cities

Figure 6.9: Municipal audit consistency (2008/9–2012/3)
70%
60%
61%
50%
40%
50%
43%
39%
30% 27%
7%
30%
25%
21% 19%
0% 0% 0%
20%
10%
13%
5%
11%
16%
13%
9% 8%
0%
Unqualified
Unqualified
with findings
1% 2% Metro District
Qualified Adverse Disclaimer Do not submit
Local
Total
Source: Data from Powell and O’Donovan (2014)
Although metro municipalities have the greatest administrative capacity, district municipalities have
better audit performances. The majority (66%) of the district municipalities consistently receive
unqualified audits, compared to 63% for metros (Powell and O’Donovan, 2014). Unlike most local
municipalities, metros have access to skills and financial resources, which contributes to their good
performance in audits. In 2013/14, only 58 out of 335 municipalities and municipal agencies achieved
clean audits. They included two metros (Ekurhuleni and Cape Town), 38 municipalities and 18
municipal entities. Tshwane, Johannesburg, eThekwini and Mangaung achieved unqualified audits
with findings (a lack of standard operating procedures for the accurate recording), while Buffalo City
and Nelson Mandela Bay obtained qualified audits with findings (irregular expenditure due to
inadequate systems). 12
Financial governance has both a strategic and an operational component. Strategically, finances must
be managed to accommodate fluctuations in the economy and the resulting changes in costs and
revenues; operationally, cities must put in place clear financial goals, policies and controls. Maintaining
a healthy financial base that fully supports the services of cities according to political priorities requires
constant vigilance. This is often reflected in restructuring and reshaping services, implementing new
financial management systems, securing sound recurrent revenues, and making responsible spending
adjustments because of limited revenue growth in order to balance the budget.
12 Stone S. 2015. ‘Most of SA’s metropolitan municipalities fail to achieve clean audits’, Business Day Live (BDLive), 7 June 2015.
226 State of South African Cities Report 2016