The Newcastle municipality has again received an unqualified audit opinion.
The audit, covering the financial year ending June 2023, did not fully endorse Newcastle’s financial health. Several issues were identified that could impact the accuracy and completeness of the municipality’s financial information. These issues might include problems with budgeting, financial management, or errors in financial reporting. However, these problems are not severe enough to completely undermine the overall reliability of the municipality’s financial statements.
Auditor General, Tsakani Maluleke, called on local government stakeholders to act “deliberately and with urgency,” and noted that audit outcomes have shown minimal improvement.
“Despite various commitments, action has been too slow and has had minimal impact on the lives of ordinary South Africans,” Maluleke commented.
Newcastle remains among the 77 municipalities with unqualified audit opinions on their financial statements but with noted issues in performance reporting and compliance with key legislation. Maluleke expressed concern over the lack of progress among municipalities that have been in this category since the end of the previous administration’s term, indicating a reluctance to advance to a clean audit status.
Maluleke pointed out that 86% of municipalities are struggling with compliance issues, which is a significant barrier to progress. Common problems impacting service delivery and worsening living conditions include delays, cost overruns, and poor-quality infrastructure work. New infrastructure projects are often not utilized promptly, and existing infrastructure continues to deteriorate due to inadequate maintenance.
Poor financial management remains widespread, with municipalities losing money through ineffective billing and collection practices. Neglect of infrastructure has resulted in losses in water and electricity services. This financial mismanagement has directly affected service delivery, leading to unpaid creditors like Eskom and water boards, thereby jeopardizing access to essential services for households and disrupting business operations.
In response to these issues, Maluleke called for increased accountability from all local government stakeholders, including mayors, municipal leaders, and executive authorities.
“Improving service delivery and making responsible use of limited funds requires capable, cooperative, accountable, and responsive municipalities that fulfill their mandates,” she concluded.
A lack of leadership, capacity, and poor consequence management remain key factors in the stagnation or regression of many municipalities. The AG has urged elected representatives to ‘foster a culture of performance, transparency, and institutional integrity’ and to be accountable to the communities they serve.
COGTA responds
COGTA Minister Velenkosi Hlabisa welcomed the report and pledged to support municipalities through several key initiatives. These include the upcoming Code for Ethical Municipal Leadership, which aims to promote ethical behaviour within municipalities, and the ongoing effort to professionalize the public service to prevent the appointment of unqualified individuals to key municipal positions.
The Cabinet’s Framework towards the Professionalisation of the Public Service, approved in November 2022, mandates that senior managers across all three spheres be appointed based on merit, ensuring that competent officials lead municipalities.
The committee will conduct inspections over 21 days and provide feedback to municipalities and their political leaders. Hlabisa commented, “We will focus on dysfunctional municipalities to assess the qualifications and competencies of key officials, including the municipal manager, CFO, and director of infrastructure, as well as the Mayor’s qualifications and competence.”
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