CIARAN RYAN: The report of the South African Auditor-General on local government audit outcomes, which was released last week, is a chilling reminder of how much has to be done to clean up the sector. Only 41 out of 257 municipalities received clean audits – and this despite years of guidance and recommendations from the Auditor-General [AG] and enhanced powers in terms of the Amended Public Audit Act to chase down missing money.
CIARAN RYAN: I think we all got a shock when the AG announced the costs of preparing financial statements at local government level. Just remind us – what were these costs? Also don’t forget the consultants who were brought in to help complete the financial statements that the finance teams themselves couldn’t do. Was this money well spent?
NATASHIA SOOPAL: There are many factors. I think the main factor would be the lack of skills. In order to prepare credible financial statements, you would need finance officials to have some of the basic financial competencies. These include the ability to know how to prepare basic reconciliations, such as bank reconciliations and debtor reconciliations.
But I think, more drastically, 89% was not dealt with, and no action was taken against those who were responsible for not complying and, probably, those that impacted the maximum potential of service delivery. This means that the municipality’s not actually receiving all of its income. I think this also alludes to the lack of leadership to ensure that there are these controls in place so that the municipality can receive all of its income.
If we look at a disclaimer of opinion specifically, it means that that municipality is unable to account for the money spent.
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