02 July 2020
Nothing to celebrate from municipal audit outcomes says SAMWU
The South African Municipal Workers’ Union (SAMWU) notes the municipal audit outcome report as released by the Auditor General (AG) Kemi Makhwetu on 01 July 2020. In releasing the report, the AG expressed concern at the continued regression in the audit outcomes for the financial year 2018/2019 in a report which he titled “Not much to go around, yet not the right hands at the till” a report which paint a bleak picture for the future of the country’ 257 municipalities and the 21 municipal entities.
As SAMWU, we were not expecting municipalities to perform any better compared to the previous years. We were however taken aback when both the Department of Cooperative Governance and Traditional Affairs (COGTA) as the custodian of municipalities and the South African Local Government Association (SALGA) as municipal representative went out and boldly welcomed the report and further congratulating municipalities which have performed better, essentially praising a fish for swimming.
Municipalities are legally supposed to abide by the Municipal Finance Management Act (MFMA) and the supply chain regulations. They are supposed to receive clean audit outcomes, there is, therefore, nothing special about a municipality that achieves this, it is a legal requirement which should be normalized.
According to the AG’s report, municipalities audit outcomes have continued to regress noting that in the year under review, 31 municipalities improved while 76 regressed, indicating a net regression of 45 municipalities. Out of the country’s 257 municipalities, 28 of them, could not be audited as their financial statements were not submitted while only 8% or 20 municipalities received clean audits. This in no way calls for a celebration, we should rather be lamenting the state of municipal finances.
Of great concern to us is that the AG has highlighted the fact that the quality of statements presented by municipalities are continuing to decline, this despite the fact that municipalities have paid over R1.26 billion to consultants to help in preparing the financial statements, an expenditure which according to the AG has not resulted in value for money.
Annually, municipalities spend billions for the preparation of financial statements despite them having people who are employed for the same function. This essentially is double payment for the same item.
SAMWU therefore demands that where a municipality uses consultants for preparation of financial statements while having people employed for the same function, such expenditure should be classified as fruitless and wasteful expenditure. As with any fruitless and wasteful expenditure, the accounting officer of that municipality should be held personally liable for wasting the much-needed resources.
The AG’s report paints a picture of a sector that is littered with efficiencies and waste, in the last 3 years, municipalities have spent over R4.6 billion in a fruitless and wasteful manner. On the other hand, irregular expenditure has increased to a staggering R32.6 billion.
We repeat our calls that unless there is personal liability, municipalities will continue waste money, people will continue doing as they please with impunity. We therefore want to see all those who authorized the fruitless and wasteful expenditure being held personally liable. The Asset Forfeiture unit should be involved in ensuring that this money is recouped, even if it means selling off their assets to recover this money.
Municipalities could also not account for over R360 million which was dished out to tenderpreneurs as documents were missing, this smells of nothing but corruption. It is for this reason that SAMWU remains opposed to the delivery of services through the tender system, this is nothing but a platform for politicians to enrich themselves and their cronies through the milking of municipal coffers.
We therefore demand that all contracts which could not be audited as a result of missing documentation should be investigated. The union will, therefore, be writing to President Cyril Ramaphosa requesting that he authorizes the Special Investigation Unit to immediately investigate these tenders.
The future of municipalities and their self-sustainability will forever remain uncertain if municipalities do not act on the report and ensure that they take corrective measures. According to the report, over 60% of the money that is owed to municipalities will never be recovered. This is because well established businesses have been reluctant to pay what they owe to municipalities.
To compound the financial problems of municipalities, they are owed over R7 billion by government departments. Municipalities are therefore supposed to ensure that they put in place proper revenue collection mechanisms from both businesses, government departments and residents.
Instead of congratulating and praising a fish for swimming, the COGTA department should have the interests of municipalities at heart and use intergovernmental mechanisms at their disposal to ensure that government departments are not 30 days in arrears on their municipal accounts.
The AG has also pointed out that problems faced by municipalities are not entirely administrative but that they are also political. Municipalities which have been identified as having political challenges have either not improved their audit outcome or have regressed. It is therefore not surprising that all municipalities which are under administration in terms of section 139 have performed dismally, a reality which makes one question the real reason for placing a municipality under administration, if the purpose was supposed to be the stabilization of the institution.
As the AG correctly puts it, municipalities do have sufficient resources to continue delivering services to South Africans. This, however, cannot be the case if there is continuous disregard for supply chain regulations, the MFMA and political instabilities in municipalities. SALGA and COGTA should, therefore, ensure that they act in the interest of municipalities and service delivery.
Issued by SAMWU Secretariat
(073 254 9394)
Deputy General Secretary
(084 806 4005)
National Media Officer
(073 710 0356).