The MLM received a disclaimer audit opinion for the 2006/2007 financial year. However, in 2007-08 it received an adverse audit opinion. This was caused mostly due to lack of accounting capacity and skills to deal with technical accounting issues. The lack of routine reconciliations of balances and accounts by officials, lapses in the control activities as well as inadequate monitoring were also factors contributing to the negative audit outcome Makhado Local Municipality did not provide timeously to auditors the clear trail of financial statement and management information. Auditors were unable to express audit opinion on the financial statement of the MLM for the year ended 30 June 2007.