Now Bitou joins the ranks of the unclean… audit-wise, that is
‘Municipalities just won’t listen, ‘says the Auditor General – STUART MURRAY explains the dire consequences
WHAT is going on at Bitou Municipality? Firstly, it seeks to take over Plett Tourism, which has done an excellent job in promoting the town as a premier holiday destination, and now it has lost its laurels as one of the few municipalities to regularly achieve a “clean” audit report from South Africa’s Auditor General.
Bitou is not alone: only 13% of the country’s 257 municipalities got good marks from Kimi Mak-wetu – which equates to 33 municipalities receiving the thumbs up, compared with 48 the year before. What’s more, there was general backsliding.
The Western Cape, which had the largest number of municipalities with clean audits (21), took a dive with six municipalities receiving a worse audit than in the previous year. These included the City of Cape Town, Eden and Bitou all losing their clean-audit status.
Nevertheless, the Western Cape remains the provincial pack leader in general, increasing its clean audit numbers to 80%, followed by KZN (18%), and Eastern Cape (16%). Gauteng was the only province to receive unqualified opinions on its financial statements.
The message emanating from a frustrated Makwetu appears to be: “They just won’t listen…” Repeated advice and warnings to officials charged with the oversight of municipal spending over the past five years had fallen on deaf ears, he says.
“We are still faced with the same accountability and governance challenges. There has been no significant positive change toward credible results. Instead, we are witnessing a reversal in audit outcomes.”
Makwetu further complains that not only are his department’s pleas being ignored but that the environment in which audit teams had to work was becoming more hostile, with increased threats to audit staff.
Irregular spending has become endemic. The AG’s report reveals a surge in such spending, rising to an astonishing R28.4bn from R 16.2bn the previous year.
Worse, Makwetu explains that some R15bn of the total reported related to irregular expenditure in prior years that had gone undetected. Unauthorised expenditure at R 12.77bn remained more or less at the same level as during the previous year.
He says that poor audit outcomes are due to instability in key positions, inadequate skilled personnel, and political infighting.
Makwetu’s problem is that at present his department hasn’t the teeth to deal with erring municipalities. His ongoing appeals and warnings are being ignored. But there is some light…
Parliament is busy approving a Public Audit Amendment Bill which will give greater power to the Auditor General’s office and includes calling in the Hawks and the SAPS. Hopefully, the bill will be presented to parliament before its current term ends in the middle of June.
The bill would also give the AG’s office the ability to order accounting officers to repay money lost as a result of their mismanagement.
But what about Bitou’s fall from grace? One interesting aspect is that in March the municipality advertised for persons with “suitable skills” to serve on its audit and audit performance committee.
Its duties would include reviewing the annual financial statements “with an authoritative and credible view of the financial position of the municipal entity, its efficiency and effectiveness, and its overall level of compliance with applicable legislation”.
The committee would be appointed for a fixed term of three years.
Alas, the committee has not yet been assembled – or even chosen. Noting this, I recently emailed the municipality asking for information as to whether the committee was still on the cards. I received a reply from the acting Chief Audit Executive explaining that the acting Municipal Manager had decided to “re-advertise” the establishment of the committee.
No reason was forthcoming for his decision. Could this have anything to do with Bitou’s loss of its clean-audit status? Such a committee will surely be of great importance.
• Stuart Murray (stuart-murray758@gmail.com) is a former senior assistant editor of Financial Mail and co-founder, editor, and CEO of Finance Week. He is retired and lives in Plettenberg Bay.
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