Auditor General Tsakani Maluleke has warned that the City of Johannesburg needs urgent attention from oversight bodies as well as the executive.
Maluleke was briefing Parliament’s Cooperative Governance and Traditional Affairs Portfolio committee on audit outcomes for municipalities for the 2024/25 financial year.
She says in general; metros have regressed in terms of their audit outcomes.
The City of Joburg relies on many outside entities for services, who themselves have for years received unqualified audit outcomes.
The city has received a qualified opinion this year after years of an unqualified opinion.
“We do want to highlight, the City of Joburg needs ongoing attention. It is crucial the institutional arrangement in Joburg be attended to…if we don’t, we will continue to see a slide where financial health deteriorates which is what we are seeing and where service delivery continues to be compromised, which is what we are living.”
Cape Town
Maluleke says the City of Cape Town also regressed in its audit outcome, from what was a clean audit for at least four years, to an unqualified finding.
Municipalities in the Western Cape have consistently been the best performers in the country.
Maluleke says while the province still has the highest concentration of municipalities with clean audits overall, there has been regression.
“Unfortunately, the WC has been regressing over the last four years. When we started with this admin there were no disclaimers. Kannaland Local Municipality has had a disclaimer; Laingsburg Municipality has had an adverse opinion. We are also starting to see pressure with regards to quality infrastructure and pressure with regards to financial health across a number of municipalities across the Western Cape.”
“They regressed on supply chain management issues…procurement, that led to non-compliance, which then landed them in unqualified space. They did submit quality financial statements, no problem there…they did submit a quality performance report, no problem there. What they need to do now is sort out the controls matters that let them down on procurement,” adds Maluleke.
Overall improvements
Maluleke says municipal audit outcomes are slowly starting to show improvement.
“Last year we reported 10 outstanding audits because of late submission, this year we have two. It says this year for very first time, we have had very high level of timely submissions of statements to audit. We have reached a milestone of 98% timely submissions of municipalities across the country.”
Disclaimer of opinion audit
Meanwhile, Maluleke says fewer municipalities have received disclaimers on their books for the 2024/25 financial years.
A disclaimer of opinion audit is the worst audit outcomes an entity can receive.
Maluleke says disclaimers in municipal audits have been reducing steadily since 2020/21.
“We have moved since beginning of term of local government administration from 29 to eight disclaimers. Of the eight, seven are repeat disclaimers. Only Kamiesberg Local Municipality in the Northern Cape went from qualified to disclaimer. Now we know we have seven disclaimers that warrant specific attention.”
Billions spent on consultants
The Auditor General says municipalities spend more than a billion rand on consultants to prepare financial statements for audit purposes.
Maluleke says 10 years ago, 179 municipalities used consultants to do this work, while in the year under review, it shows that this situation has deteriorated over the years.
“In 2024/25 it is 225 municipalities using consultants for same purpose, spending R1.6 billion. It’s telling us that the situation getting worse. We looked at reasons why. Yes, there are vacancies, but we found lack of skills. there are people appointed that must do the job but are unable to do so. So, consultants are hired year after year.”
AGSA notes decline in disclaimer audit opinions for municipalities:
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