Speaker, the Auditor-General's findings related to supply chain management, which showed weaknesses in procurement processes, human resource management issues, and the filling of vacancies, in particular in information technology, financial health, and competency levels in key positions, such as those of municipal managers and chief executive officers.
An adverse opinion is issued when the Auditor-General determines that the financial statements are materially misstated and, essentially, that the information contained in them is materially incorrect, unreliable, and inaccurate in relation to the task of assessing the financial position and results of operations.
A disclaimer, on the other hand, is issued when a limitation on scope is imposed by the municipality as a result of the auditor being unable to obtain sufficient and appropriate audit evidence to support key information in the financial statements. This renders the Auditor-General unable to express any opinions.
Disclaimers and adverse audit opinions therefore cannot be directly linked or ascribed to corruption and maladministration. In the event that the Auditor-General identifies cases of potential corruption and maladministration, these are brought to the attention of management for investigation, as they constitute criminal activity. However, the absence of information resulting from the lack of proper record-keeping in the case of disclaimers presents a risk of corruption, because the environment becomes conducive to corruption and maladministration that can occur and remain undetected.
The Minister is not considering instituting lifestyle audits in municipalities as a measure to fight corruption. Whether the Minister has the power to do so is debatable. Instead, the Minister is looking at finalising regulations which are now before Parliament, and which will require senior managers in municipalities to disclose their financial interests annually within 30 days of the commencement of the new financial year of a municipality, or their date of appointment and when they entered into an employment contract with the municipality.
The other measure that is in place, or proposed, to prevent corruption relates to the application of section 57A(3) of the Local Government: Municipal Systems Amendment Act, which provides that any member of staff found to have been dismissed for financial misconduct relating to corruption and fraud will not be re-employed in any municipality for a period of 10 years. I thank you.