Sun. Oct 20th, 2019

OUTA not surprised by the decline of local governance

OUTAThe Organisation Undoing Tax Abuse (OUTA) held no punches in their response to the Auditor General’s report that only 8% of municipalities got a clean audit score.

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OUTA believe the poor performance of local municipalities as shown by the Auditor General’s audit report is one of the biggest threats to South Africa, but they are not surprised by the news.

Auditor General report on local governance

While the amount of irregular spending declined to R21.2 billion from R27.7 billion in the 2016/17 financial year, the overall picture was a bleak one.

The AG’s report showed that just 8% of municipalities received a clean audit score in the 2017/18 financial year, down from 14% the year before.

The biggest concern is that not enough is being done at municipalities to set up the mechanisms, protocol, and checks and balances needed to curtail irregular spending. This means that optimism is not high that this issue will be fixed any time soon.

“Audit results show an overall decline… this undesirable state of deteriorating audit outcomes shows that various local government role players have been slow in implementing, and in many instances, even disregarded the audit offices recommendations,” said Auditor General Kimi Makwetu.

Local Municipalities demise is South Africa’s biggest threat

The issue is a major concern of OUTA, who view municipalities as the engine room of the economy and believe that economic recovery would be next to impossible without them functioning correctly.

“Municipalities form the lifeblood of South Africa. It’s where we work, live and create a life. If it fails, the country fails. Hence, we need to do everything in our power to ensure it succeeds,” Julius Kleynhans, OUTA’s operations manager for local government.

According to Godfrey Gulston, OUTA’s CFO and local government financial analyst, the organisation’s dealings with municipalities over the years has shown a lack of management and accounting skills.

“There seems to be a culture of entitlement among some municipal staff that they have been elevated to officials rather than public servants and this must be stopped,” Gulston said.

“External influences of exorbitant costs by ESKOM, Water Boards, SAMWU and SALGA make services unaffordable. This leads to payment defaults that creates cash flow issues, which hamper the ability to pay suppliers and in effect drains cash reserves.”

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