Mere days after slamming local government in Eastern Cape because not a single municipality in the province had received a clean audit in the last financial year, local government MEC Mlibo Qoboshiyane stood in front of a room of municipal managers and heads, and congratulated them for their “excellency” in financial management, at the annual Vuna Awards in East London.
This week’s zero is the Eastern Cape department of local government and traditional affairs for celebrating municipalities with sloppy financial records, which helps breed a culture of corruption and mismanagement.
Last month, provincial auditor-general Singa Ngqwala said that not a single municipality in Eastern Cape had received an outright clean audit for the financial year 2011-2012. Ngqwala stated that municipalities in the province had regressed compared to the 2010-2011 financial year. Countrywide, only five percent of municipalities – or 13 out of 343 municipalities – obtained clean audit reports in the financial year 2010/2011 .
Municipalities can receive one of three audits from the auditor-general, Terence Nombembe:
- A qualified audit, which means that the municipality is not adhering to generally accepted accounting principles and there is definitely something wrong going on;
- A unqualified audit with findings, which means that there are financial irregularities that need to be addressed; or
- An unqualified audit, which means that everything is correct and completely transparent. This is also known as a clean audit.
Since 2003, the Department of Co-operative Governance and Traditional Affairs, in conjunction with other government departments, has hosted awards to celebrate good governance and accounting practices in local municipalities. The Vuna Awards, as they are known, were created to “reward the municipalities that go beyond standards to give their communities excellent services and governance”, according to the department’s website.
Municipalities are encouraged to enter the awards if they are confident of their annual performance. The department of local government in each province then decides on the winners according to the financial records provided.
This year, winners in their respective categories were given cash prises varying from R40 000 to R80 000. Despite the auditor-general’s findings, six municipalities in Eastern Cape were recognised for sound accounting practices and received R45 000 each. These were:
- Amathole District Municipality;
- Ingquza Hill Local Municipality;
- uMzimvubu Local Municipality;
- Joe Gqabi District Municipality;
- Mnquma Local Municipality; and,
- Elundini Local Municipality.
But according to the latest general report on Eastern Cape local government 2010-2011 from the auditor-general , five of these six received unqualified audit reports with findings.
This is distressing to Nombembe, who explained in parliament in 2012 that had it not been for his institution stepping in to reprimand poor financial management, citizens would have been misled as funds could have easily disappeared into the pockets of corrupt officials. “Don’t run your business in local government to satisfy auditors. Run municipalities to satisfy your citizens. Inculcate the practice and culture of doing the right thing without the auditors being present,” he said.
Matatiele and Senqu Local Municipality were awarded R50 000 for four years of unqualified audits. But again, these were unqualified audits with findings. In October, residents in Senqu Local Municipality violently protested against being part of the municipality and demanded cleaner drinking water and improved roads. The Sterkspruit Civic Association, which wants to break away from Senqu, has alleged corrupt practices in how things are run in the municipality, and lack of service delivery.
Asked how a municipality could be given recognition for good accounting practices when the auditor-general did not give a clean audit to a single municipality, Eastern Cape local government spokesperson Mvusiwekhaya Sicwetsha responded in an email:
“The audit category does not focus on clean audit but on municipalities that continue to maintain unqualified audit, which is closer to clean audit, for a number of years, between two, four and six years. This is the audit done by the [auditor-general] and our idea is to support and encourage them to do better,” he wrote.
Corruption Watch is not against celebrating excellence in local government, but by their own definition and judging criteria it seems like mediocrity in local government is good enough to be deemed “excellent”. A municipality that receives an unqualified audit with findings is not performing at an extraordinary level and therefore should not be rewarded.