It appears that the idea of clean audits for municipalities and municipal entities by the year 2014 will still remain just that, an idea based on the Auditor General’s report that was presented in Pretoria on Wednesday.
Launched in 2009 by the then minister of local government, Sicelo Shiceka, ‘Operation Clean Audit 2014’ was targeting that all municipalities and municipal entities in the country have clean audits by the year 2014. However, commenting on the progress made by this operation, the current minister of local government, Pravin Gordam said that the ambition was still there as they wanted everyone to be compliant in all respects. He also said that there was progress and in the right direction adding that it was also important for the public to view the concept of clean audits in the context that institutions of this nature had only been in existence for 14 years.
Minister Gordam was speaking after the presentation of the Auditor General’s report on the financial performance of the different municipal institutions across the country. Auditor General Kimi Makwetu said that only 9% of all the municipalities and municipal entities had achieved what he termed clean audits. This, he said, was an improvement from the 5% that the institutions achieved in the last financial year.
Makwetu, who has replaced Terence Nombembe, said out of 319 audits that his office inspected, 22 municipalities and eight municipal entities had unqualified audits with no findings. This means that the entities have clean audits and of these, 13 of them had maintained this standard from the previous financial year, in the 2011/2012 audit. However, at the opposite end of the spectrum, 18 percent, or 59 of those audited, received disclaimed audit opinions, the worst finding the AG could make. This emanated from the fact that these municipalities could not provide credible financial statements that could be relied on in the audit.
Turning to institutions with unqualified findings, Makwetu said 138 auditees or 41 percent, were found to have credible presentations of financial statements, adding that some findings had indicated that there were cases where the requisite processes were not followed which cast doubt on the transparency of the municipal activities. Furthermore, a quarter of the audits were returned with qualified opinions which meant there were elements that the municipalities or entities could not adequately account for, making elements of their financial statements unreliable. In addition to that, 2% or eight auditees received adverse audit opinions, where an extreme lack of accountability was evident in their financial statements.
Another element that was revealed in the AG’s report was that the majority of municipalities that had clean audits were those in the Western Cape while the other end of the spectrum, the ones with the worst audits were in the Limpopo and Mpumalanga provinces.