Only 28% of municipalities could produce quality financial statements, AG tells MPs

Auditor General Tsakani Maluleke briefed MPs on her office’s oversight into 200 municipalities whose audits were completed by mid-April. 

Maluleke made the shocking revelation before the Standing Committee on Public Accounts (Scopa) on Tuesday morning.

“This means that the vast majority of auditees did not have the critical disciplines, weekly, monthly, quarterly, bi-annual disciplines for preparing and presenting quality financial reports. They then rely on the audit process to compile financials to fix the mistakes that the auditors find in the audit process." 

Maluleke also revealed that municipalities spent a whopping R1 billion on consultants during the 2019/20 period. 

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“This is an area that we have raised before and we highlighted the perils that go with over-reliance that goes with using consultants. There is nothing wrong with looking for external experts to help dealing with aspects of compiling financials. 

"However, if year on year the municipality relies on consultants to put basic financial statements together, then we are concerned. In this year we found that R1 billion was spent on consultants that helped municipalities compile financial statements for audit.” 

Maluleke warned MPs that the country's already-precarious financials continue to worsen.

"Indeed local government finances continue to worsen. I must then say that the 2020 financial year does not have the full impact of the Covid-19 pandemic and the lockdown provisions. It has about a quarter of the year affected by it."