01/03/2023
For the fourth year in a row Lekwa municipality got a disclaimer of opinion for their audited financial statements.
In the AFS 30 June 2022 the Auditor General wrote,
“I do not express an opinion on the financial statements of the municipality. Because of the significance of the matters described in the basis for disclaimer of opinion section of this auditor’s report, I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. “
a Briefing document sent to the municipality by the Auditor General says the following,
“Material limitations and disagreement misstatements have been identified on the submitted financial statements. Material findings on performance information and non-compliance with laws and regulations have also been noted.
The municipality has stagnated its audit outcomes for the past years. Whilst some controls are implemented in the current year, they require continuous strict monitoring by senior management – in a pro-active manner until such time the internal controls are embedded and institutionalised into all key processes of the municipality.
We would like to urge all the assurance providers in the accountability ecosystem within the municipality to reflect on their effectiveness in providing the necessary level of assurance. The slow response by management together with the lack of consequences for those who breach controls are driving the stagnation of the audit outcome. It will also benefit the municipality if the issues that are continuously raised during the audit, year in and year out, are addressed. Action plans developed by management to address the issues do not adequately identify the root causes and appropriately devise a plan to deal with the root causes.
The ineffectiveness of controls such as inadequate review and supervision by senior management, poor records management and lack of due care in the exercise of duties throughout the year, resulted to material misstatements that were elevated to the audit report.”
When reviewing the Audited financial statements last year, we warned that without drastic change we will continue with receiving these audit opinions, or as the Auditor General notes it’s a stagnation in audit opinions.
It is clear that no one person, but rather officials who couldn’t care less and political leaders who serve in council and fail to read or comprehend the reports, who should take accountability for the poor audit outcome.
The Auditor General has been warning successive administrations of the massive problems in the finance department, but to no avail.
It is political leaders’ responsibility to hold these officials to account and insist on accurate information and that necessary corrections are made so that stakeholders have a true reflection of the state of the municipality’s finances.
This municipality is still technically under administration, there has been intervention by multiple parties, the court, the minister of finance, an administrator, national government, COGTA, provincial government and a new council was elected. Between all of this we still received the same audit opinion as previous years.
Currently we owe Eskom more than R1.9 billion, we owe the Department of Water more than R1 billion, we still incur massive distribution losses in the sale of electricity, the revenue enhancement strategy is failing and the much-vaunted financial recovery plan is not being adhered to.
We urge councillors to make efforts to come up with a sustainable way forward that will eventually move this municipality to a viable financial position, better the experience of the citizens it serves and an improved service delivery.
