Clean audit increase marred by massive rise in irregular and wasteful expenditure

By George Mari, MPL, DA KZN Spokesperson on COGTA:

A 13% improvement in the number of clean audits for KZN municipalities and their entities for the 2013/14 financial year has been marred by a massive increase in irregular, unauthorised expenditure, fruitless and wasteful expenditure.

The figures were announced yesterday by Auditor-General Kimi Makwethu.  According to his report on KZN municipalities;

–          Fruitless and wasteful expenditure sky-rocketed by 440% from R10million to R54million mostly as a result of overdue accounts, penalties, litigation, claims and “poor project management by Umtshezi municipality” on a R29million hostel rehabilitation

–          Irregular expenditure jumped by 30% from R1.78billion the previous year to R2.31billion for 2013/14, indicating that “systems and controls to detect irregular expenditure were absent or not effective”

–          R104million was spent by municipalities on external consultants for financial reporting, indicating a “skills gap” and “weaknesses in internal controls”.

The AG again found the DA-led Western Cape to be the best run province, with 71% of municipalities and their entities receiving clean audits.  This was followed by Gauteng with 40 % and KZN with 26%.

While this may be an improvement on previous years, 26% is in fact a fail.  It is not a figure to be celebrated.  Nor is the fact that KZN municipalities have failed to achieve the objectives of Operation Clean Audit 2014.

Service delivery to the people of KZN depends entirely on how a municipality is run.  Poor financial management leads to poor service delivery.

The increase in violent protest action by communities who are sick and tired of non-existent service delivery is testament to the fact that our municipalities are still not performing as they should.

There is a recurring theme in the AG’s report for KZN municipalities – one which confirms that internal controls in KZN municipalities are pathetic.  That 34 auditees would have received qualified audits had the Auditor’s department not stepped in is proof of this.

The DA expects MEC Dube-Ncube to sit up and take notice of the AG’s comments.  It is unforgivable that the same issues are raised year after year.