NOMPU SIZIBA: The Auditor-General has released the municipal audit results for the year 2018 to 2019. He has entitled his report – and I quote – “Not much to go around, yet not the right hands at the till”. Out of the 257 municipalities the AG was set to audit, his office was able to complete audits on only 229, as the other 28 municipalities had not completed the necessary work by the cut-off date of January 31, 2020. Overall, there were more financial management regressions than there were improvements. Only 18% of municipalities were able to submit financial statements that had no material misstatements. Irregular expenditure deteriorated to the tune of just over R32 billion, compared with R24.4 billion in the year prior. Of the irregular expenditure, 33% speaks to goods and services that were not even received – and that’s an amount of R11.4 billion.
Well, to discuss the latest report further I’m joined on the line by Auditor-General Kimi Makwetu. Thank you, sir, for joining us. There’s so much that you pack into this annual report, but ultimately it seems to be a continuation of largely bad or poor financial management, with only 20 out of the 257 municipalities having a clean bill of financial health.
KIMI MAKWETU: Yes, you’re right, Nompu. I think we can all agree that it is not sustainable to have negative audit outcomes because, once you allow them to become a permanent feature of your operating environment, you will quickly realise that you can easily go out of business as a municipality because you don’t take proper care off your administration – as well as gross oversight overreach. So we need to get to a point where it’s no longer about how many municipalities got how many clean audits in each part of the country. What matters most is what happens to those resources at all of those municipalities, regardless of where they are. I think we need to move the debate to that level.
NOMPU SIZIBA: This goes against a little bit of what you’ve just said now, but perhaps you can take us through the municipalities within the various provinces that continued to do well or improved, even though it’s clear that they don’t represent the majority? And perhaps take us through what it is they’ve been doing right.
KIMI MAKWETU: What I’m going to do is just to draw some broad strokes over that number, because you’ll see that quite a number of municipalities in the Western Cape have sustaining financials; it’s not something new, it’s a narrative that has been coming a number of years. Part of it came on the back of the steps that were taken by the provincial leadership, together with the local government leadership. And this would include mayors, municipal managers and chief financial officers who under subject item on their agenda on a quarterly basis would scrutinise those matters that cause regular deficiencies in the financial management. And I think that’s why they got over the hill as far as the those disciplines that concern that province. That’s why you happen to trust those numbers.
Then you see bits and pieces of it in Gauteng, but I think Gauteng’s problem has had a unique disruption from the instability that happened in a number of the municipalities, including metros, around political and the administration interface. When things fall apart at that level, then too many other things have had their effects of moving you backwards, even though you may claim to have the right accountant to put proper entries in your books.
NOMPU SIZIBA: So what were your observations of municipalities in the likes of the Free State, North West and Eastern Cape, whose audit outcomes didn’t look so rosy. What is it that these regions keep on doing wrong?
KIMI MAKWETU: Each one of the municipalities in those provinces that you mentioned has got a budget that its receives from the fiscus. Some of them collect revenue if they’ve got the opportunity to bill directly.
The common feature among many of those municipalities that failed their audits is when they have to account for the utilisation of their resources.
In some instances, the basic accounting reconciliations of records are not in place, and in certain instances the adherence to the processes of supply chain, for example, are not always observed.
And the evidence of some of the assets they purport to have bought, based on the monies that they show in their financial statements, sometimes are not anywhere to be seen.
So it’s a combination of all of those things that points to the fact that there’s no proper supervision of what those activities are about, and there is no real call for these accounts at council on a frequent basis rather than just once a year, because those are the people who ought to know what happened to what portion of the budget.
NOMPU SIZIBA: You’ve been harping on for years about local authorities needing to up their game in terms of greater internal controls and dodgy-behaviour prevention mechanisms. That would obviously better ensure that there are no or fewer leakages, at least, and better public finances. But this wisdom doesn’t appear to have really taken off. From where you sit, what are the constraints – or does this speak to wilful neglect where people just don’t care, even though they’re located in a public service?
KIMI MAKWETU: For me, I think it will take a number of constituencies to start looking at the value proposition for them as far as the judicious management of finances in local government is concerned. And I think if all the key representative constituencies do their bit, take their own steps, among others, and will be the people who vote people into councils, they’ve got a stake in the matter.
And I think those that are elected into office also have a stake in the matter. And until such time that you see them focusing on the things that were promised for delivery and were funded for projects, when they don’t appear anywhere, and the money has also been spent, they ought to be the first people to stand up and say, “We cannot sustain a situation like this, otherwise, if either we produce the records to substantiate the transactions or we find somebody who is going to do it, because ultimately they will be held to the same standard as far as transparency and accountability is concerned.
NOMPU SIZIBA: Mr Makwetu, you’ve been in the AG seat for seven years now, and you’re only able to serve one term. That’s a standard, and yours I think comes to its end in November this year. What have been the key takeaways from your tenure, and what is it you’d want to impress upon those who lead in the public service about improving the country’s fortunes?
KIMI MAKWETU: When you look at our public sector environment, Nompu, you can almost see that there are a number of areas where low-hanging fruit is evident, but the machinery is not operating in the way that can exploit the value that is attached to the assets that belong to the public system. So you don’t have people who wake up with a preoccupation to make sure that that dam that enables water to move from one area to the other is constantly looked at and appraised and maintained, so that there are no troubles with disruption of water for something that can be prevented. And I think there are many of those opportunities provided if they are to be dealt with in a manner that embraces the professional disciplines that many South Africans have, because others come into these environments and they get overtaken by the political cancer, and never get the opportunity to flourish in providing their technical capabilities to help improve the fortunes of many that are in those particular towns and provinces in the country.
So for me, I think that’s the key, because it doesn’t really get solved by one institution just because it was given additional powers. That might help along the way to scare off the few that …… start the roads don’t work. But ultimately, my task is whether we can take advantage of the assets that we own and make sure we derive value from them.
NOMPU SIZIBA: And then one last thing – legislation has given you or your office more power to bite those who are not doing their jobs or whatever. Do you see yourself using those powers somewhere in the remainder of your tenure, or are you going to leave that to the next guy or woman who’s going to take over?
KIMI MAKWETU: Well, on our part there are no constraints in terms of dealing with those issues. However, we have been investing for a bit of time on systems and procedures that will make sure that we can pass the test when it comes to the considerations of natural justice as we implement these provisions. So we thought it’s important we make the effort so that you don’t have to hassle with issues with certain provincials that you ought to have followed if you were to attach the certificate of debt in the name of the particular accounting officer. I’m sure somebody who gets taken on at that level will want to rip the case apart from all the angles.
NOMPU SIZIBA: That’s right.
KIMI MAKWETU: So that is an investment that we have been putting in, just to make sure that we are on a firm foundation as we commence the execution of using your provisions. And I guess, like any other provision, it will obviously be seen in terms of its impact over a period of time. But I think let me emphasise one point, Nompu, and that instrument that has enabled the strengthening of the mandate of the office can never operate in isolation. You can always operate and be effective in its operation if those that are charged with leadership in those institutions also are responding, and they are part of the accountability side.
NOMPU SIZIBA: Absolutely. Yeah. The stick really isn’t enough on its own. Like you say, there needs to be a culture of accountability and doing the right thing. Thank you so much for joining us, Auditor-General Kimi Makwetu. Take care, Ntate.