While the province continues to use and spend large amounts of money to pay consultants to assist municipalities to improve performance and audit outcomes this has not translated into improved audit outcomes. Municipalities in the Province have been found to over rely on the services of the consultants for the past 5 years with at least 91% of the municipalities utilising the services of the consultants.
The majority of municipalities in the province utilized the services of consultants for the preparation of Annual Financial Statements (AFS’s) in the 2018/2019 financial year and albeit the significantly high cost of such services, the municipal audit outcomes did not materially improve.
Notwithstanding the utilization of consultants, the Province did not improve much from its poor audit outcomes as the province did not have a single financially unqualified audit opinion in 2018/19 financial year.
As a result of this, the provincial treasury held a groundbreaking and historical webinar with all stakeholders in the local government sphere to assess the impact of utilizing consultants and the benefits thereof in terms of changing the audit outcomes of the province.
The webinar was attended by Premier Prof Job Mokgoro, MEC for Finance, MS Motlalepula Rosho and representatives of the Auditor General of South Africa, Executive Mayors, Mayors, Municipal Managers, Chief Financial Officers and representatives of Salga amongst others.
Delivering the purpose of the day, the MEC for Finance, Motlalepula Rosho said the continued utilization of consultants by municipalities in the province and lack of improvement in audit outcomes is a going concern as the use of consultants by municipalities remain one of the key cost drivers in local government.
“The use of consultants in municipalities remains one of the growing cost drivers within Local Government in the Province however we continue to receive adverse audit opinions whilst we consistently reflect a higher percentage of consultant costs against their Budget and Treasury Ofiices (BTO’s) departments’ salary costs,” said MEC Rosho.
She said even in instances where consultants are used there is no skills transfer to officials in the Budget and Treasury office. Skills transfer or lack thereof was blamed on the officials not taking a keen interest to learn.
“The important aspect of skills transfer also seems to be non-existent as can be observed in the need for our municipalities to constantly engage consultants’ year in, year out,” observed Rosho.
Delivering the keynote address, Premier Prof. Job Mokgoro decried the dysfunctional state of municipalities in the country and the province in particular.
“There is visible collapse in our municipalities; not only in the North West but countrywide. Out of the 257 municipalities in South Africa, only 27 of them received clean audits. There was not even one from the North West amongst those.”
The Premier further indicated that the level of skills of finance staff, the high cost of consultants, and the vacancy rate among key senior managers such as Municipal Managers, CFOs and Technical and Corporate Service Directors are matters for serious concern.
“The use of consultants continues to be ineffective in the areas of records and documentation, monitoring and project management.”
“Of the ten municipalities that made use of consultants at a cost of R122 million to assist with financial management and submission of reports to the AG, none received a clean audit in the 2019-2020 financial year.”
“What is evident is that these municipalities paid their staff as well as consultants to perform the same work, but there were no visible returns on these investments, leading to a “waste of scare public resources,” stated Premier Mokgoro.
Premier Mokgoro firmly believe that the use of consultant should not be viewed as a solution to the many financial management and reporting problems besetting municipalities, but it should be seen as a means to a solution; key being the need to address skills shortage problems through the necessary transfer of those skills by consultants in the process.
“It is very critical that officials at local government level are equipped and properly capacitated, and the appointment of consultants should be done with this in mind – it should be one of the single most determining factors as to why we appoint them,” said Premier.
In his presentation the Acting Business Enterprise from the Auditor General, Mr. Mthokosizi Msibi elevated key areas of concerns impacting on the audit outcomes. Mr Msibi stated that there is total collapse of preventative controls and this in turn has led to collapse in financial management and weakened internal control.
He reiterated the need for provincial and local government to focus on implementing preventative controls, with governance structures insisting on in-year preparation and submission of accountability reports.
He indicated despite using consultants, municipalities continue to submit poor quality annual financial statements which are not credible and other fail to submit on the legislated date.
Mr Msibi said nothing has changed from the 2016/17 audit outcomes and if anything there has been regression of outcomes.
He said it has become a futile exercise to continue using consultants with no tangible results on audit outcomes. He said the use of consultants should be a short term solution and municipalities should focus on finding long term solution for improving future audit outcomes.
“We are of the view that something drastic needs to happen for the picture to look better.” Concluded Mr Msibi
One of the key challenges identified amongst others was that municipalities have not been effectively monitoring the work performed by consultants.
Municipalities must ensure that deliverables are clear, specific and measurable to easily measure project outcomes and to ensure that institutions receive value for money
Contact:
Ms. Kesalopa Gill
Cell: 079 5486 352
Tel: 018 388 3584
Email: kgill@nwpg.gov.za
