A third of South Africa’s 263 municipalities risked becoming financially unviable according to the latest audit outcomes released by Auditor General (AG) Kimi Makwetu on Wednesday.
“If you’ve got a third of municipalities whose expenditure is starting to become bigger than their revenue either from appropriation or sale of services…it may not be sustainable in future,” Makwetu told reported.
Makwetu said it boiled down to a number of factors including municipal leadership not creating a culture of honesty, ethical business practices and ensuring transactions were done in accordance with financial laws and regulations.
A lack of internal controls to ensure proper financial management continued to rear its ugly head.
The audit outcomes showed irregular expenditure increased by a staggering 50% to R16.8-billion, while their was a downward trend in fruitless and wasteful expenditure to R901 -million (down 21%) and unauthorised spending remaining at similar levels to the previous financial year at R12.77-billion.
“With the absence of consequences, these things are going to remain…we’ve been painting this picture of lack of consequences over and over for number a of years…,” said Makwetu.
Makwetu’s executive summary also points to the fact that the “track record” of municipalities in dealing with irregular expenditure remained “poor”.
“The year-end balance of irregular expenditure that had accumulated over many years and had not been dealt with (though recovery, condonement or writing off) was R41.7-billion.
The bulk of fruitless and wasteful expenditure stemmed from penalties on overdue accounts, late payments, as well as litigation and claims against municipalities.
Unauthorised expenditure stemmed mostly from municipalities overspending on their budgets – an indicator of poor budget planning.