I hereby present to the legislature and municipal councils of the Eastern Cape my general report summarising the results of the audit outcomes of local government for the financial year ended 30 June 2012. While we expected an improvement towards clean administration, based on the previous year’s commitments, these outcomes show a year-on-year regression with the six improvements in outcomes being nullified by the eight regressions.

The province is now in the position where 80% of its municipalities received qualified, adverse or disclaimed audit opinions, while a mere 20% received unqualified audit opinions with findings.

The processes of accountability for the actions and performance of all involved in local government serve as a cornerstone of democratic governance in South Africa. It is clear that very few of the key role players in local government in the Eastern Cape live up to their responsibilities and they add very little in terms of assurance on, or credibility of, what is being done at municipal level. Serious questions need to be asked about the effectiveness of councillors in adhering to their basic responsibilities.

The strong correlation between the low levels of assurance provided and the poor audit outcomes of the province is a very unfortunate reflection of the seriousness of these role players to make a difference in the lives of the citizens of the Eastern Cape. The poor status of the drivers of internal control confirms that role players have failed to instil even the most basic disciplines and controls at municipal level. As a result, similar findings to those reported in the previous year persist. A clear pattern of the political and administrative leadership’s slow response to the audit messages and root causes is evident at 73% of the municipalities. This lack of discipline, as well as insufficient in-year reporting and monitoring, resulted in financial statements of a poor quality being submitted for auditing, with most of these requiring material adjustments during the process.

Vacancies in key positions or key officials lacking appropriate competencies and the lack of consequences for poor performance and transgressions were prevalent at 82% and 71% of the municipalities, respectively. This has resulted in very little or no progress having been made in the areas of supply chain management, human resource management, information technology controls and the quality of reporting on predetermined objectives. This in turn had a negative impact on the financial health of the province’s municipalities and, therefore, their ability to render services to citizens in the future.

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