FS moves to fix municipalities
Special assistance programme begins in 14 days
The Free State treasury department has hired about 42 service providers — among them debt recovery, accounting and management consultancy firms — to assist municipalities that have continued to struggle managing their finances and to provide services to residents over the past few years.
The service providers will sit on a panel set up to help the local authorities under a special intervention programme that provincial treasury chief executive officer Godfrey Mahlatsi said will run for at least three years.
The programme will especially focus on the eight municipalities that received disclaimer audit opinions as well as those that got qualified audit outcomes for the 2013/14 financial year, Godfrey Mahlatsi told The Weekly yesterday.
“We have appointed about 42 companies on a panel of service providers offering different services to municipalities,” said Mahlatsi in a telephone interview.
A report of the audit outcomes for the country’s municipalities and municipal entities released by the auditor-general (AG) Kimi Makwetu in Cape Town on Wednesday last week indicated that at least 33 percent or eight auditees from the province got disclaimed opinions.
A disclaimer is issued when the financial statements of the audited entity are so materially defective or inadequate that the auditor is unable to and refuses to express an opinion on the statements.
The municipalities that received disclaimer audit opinions include; Letsemeng, Mafube, Maluti-A-Phofung, Mantsopa, Matjhabeng, Moqhaka, Nala, Ngwathe and Phumelela local municipalities.
Another 22 percent of municipalities and municipal entities received qualified audit opinions on their financial statements.
A qualified audit opinion is obtained when an institution submits to the AG financial statements that contain material misstatements in specific amounts, or there is insufficient evidence for the AG to conclude that specific amounts included in the financial statements are not materially misstated.
According to Makwetu’s report, about 41 percent of the auditees in the province received unqualified audit opinions with findings because while their financial statements were essentially true they, however, had either failed to report on their financial performances against their predetermined objectives or failed to comply with some other legislation governing use of public funds.
No municipality or municipal entity from the province achieved an unqualified audit opinion with no findings — or clean audit — as it is commonly known.
A clean audit is when auditors are satisfied that the financial statements of the audited entity are a true record of its finances, containing no material misstatements and are compliant with legislation governing use of public funds.
Mahlatsi said the intervention programme was aimed at ensuring that municipalities that were lagging behind improved their audit outcomes as well as their operations.
He pointed out that the intervention programme was not a knee-jack reaction to the latest AG’s report but that the department had worked on it for some time and was now ready to implement it.
“The municipalities are faced with different challenges which include financial management. Others don’t have internal audit capacity while others don’t have risk management capacity.
“There are those that are struggling with revenue collection, some are struggling with asset registers especially the technical aspects which require them to clearly describe their assets and a host of other challenges,” he added.
The treasury boss expressed confidence in the plan saying they had brought together service providers relevant to the needs of the municipalities which means the programme was very focused.
“We looked at the weaknesses in each and every municipality and have identified the areas where they need to improve,” he said.
“We have got an intervention programme for every municipality where we address those issues that could help them improve their performance. The municipal support programme will be based on the specific needs of each and every municipality. We are at an advanced stage to get it underway,” said the treasury CEO.
“We should be implementing the programme in about two weeks’ time when we will be sending people with different expertise to the specific municipalities where they are needed.
“But it should be noted that as a provincial treasury we have been assisting municipalities on an on-going basis. However, we have limited capacity to do this. We need to strengthen our capacity with that of the private sector. Some of the work requires you to be there physically all the time until you start seeing improvements.”
Asked whether the move was not going against the call from national treasury to stop using consultants, Mahlatsi said there was no conflict as the targeted municipalities were in dire need of support.
“National treasury doesn’t say don’t use consultants. It says you must minimise the use of consultants,” he explained.
“There are areas where you find that there is capacity but the officials are not doing what they are supposed to be doing and rather, consultants are doing their work. But at the same time, there are areas where you don’t have capacity at all.
“In such cases, you will need to improvise. Some smaller municipalities like Mohokare Local Municipality cannot afford qualified staff hence we are bringing in consultants,” said the CEO. – (See additional report on municipalities on Pg 5)
