AG exposes municipal meltdown

Taxpayers are paying for ill-disciplined, debt-ridden, unaccountable local governments

- Lyse Comins

Auditor general Tsakani Maluleke has delivered a damning indictment on the state of municipal finances and lack of accountability, manifested in crumbling service delivery.

This is despite an uptick in the number of clean audit reports for the 2023-24 financial year.

Maluleke painted a dire picture of the widespread poor quality of financial reporting and mismanagement in a briefing to parliament's cooperative governance portfolio committee on local government audit outcomes for the financial year.

"The good news is that we are back to 41 clean audits [out of 275 municipalities], which is where we started back in 2021. So we're no more at the 34 that I talked about last year. However, that makes up 15% of the municipalities across the country," she said.

"It's great that we are reversing this trend around disclaimers of audit opinion. However, the state of financial and performance management disciplines in local government still leaves much to be desired, and so the story, in many ways, is similar to what I would have shared before. I worry that I will sound like a stuck record."

Her office's assessment underscored a profound crisis in municipal governance that extends far beyond mere administrative inefficiency.

She said 14 municipalities received disclaimer audit opinions — when an auditor is unable to obtain sufficient audit evidence to form an opinion — while seven had adverse audit opinions, and 35 had qualified audit opinions - meaning the financial statements contained material misstatements in specific amounts, or there was insufficient evidence to conclude that specific amounts included in the statements were not materially misstated.

Ninety-nine municipalities had unqualified opinions and 41 municipalities achieved clean audits.

Maluleke said the metropolitan landscape was particularly alarming.