Audit outcomes in KZN no cause for celebration

MEC for Co-operative Governance & Traditional Affairs (CoGTA) Sipho Hlomuka has expressed his dissatisfaction with the performance of KZN’s municipalities.
The Auditor-General recently released an audit report, with 32 municipalities in KZN receiving ‘unqualified audit opinion’. 18 received ‘qualified opinion’, one received an ‘adverse opinion’, two received a ‘disclaimer’ and only one maintained a clean audit outcome.
AbaQulusi Local Municipality – together with Pongola, Nongoma and Ulundi – were among the 32 with an ‘unqualified audit opinion’.
Hlomuka said, “The latest set of audit outcomes of KZN’s municipalities show a slight improvement, but they are certainly no cause for celebration. Overall, there have been eight improvements against seven regressions in KZN, with all other municipalities maintaining the status quo. These results are by no means satisfactory and the situation demands an urgent response.”

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He said that, as a provincial department that exercises general oversight over KZN’s local government institutions, “We are determined to ensure that we lay solid foundations for radically improved audit outcomes in all of our municipalities. More specifically, we need to reverse the trend of poorly-performing municipalities continuously incurring unauthorised, irregular, fruitless and wasteful expenditure. In this regard, we also need to determine the level of consequence management in all municipalities, where such expenditure is leading to poor audit outcomes.”
The contributing factors to negative audit outcomes, Hlomuka said, were: slow response to improving key internal controls by senior management and political leadership, inadequate consequences for poor performance and instability, and prolonged vacancies in key management positions.
“The latest municipal audit outcomes must therefore be a wake-up call for all senior municipal officials whose poor performance has caused this, as well as all mayors and councillors whose poor oversight has failed to prevent it.
“Our mayors have a critical role to play in financial management, and providing leadership over the fiscal and financial matters of their municipalities. Similarly, municipal managers run the administration and must take guidance from the mayors, but ultimately the accountability rests with these officials to ensure clean audits,” said Hlomuka.
He added that, “Chief financial officers are technical experts in preparation and submission of annual financial statements of municipalities and dealing with their financial matters. Material adjustments to financial statements are an indictment on these officials, because this reflects ill-discipline in maintaining the financial record of the municipality and reporting in compliance with the relevant legislation.
“We cannot rely on the Auditor-General to come and tell us at the end of the year what is wrong with our accounting and record-keeping.”

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