By Kwazi Dlamini

R25.2-billion – that’s the amount of irregular expenditure recorded by South African municipalities for the 2017/2018 financial year according to Auditor General (AG) Kimi Makwetu.  Makwetu on Wednesday released the audit findings reports of 257 municipalities. 

Irregular expenditure decreased from the R29.7-billion of the previous year, but non-compliance with key governance laws was still a challenge, said the AG. For the 2017/ 2018 financial year, his team recorded the highest level of non-compliance with these governance laws since the 2011/2012 financial year. It now sits at 92% compared to 85% for the previous year. 

Of the 257 municipalities, only 18 municipalities received clean audits and produced quality financial statements and performance reports – they also complied with all key legislation. In the previous year 33 municipalities received clean audits, so this year’s results are a further indication of the worsening poor performance by municipalities.

“Not only did the unqualified opinions on the financial statements decrease from 61% to only 51%, but the quality of the financial statements provided to us for auditing was even worse than in the previous year,” said Makwetu.

Makwetu also said only 19% of the municipalities could provide financial statements without material misstatements. Furthermore, 63 municipalities regressed which means there was no improvement in their previous performance or they worsened, while just 22 municipalities improved. Makwetu added that performance reports of 65% of the municipalities had material flaws and were not credible enough for the council or the public to use.

The AG further revealed that municipalities are disregarding recommendations; the latest report paints an ugly image of municipalities refusing to follow advice and implement suggestions from the audit office to curb irregular expenditure and impunity.

Some municipalities failed to fully disclose the extent of their irregular expenditure while some claimed to not know the exact amount. “The amount could be even higher, as 46% of the municipalities were either qualified on the incomplete disclosure of irregular expenditure or disclosed in the financial statements that they did not know the full extent of irregular expenditure,” he said.

These municipalities were also included in the total amount of irregular expenditure to account for R4-billion. The total irregular expenditure amount also includes those municipalities who made payments to contracts irregularly awarded in previous years and those contracts were not investigated and condoned – the amount is R6.4-billion.