Local Government, Environmental Affairs and Development Planning

[1][a]-[c] Implementation of recommendations by the Auditor-General and implementing stronger controls to measure the spending of public funds for the last three years:

The Department of Local Government [DLG] in collaboration with the Provincial Treasury [PT] have instituted measures to address issues raised by the Auditor- General South Africa [AGSA] and provided extensive support to all municipalities in the Western Cape towards strengthening controls and achieving good governance and positive audit outcomes.

All municipalities are implementing recommendations made by the

AG [AG] and are putting stronger control measures in place to ensure that public funds are spent in a responsive and sustainable manner.

These measures have resulted in Western Cape municipalities achieving 90% unqualified audit outcomes consistently over the last three financial years.

[2] The following amounts relates to fruitless and wasteful expenditure, mismanagement of public funds and corruption:

[a] Fruitless and wasteful expenditure:

In the Western Cape, fruitless and wasteful expenditure decreased from
R101,6 million in 2019/20 to R95,7 million in the 2020/21 financial year. It should be noted that the latter amount makes up 4,9% of the fruitless and wasteful expenditure amount recorded Nationally.

[b] Mismanagement of public funds:

Unauthorised Expenditure for the Western Cape amounted to R244 million or 1,2% of the National recorded amount. Unauthorised expenditure refers to expenditure incurred that is not in accordance with the municipal budget and that have not been condoned by council. It implies that value for money has been received by government.

[b] Irregular Expenditure:

Irregular expenditure for the Western Cape amounted to R1.23 Billion or 5,6 % of the National recorded amount.

It should be noted that matters classified as irregular expenditure may however be misleading and can on face-value be construed as corrupt practices. However, many cases reported as irregular expenditure are later found to be misreported.  For irregular expenditure value for money has been received.  Expenditure in relation to corruption is determined when the necessary investigations are completed and findings and recommendations made.

[3] The following are responses and interventions implemented in municipalities to reduce fruitless and wasteful expenditure, corruption and the mismanagement of public funds:

The Department of Local Government have a standing agreement in place with the Provincial Treasury, by means of a Memorandum of Understanding [MOU], where Provincial Treasury is required to monitor and drive all financial related matters concerning municipalities and to report these matters to the MEC of Local Government on a regular basis.

To this end, the following support initiatives have been instituted to strengthen financial governance in municipalities and promote good audit outcomes and address issues raised by the auditor general:

• Development of an audit action plan support strategy where municipalities are actively supported to address matters raised by the AG.
• Vetting of all submitted Audit action plans.
• The development of a Consolidated municipal management reports database where like issues are grouped together and made available to all municipalities as a library of audit issues with practical examples of how it has been responded to by municipalities. This has been an ongoing, institutionalized process for the last number of years. Consequently, the issues raised by the AG to our Western Cape municipalities are mostly non-recurring and transversal in nature.
• Collaborative TIME engagements have allowed us to be proactive on transversal issues that spans across various disciplines within relevant government departments, in order to craft transversal support plans to cater for the requests and needs of the municipalities.
• Audit readiness engagements are held regularly where an assessment is done on certain aspects required for audit, amongst other things, to ensure that municipalities are well prepared for their upcoming audits.
• The hosting of an Annual Financial Systems [AFS] consistency workshop. This is where Provincial Treasury presents its position on certain accounting complexities based on its review of the draft AFS, prior year audit findings and a heat map analysis using its consolidated AFS database. This workshop assists in achieving minimal material misstatements across the Western Cape municipal portfolio using a consolidated analysis and drilling down to the root causes of the accounting complexities.
• Review of Annual Financial Statements prior to submission to the Auditor General with the aim that municipalities may institute corrective measures of any findings before they submit it to the auditors.
• Weekly Provincial audit steering committee meetings are held during the audit cycle consisting of key provincial departments to assist municipalities to identify and elevate potential transversal issues timeously and getting the right people to engage and assist. 
• Various engagements are hosted throughout the year such as the Chief Risk Officers [CRF] and Chief Audit Executives [CAE] forums, Management Accounting Forum [MAF], Accounting Working Group meetings, Municipal Managers forums, Public Sector Accounting forum, ICT governance forum amongst others, to stay abreast of what is happening in the industry and to alert municipalities of any matters that could potentially impact audit outcomes.
• The initiation of an Unauthorised, Irregular and Fruitless or Wasteful Expenditure [UIFW] strategy where expenditure is regularly monitored in line with the National Treasury strategy, to curb/curtail incidents of UIFW.
• Continuous support to municipalities to institutionalise Information and Communication Technology [ICT] governance and to address ICT related Audit findings.