I hereby present to the legislature and municipal councils of the Western Cape province my 2011-12 general report summarising the results of the audit outcomes of local government for the financial year ended 30 June 2012. The positive trend towards clean administration in the province is slowly gaining momentum, with five (19%) of the 26 municipalities in the province included in this analysis for 2011-2012 achieving clean audit outcomes.

Despite commitments by the municipal leadership, 20 of the 26 auditees (77%) received financially unqualified with findings. Of the 20 auditees in this category, 17 remained financially unqualified with findings. These auditees had to make material corrections to their financial statements during the audit and failed to avoid material findings on predetermined objectives and/or compliance with laws and regulations.

This stands in sharp contrast to those municipalities with clean audit outcomes whose leadership is working together with the governance and oversight structures to monitor the implementation of credible actions plans to address past audit findings and internal control deficiencies, while basic financial disciplines and monthly processing and reconciling of transactions, regular preparation of credible financial and performance reports, as well as the effective implementation of checklists to ensure compliance with laws and regulations have become the norm.

The rand value of irregular expenditure decreased notably in the current year from R242,8 million to R66,6 million through the concerted efforts of the leadership to prevent non-compliance with supply chain management regulations, after being highlighted as a key concern in 2010-11. A total of four audits were still outstanding at the date of this report due to municipalities not submitting financial statements by the legislated deadline. This is a result of poor discipline and a lack of competence as well as the leadership’s failure to set the right tone with a view to improving accountability.

These municipalities must consider replicating the processes implemented by the Swartland and West Coast District Municipalities, which have sustained their clean audit outcomes and which have ensured that their finance units are adequately capacitated and the municipal managers hold all municipal officials accountable for clean governance within the municipalities.

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