34 Clean Audits
34 of South Africa’s 257 Metropolitan, District, and Local Municipalities secured clean audit outcomes in the 2022/23 financial year. This result, revealed by Auditor General (AG) Tsakani Maluleke, underscores both the challenges and successes within local government. Despite these pockets of success, the overall audit results reflect a regression, highlighting the ongoing struggles municipalities face in maintaining sound financial management and service delivery standards.
On Tuesday, Maluleke briefed the Portfolio Committee on Cooperative Governance and Traditional Affairs on the consolidated general report for the 2022/23 local government audit outcomes. The AG’s report, which provides a detailed analysis of the financial health and operational effectiveness of municipalities across the country, revealed that the number of clean audits had fallen compared to previous years.
Audit Outcomes: A Mixed Picture
The latest audit outcomes paint a complex picture of local government performance. Of the 257 municipalities evaluated, only 34 received clean audits, a figure that reflects a concerning trend. The remaining outcomes include:
• 110 unqualified audits with findings
• 90 qualified audits with findings
• 6 adverse findings
• 14 disclaimed with findings
• 3 outstanding auditsThis distribution indicates that while there have been improvements in certain areas, with 45 municipalities improving their audit outcomes since the last year of the previous administration, 36 municipalities have regressed. This regression, as noted by Maluleke, signals a need for more robust interventions and consistent adherence to financial management practices.
The Significance of Clean Audits
Municipalities that achieve clean audits are typically characterized by their adherence to sound financial management practices. According to Maluleke, these municipalities manage their projects effectively, ensuring that deficiencies are promptly identified and rectified. “They generally manage projects well so that deficiencies are identified and rectified promptly and so that timelines, budgets, and quality standards are adhered to,” Maluleke said during her briefing.
The presence of a well-functioning control environment and effective systems at these municipalities serves as a solid foundation from which councils can prioritize further improving performance and service delivery. These clean audits are not merely a bureaucratic achievement; they are a reflection of a municipality’s commitment to transparency, accountability, and efficient service delivery.
The Impact of Poor Financial Stability
While clean audits are a cause for celebration, Maluleke did not shy away from highlighting the serious repercussions of poor financial management in municipalities that failed to meet these standards. “Wasted money and resources mean reduced funding for service delivery priorities and, eventually, a greater burden on taxpayers,” Maluleke lamented. The lack of credible reporting on performance and finances, she noted, weakens municipal accountability processes and hampers the council’s ability to assess performance or make informed decisions.
These ongoing issues, particularly in municipalities with disclaimed or adverse audit outcomes, continue to undermine the trust of communities in their local governments. The AG emphasized the need for elected leadership to take more decisive action to address these challenges, warning that the most critical aspects of municipal operations are not receiving the necessary attention.
Call to Action for Municipal Leadership
Maluleke urged municipal leadership, councils, and mayors to set the tone for ethical behaviour, good governance, and accountability. She stressed that improvements in service delivery and the responsible use of limited funds would only be possible when municipalities become capable, cooperative, accountable, and responsive to their mandates.
“Municipal leadership, councils, and mayors play a critical role in setting the tone for ethical behaviour, good governance, and accountability; and in creating a culture that fosters trust and confidence in local government,” Maluleke stated. Her comments are a call to action for municipal leaders to take the necessary steps to address the shortcomings identified in the audit reports.
Improvements in Timely Submissions and Fewer Disclaimed Opinions
Despite the overall regression in clean audits, there have been notable improvements in other areas. The number of municipalities submitting their financial statements on time increased significantly from 81% in 2020/21 to 94% in 2022/23. This improvement was largely due to accounting officers responding positively to the AG’s material irregularity notifications, coupled with the support provided by provincial governments.
Furthermore, fewer municipalities received disclaimed audit opinions compared to previous years. Over the administrative term, 18 municipalities, mostly in KwaZulu-Natal, Mpumalanga, and North West, have improved from being disclaimed, showcasing progress in areas previously identified as problematic.
Maluleke acknowledged the efforts of provincial governments in providing the necessary support to these municipalities, which contributed to the positive shift. However, she also emphasized the need for this support to be sustained and intensified as the country moves into the next administrative term.
Looking Ahead: Support and Partnership
In her concluding remarks, Maluleke reaffirmed the commitment of the AG’s office to continue partnering with municipalities to enhance governance and accountability. “We remain committed to partnering with and supporting the local government accountability ecosystem through our audits, the use of our expanded powers as granted by the Public Audit Act amendments, and the many initiatives that we have implemented to assist and guide all role players,” she said.
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