Minister Nkadimeng Welcomes The AGSA 2021/22 Audit Outcome Report And Emphasises Post Audit Support Interventions

The Minister of Cooperative Governance and Traditional Affairs (COGTA), Ms. Thembi Nkadimeng notes and welcomes the 2021/22 audit reports to individual municipalities as released by the Auditor General of South Africa (AGSA) on 31 May 2023 under the theme – “A culture of accountability will improve service delivery”.

“We continue to support the work done by the AGSA and all other initiatives aimed at consolidating the improvements recorded in some municipalities and supporting them to implement and maintain effective systems in governance, financial management, performance management, infrastructure, service delivery, and compliance with local government legislation and related prescripts”, said Minister Nkadimeng.

The local government audit outcomes are an important barometer of transparency and accountability to taxpayers, the public sector, investors, and citizens at large in our participatory democracy. Furthermore, the local government audit outcomes are aimed at empowering oversight structures and executive leaders to focus on those issues that will result in reliable financial statements, credible reporting, and compliance with key legislation.

The Minister welcomed the audit improvements in some municipalities but expressed serious concern about those that have regressed as well as those who have not improved as per the Audit outcomes report for the financial year ended 30 June 2022.

However, on the positive side, some municipalities improved from disclaimer audit opinions, which warrants municipalities to institutionalize intervention measures for sustainability. The biggest improvements in the audits were noted in the Eastern Cape and Kwazulu-Natal provinces respectively.

These audit outcomes are in line with the Department’s reports on the State of Local Government, it is for this reason that the Department and National Treasury are leading the process of the development of the Municipal Support and Intervention Plans (MSIPs) in collaboration with sector departments, SALGA, provinces, and municipalities. MSIPs for the 66 municipalities categorized as dysfunctional have now been developed. Financial Recovery Plans (FRPs) have also been developed for municipalities placed under mandatory intervention in terms of Section 139(5) of the Constitution.

The report by the AGSA confirms that the audit outcomes, in the areas of governance, financial health, institutional matters, and service delivery, of municipalities need effective coordination across all spheres of government to ensure that municipalities receive support so that they achieve their Constitutional mandates.

To this effect, the Minister called for the prioritisation of post-audit support interventions. Minister Nkadimeng has committed in line with the provisions of section 134 of the Municipal Finance Management Act (MFMA), to work with MECs of local government to support municipalities to address issues raised by the AG in audit reports on financial statements of municipalities.

As noted by the AG, significant progress was made with the collaboration and support from the leadership of provincial Local Governments departments and Treasuries. This crucial collaboration and support is in keeping with the injunctions of section 154 of the Constitution which mandates National and Provincial government, through legislative and other measures, to support and strengthen the capacity of municipalities to manage their own affairs.

In this regard, the Department of Cooperative Governance will implement initiatives aimed at ensuring, amongst others, that:

  1. there is a multi-stakeholder approach with clear roles and responsibilities in supporting the local government – our collaboration with National Treasury, SALGA, provinces, and the AGSA has already commenced in this regard, more especially in monitoring the functionality of oversight committees in municipalities;
  2. linked to the theme of “a culture of accountability”, the Ministry, launched the Local Government Anti-Corruption Forum, and the Local Government Ethical Leadership Institute in September last year;
  3. regulations on the Code of Conduct for Councillors will soon be promulgated to address instability within municipal councils and ensure that there is accountability and consequences for undesired behaviour;
  4. in promoting professionalisation in the public service, Cabinet approved the Framework Towards the Professionalisation of the Public Service in November 2022. The Framework requires amongst others that senior managers across all three spheres must be appointed on merit. This, the Minister believes, will ensure that qualified and competent officials are appointed within municipalities, and the Department will therefore monitor the appointment of senior managers in municipalities;
  5. lack of consequence management continues to remain a challenge. In this regard, the Department will work with MPACs to (i) ensure the existence of their governance documents and the alignment thereof with applicable legislation, and (ii) ensure a proper understanding of their legislative responsibilities through capacity-building initiatives. This will be done in collaboration with our key strategic partners;
  6. the implementation of consequence management is also highly dependent on the existence of functional disciplinary boards. We will work with the National Treasury to see what more can be done to ensure and encourage functional disciplinary boards within municipalities;
  7. the increase in the number of hung councils (coalition governments) has added to the instability in some municipalities. In this regard, the Department is working towards the development of a framework that will be supported by legislative reform to strengthen the functionality of coalition governments and to bring about stability;
  8. the municipal support intervention plans are formulated following a proper diagnostic assessment to ensure that the interventions are tailor-made for each municipality. Work is underway to assess how the plans can be strengthened in terms of their enforceability;
  9. the financial health and overall sustainability of municipalities are highly dependent on the ability of a municipality to collect the revenue that it has billed. Revenue management remains a constant challenge within municipalities and hence the Department has commenced a project on data management to support municipalities in their data purification to ensure the existence of correct data to inform correct billing to ensure that customers are billed correctly using the correct tariff based on the available data. This, we believe, will maximise the revenue potential of municipalities and ultimately improve the overall financial health;
  10. whilst it is encouraging to note a reduction in the number of municipalities that have received disclaimed audit opinions, we must intensify efforts to assist those municipalities that remain in this category of audit opinion. The Department has commenced a records management project in selected municipalities to assist with the development and strengthening of records management practices. This support, we believe, will help those municipalities improve their audit outcome in subsequent audit cycles and this further reduces the number of disclaimed audit opinions.

To adequately address these shortcomings, we need to transition as envisioned through the DDM to a more functional and integrated government, which is capacitated with professional, responsive, and meritocratic public servants to strengthen relations and efficiency. Intergovernmental relations and citizen engagements are key enablers in making “Local Government everybody’s business”.

We call on all stakeholders, including the elected political leaders to work with us in the interest of the communities that they serve by activating the accountability ecosystem to shift the culture in local government towards performance, integrity, transparency, and accountability.

For any media enquiries, kindly contact:

Tsekiso Machike: 078 237 3900

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ISSUED BY: Ministry of Cooperative Governance and Traditional Affairs (CoGTA)