Auditor general Kimi Makwetu said there had been a reversal in audit outcomes ©Auditor-General of South Africa
Auditor general Kimi Makwetu said there had been a reversal in audit outcomes ©Auditor-General of South Africa

Irregular spend rises to R28.4bn

Last year saw the highest level of non-compliance within municipal governments since 2012-13, the auditor general of South Africa has said.

In his annual report on local government audit outcomes, auditor general Kimi Makwetu said 86% of municipalities reported non-compliance with key governance laws in 2016-17.

He added that the percentage of municipalities with non-compliance on supply chain management issues rose to 73%, up from 63% the previous year.

Makwetu said he highlighted the lack of leadership, accountability and internal controls in municipal governments back in 2011-12. “It is now five years later, and we are still faced with the same accountability and governance challenges we had flagged throughout these years,” he said.

“There has been no significant positive change towards credible results; instead we are witnessing a reversal in audit outcomes.”

The report said the issue “of most concern”  was a lack of consequence for non-compliance with legislation, evidenced in more than half (55%) of municipalities.

“This lack of consequences is also evident in municipalities again not paying sufficient attention to the findings on supply chain management and the indicators of possible fraud or improper conduct that we reported and recommended for investigation,” said Majwetu.

The report also found irregular spend had increased 75% in 2016-17 on the previous year, to R28.4bn, up from R16.2bn. However, Makwetu added municipalities had been making a significant effort to to identify and report irregular expenditure, and that R15bn of the total was irregular expenditure from prior years that had only been discovered in 2016-17.

The remaining R13.4bn that related to payments and expenses in 2016-17 accounted for 4% of the local government administration budget.

Wasteful expenditure also increased 71% on the previous year, to R1.5bn.

The report listed a number of reasons for poor accountability, including vacancies in key positions, inadequate skills, political infighting and “a culture of no consequences”.

“We have seen again and again that many of these problems can be turned around through strong, ethical and courageous leadership in the administration,” the report said.

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