By Thapelo Molefe
Despite some improvements in municipal audit outcomes across the province, alarming financial mismanagement continues to plague cities like Tshwane and Emfuleni, both failing to shake off their qualified audit statuses.
This is according to the latest report by the Gauteng Provincial Treasury, which shows a stark contrast that while some municipalities are progressing, others continue to lag behind, failing to meet basic financial compliance standards.
Gauteng MEC for Finance and Economic Development, Lebogang Maile, announced this during a media briefing on the province’s municipal finances and the 2023/24 audit outcomes by the Auditor-General of South Africa (AGSA).
“The audit opinions for the City of Tshwane and Emfuleni Local Municipality are unchanged from the 2022/23 financial year, with both being qualified,” said Maile.
“This is an indication of the inability by the said municipalities to implement the recommendations made by the AGSA in the 2022/23 financial year audit outcomes.”
During the media briefing, Maile expressed concern over the audit outcomes.
“While this is concerning, the municipalities, GPT, Gauteng COGTA and SALGA are hard at work reviewing the particular challenges that the two municipalities are confronted with, focusing specifically on why the efficacy of the recommended interventions within the context of the said municipalities’ material circumstances,” said Maile.
Out of the province’s 11 municipalities, eight received unqualified audit opinions, with two achieving the prestigious clean audit status, meaning their financial statements were found to be free of material misstatements and non-compliance issues.
While the Midvaal Local Municipality stands out with its 11th consecutive clean audit, the broader picture reveals deep-rooted financial weaknesses in other municipalities.
“The number of auditees with non-compliances decreased from 92% (22) in the previous financial years to 79% (19) in the current year,” Maile acknowledged, but added that irregular and wasteful expenditure remains widespread.
The AG report further highlighted that municipalities with qualified audit opinions continue to struggle with inadequate internal controls and poor financial discipline.
The report highlighted key governance failures, including inadequate financial oversight and lack of accountability in municipal spending.
“The speakers of councils, municipal public accounts committees, and other council committees must instil a culture of good governance by promptly investigating instances of unauthorised, irregular, and fruitless and wasteful expenditure,” Maile said.
The AG urged municipal leadership to act urgently to address instances of non-compliance, hold officials accountable for not implementing basic controls, and prioritise service delivery.
In a bid to turn the tide, the Gauteng Provincial Treasury has introduced financial oversight initiatives such as the Financial Management Capacity Maturity Model and the e-monitor system.
“These mechanisms are crucial in building financial resilience within our municipalities, but they require full cooperation from municipal leadership,” Maile said.
Additionally, the government has intensified its audit preparation processes, including technical reviews of financial statements and targeted workshops with municipal leaders.
“The idea is to create a culture shift where AFS preparation is viewed as a year-long process informed by daily, weekly, and monthly disciplines,” Maile explained.
Beyond structural reforms, municipalities were urged to improve their financial reporting accuracy.
“A total of 12 (50%) of auditees submitted AFS that are free from material misstatements,” Maile noted, showing some progress in financial reporting.
However, major concerns remain over expenditure management, procurement irregularities, and the continued presence of fruitless and wasteful spending.
“The key non-compliance areas include: material misstatement or limitations in submitted AFS (12); unauthorised, irregular, as well as fruitless and wasteful expenditure (16); expenditure management (15); consequence management (7); and procurement management (10),” the report detailed.
The provincial government insists it is committed to improving municipal financial health.
“We believe that while some audit outcomes of municipalities in the province are not ideal, there is room for improvement. Stronger fiscal controls will not only improve governance, but they will also allow for more resources to be directed towards critical areas of service delivery,” Maile said.
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