The DA in Limpopo will request the MEC for COGHSTA, Basikopo Makamu, to enforce penalty clauses on service providers for botched financial reporting, following the concerns raised by the Auditor- General(AG), Tsakani Maluleke, on the use of financial consultants by municipalities in the 2024/25 financial year.
In the Consolidated General Reports on Local Government Audit Outcomes 2024/2025 the AG expressed concern that all 27 municipalities used consultants for financial reporting at a total cost of R235.85 million.
The big spenders include:
· Mokgalakwena Local Municipality- R31 476 244 million
· Polokwane Municipality – R26 624 049 million
· Fetakgomo-Tubatse Local Municipality – R22 510 114 million
· Thabazimbi Local Municipality- R19 383 763 million
· Collins Chabane Local Municipality- R 17 250 146 million
· Modimolle-Mookgopong Local Municipality – R16 502 770 million
· Maruleng Local Municipality – R11 751 321 million
Despite this investment, 20 municipalities (74%) submitted financial statements with material misstatements in the areas on which the consultants worked; the quality of the financial statements remained poor, as finance units did not adequately review the work of consultants.
These consultant fees were spent in addition to the R885,01 million that municipalities spent on their finance units; the DA will further request a skills audit to be conducted in all municipal finance units to determine lack of competencies.
The AG cited poor financial reporting, driven by a lack of skills in the finance units, weak in-year controls, poor record-keeping and a lack of consequence management, resulting in recurring errors as reasons for the chronic underperformance.
While spending on consultants remain stubbornly high, questions remain about the real value for money and the lack of capacity of consultants. Material misstatements were identified in 74% of financial reports submitted for auditing, including work done by consultants.
Results confirm that financial management disciplines remain significantly weak, and municipalities increasingly continue to depend on excessive use of consultants without paying attention to achieve meaningful improvements in financial reporting and accountability.
Eleven municipalities operated on an unfunded budget and a further five municipalities reported deficits, which indicate a deterioration in financial health; there is simply no more room for persistent non-compliance and substandard service providers which costs taxpayers millions.