South Africa

AUDIT OUTCOMES

Auditor-General calls on Eastern Cape municipal leaders to promote transparency and accountability

Auditor-General calls on Eastern Cape municipal leaders to promote transparency and accountability
Gqeberha in the Eastern Cape, May 2022. (Photo: Deon Ferreira)

Eastern Cape municipalities have shown some improvements in terms of audit outcomes, according to Auditor-General Tsakani Maluleke’s 2021/22 local government audit. But with R10.6bn in irregular expenditure, there’s room for improvement.

While only three of Eastern Cape’s 39 municipalities received clean audits, one less than the previous year, Auditor-General Tsakani Maluleke’s 2021/22 local government audit report shows an overall improvement in the province’s municipalities.

Mnquma Local Municipality improved from an unqualified audit opinion with findings to a clean audit. Joe Gqabi District Municipality and Winnie Madikizela-Mandela Local Municipality also received clean audits.  

Ngqushwa, Ndlambe and King Sabata Dalindyebo municipalities improved from qualified audit opinions with findings to unqualified opinions with findings. And Walter Sisulu Local Municipality improved from a disclaimer audit opinion with findings to an adverse opinion. The number of municipalities that received disclaimed audit opinions decreased from last year to just one — Makana.

 

Maluleke said: “We are particularly encouraged by the significant improvement in the audit opinion of Mnquma Local Municipality, from a disclaimed opinion five years ago to a clean audit in 2021-22. This is a testament to the municipality’s good administrative and political leadership, as well as its commitment to implementing strong internal controls and consequence management measures.”

Enoch Mgijima, Makana and Amathole District municipalities have all been placed under provincial or national administration after they received qualified, disclaimed and outstanding audit opinions, respectively.

Maluleke said, “There would have been greater improvement in audit outcomes had municipal political leadership acted swiftly to institutionalise the internal controls that are necessary to promote transparency and accountability and to protect the public purse.” 

She said this against the backdrop of the biggest metro in the Eastern Cape, Nelson Mandela Bay, facing political instability, which has affected administration and service delivery. The Northern Alliance’s Gary van Niekerk was recently elected as the city’s mayor, with the support of the ANC and EFF, replacing the DA’s Retief Odendaal. 

Earlier in 2023, residents of Govan Mbeki Village in Gqeberha protested by emptying buckets of excrement on the R75 Uitenhage Road and blocking the Chatty Dip intersection with rocks and burning tyres in retaliation for a lack of service delivery by the Nelson Mandela Bay Metro.

Despite the improvements shown in Eastern Cape municipalities, Maluleke said weak control environments persist. 

Slow consequence management

“Most municipalities did not investigate irregular expenditure, and thus consequence management was very slow. This resulted in R24.29-billion of last year’s irregular expenditure closing balance of R27.20-billion not being dealt with (written off or recovered) and no action being taken against the responsible officials. Municipalities incurred R10.6-billion in irregular expenditure in the current year as they did not follow prescribed procurement processes,” she said.

Buffalo City Metro was the highest contributor to the province’s irregular expenditure, accounting for R6.5-billion (61%) of the total, followed by Nelson Mandela Bay Metro and King Sabata Dalindyebo Municipality, contributing R1.4-billion and R1.3-billion.

Eastern Cape has 10 municipalities that have been in concerning financial positions for consecutive years, Maluleke found. They are Amahlati, Blue Crane Route, Dr Beyers Naudé, Enoch Mgijima, Inxuba Yethemba, King Sabata Dalindyebo, Kou-Kamma, Makana, Raymond Mhlaba and Walter Sisulu. 

According to reports, the Hawks are investigating corruption cases at 17 of the province’s 39 municipalities. 

Maluleke said response and consequence management remained slow in the Eastern Cape. Three municipalities were reported to have failed to address reported material irregularities from the last previous general report.

“At Chris Hani District Municipality, the municipal manager did not act on a material irregularity relating to an unjustifiable R20-million payment for a variation order. Inxuba Yethemba and Raymond Mhlaba local municipal managers did not take appropriate action on material irregularities related to interest incurred due to late payments to Eskom,” said Maluleke.

She said the province needed capable leadership to enhance transparency and accountability, prioritise the fundamental needs of communities and promote social and economic development as mandated by the Constitution. 

“To achieve this, political leadership supported by the coordinating institutions should provide adequate oversight and monitor the financial reporting process throughout the year to improve the quality of financial statements.

“Both political and administrative leadership must further foster a culture of accountability by enforcing effective consequences for wrongdoing, strengthening governance structures, and ensuring that basic controls are implemented and maintained throughout the year. This will enable the local government to fulfil its developmental mandate and improve the welfare of all the people of the Eastern Cape.” DM

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