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With his latest audit report having shown increasing irregular expenditure, the Auditor-General requires accountability.
Despite increased efforts to get their books in order, many municipalities still cannot – or will not – account for their spending. Be it erroneous or deliberate, this behaviour is Auditor-General Kimi Makwetu’s main concern.
After his press briefing in Pretoria on Wednesday, when he tabled his audit findings of the country’s 263 municipalities for the 2015/16 financial year, Makwetu told City Press that there were municipalities that went out of their way to correct mistakes in their financial reports.
“They understood that, when financial statements were found to be inaccurate, they would sit with a qualification if inaccuracies that had been picked up were not corrected,” he said.
“That is one part we find as a key feature in the report, which suggests this financial management discipline.”
Among these were the 49 municipalities with clean audits.
However, there were others – including the 25 that scored disclaimers, the worst audit opinion possible – where officials did not care at all, providing no records or documents to prove how they spent public money.
One disastrous trend that Makwetu highlighted was the unprecedented amount in irregular expenditure – R16.8bn in 2015/16, compared with R11.1bn the previous year.
Fruitless and wasteful expenditure was pegged at R901m in 2015/16, slightly down from R1.14bn.
For Makwetu, it is high time the trend of irresponsible spending was stopped.
“Much as we accounted for transactions on the books, we also have not dealt with compliance issues,” he said.
“What it means is that future revenues ... are going to be narrowing over time.”
He said municipalities were allowed to spend on unnecessary items or make double payments to suppliers because no one prevented them from doing so.
Makwetu stressed the urgent need to find out whether this happened because council staff were badly managed or poorly qualified, or because of crucial positions that had not been filled.
Makwetu has pleaded with Parliament to extend his powers and allow his office to approach the Hawks, the Special Investigating Unit and the Public Protector to investigate circumstances leading to the abuse of funds in municipalities and their entities.
“We have been shocked many times before, to the point of getting numb. Numb in the sense that we have developed an expectation over the years ... that there is a category of issues that will either not be addressed or will take a long time to address. What shocked us years ago continues to shock us today.”
Normally, he added, people changed when the pain of change became greater than the pain of remaining the same.
“So, if someone says you will be investigated for irregular expenditure, you are not going to wait – you are going to make an effort to address the fundamental issue. If you decide to remain the same, it means that this irregular expenditure is good for you.”
Some municipalities had remained stuck with disclaimer audits for years, while certain officials had not given auditors evidence of any spending because they knew that there would be no consequences.
“What is the incentive to sweat and clean up an environment that potentially feeds you?” Makwetu asked.
“For as long as those things remain a dominant feature of municipalities’ accounts, the reality is that a lot of money will go missing. What gives rise to all of these issues is that the controls needed to detect and prevent the recurrence of irregular expenditure are still very weak.”
