor-General (AG) Tsakani Maluleke: “Municipalities in NW have … focused on negative trends, with only three municipalities having evidenced improvements … a worsening culture of accountability in the province over the past five years. Every municipality in the province had transgressions regarding compliance with finance management.”
North West district municipalities
In particular, the Ngaka Modiri Molema District Municipality, which covers Ditsobotla, Mahikeng, Ramotshere Moiloa, Ratlou and Tswaing local municipalities, received an adverse audit with findings from the Auditor-General. This means the financial statements were misrepresented, misstated and did not accurately reflect the municipality’s financial performance and health.
Three material irregularities were issued against the district municipality’s management for failed water supply and sewage projects that have led to a continued lack of clean and drinkable water.
According to the AG’s report, no action appeared to have been taken to repair the water and sewage works, which were not functional because of poor management, inadequate security and equipment not repaired or maintained.
“This resulted in raw sewage overflowing from manholes before reaching the plant due to blocked pipes. The wastewater received at the plant was discharged into the nearby wetlands and river without being treated first. This state of affairs was unchanged from previous site visits. Other plants in the district are in a similar state of disrepair,” the audit report said.
At the presidential imbizo held in Mahikeng in March, residents of the district municipality decried the slow service delivery, water problems, bad roads and unemployment. However, corruption and mismanagement were their top concerns.
Read more in Daily Maverick: “The pathology of a corrupt province”
Last year, the Auditor-General recommended remedial action for the district municipality. She warned that if the recommendation was not acted on, North West may become the first province to be issued a certificate of debt against its top management.
Disclaimers of opinions
At least nine municipalities in North West received disclaimers of opinion: Greater Taung, Kgetlengrivier, Madibeng, Mamusa, Naledi, Ratlou, Ditsobotla, Ramotshere Moiloa and Maquassi Hills. A disclaimer is the worst audit opinion, where, because there were insufficient disclosures, the AG was unable to form an opinion on the credibility of the statements.
Improved local and district municipalities
Out of the 22 North West municipalities, Dr Ruth S Mompati District Municipality, Lekwa-Teemane Local Municipality and Rustenburg Local Municipality were the only municipalities that moved from disclaimers of opinion.
Seven local municipalities and two district municipalities’ fates remain unknown as audits are outstanding due to the late submission of financial reports.
The AG said the quality of the province’s financial reports had declined and submissions for auditing by the legislated date had decreased from 100% in 2016/17 to only 45% in 2020/21.
North West municipalities in dire straits
The municipalities of Matlosana, Mahikeng, Maquassi Hills, Tswaing, Mamusa, Naledi, Kgetlengrivier, Moses Kotane and Rustenburg have been flagged as municipalities with ongoing concerns over a period of three to five years. Mahikeng, Tswaing, Naledi and Kgetlengrivier were put under administration after 30 June 2021.
Root causes of poor audit outcomes
The AG stated that the poor audit outcomes for the province were mainly attributable to three factors:
- Leadership instability at political and administrative levels;
- Municipalities’ slow response to the AG’s recommendations, particularly in respect of municipal leadership and strengthening internal controls; and
- Lack of consequence management in respect of non-compliance with legislation.
Maluleke further stated that these factors had contributed to the financial quagmire and operational collapse in the province.
Read more in Daily Maverick: “Our municipalities are in a state of disaster; we have one last chance to fix them”
North West’s financial woes
Maluleke said many municipalities in North West were in a dire financial position multiple times in previous administrations and the problems had been carried forward into the current financial year. She said every municipality in the province had transgressions regarding compliance with finance management.
The province had racked up irregular expenditure of R28.7-billion, with unauthorised spending amounting to 42% of all procurement in the province’s municipalities.
“Municipalities’ financial health was dire… Most municipalities could not pay for critical supplies, such as Eskom and water boards. These financially distressed municipalities depended on equitable share allocations, most of which went towards paying salaries,” Maluleke said.
Despite their financial difficulties, the municipalities spent R238-million on financial reporting consultants, with the total spent on such services since 2016/17 at R989-million. However, the AG said, the quality of financial reports had decreased.
Maluleke said her office had urged the province’s political leadership and oversight structures to hold municipal managers and officials accountable for poor audit outcomes and to implement consequences promptly where required.
Daily Maverick has been unpacking the AG’s report. Find some of the articles here:
- Financial gauge: Auditor-General puts spotlight on state of South Africa’s eight metros
- Only 41 municipalities register clean audits, with Western Cape leading the pack – and Free State at the bottom
- More than a quarter of SA’s municipalities are on brink of financial collapse, warns AG
- The good, the bad and the shocking: A visual gauge of the financial state of South Africa’s municipalities
- Levels of financial stress – The best and worst municipal performers in KwaZulu-Natal
- Gauteng municipalities rack up R6.6bn in irregular expenditure in a single year
- Northern Cape municipalities are in dire financial health and face collapse from unresponsive leadership DM