Tshwane leads irregular expenditure in Gauteng - AG

Kimi Makwethu
Kimi Makwethu

The political instability in the Tshwane metro has contributed largely to Gauteng's irregular expenditure, findings by the auditor-general stated.

Although auditor-general (AG) Kimi Makwetu yesterday said Gauteng municipalities have in general improved in their audit outcomes, he flagged the collapse of the City of Tshwane council as having negatively impacted the province's financial accounting.

He said the council failed to appoint a city manager and to act on a decision to recoup R3.2bn from individuals who were awarded tenders, including that of smart prepaid meter contract. "The instability in the council as evidenced by numerous collapses in council sittings has resulted in an inability to table investigations and effectively implement resolutions," Makwetu said.

Makwetu revealed this yesterday when he released the 2018/19 local government audit results in which he reported that irregular expenditure went up by R7bn to R32bn, while fruitless and wasteful expenditure increased to R2bn in 200 municipalities.

According to Makwetu only 31 municipalities improved while 76 regressed.

"In total, 91% of the municipalities did not comply with legislation. The outcome is similar to the previous year and slightly higher than the 85% in 2016-17. The lapse in oversight and lack of controls relating to compliance were evident in a number of areas, including supply chain management," Makwetu said.

KwaZulu-Natal and the Eastern Cape were the worst offenders on irregular expenditure amounting to R6.7bn each. In the North West, R5.5bn was spent irregularly, R5bn in Gauteng, R2.7bn in the Western Cape, R2.1bn in Limpopo, R1.7bn in the Free State, R1.4bn in Mpumalanga, with the Northern Cape reporting R390m.

He said that municipalities across the country spent R1.26bn on consultants to assist with preparation of financial statements even though there were permanent staffers tasked with this job, but said that there was still little value in this spending as only 14% of them showed improvements.

The biggest culprits were North West - which did not receive even a single clean audit - and Limpopo, who spent R249m and R122m respectively on consultants.

"Although the municipality used consultants, material misstatements were again identified in the areas of their responsibility," Makwetu said on Limpopo.

"In most instances, consultants were appointed annually for the same services as in the previous year, which is a clear indication of the high reliance on these consultants."

Elias Motsoaledi in Groblersdal and Mopani district in Giyani spent R11m and R34m respectively, mostly on the same consultants they had previously used.

Makwetu reported that the multibillion corruption that took place at VBS Mutual Bank in Limpopo had a huge impact on service delivery in the province.

He said that eight municipalities incurred losses of up to R1.2bn through investments into the bank.

Hardest-hit were Fetakgomo-Tubatse, Vhembe district and Makhado, who respectively invested R243m, R369m and R63m in the bank.

"In the hope of recovering from the big VBS loss, municipalities are implementing cost-containment measures and have introduced recovery plans. Despite these efforts, municipalities affected by losses in VBS took an average of 129 days to pay their creditors," he said.

Makwetu said that municipalities across the country continued to fail to collect money from residents or business on services rendered.

"The inability to collect debt from municipal consumers was widespread. In these circumstances, it is inevitable that municipalities will struggle to balance the books.

"Overall, 34% of the municipalities disclosed a deficit (in other words, their expenditure exceeded their income) - the total deficit of these municipalities amounted to R6.29-billion," Makwetu said.

Makwetu said that the amendment to the Public Audit Act will give him more powers to whip municipalities in line.

He explained that the amendment would ensure that municipalities acted swiftly in acting on his findings on irregular expenditure.

"It's going to mean that you do not have the luxury to sit around with an audit recommendation within a specified period and not implement it.

"And if you don't implement it and you were given sufficient time to find ways to correct that which was going wrong, then the auditors are going to come closer to you now to say that maybe you need to make good on that which has been lost by the system on the back of not gearing up on those systems of internal control," he said.

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