For the second consecutive year none of the 24 municipalities and four municipal entities in the province received a clean audit. Two municipalities (8%) and one entity (25%) received unqualified audit opinions with findings, while 29% of the municipalities and entities received either qualified or disclaimed/adverse audit opinions. These results do not reflect the complete picture, as the outcomes of 15 municipalities (63%) and two entities (50%) are not included in this analysis due to the late or non-submission of financial statements.
“The local government leadership in the province does not take the message from my office seriously,” said Auditor-General (AG) Terence Nombembe, highlighting one of the reasons for the regression in audit outcomes. According to the AG, this province has stagnated in five critical areas, namely supply chain management, predetermined objectives (service delivery), human resource management, information technology controls, and material errors and omissions in the financial statements. This situation is underpinned by the status of internal controls which require urgent intervention (75%), with only a few municipalities in the process of improving their internal controls (23%), and only a few (2%), showing good internal controls.
There are three underlying challenges to be addressed by the municipal government leadership in order to achieve clean administration in the province, namely a lack of appropriate skills at all 100% the municipalities; poor performance management practices, with no formal consequences for poor performance and transgressions at 92% of the municipalities; and an inability on the part of most municipal leaders to demonstrate an appetite for taking ownership of good governance practices required in their institutions, as evidenced by their disregard for deficiencies previously identified at 92% of the municipalities.
“A culture of accountability can only be enforced by a strong and committed leadership,” said Nombembe, who stressed the need for effective internal audit units, audit committees and municipal public accounts committees. The provincial treasury, the provincial department of Local Government and Housing, the South African Local Government Association (SALGA) and the University of the North West need to partner with the municipalities to ensure ongoing capacity building, a process being driven by the premier. There is also a need for elevated cooperation between the provincial public accounts committee and the portfolio committee on local government to deal with the challenges in local government.
To give support and guidance to the auditees, the Auditor-General of South Africa is continuing with its quarterly municipal door-to-door visits with a view to monitoring and evaluating the status of improvements and the sustainability of key internal controls and leadership tone that would serve as a catalyst for realising clean administration in municipalities in the province. These insights will continue to be shared with the provincial executive and oversight leadership on a quarterly basis 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 North West 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).