The PLM did not provide its annual statement to auditors, including management information, for the financial year 2007-08. As a result auditors were unable to produce a audit report of the municipality for the year ended 30 June 2007. This is contrary to section 126 (1) (a) of the MFMA, which requires the Accounting Officer of a municipality to prepare the annual financial statements of the Municipality and, within two months after the end of the financial year to which those statements relate, submit the annual financial statements to the Auditor - General for auditing. Ba-Phalaborwa Municipality owes approximately R793, 673 in outstanding audit fees to the Auditor-General.