The Western Cape has one metropolitan municipality, five district municipalities, 24 local municipalities and two municipal entities. Thirty of the 32 auditees (94%) submitted their financial statements for the 2012-13 financial year within the prescribed timelines. Fifty-six per cent (56%) of auditees prepared and submitted reliable and useful performance information that was supported by an adequate audit trail.

The overall total expenditure for the Western Cape municipalities amounted to R42,8 billion for the 2012-13 financial period. This amount is made up of R11,3 billion for payroll costs (including councillors), R24,1 billion for goods and services and R7,4 billion in capital expenditure. The metro accounts for 70% of the total.

Overall, the Western Cape’s MFMA 2012-13 audit outcomes improved significantly compared to the previous year.

Considerable attention and effort dedicated to prior year qualifications resulted in a significant reduction in auditees with qualified and disclaimed audit opinions, from four auditees to one auditee.

Only Kannaland Municipality retained its adverse opinion with findings on compliance and performance information.

Seven auditees (22%) managed to move from financially unqualified with findings to a clean audit outcome, while five auditees (16%) maintained their clean audit outcomes of 2012.

Overall, there was a reduction in irregular expenditure reported, down to R102,7 million compared to R114,3 million in the prior year. The R101,6 million constitutes irregular expenditure incurred due to non-compliance with supply chain management legislation and other applicable regulations. This includes awards made to suppliers in which officials of other state institutions, employees and councillors of the auditees had an interest. While in most goods and services were delivered, it was impossible to confirm whether value for money was received. Irregular expenditure reported merely indicates that provisions of the legislation, which may include provisions aimed at ensuring that procurement processes are competitive and fair, were not adhered to.

The drivers that support these positive outcomes include commitment displayed by both political and administrative leadership to deal with audit findings and action plans; institutionalisation of good governance practices, including the role played by internal audit and audit committees; strong drivers of internal controls, with the focus on entrenching administrative basics and standard disciplines and processes which were continuously monitored; and implementation of commitments made in the previous year by the role players as this provides the essential assurance.

While the municipalities and their respective entities are not in a financial health crisis, our analysis of financial health showed that some municipalities experienced financial difficulties which necessitate a viable intervention strategy to stabilise liquidity concerns and prevent the municipalities from getting in the red zone.

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