While Eastern Cape municipalities have shown some slight improvements in terms of their latest audit outcomes, auditor-general Tsakani Maluleke raised concerns that such improved outcomes had been hampered by a culture of unaccountability.
Delivering her 2022/2023 municipal audit outcomes in Cape Town on Tuesday, Maluleke revealed that municipalities in the province had increased their number of clean audits, from three in the 2021/2022 financial year, to four in the year under review.
Seven of the province’s 39 municipalities had improved in their latest audit outcomes and four regressed from their previous outcomes.
A total of 19 municipalities obtained unqualified opinions with material findings, 13 got qualified opinions, none with a disclaimer, and three troubled municipalities got disclaimers, the worst possible outcome.
In the previous assessment, three municipalities — Mnquma, Joe Gqabi and Winnie Madikizela-Mandela — obtained a clean bill of health from Maluleke’s office, a feat they had since maintained.
Maluleke said this was due to “a strong organisational culture, competent staff and effective oversight”.
The three have since been joined by the Senqu municipality.
While only one municipality, Walter Sisulu, obtained an adverse audit opinion in the 2021/2022 review, none of the provincial municipalities obtained such a finding in this current review.
On the flip side, four municipalities — Buffalo City Metro, Amahlathi, Nyandeni and Kou-Kamma — all regressed to qualified audit opinions, with Maluleke saying this was because of a “lack of oversight in addressing internal control deficiencies”.
“Buffalo City and Kou-Kamma both had instability in the municipal manager position during the year, which made the control environment weaknesses worse,” she said.
The AG said it was a concern that three Eastern Cape municipalities — Amathole District, Makana and Sundays River Valley — had again received disclaimed audit opinions despite spending a combined R42.5m on consultants.
The Nelson Mandela Bay metro, OR Tambo District, Dr Beyers Naude, Intsika Yethu and Ntabankulu local municipalities all improved from qualified to unqualified opinions.
BCM and Nelson Mandela Bay, Maluleke said, “continue to display deficiencies in monitoring and reporting performance, leading to us raising material findings on their performance information”.
“BCM could not support its reported achievements for several indicators, making the performance report unreliable for council decision-making.
“NMBM spent 85% of its budget for basic service delivery, but only achieved 68% of its targets, notably facing challenges in providing water and sanitation, which caused delays in essential services for communities.
“The two metros also did not effectively manage certain wastewater treatment works, creating a persistent pollution threat and endangering community health and safety,” the AG said.
One of Buffalo City’s bulk outflow sewers, Maluleke said, caused environmental harm by releasing untreated wastewater into the Nahoon River, “prompting us to notify the accounting officer of a material irregularity because of harm to the general public”.
Most of the province’s recurring irregular expenditure of R31.2bn, she said, remained unaddressed, “primarily from top contributors such as BCM, NMBM and OR Tambo District, and not much progress has been made to investigate this expenditure”.
Maluleke said provincial municipalities incurred a total of R5.18bn in irregular expenditure, with the biggest contributors again being BCM (R1.71bn) and NMBM at R1.4bn.
She said the number of Eastern Cape municipalities that disclosed significant doubt about their ability to continue operating had decreased, from 11 in 2023 to nine in 2024.
Co-operative governance MEC Zolile Williams said these audit outcomes indicated significant concerns about the financial bill of health and the management of finances in municipalities.
“Financial management in many municipalities remain unsatisfactory with no substantial improvement compared to the previous year.
“The metros are struggling to manage their finances effectively. This does not augur well and is an ongoing concern.”
DA MPL Retief Odendaal said most municipalities had failed to collect the money owed to them for the services they provided, and that in 30 municipalities more than 50% of the outstanding debt was not recoverable.
“This not only exacerbates the already strained government finances but also threatens the sustainability of these municipalities.”
EFF MPL Simthembile Madikizela said the audit outcomes were a result of the lack of vision, leadership and stability in the co-operative governance department and in councils.
“We are extremely worried that the current Cogta MEC is unable to show leadership in the department.”
Salga’s Sivuyile Mbambato commended the 45% national reduction in the number of municipalities with disclaimed audit opinions, saying this “needs to be replicated to improve financial governance in all those municipalities still in the red zone”.
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