Metros show a mixed bag of audit outcomes

Coalition governments in the metros have not been the remedy of ANC’s misrule and if anything, some have worsened the situation in municipalities.

This is evidenced by the latest overall audit outcome of metropolitan municipalities which showed that their financial performance has worsened since the last year of the previous administration. In Gauteng, the trio of metros Johannesburg, Ekurhuleni and Tshwane which have been governed by coalition governments since 2016 showed a mixed bag of audit outcomes however some have performed worse than they did prior to coalitions. 

According to the auditor general Tsakani Maluleke, the city of Ekurhuleni regressed from a clean audit in 2021/22 financial year to an unqualified audit in the 2022/23 financial year while Johannesburg maintained its last year’s outcome with unqualified audit opinion with findings. Tshwane’s outcome had improved from an adverse audit opinion to a qualified opinion.

Maluleke said the metros’ financial health was concerning as they struggled to improve their revenue collection levels despite implementing financial recovery plans and turnaround strategies.

“We are finding that metros struggle with controls over compliance, especially on procurement and contract management but they also struggle with service delivery information [and] 75% of the metros are unable to produce reliable service delivery reports and these are institutions that should hire the type of skills to acquire the type of information system that help them to collate the data,” Maluleke said. She added that metros needed support to build capacity.

“The political instability that often confronts the administration of metros has a direct impact on weakening those institutions and weak institutions will always struggle to protect public resources, they will always struggle to have the type of reliable and predictable controls and systems that make for a well run institutions and we have seen the direct impact of weakened metros on the lives of citizens,” she said. 

The country’s metros account for a combined budget of R279.8bn.

Maluleke said of the eight metros in the country, the City of Cape Town was the only one to get a clean audit, which is when a municipality has credible financials, useful and reliable service delivery report and complies with laws and regulations that relate to financial performance.

Buffalo City metro in the Eastern Cape regressed from an unqualified audit opinion with findings to a qualified audit opinion due to internal control deficiencies. Mangaung metro in the Free State again received a qualified audit opinion due to audit action plans that were not effectively implemented to address prior-year qualifications and poor record keeping.

“Infrastructure delivery and maintenance still do not receive enough attention at metros. As can be seen in projects being delayed, grant funding having to be returned to the National Treasury, and a lack of consequences for poor performance.”

Earlier this year, the National Treasury wrote to several metros which include City of Joburg, Tshwane and Ekurhuleni – on their inability to spend their capital infrastructure grants.

At the time, Treasury warned that they would lose millions of rand from the grants. 

Maluleke also added 110 municipalities out of 257 in SA have unqualified audits. She said the 110 that are there include 77 municipalities that have been in the unqualified zone for a number of years.

“So, there is inertia in that particular category which should worry all of us because we know within those 110 are some problematic municipalities and whose inability to deliver properly and to procure in a manner that is consistent with the law has a direct impact on the lived experiences of citizens and the direct impact of quality of spent on resources,” she said. 

“All too often, municipalities celebrate when they get an unqualified audit opinion. But what gets left behind is an understanding of the pitfalls of running a municipality that remains too comfortable in that unqualified space.

“They are unable to report faithfully on service delivery issues and they are also unable to procure in a manner that is consistent with the law,” she said.

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