Auditor - General Terence November and Deputy Minister of Corporate Governance and Traditional Affairs Yunus Carrima. Auditor - General Terence November and Deputy Minister of Corporate Governance and Traditional Affairs Yunus Carrima.
Giordano Stolley and Hlengiwe Nhlabathi
Sapa
PRETORIA: The Cape Town and Tshwane metropolitan municipalities are the only two in the country to show improvements in financial management over the previous financial year, Auditor-General Terence Nombembe’s report on municipalities reveals.
The Consolidated General Report on the Local Government Audit Outcomes, released in Pretoria yesterday, showed that Cape Town was the only metro to obtain a clean audit, while Nelson Mandela Bay, Ekurhuleni, Tshwane and eThekwini all obtained audit reports that were financially unqualified, but with findings.
Cape Town received an unqualified audit report with findings in 2008/09, while Tshwane received a qualified audit report that year.
He was heartened by improvements at municipalities, but at the same time warned that much improvement was needed, Nombembe told the National Press Club in Pretoria at the release of the report.
There were 51 municipalities whose audit reports had not been finalised by January 31. Of the 237 municipalities audited, 60 received adverse findings or a disclaimer, 50 received qualified audit reports and
120 financially unqualified reports with findings.
Seven got clean audit reports, up from three in the previous financial year. “We need a lot of effort to move them away from that status,” Nombembe said.
A disclaimer is issued when the auditor could not form an opinion on the financial statements. This could happen where the entity being audited concealed or failed to provide relevant information, if it was involved in litigation or if its status as a going concern was threatened.
Those that received clean audit reports are the Ehlanzi district municipality, the Steve Tshwete and Victor Khanye municipalities (all three in Mpumalanga), the City of Cape Town, Metsweding (Gauteng), Frances Baard (Northern Cape) and the local municipality of Fetakgomo (Limpopo).
Clean audit municipalities disclosed all required information. A municipality with a financially unqualified audit is described in the report as “not having fully addressed deficiencies in their reporting on predetermined objectives and/or compliance with laws and regulations”.
The report revealed problems in relation to quotes and contracts for goods and services provided to municipalities. Of 289 audits of the supply chain management processes, the AG raised concerns with regard to 214.
Some of the issues included contracts going to municipal employees or their family members. “The possibility of undue influencing of the procurement process by the identified persons cannot be discounted,” the report reads.