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provide financial statements without misstatements. The AG paid tribute to the Mgcawu District Municipality, who received a clean audit for many years, but due to a single compliance finding failed to garner a clean audit this time. However, the AG noted that the municipality is “well capacitated” with strong leadership that includes a qualified chartered accountant who hold staff accountable. Prevalent use of consultants Despite the prevalent use of consultants this practice did not yield the intended results. An amount of R1.26b was spent on consultants for financial reporting services of which only 7% was a result of vacancies in the municipal finance units. Only 14% of the municipalities using consultants showed an improvement in their audit outcome while 22% regressed. Despite some adverse comments regarding the use of consultants the AG acknowledged that consultants play a constructive role in assisting municipalities in providing a financial support system to discharge their financial mandates. In this regard he drew

attention to Pixley ka Seme (De Aar) and reported that while the municipality did not receive a clean audit, he commended the municipality for holding consultants accountable for poor service. When the municipality became aware that the statements produced by the consultants contained numerous errors, the consultants had their fees docked by 35%. The consultants resolved the outstanding issues at no further costs. Similar comments were made by the AG in his report in respect of consultants used by the Moses Kotane (Mogwase Sun City) municipality. In this municipality, due to the lack of skills necessary to manage their finances, the municipality made use of consultants for two consecutive years. The outstanding feature in this case was that “the management did not delegate their responsibility for financial statements to the consultants”. Poor financial health of municipalities The financial statements showed increasing indicators of a concern in local government finances. The AG assessed that 79% of municipalities as having a financial health status that was either concerning or requiring urgent

intervention. Just under a third of the municipalities were in a vulnerable financial position. This could be ascribed to the inability to collect debt from municipal consumers. This situation has worsened as a result of the poor economic climate brought about by the Coronavirus. In these circumstances it is inevitable that municipalities will struggle to balance the books. Overall 34% of the municipalities disclosed a deficit. Conclusion In his conclusion of his last report the AG says “when looking across the board and after careful analysing the financial statements we audited, we can safely conclude that local government does have sufficient money and assets to fulfill most of the basic needs and aspirations of its citizens. However, much work is needed to make sure that this is realised. Proper administration and superintendence over the financial affairs of local government were not exercised and we found through this audit examination to be seriously lacking with subsequent consequences.”

However in his last audit he was able to provide clean audits to the following municipalities:

CLEAN AUDITED MUNICIPALITIES Eastern Cape

Senqu District Municipality

Gauteng

Midvaal Local Municipality

KwaZula Natal

Okhahlamba Local Municipality

Limpopo

Capricorn District Municipality

Mpumalanga

Gert Sibanda District Municipality Nkangala District Municipality

Northern Cape

John Taola Gaetsewe District Municipality

Western Cape

Cape Winelands District Municipality West Coast District Municipality Berg River Local Municipality Drakenstein Local Municipality Cape Agulhas Local Municipality Cederberg Local Municipality Hessequa Local Municipality Langeberg Local Municipality Overstrand Local Municipality Prince Albert Local Municipality Saldanha Bay Local Municipality Theewaterskloof Local Municipality Witzenberg Local Municipality

Municipal Focus

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Profile for kwedamedia

Municipal Focus Magazine - Volume 51  

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