Auditor-General Kimi Makwetu said there were largely no consequences for those who flouted legislation to improve accountability © AGSA
Auditor-General Kimi Makwetu said there were largely no consequences for those who flouted legislation to improve accountability © AGSA

Most SA municipalities have unfair procurement processes

posted by Charlie Hart
27 June 2019

South Africa’s (SA) auditor-general (AG) has been unable to audit R1.2bn ($84.7m) of spend by municipalities due to missing or incomplete information.

A report on municipality audit results for the financial year of 2017-18 showed the extent of accountability failures at local governments.

AG Kimi Makwetu said there were largely no consequences for those who flouted legislation to improve accountability and audit outcomes for local governments. 

Auditors found non-compliance in the management of procurement and contracts at 81% of municipalities, up from 72% the previous year.

The report found 88% of municipalities had uncompetitive or unfair procurement processes, 77% of which were material non-compliance.  

The most common failures to meet procurement rules included not having three written quotations provided, not inviting competitive bidding and the non-submission of declarations of interest by suppliers.

While municipalities are required to procure some commodities locally, audits found 68% had failed to comply with the regulation on the promotion of local producers. 

Makwetu said the office had not been able to audit procurement valued at R1.2bn ($84.7m) due to missing or incomplete information at 49 municipalities.

Despite efforts by the audit office to take action against irregular expenditure, the report found 60% of municipalities were non-compliant with legislation – an increase of 6% from the previous year.

It said three quarters (74%) of municipalities had not adequately followed up allegations of financial or supply chain management misconduct and fraud.

The AG also highlighted that municipalities had not sufficiently taken into account findings from the previous year’s report on supply chain management and the indicators of possible fraud or improper conduct.

“More than half of the municipalities did not investigate any of the findings reported. Where investigations did take place, 34% of the municipalities failed to resolve all of the findings satisfactorily,” the report said.

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