No improvement in SA’s municipal audits
South African municipalities spent R5.3 billion on consultants in the past five years. A whopping 70% of them used these consultants every single year. From preparing financial statements to managing assets and tax services, the permanently employed financial managers and their teams couldn't complete those tasks without external help.
In the 2021/21 fiscal year alone, municipalities spent R1.26 billion on consultants. Of that, R431 million was spent on asset management. Around R300 million went to the preparation of financial statements. Tax services took up just over R300 million. They paid R54 million towards accounting services and the rest went to other "general services".
But even with all those billions of rands going towards these tasks, 58% of financial statements submitted by municipalities to the Auditor General of SA (AGSA) in the past five years had "material misstatements" from work that consultants were paid to do. Even after corrections, 41% had modified opinions, including three municipalities with adverse opinions and 18 with disclaimed opinions.
In 2020/21 alone, the salary bill, plus the total cost of the consultant saw municipalities incur a total bill of R11.6 billion.
Even though clean audits in the municipalities have improved from 33 audits in 2016/17 to 41 in the 2020/21 year, Sedikela said that is not so much an improvement. This is because the 41 that got clean audits are mainly district municipalities. They are not so much responsible for service delivery.
There were also 100 municipalities whose audits looked like they had improved as they got unqualified audit opinions with findings, they did produce quality financial statements, but struggled to produce quality performance reports. But Sedikela said that too is no course for celebration.
"We are cautioning that celebration because only 62 of the oddities that gave us financial statements were credible, that's 25% of the municipalities. If we had arrived, on day one, audited and express an audit opinion, only 62 would have had better outcomes," she said. -Fin24
In the 2021/21 fiscal year alone, municipalities spent R1.26 billion on consultants. Of that, R431 million was spent on asset management. Around R300 million went to the preparation of financial statements. Tax services took up just over R300 million. They paid R54 million towards accounting services and the rest went to other "general services".
But even with all those billions of rands going towards these tasks, 58% of financial statements submitted by municipalities to the Auditor General of SA (AGSA) in the past five years had "material misstatements" from work that consultants were paid to do. Even after corrections, 41% had modified opinions, including three municipalities with adverse opinions and 18 with disclaimed opinions.
In 2020/21 alone, the salary bill, plus the total cost of the consultant saw municipalities incur a total bill of R11.6 billion.
Even though clean audits in the municipalities have improved from 33 audits in 2016/17 to 41 in the 2020/21 year, Sedikela said that is not so much an improvement. This is because the 41 that got clean audits are mainly district municipalities. They are not so much responsible for service delivery.
There were also 100 municipalities whose audits looked like they had improved as they got unqualified audit opinions with findings, they did produce quality financial statements, but struggled to produce quality performance reports. But Sedikela said that too is no course for celebration.
"We are cautioning that celebration because only 62 of the oddities that gave us financial statements were credible, that's 25% of the municipalities. If we had arrived, on day one, audited and express an audit opinion, only 62 would have had better outcomes," she said. -Fin24
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