Municipalities pay consultants millions to perform very basic tasks, says AG

  • Auditor General Tsakani Maluleke says her office’s annual survey of South Africa’s 257 municipalities shows no improvement in the way they manage their finances.
  • Maluleke says many municipalities hire expensive consultants to do “basic” tasks like submitting tax returns.
  • His office has no idea how some of the most poorly run municipalities have spent their funds because their record keeping is non-existent.

There has been no improvement in the audits of South Africa’s municipalities, Auditor General (AG) Tsakani Maluleke has announced, with only 41 of South Africa’s 257 municipalities receiving clean audits.

Of the 41, 22 were in the Western Cape, two in Gauteng, five in the Northern Cape, four in the Eastern Cape, one in Limpopo, four in Mpumalanga and three in KwaZulu-Natal. For the fifth year in a row, not a single municipality in the Free State received a positive audit.

Meanwhile, only a quarter of municipalities have submitted their financial statements to his office on time.

“What we see looking at the results of this year’s audit is that there is no improvement in the state of transparency, accountability, performance or compliance. integrity of local government,” Maluleke said.

She said that compared to five years ago, 61 municipalities had improved their audit results, while 56 had regressed. This showed that his office’s interventions to improve financial management were not taken seriously.

“There hasn’t been a lot of movement in the right direction.”

The AG said poor or non-existent record keeping again plagued many municipalities, which often employed expensive consultants to try to make sense of their finances.

At times, she said these consultants were employed to do “the essentials”, such as VAT and tax returns, even though municipalities have staff to do so.

Consultants were paid R1.26 billion to help improve municipal financial reporting, even though municipal finance units received over R10 billion in salaries.

Chris Hani Municipality in the Eastern Cape, for example, paid a consultant R34 million for VAT returns.

“You have to ask the question, where is the city manager? Where is the mayor?”

The worst of the worst

Maluleke said 25 municipalities received a disclaimer audit notice from his office, while nine did not even submit enough information for a notice to be put at risk.

A disclaimer is the worst result a municipality can receive from the AG, indicating that its financial statements are worthless.

“If you are unable to do the most basic thing of showing what you have done with public funds, it demonstrates that you have no commitment to uphold your moral obligation to serve as a steward,” said she declared.

“It shows that you have absolutely no will to drive transparency and no interest in being accountable,”

She said her office dug into the financial statements of 10 of the worst municipalities to see if they could track what they had done with their money.

For six of those municipalities, his office could not find out who was being paid or calculate the rand value of what they were spending.

“We don’t know where the money went,” she said.

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