AG still concerned about use of consultants in KZN municipalities

The office of the Auditor General South Africa (AGSA) has seen an improvement in some KwaZulu-Natal municipalities, and while consultants are widely used, there has been a reduction in consultancy fees from R240 million to R220 million in the last financial year.

Irregular expenditure also decreased from R6.2 billion to R5.7 billion. Nomalungelo Mkhize, AGSA Business Unit Leader in KZN, presented the local government audit outcomes of the Municipal Financial Management Act (MFMA) to the KZN Legislature-Standing Committee on Public Accounts (SCOPA) and the Portfolio Committee on Cooperative Governance and Traditional Affairs(Cogta), on Tuesday.

Mkhize said they made a call to action at the end of the financial cycle in 2022 and 2023, requesting leadership to ensure that the key service delivery indicators are being prioritised with adequate funding to fast track infrastructure projects and to ensure that there is adequate budget for repairs and maintenance.

Mkhize said that the AGSA has seen an increase or a gradual improvement compared to 2022 and 2023 in terms of the audit outcomes. Mkhize said that this demonstrates that the municipalities and the officials are able to present a credible set of financial statements indicating how the monies have been spent.

“Although we have seen a decrease in the use of consultants there are a number of municipalities that do use consultants for financial reporting. We still find misstatements in the work that the consultants are doing and at times the consultants are taking on work where they can see that they may not be able to conclude the work with quality.

"We are also finding that consultants are not being monitored to see whether there is delivery according to what was contracted for."

The AGSA said that municipalities are still struggling with action plans not being implemented and that there was a lack of enforcement being taken against officials that are found to have transgressed previously. Mkhize said that this is the root cause for the continued transgressions and the non-performance in some municipalities.

"It then creates the culture that non-compliance can go on without the necessary consequence management. Officials are not being held accountable," she said. 

Mkhize said that poor payment practices are resulting in interest charges and penalties. Mkhize said poor management of electricity and water distribution losses are above the acceptable norms in a number of municipalities.

"There is a concern regarding the credibility of share grants received from national and provincial government. If it was any other business they would actually be at a point where they need to be closed. There is also insufficient funds that are available to complete projects," she said. 

The AGSA said that in municipalities that ended the year in deficit, where expenditure was more than revenue, many of them already started eating into the next year's budget.

zainul.dawood@inl.co.za