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Auditor-General (AG) Terence Nombembe today released his 2009/10 provincial general report on local government which shows that the audit results of the North West municipalities have regressed further.

Tabling the provincial general report to the North West legislature on the audit outcomes of the province’s municipalities in the 2009/10 financial year, Nombembe said of the province’s 24 municipalities, only 10 (Bojanala, Dr Kenneth Kaunda, City of Matlosana, Greater Taung, Lekwa-Teemane, Moses Kotane, Ramotshere Moiloa, Ratlou, Rustenburg and Tlokwe City Council) had submitted their financial statements for audit by the legislated submission date.

The main reason for non-submissions by most municipalities and the regressed outcomes was inadequate Human Resources planning which gave rise to leadership vacancies or suspensions, resulting in capacity constraints in the key finance portfolios of municipalities. Consultants were being used by a few municipalities to assist with accounting-related services and the compilation of financial statements.

The North West province is one of two provinces where more than half of the municipalities did not submit their financial statements for audit within the legislated time frames. This has adverse implications for the timely exercise of oversight by those charged with governance and may defer the opportunity for accelerated movement towards achievement of clean administration.

Audit outcomes

In respect of the 10 municipal audits finalised, only two municipalities, Greater Taung and Tlokwe, improved their audit opinions from disclaimers of opinion to qualified opinions.

Of the eight municipalities where audit outcomes remained unchanged, two audit opinions (Bojanala Platinum District and Ratlou) remained unqualified with findings on predetermined objectives and/or compliance with laws and regulations; three (Dr Kenneth Kaunda District, Ramotshere Moiloa and Rustenburg) remained qualified; and three (Matlosana, Lekwa-Teemane and Moses Kotane) remained disclaimed.

The audit opinions on the two municipal entities (Dr KKDM Economic Agency (Pty) Ltd and Rustenburg Water Services Trust) remained unchanged, namely unqualified with findings on predetermined objectives and/or compliance with laws and regulations.

Other findings which relate to non-compliance with laws and regulations are summarised as follows:

An increase in unauthorised expenditure to R396 million (2008/09: R285 million) incurred by four municipalities, namely the City of Matlosana; Greater Taung Local Municipality; Rustenburg Local Municipality and the Tlokwe City Council.

Total irregular expenditure of R377 million (2008/09: R167 million) incurred by all 10 municipalities audited – this was due to contravention of or non-adherence to supply chain management policies.

Fruitless and wasteful expenditure of R4,7 million (2008/09: R9,6 million) incurred by four municipalities, namely the Bojanala Platinum District Municipality; Greater Taung Local Municipality; Lekwa-Teemane Local Municipality and the Tlokwe City Council.

Findings were raised during the audit of predetermined service delivery objectives at all 10 municipalities audited in the current year.

The report also highlights the fact that municipalities have made no progress in addressing the key information technology findings raised in 2008/09, resulting in a recurrence of several high-risk deficiencies in general computer controls.

“It is encouraging to note that the provincial leadership acknowledges that urgent and intensified leadership interventions are needed to turn the situation around. An adequate leadership tone on the part of mayors and incoming councils is needed to move towards clean administration.

This is possible when there is continuous review and monitoring of action plans and a focused implementation of significant internal controls to root out identified internal control deficiencies. A coordinated effort by leadership at local and provincial government level needs to urgently address the shortage of adequately skilled personnel in critical areas such as finance,” said Nombembe.

“From our side, we have committed to highlighting internal control deficiencies that could hinder the progress towards clean administration. We will flag these through our quarterly assessment and visits so that leadership is aware of any administrative challenges in their municipalities before we do our annual regularity audits. It is encouraging that provincial and local government leadership have committed to intensify their monitoring and oversight to ensure that the province turns the corner and municipalities move towards clean administration,” concluded Nombembe.