Audit opinions of irregularities issued to four municipalities: AG

The office of the Auditor General says it has formally issued audit opinions of material irregularities to four municipalities for late submission of financial statements for 2023/2024 financial year. Earlier, AG Tsakani Maluleke wrote to the Speaker of the National Assembly Thoko Didiza requesting her to use her legislative intervention in the case of ten municipalities that failed to submit annual financial statements for the year under review.

Head of the National Audit in the AG’s office, Bongi Ngoma says two municipalities are yet to submit, while the audits for four others are still being processed and another has been concluded.

“We have issued material irregularities on all of them. So, anticipating a question by honourable Mente that says you have got the powers now, what have you, with these powers around these ones. So, we have notified on all of these four outstanding submissions of annual financial statements. So, we have used our powers chair, which is why trend, as I started earlier on, you have noted that the trend has been reducing over the years. It has been as a result of the effectiveness of the material irregularities in those instances,” says Ngoma.

The office of the Auditor General (AGSA) says the bulk of material irregularities by four municipalities that failed to submit their annual financial statements on time was caused by the flouting of procurement processes and goods not received.

The AG’s office was updating Scopa on the municipalities that failed to meet the deadline of submitting annual financial statements.

“Lastly, on the common trends that we note, chairperson, of key importance is that in many of these municipalities, there are issues around compliance SCM laws. Many of them have got this problem where they are no complying with their own principles. Where they are not complying with the costs that are allocated in the five pillars of SCM principles of fairness, principles of ensuring that there is competitiveness and there is value for money for what has been procured,” Ngoma elaborates.

The office of the Auditor General has warned that it will take court action to force municipalities to implement its remedial action should no action be taken on irregularities. It was referring to four out of the 10 municipalities that did not submit their annual financial statements on time.

The Office told Scopa that it is also empowered to issue certificates of debt to accounting officers.

AG’s head of portfolio for the Free State and Western Cape provinces, says Sharonne Adams, says, “If they didn’t do their part, then we go to the next steps of the recommendations. When they didn’t do their part, we go the route of the remedial action. From the remedial action, we indicate where there is no financial loss. So, in the case where we got the wasteful treatment plant, water treatment plant for the land for sites and not being fully licensed. In those instances, in terms of the material irregular processes, we issue what we call ‘eleven two’. So, this ‘eleven two’ is basically to say there is no loss in terms of issuing certificate of debt. But in those instances, we will involve the key role players of the ecosystem.”

Ngoma says majority of municipalities are unable to collect revenue optimally and effectively. She’s told Scopa that the collection of municipal revenue is often compromised, and that there’s no application of the checks and balances as required by the by law.

“What we picked up in these entities, there is a common trend across poor revenue management disciplines. In most of these local municipalities, as you would know, the water meters, the electricity meters would not be working. The proper checks and balances would not been in place and billing for revenue would be compromised, where the billing has taken place, the collection is also compromised. So, the areas of financial sustainability then gets compromised across,” says Ngoma.