WESTERN CAPE MUNICIPAL AUDITS
Cape Town and Prince Albert pave the way with clean audits but problems persist in Beaufort West, Laingsburg and Kannaland
The Western Cape has the highest number of clean audits in the Auditor-General’s 2021/2022 local government audit. And some surprises: Prince Albert and the City of Cape Town gained clean audits, but Laingsburg, Beaufort West and Kannaland are still troubled.
The Auditor-General (AG) said the Western Cape municipalities of Beaufort West, Kannaland and Laingsburg “did not improve their audit outcomes” in the release of the 2021/2022 local government audit. The three municipalities have often made headlines for financial and governance problems – along with debts to entities including the AG’s office.
The AG’s office released the local government audit findings on Wednesday 31 June, following a meeting in Parliament.
Read in Daily Maverick: Local government litany of woe — municipal decay and its dire consequences for service delivery
According to the AG’s office, 21 of the province’s 30 municipalities received a clean audit outcome during the reporting period.
It’s not the first time these three municipalities have raised concern from the AG’s office – in the 2020/2021 local government audit findings, Daily Maverick reported that three municipalities were identified as troubled.
Read in Daily Maverick: Laingsburg, Kannaland and Beaufort West still identified as troubled Western Cape municipalities
In the AG report, it is noted that “Beaufort West, Kannaland and Laingsburg local municipalities did not improve their poor audit outcomes, with Beaufort West again receiving a qualified audit opinion, while Kannaland regressed to a disclaimed opinion and Laingsburg to an adverse opinion”.
Encouraging leadership stability
The AG said during the past year, the office encouraged the provincial leadership to assist municipalities with their skills shortages and to “encourage leadership stability, but these challenges are still present and have further contributed to the unfavourable audit outcomes”.
Since the 2021 municipal elections, Kannaland has had three mayors and faced Parliament over its governance and service delivery issues. Kannaland is governed by the Independent Civic Organisation of South Africa (ICOSA) and the Karoo Independent Party (KIP) in the seven-seat council.
Both Kannaland and Beaufort West are in debt to the A-G and Eskom.
Read in Daily Maverick: Beaufort West and Kannaland owe millions to both Eskom and the Auditor-General
Laingsburg and Beaufort West are both run by a coalition of the ANC, Patriotic Alliance (PA) and the Karoo Defence Force (KDF).
In the AG’s report, there is also a material uncertainty about the financial sustainability of Beaufort West, Cederberg and Kannaland – due to their cashflow challenges as “they owed more to their creditors than the cash they had in their bank accounts”.
Cederberg has regressed in audit findings: in the 2020/2021 audit, Cederberg received a clean audit. But in the latest findings, the West Coast municipality received an “unqualified with findings” audit outcome.
Cederberg was also highlighted by the AG for having an Eskom debt. Daily Maverick reported in June 2022 that Cederberg was in arrears with Eskom to the tune of R47,811,007.53 and that it has a payment plan in place. After the 2021 municipal elections, the municipality was governed through a Democratic Alliance (DA)/Freedom Front Plus (FF+)/Cederberg Eerste (CE) coalition.
In July 2022, DA speaker and ward councillor Joseph Farmer voted against his party to remove CE mayor Ruben Richards. Farmer then defected to the PA, who with the ANC, then voted in Farmer as mayor. Following a by-election in September, where Farmer lost to a DA candidate, it then allowed the DA/FF+/CE coalition to take back the council.
Matzikama municipality – who received an “unqualified with findings” audit outcome – was also highlighted by the AG for its Eskom debt, which by June stood at R97,019,771.04.
Some sustained clean audits
Further on in the 2021/2022 reporting period, the AG found that 19 of the 21 sustained clean audit opinions from their previous year. At a district level, Cape Winelands and the Overberg districts were the only areas where all municipalities sustained clean audit outcomes.
While the audit figures were dire for some parts of the province, the AG praised the City of Cape Town and Prince Albert.
In Prince Albert’s case, the AG said the improved outcome was due to the appointment of a new chief financial officer who improved “the implementation and monitoring of sound internal controls”. Prince Albert is currently the only municipality in the Central Karoo run by the DA.
The City of Cape Town’s city manager was singled out by the AG for taking “appropriate action” to resolve two material irregularities issued in 2021, which included payments to service providers and paying external contractors for excessive standby hours.
In response to the release of the audit findings, Western Cape MEC for Local Government Anton Bredell said of concern to the province was the audit outcomes of Beaufort West, Kannaland and Laingsburg. Bredell noted a direct link between adverse audit results and weak service.
“The Department of Local Government, together with the Provincial Treasury, has spent a lot of time and resources on these municipalities, but the road to recovery is still long and difficult for them. Our efforts are severely hampered by unstable coalition politics, where the focus is on individual benefit at the expense of service delivery to the community,” said Bredell. DM