Municipal staff at three dysfunctional municipalities are relying on consultants to complete important financial and administrative tasks.
The Auditor General of South Africa (AG) was on Tuesday before the public accounts portfolio committee, where officials presented detailed accounts of these municipalities’ recent performances.
The municipalities concerned achieved roughly 50% of their service delivery and infrastructure targets, with none achieving clean audits.
Officials from the AG said the municipalities had been told to ensure the majority of tasks were handled by staff, but said there was a “combination” of factors that prevented it.
“There is some capacity issues that would exist in the environment but there is also a question on skill in terms of them being able to do some of these processes in-house,” the AG said.
Millions spent on financial consultants
The AG confirmed that the JB Marks, Matlosana and Ditsobotla municipalities had spent a combined R68.5 million on consultants for the last fully audited financial year.
JB Marks spent R9.5 million on asset management, R10 million on financial management services and R14.1 million for consultants to prepare its own financial statements.
Matlosana spent R10 million on asset management, R8.7 million on internal audit services, R9.6 million on value-added tax review and recovery, as well as R4.5 million on financial statement preparations.
While Ditsobotla only spent R1.7 million on consultants for asset management and tax services, the municipality reported material findings in each of the last four financial years.
“[Ditsobotla’s] finance unit lacks skills to prepare credible financial statements resulting in overreliance on consultants,” the AG’s presentation stated.
JB Marks was the only one of the three to show an improvement, moving from a qualified audit with findings to an unqualified audit with findings, but even the work of the consultants was questioned.
“Material misstatements from work done by consultants had to be corrected to achieve an unqualified opinion due to weak internal reviews,” the AG stated.
Service delivery targets
JB Marks had the highest service delivery and infrastructure target achievement rate with 67%, but missed key objectives, including progress on water and electrification projects.
Matlosana recorded a 58% target achievement, however, the AG said this was doubtful as “proper data collection processes were not established” and project planning was poor.
“Inadequate procurement planning causes emergency or last-minute procurement. This can result in higher costs due to poor planning and the opportunities for manipulation,” the AG stated.
Ditsobotla achieved only 31% of its service delivery targets, with the AG noting a lack of skills among staff and a lack of accountability within the municipality.
“No improvements in the performance management process of the municipality, as similar issue of lack of records to audit was also experienced in the prior year,” the AG’s presentation read.
Jean le Roux, representing the AG, explained that financial constraints were creating a spiralling instability in the Ditsobotla municipality.
“Because of the lack of funds, the municipality cannot appoint a municipal manager or Section 57 manager, so there is always people acting in these positions for three months, then they change positions,” said Le Roux.
‘Accountability is absent’
Ditsobotla has been placed under national or provincial administration eight times since 2008, with Matlosana requiring outside intervention three times since 2013.
Chris Hattingh, executive director at the Centre for Risk Analysis, explained that while being placed under administration was a negative, failure to recover was worse.
“The more damaging message is inaction. A municipality left to deteriorate without consequence tells investors that accountability is absent at every level of government,” Hattingh told The Citizen.
He added that investors, who are critical for growth and recovery, have seen too many municipalities fail to recover due to continued political interference and recovery plans that ignore the root causes.
“Section 139 interventions, when applied decisively and with a credible recovery plan, at least signal that the system retains some self-correcting mechanism.
“The administration mechanism is not the problem; the absence of an exit standard and genuine consequence management is,” Hattingh concluded.
