KwaZulu-Natal (KZN) municipalities made significant strides towards clean audits during the 2010-11 financial year, moving from no clean audits in the previous financial year to five clean audits this year.
The five municipalities with clean audits are Umzinyathi District Municipality, eMadlangeni Local Municipality, Richmond Local Municipality, Umdoni Local Municipality and Umtshezi Local Municipality.
Auditor-General (AG) Terence Nombembe remarked: “This is an indication that clean audits are achievable with leadership’s consistent commitment to take ownership of municipal performance and insistence on adequately qualified staff and effective performance management practices.”
“The next logical step for these municipalities is to institutionalise these gains so as to sustain the continued culture of clean administration. This will surely sustain the public confidence that we witnessed during the presentation of clean audit awards at each of the municipalities, and provincially as led by the premier.”
The vast majority of municipalities, 47 out of 61 (77%), registered unqualified audit opinions (with findings or concerns), while seven (11%) were qualified, one (2%) was disclaimed and one (2%) received an adverse opinion. However, the greatest effort is required from the municipal leadership to deal with the real obstacles to clean audits, such as weaknesses in supply chain management, service delivery reporting, human resource management, information technology controls as well as significant errors in financial reports that are detected and corrected at the time of conducting the audits.
This situation is underpinned by the status of key internal controls that require urgent intervention at 14% of the municipalities, with 31% are in the process of improving their internal controls and 55% have good internal controls. To sustain clean administration in the province, Nombembe cited three challenges to be addressed by municipal government leadership. These are: Lack of appropriate skills at the majority (61%) of municipalities;
Poor performance management practices resulting in a lack of formal consequences for poor performance and transgressions at 51% of municipalities and a few municipal leaders who still do not demonstrate the appetite to take ownership of good governance practices at their institutions, as is evident from the disregard for challenges previously identified by the audits at 21% of the municipalities in the province.
The Auditor-General of South Africa (AGSA) continues to work with the provincial government on the three critical issues that KwaZulu-Natal needs to address. In this regard he mentioned heightened coordination among provincial oversight structures; strengthening coordination between the provincial department of cooperative governance and traditional affairs and the provincial treasury to effectively guide and assist municipalities; as well as enhancing provincial skills and diagnostic tools, especially for the strategic municipal finance teams. The AGSA has continued with its quarterly municipal “door-to-door” visits aimed at monitoring and evaluating the status of improvements and the sustainability of key internal controls and leadership tone that would be a catalyst for the realisation of clean administration in municipalities in the province.
Insights gathered during these visits will also continue to be shared quarterly with the provincial executive and oversight leadership in order to create a platform for forward momentum towards clean audits while also working closely with internal audit units and audit committees.
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MEDIA NOTE: The General report on the MFMA provincial audit outcomes of KZN is available on www.agsa.co.za.
ABOUT THE AGSA: The Auditor-General of South Africa (AGSA) is the country’s supreme audit institution. It is the only institution that, by law, has to audit and report on how government is spending taxpayers’ money. This has been the focus of the AGSA since its inception in 1911 – the organisation celebrated its 100-year public sector auditing legacy last year (2011).