Maluleke said municipalities with clean audits generally manage projects well so that deficiencies are identified and rectified promptly. "The well-functioning control environment and good systems present at these municipalities form a solid foundation from which councils can prioritise further improving the performance and service delivery of their municipalities," she said.
Of the 41 municipalities, 25 have sustained their clean audit status every year since at least 2020/21 financial year, Maluleke noted, adding that these councils were an example of what was possible.
She said while 59 municipalities have improved their audit outcomes since 2020/21, 40 have regressed. “While the audit opinion on the financial statements of these municipalities may be unqualified (unmodified), meaning their published financial statements are credible; the material findings on performance information mean that their performance reports are not credible; while the material findings on compliance signal continued disregard for legislation or significant lapses in control."
Maluleke said 99 municipalities had an unqualified audit opinion with findings on performance information and compliance, but said this was not something to celebrate, as these municipalities could easily lose their unqualified status if they do not address challenges.
She said of the 99 municipalities, 71 failed to submit quality financial statements and relied on the audit process to correct the errors identified by the auditors. "Of the eight metros, four received unqualified audit opinions, after only three submitted quality financial statements for audit."
Maluleke said she was concerned that not enough attention was being paid to the significant weaknesses in financial management, performance management and compliance obligations and the impact on citizens. She said municipalities continued with the practice of spending significant financial resources on hiring consultants to assist them with preparing financial statements for audit.
In the 2023/24 financial year, 219 municipalities spent R1.47bn on financial reporting consultants. Of these, 130 still submitted financial statements that still had errors in the areas where consultants did work, she said, adding that this indicated that what they spent was not effective. "We included a similar message on the ineffective use of financial reporting consultants in our 2013/14 general report – little has changed in the decade since then," she said.
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AG raises concerns about municipalities’ poor audit outcomes
A clean audit is when an auditee has credible financials, a useful and reliable service delivery report and complies with laws and regulations that relate to financial performance.
Image: Freddy Mavunda
Auditor-General Tsakani Maluleke has raised concerns over the trend of poor audit outcomes in municipalities, saying only 41 out of 257 councils received a clean audit.
Maluleke released the 2023/24 consolidated general report on local government audit outcomes in Parliament on Wednesday.
A clean audit is when an auditee has credible financials, a useful and reliable service delivery report and complies with laws and regulations that relate to financial performance.
Maluleke said municipalities with clean audits generally manage projects well so that deficiencies are identified and rectified promptly. "The well-functioning control environment and good systems present at these municipalities form a solid foundation from which councils can prioritise further improving the performance and service delivery of their municipalities," she said.
Of the 41 municipalities, 25 have sustained their clean audit status every year since at least 2020/21 financial year, Maluleke noted, adding that these councils were an example of what was possible.
She said while 59 municipalities have improved their audit outcomes since 2020/21, 40 have regressed. “While the audit opinion on the financial statements of these municipalities may be unqualified (unmodified), meaning their published financial statements are credible; the material findings on performance information mean that their performance reports are not credible; while the material findings on compliance signal continued disregard for legislation or significant lapses in control."
Maluleke said 99 municipalities had an unqualified audit opinion with findings on performance information and compliance, but said this was not something to celebrate, as these municipalities could easily lose their unqualified status if they do not address challenges.
She said of the 99 municipalities, 71 failed to submit quality financial statements and relied on the audit process to correct the errors identified by the auditors. "Of the eight metros, four received unqualified audit opinions, after only three submitted quality financial statements for audit."
Maluleke said she was concerned that not enough attention was being paid to the significant weaknesses in financial management, performance management and compliance obligations and the impact on citizens. She said municipalities continued with the practice of spending significant financial resources on hiring consultants to assist them with preparing financial statements for audit.
In the 2023/24 financial year, 219 municipalities spent R1.47bn on financial reporting consultants. Of these, 130 still submitted financial statements that still had errors in the areas where consultants did work, she said, adding that this indicated that what they spent was not effective. "We included a similar message on the ineffective use of financial reporting consultants in our 2013/14 general report – little has changed in the decade since then," she said.
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