Province helping to capacitate municipalities - Zille

(Image: GCIS)

This was in response to the release of the Auditor General's audit outcomes for the province for 2010/11, which revealed there had been little change from the previous financial year's outcomes.

Zille said the provincial government was providing support to several municipalities to address key concerns raised by the Auditor General (AG) Terence Nombembe in the Audit Outcomes of the Western Cape Local Government 2010/11, released on Monday.

The first category of interventions focused on strengthening the relationship between the provincial government, the provincial legislature and municipalities, while the second category focused on providing support to municipalities.

The first category addressed the concerns of the Auditor General - that greater co-ordination between the public accounts committees and the portfolio committees responsible for municipalities was needed to promote the frequency of municipal monitoring by the province's committees.

Joint working group

Zille said a joint working group had been set up between the provincial Departments of Treasury and Local Government, which was tasked to provide support to municipalities.

Among other interventions, the provincial government's local government medium-term expenditure committee had assisted 30 municipalities with their draft 2012/13 budget assessments and had helped some municipalities to submit their respective cash-funded budgets for 2012/13.

Added to this, the provincial government was helping municipalities to manage their cashflow better by having provincial debt owing to municipalities tabled in the provincial cabinet quarterly, while municipal budget performance is tabled quarterly in the provincial legislature.

Provincial government officials had also made a number of scheduled visits to municipalities to improve their in-year monitoring process and reports.

In his audit outcomes of 2010/11, the AG had raised concerns that no improvement had been shown in HR processes, as well as in supply-chain management, IT controls and in addressing material errors or omissions in audited financial statements submitted for audit.

He suggested that the province take advantage of skilled staff, found in 53% of municipalities, to eliminate the extensive use of consultants and set up plans to address the shortage of key staff with the right skills and competencies in the remaining 47% of municipalities.

Leadership instability

The AG attributed the stagnation of audit outcomes in unqualified reports to leadership instability - particularly the frequent changes in municipal managers and chief financial officers - and to the failure of municipal officials in 63% of municipalities to take ownership to improve key controls as identified quarterly by his office.

Under the second category of interventions, Zille said a service provider had been appointed to assist with the recruitment of people to 20 positions, including nine municipal managers.

The provincial government was also involved in initial induction and training of newly-elected councillors in all municipalities after last year's local elections.

To boost underperforming municipalities, the provincial Treasury provided a R3.45 million financial support grant to assist municipalities to improve revenue collection, develop credible budgets, improve financial governance and strengthen their supply chain management.

The provincial Treasury had also set up a help desk to assist municipalities as well as a website to assist the chief audit executives, chief risk officer forum and enterprise risk management units in municipalities.

Last year, the provincial Treasury initiated the financial governance and outlook process which aims to assess and support municipalities to receive clean audits.

Western Cape sees 'significant improvement

The Auditor General's audit outcomes for the Western Cape revealed that of the province's 30 municipalities (which include one metro, five district municipalities and 24 local municipalities), 21 achieved outcomes of financially unqualified with findings - unchanged over 2009/10.

Two municipalities achieved financially unqualified audit outcomes with no findings - the Swartland and West Coast municipalities (up from one in 2009/10).

Three achieved qualified opinions (down from four in 2009/10), none received a disclaimer (down from one in 2009/10) or an adverse opinion (down from two in 2009/10).

However, the number of municipalities that had not submitted audited financial statements on time, rose to four, from just a single municipality in 2009/10.

Commenting on the release of the audit outcomes, Western Cape MEC for Local Government, Environmental Affairs and Development Planning, Anton Bredell, believed that municipalities had made a significant improvement since 2000 and that about three quarters were doing "very well", but that to move to a higher level of financial performance was not easy.

This is backed up by the Auditor General's Consolidated Report on Provincial Audit Outcomes, also released on Monday, which reveals that over the last three years, the Western Cape, along with Gauteng and KwaZulu-Natal, had made sustained progress towards financially unqualified audit reports.

Provinces stagnate, or have gone backwards

The Eastern Cape, Free State, Limpopo, Mpumalanga and the Northern Cape have stagnated, while the audit outcomes of the North West have gone backwards in the same period.

Bredell attributed the clean audits that the Swartland and West Coast municipalities received to the millions spent on building good systems and computer systems in the last few years.

Zille said though she was concerned that the province's audit outcomes had remained largely stagnant, she pointed out that it was encouraging that no municipalities had disclaimers in 2010/11, a fall from 2008/9 when 15% of municipalities were given disclaimers.

She said good audit outcomes were premised on municipalities with stable governments in a competent environment.

However, she was concerned about the high number of regulations that officials had to adhere to, pointing out that this often led to a trade-off between service delivery and compliance.

Zille said as the provincial government is regarded as a separate sphere to local government, the province could not force municipalities to adhere to concerns around the audit outcomes, but could merely advise them on recommendations.

Thandeka Zondi, who oversees the Western Cape province under the Auditor General's office, advised Zille to develop a strong relationship with district municipalities and to gain their trust by listening to the problems they face.

The Auditor General said his office would continue to hold quarterly municipal door-to-door visits to offer support and guidance to municipalities, by evaluating the status of improvements and the sustainability of key internal controls.

The office would then share these insights quarterly with the provincial executive and oversight leadership.