The Free State Departments of Cooperative Governance and Traditional Affairs (CoGTA) and Provincial Treasury say they have noted the report on the audit outcomes of municipalities for the 2017/2018 financial year.
In a statement, the two provincial departments said the outcomes shows that three FS municipalities have received unqualified audits while 15 had qualified opinions and three moved from a disclaimer to qualified audit opinions. Two municipalities received disclaimers.
“We emphasise that governance structures should hold officials accountable for poor quality and late submission of financial statements,” read part of the statement.
It said three local municipalities under Section 139 interventions namely Mafube, Masilonyana and Maluti-A-Phofung have still not complied with the Municipal Finance Management Act, 2003 on timely submission of annual financial statements.
“Delays in submission should not be tolerated…. Of concern is the statement by the Auditor General of South Africa Kimi Makwetu which indicated that there was a total breakdown in internal controls in Free State Municipalities.
“Our further despondence was that most of the municipal leadership did not implement the Auditor General’s recommendations which resulted in the significant deterioration of municipal audit outcomes, service delivery and financial health of municipalities,” continued the statement.
According to the statement, national and provincial government, in partnership with the SA Local Government Association (SALGA) have been providing support and capacitating municipalities in specialised technical areas such as Asset Management, Supply Chain Management, Revenue Management, Internal Audit, Risk Management, Audit Action Plans, Audit Readiness Programs, Financial Recovery Planning, the Municipal Audit Support Programme and other related fields within municipalities struggling with capacity.
“We congratulate Lejweleputswa, Moqhaka and Xhariep municipalities that have received unqualified audits outcomes and the three municipalities that have also improved from a disclaimer to a qualifications namely: Letsemeng, Mohokare and Nketoana local municipalities. Ideally, we would like this success to be repeated and improved at all municipalities in the audit outcomes for the 2018/2019 financial year,” said the statement.
It said provincial treasury had also urged all municipalities to analyse the Auditor-General’s findings and implement immediate consequence management measures where required, in light of the amended Public Audit Act.
CoGTA will be convening municipal CFOs on Friday, July 12 to try and understand, from their own perspective, what are the challenges and forward tangible solutions.
The provincial government says it would also like to see a situation where mayors and municipal managers who have failed to apply due diligence facing sanctions in terms of all incurred wasteful and irregular public funds.
“It is clear that all legislation, policies and regulations have to be enforced if they are to yield the desired outcomes. We need to get serious about improving municipal audit outcomes across all municipalities.
“In an effort to stabilise municipalities, all stakeholders will continue assisting municipalities to improve their audit outcomes through targeted support programmes and regular engagements with all municipalities in the province,” said the statement.
CoGTA MEC Thembeni Nxangisa met with the provincial office bearers of SALGA on Wednesday to discuss some of the issues.
According to the statement, one of the key decisions taken by the meeting was that SALGA would have to assist municipalities to improve their audit outcomes and that SALGA officials who ensure perennial clean audits for the association, should be brought in the local sphere to assist SALGA’s member municipalities.
“As we reflect on these municipal audit outcomes, we are reminded of President Cyril Ramaphosa’s profound words in the State of the Nation Address to remain positive:
“Let us make these commitments now – to ourselves and to each other – knowing that they will stretch our resources and capabilities, but understanding that if we achieve these goals, we will have fundamentally transformed our society,” the statement noted.
It went on to say it doesn’t however mean that “we can condone repeated failures where there is no evidence of improvement.”
In order to support distressed municipalities, the provincial government would deepen and strengthen its support programmes such as municipal technical support and recovery programmes to transform municipal reporting efficiencies which would correlate to better service delivery to our communities. In addition, the benefits of these programmes would enhance the control environment.
“In practice, no bonuses should be paid to officials in municipalities where the latest audit outcome was a disclaimer or an adverse opinion or where there has been no tangible improvement.
“All political parties… need to show leadership as they are the ones elected by all of us to lead us in our localities. This scourge has afflicted all of us in this province,” the statement pointed out.
It added: “The poor municipal audit outcomes signal and inability to comply. All municipalities must be required to join the government’s transparent online transversal procurement system. The current practice of many municipalities simply using manual quotes is a breeding ground for looting.”