Fiscal controls needed to address Gauteng’s struggling municipalities

Though Gauteng MEC for finance, Lebogang Maile has welcomed the audit outcomes of the 2022-23 financial year recently tabled by auditor-general (AG) Tsakani Maluleke, he emphasised the need for stronger fiscal controls to enhance governance and service delivery.

The provincial government will intensify training for senior managers at struggling municipalities, Maile said.

“Compliance with legislation is not improving and remains a stumbling block toward good governance as most municipalities still do not comply with procurement legislation,” he said.

Call for stronger fiscal controls

“Urgency is required from accounting officers, mayors and members of mayoral committees to address service delivery challenges. Internal audit units and audit committees should intensify their quarterly assessments of performance information.”

Maile said continued support was needed for improving audit outcomes and accountability across municipalities.

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Gauteng Treasury had embarked on support and monitoring activities to improve the financial reporting control environment.

In addition to the standard support given to municipalities, he said new initiatives have been introduced to improve the credibility of annual financial statements.

Out of the 11 municipalities in Gauteng, only the DA-run Midvaal received a clean audit for the 2022-23 financial year.

Other municipalities received unqualified audit opinions

The AG’s report showed that six other municipalities received unqualified audit opinions with findings, while the rest received adverse opinions.

Nationally, 34 out of 257 municipalities received clean audits – 18 of them are in the Western Cape.

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The AG said the most common findings related to expenditure management, unauthorised, irregular and wasteful expenditure, procurement and contract management, material misstatements and limitations in the submission of annual financial statements, as well as consequence management.

SA Local Government Association Gauteng chair Jongizizwe Dlabathi highlighted the need to address governance issues, particularly those outlined in the audit outcomes.

“The audit outcome is a reflection of the concerning financial state of municipalities,” he said.

‘Cannot afford local govt that fails’

“We can’t dispute that municipalities are struggling financially and it’s a concern because we cannot afford a local government that fails to fulfil its mandate.”

Dlabathi said municipalities were not properly funded, especially when considering the mandate given to them compared to provincial and national departments. He also stressed the importance of improving performance management and compliance with supply chain management procedures.

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“Poor performance management is an issue, as municipalities are often unable to report accurately on their performance,” he said.

“Inadequate internal controls, particularly around supply chain management, further compound these issues, as some municipalities lack strong oversight.

“It could be that we do not have the right calibre of administrators with the capacity to ensure compliance with supply chain management processes.”

R77m budget to assist ailing municipalities

During the budget vote in July, Gauteng MEC for cooperative governance and traditional affairs (Cogta) Jacob Mamabolo announced a budget of R77 million to assist ailing municipalities.

At the national level, Cogta Minister Velenkosini Hlabisa is expected to unveil a 12-month turnaround plan for municipalities across the country.

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Alan Fuchs, DA Gauteng member of the standing committee on public accounts, criticised Cogta for failing in its duty to support municipalities.

He attributed the collapse of service delivery, infrastructure and increasing corruption to the department’s incompetence and lack of resources.

“Cogta has been slow in its approach. In previous years, they have lacked the skills, resources, and will to do what is required to support municipalities,” he said.

Need for a strategic plan

Fuchs added while provincial and national governments cannot interfere with local governance, there is a need for a strategic plan to support local municipalities.

“Municipalities are now in financial free fall, unable to invest in critical projects or pay suppliers on time. Poorly planned infrastructure projects are leaving communities in the lurch, while insufficient maintenance budgets are allowing assets to crumble.”

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