Thank you very much, Deputy Chairperson. I thought I had been skipped! On 13 April 2011 the Select Committee on Co-operative Governance and Traditional Affairs, in collaboration and co-operation with the Auditor-General and the House, with the Chairperson: of Committees and Oversight, held a workshop at the National Parliament on the consolidated 2009-10 local government audit outcomes in municipalities and municipal entities as at 31 January 2011.
In terms of the 2009-10 financial year's consolidated audit report, there are seven municipalities that achieved financially unqualified audit reports with no other matters of concern, as compared to four municipalities during the previous financial year. The municipalities that achieved a clean audit were Ehlanzeni District Municipality, Steve Tshwete Local Municipality, Victor Khanye Local Municipality in Mpumalanga, Metsweding District Municipality in Gauteng, Frances Baard District Municipality in the Northern Cape, Fetakgomo Local Municipality in Limpopo and City of Cape Town Metro.
Fetakgomo Local Municipality in Limpopo is one of the smallest rural municipalities in the country. Their achievement suggests that achieving a clean audit is within the grasp of any willing and determined municipality. Mpumalanga province must be applauded for its outstanding achievement. Half of all clean audits in the country come from that province. [Applause.]
The 10 municipal entities that achieved clean audit reports include Amathole Economic Development Agency in the Eastern Cape; and Brakpan Bus Company; East Rand Water Care Company, Erwat; Joburg Property Company; Johannesburg Civic Theatre; Johannesburg Social Housing Company; Lethabong Housing Institute and Roodepoort Civic Theatre in Gauteng. In the Western Cape, the Cape Town International Convention Centre and Overstrand Local Economic Development Agency received clean audits. None of the municipalities or municipal entities in the Free State, KwaZulu-Natal and North West provinces obtained audit outcomes that fall within this category.
The audit in 219 municipalities on predetermined objectives reporting has found that 25% was composed of late submissions or nonsubmissions and 88% of noncompliance with the Local Government Municipal Finance Management Act, the Local Government: Municipal Systems Act and the Municipal Planning and Performance Management Regulations. Then, 68% of the information was not consistent or relevant in terms of the planned performance information, and 47% of the reported information was not accurate, complete and consistent in relation to source data, evidence or documentation.
The audit findings on compliance with laws and regulations in both municipalities have revealed that expenditure was not paid within the parameters set by the applicable legislation; the mayors, accounting officer or officers did not adhere to their statutory responsibilities; and the audit committee and internal audit units were not properly established or functioning properly.
The audit findings have revealed that unauthorised expenditures were incurred in 110 municipalities and two municipal entities. Irregular expenditure was incurred in 168 municipalities and 22 municipal entities. Fruitless and wasteful expenditure was incurred during the period under review in 105 municipalities and 60 municipal entities.
The audit outcomes indicated leadership, financial and performance management, and an information technology governance framework as institutional drivers required to improve audit outcomes at municipalities and municipal entity level.
The Select Committee on Co-operative Governance and Traditional Affairs believes that the municipalities and the entities that moved from negative audit findings to improved results have shown that the challenges facing local governments are not insurmountable. Where leadership have shown keen interest and played their part by getting involved with the key operations of their municipalities, the outcomes testified that others can follow suit and drive the process towards clean administration.
Leadership need to improve results in the area by appointing dedicated human resources to manage performance and by formally incorporating service delivery in the performance management framework of municipalities.
It needs to be re-emphasised that the primary responsibility for achieving clean audit outcomes remains that of municipalities. In this regard it is the municipal political leadership that must set the right tone and foster the right culture. National and provincial governments do and should provide support in terms of section 154 but the primary responsibility to address the challenges resides with the municipalities.
The consolidated audit outcomes have indicated the need for the NCOP and National Assembly to develop an action plan for overseeing the role of municipalities and municipal entities in areas such as supply chain management, predetermined objectives, financial management, turnaround plans, IT controls, human resource management, use of consultants, municipalities under administration and governance structures. Therefore the Select Committee on Co-operative Governance and Traditional Affairs has committed itself during this third term to co-ordinate, in collaboration with these standing committees in the provincial legislatures, to a follow- up workshop on the final consolidated report on 2009-10 audit outcomes in municipalities with the Auditor-General.
The Select Committee on Co-operative Governance and Traditional Affairs, in collaboration with the standing committees in the provinces, should, after the 2011 local government elections, develop co-ordinated oversight action plans to address areas that require intervention in the municipalities and municipal entities. The oversight action should focus on areas such as supply chain management and all other predetermined objectives.
Debate concluded.
Question put: That the Report be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report accordingly adopted in accordance with section 65 of the Constitution.