Municipalities 'stagnating': Report

"One of the key things that stand out for us in this report is that we've noticed stagnation," said Deputy Auditor General Kimi Makwetu.

The report found that nine municipalities received clean audits in the financial year ending 30 June 2012. Of the nine municipalities with clean audits, three had received clean audits for the first time. They are the George Local Municipality, Langeberg Local Municipality and Mossel Bay Local Municipality - all located in the Western Cape.

The other municipalities that received clean audits are the:

• Umtshezi Local Municipality in KwaZulu-Natal
• Waterberg District Municipality in Limpopo
• Ehlanzeni District Municipality in Mpumalanga
• Steve Tshwete Local Municipality in Mpumalanga
• Swartland Local Municipality in the Western Cape
• West Coast District Municipality in the Western Cape
• Fezile Dabi District Municipality Trust in the Free State

According to the AGSA's report, progress towards clean audits has been slow, with the number of clean audits remaining at the same low level of 5% for the past three years.

Almost half of the auditees that obtained a clean audit opinion were municipal entities rather than municipalities. In the Free State, Gauteng and KwaZulu-Natal, almost all the clean audits were achieved by municipal entities. Eight municipal entities had clean audits, including the Johannesburg Fresh Produce Market and the Fezile Dabi District Trust in the Free State.

The report covers four key areas, namely an overview of the audit outcomes; the root causes of audit outcomes; initiatives and impact of key role players on audit outcomes and the financial health of local government.

None of the country's eight metros obtained a clean audit opinion. Clean audit opinions are achieved when financial statements are unqualified and there are no reported audit findings in respect of either reporting on predetermined objectives or compliance with laws and regulations.

The AG's office noted a slow response by leaders to be one of the root causes of poor audit outcomes.

"There is a slow response to commitments that are made," said Makwetu.

Another was the filing of vacancies in key positions such as that of chief financial officer, with the report noting that the filing of such posts did not always equal officials having the appropriate competencies to ensure quality financial statements.

Additionally, a lack of consequence for poor performance was another issue identified. The report recommended that in order to improve the performance of municipal officials, leaders should implement sound performance management processes.

Makwetu also highlighted that 71% of municipalities use consultants.

The Deputy Minister of Cooperative Governance and Traditional Affairs (Cogta), Andries Nel said: "The picture painted by the report cries out for concerted action by government at all levels," he said, adding that the report does not make for pleasant reading.

Outgoing Auditor General Terence Nombembe - whose term ends in November - said one of the biggest "highs" for him during his tenure was the leadership of local government opening their doors to have conversations with his office.

The aim of the consolidated report is to empower leaders of provincial and local government to focus on issues that will result in reliable financial statements, credible reporting on service delivery and compliance with legislation.