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Makwetu releases audit results for 2015-16 financial year

The auditor-general (AG), Kimi Makwetu, on Wednesday released audit results for local government limited improvements in the review outcome of South Africa’s municipalities for 2015-16 financial year.

Auditor General(AG)Kimi Makwetu releases audit results for 2015-16 financial yea

According to the statement, Makwetu says the local government had failed to maintain the promising five-year momentum gained in the years 2010-11 to 2014-15 that he reported on last year.

He highlighted the importance of respect for the law in the running of municipalities, monitoring by all political and administrative leadership that budget and performance targets are appropriately achieved, and that there are consequences for mismanagement and non-performance.

“Strong internal control and good governance are in place, only if these basic principles of accountability are built around a central theme. Municipalities should be well geared to live up to the expectations of the communities that they serve”. Says Makwetu.

The importance of strong internal controls

Makwetu highlighted the following basic controls that still require attention: Filling of vacancies in critical areas such as municipal managers, chief financial officers, heads of supply chain management and chief information officers, and generally ensuring an appropriate level of financial management capacity in a municipality.

 The audit outcomes at a glance

Fair presentation and absence of material misstatements in financial statements, Reliable and credible performance information for purposes of reporting on as well as predetermined performance objectives

Total local government expenditure budget in 2015-16

The expenditure budget for the municipal sphere in 2015-16 was R378 billion. Municipalities with clean audit opinions represent R70,9 billion (19%) of this amount, while those with unqualified opinions with findings represent R218 billion (57%).

Provinces with municipalities that have shown the right momentum in their audit outcomes

Makwetu says the audit outcomes of municipalities in the Eastern Cape, Limpopo and Mpumalanga showed momentum in the right direction, with the Eastern Cape showing the greatest improvement.

Irregular expenditure

Irregular expenditure has increased by just over 50% since the previous year to R16,81 billion – the highest since we started tracking the values.

Makwetu says the amount could be even higher, as a third of the municipalities disclosed that the full amount was not known and 24% were qualified as the amount they disclosed was incomplete. The top 10 contributors to irregular expenditure were responsible for 42% of the irregular expenditure.

The Constitution (Section 152) asks that local government should provide a democratic and an accountable government for local communities.  As the newly elected mayors and councilors and the administration that supports them are ready to accept their responsibilities and are willing to be held accountable for the performance of the municipalities they now govern.