It is with pleasure that I present to the Free State Provincial Legislature and municipal councils my 2011-12 general report summarising the audit outcomes of local government for the financial year ended 30 June 2012.

These outcomes show a steady but slow year-on-year improvement towards unqualified audit opinions (27%). The clean audit (3%) relates to a dormant trust and no municipality in the province managed to achieve this goal. Where improvements were noted, the progress was as a result of enhanced oversight by mayors who were actively involved during the audit process, but at 92% of the municipalities there is generally a slow response by the political leadership to address the root causes to improve the audit results.

This slow progress is also influenced by the lack of improvement in key controls, which indicates that the basics are still not in place for the day-to-day operations of the municipalities. This is due to key positions being vacant and a lack of competence in the finance units.

The quality of financial information submitted for audit therefore remained poor notwithstanding the investment of R53 million in consultants at 92% of the municipalities. Consultants are generally required to use the poor information produced by the municipality to compile the financial statements.

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