The National Treasury has developed a regulatory framework for the use of consultants by state organs that require accounting officers to develop a reasonable remuneration framework to determine the fee structure for consultants.
This as R1.3 billion has been spent by the local government sphere on the use of consultants to compile financial statements.
Responding to parliamentary questions from ActionSA MP Alan Beesley, Finance Minister Enoch Godongwana said there was a regulatory framework for consultants, which was contained in the Municipal Cost Containment Regulations, that was promulgated in 2019.
“Regulation 5 requires municipalities to appoint consultants only after conducting a needs assessment which confirms that the affected municipality or municipal entity does not have the requisite skills or resources in its full-time employ to perform the function.
“These regulations further require municipalities to implement consultancy reduction plans,” Godongwana said.
He was responding to Beesley when he asked whether he intended reducing the R1.3 billion spent by municipalities on consultants establishing stricter guidelines on consultant fees, enhancing transparency in procurement, increasing the capacity-building for municipal staff and conducting audits to assess the necessity of consultant engagements.
In August, Auditor-General Tsakani Maluleke found that there was on-going reliance on the use of consultants to compile financial statements.
In her consolidated report on audit outcomes of local government for 2022-2023, Maluleke said the amount recorded in 2022-23 was reduced to R1.35 billion compared to the R1.63 spent in the previous financial year.
In his response, Godongwana said the regulation on the use of consultants required accounting officers to develop a reasonable remuneration framework to determine the fee structure for consultants, considering the rates that have been determined by different bodies.
He also said the Municipal Finance Management Act (MFMA), read together with regulation of the Municipal Supply Chain Management Regulations, outlined processes which must be followed with respect to appointing consultants.
“These processes are aligned to the public sector procurement principles in section 217 of the Constitution which is inclusive of the principle of transparency. These provisions must be read together with Regulation 5 of the Municipal Cost Containment Regulations which further outlines additional terms and conditions for the appointment of consultants.”
Godongwana also said the National Treasury has been supporting municipalities through the financial management grant, which has been used by municipalities to capacitate their officials by undertaking the relevant training.
The training sought to ensure that officials were competent to perform their financial management and supply chain management related responsibilities, as outlined in the MFMA and the municipal regulations on minimum competency levels.
“Over and above the support provided through the Financial Management Grant, the National Treasury has undertaken several capacity building initiatives aimed at supporting and building capacity within municipalities, which includes the Municipal Finance Improvement Programme where technical advisors are deployed in municipalities to provide support on a number of disciplines such as asset management, accounting, budgeting and others.
“The National Treasury also undertakes numerous capacity building workshops for municipal officials including on the generally recognised accounting practices (GRAP) standards.”
The Minister added that the Auditor-General of South Africa undertakes audits on the use of consultants.
“This has assisted the National Treasury to customise its support initiatives to be responsive to the areas where consultants are used excessively,” Godongwana said.
Cape Times