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Municipalities' misuse of money rockets

Jun 30 2011 06:53 Antoinette Slabbert

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Pretoria - Misappropriation of municipal funds has, according to the latest report by the Auditor-General (AG) increased dramatically, but the situation might be even worse than it currently appears.

Unauthorised, irregular, fruitless and wasteful expenditure by municipalities rose 77% in the financial year to end-June 2010 – and this is probably an underestimate.

A full R9.2bn was lost to service delivery in this manner. The comparative amount in the previous financial year was R5.2bn.

This was revealed on Wednesday in the latest report on countrywide municipal audits for the 2009/10 financial year announced by AG Terence Nombembe at a National Press Club news conference in Pretoria.

The R3.5bn revenue loss from water and electricity distribution, write-offs of R3.6bn in bad debts and underexpenditure amounting to R1.2bn which occurred in only five Western
Cape municipalities was not  included in the above R9.2bn.

Nombembe attributed the sharp increase to improved financial reporting. But he conceded that most municipalities had not yet attained the required standard of reporting. The real picture might therefore be even gloomier.

Nombembe said that as reporting improved problems became more evident and it was easier to do something about them.

He said that although progress with financial reporting was slow, it was moving in the right direction.

In all, 57 municipalities had improved audit outcomes, 165 were unchanged and 15 had regressed.

The number of municipalities with clean audits rose from four to seven.

The number of municipalities for which an audit opinion had been withheld – the poorest possible outcome – had fallen 46% from 121 to 65. But Nombembe pointed out that 51 audits were still outstanding at January 31, and had therefore not been included in the analysis.

Of these laggards, most had received withheld opinions or unfavourable reports in the previous financial year.

Johannesburg was one of those whose report had not been received by deadline.

Nombembe said systemic problems existed in Johannesburg, which included the widely reported consumer accounts headache.

In Tshwane R1.5bn worth of unauthorised expenditure had taken place in the period under review. This was more than in KwaZulu-Natal, Limpopo, Mpumalanga and Northern Cape combined. According to Nombembe, Tshwane mayor Kgosientso Ramokgopa was spearheading efforts to improve corporate governance in his council.

Reporting on service delivery was generally poor, with 84% of municipalities and municipal entities having failed to comply with regulatory requirements. The information supplied by 65% was not meaningful and 48% were unable to substantiate the information that they provided.

Nombembe said adequate funds, instruments and support were available to make local government in South Africa work, but there was a lack of leadership.

The following municipal authorities received totally clean reports:
  • Cape Town Metro (Western Cape)
  • Ehlanzeni District Municipality (Mpumalanga)
  • Steve Tshwete (Mpumalanga)
  • Victor Khanye (Mpumalanga)
  • Metsweding (Gauteng, since incorporated into Tshwane)
  • Frances Baard (Northern Cape)
  • Fetakgomo (Limpopo)

- Sake24
For business news in Afrikaans, go to Sake24.com.
terence nombembe  |  municipalities


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