AG raises alarm over slow municipal reform despite improvements
More worrying for the Auditor-General was the fact that 38 municipalities, including three metropolitan municipalities, had regressed since the 2020/21 financial year.
While Auditor-General Tsakani Maluleke has acknowledged improvements in some municipalities across the country, she warned that the pace of reform remains far too slow to reverse years of governance failures, financial mismanagement and deteriorating service delivery.
Presenting the 2024/25 local government audit outcomes report in Parliament, Maluleke painted a mixed picture of a sector showing pockets of progress but still struggling to meet the expectations of communities.
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While municipalities have made gains in areas such as the timely submission of financial statements and reducing the number of disclaimed audit opinions, Maluleke said the overall state of local government remains a cause for concern.
“Over the past four years, mayors and councils of the sixth administration have made limited progress to strengthen governance and improve service delivery, as residents and businesses continue to experience unreliable service delivery, environmental hazards and deteriorating infrastructure,” she said.
The report found that only 39 municipalities – representing 15% of the country’s municipalities, achieved clean audits in the 2024/25 financial year.
Collectively, the municipalities which received clean audits account for only 8% of total local government expenditure.
More worrying for the Auditor-General was the fact that 38 municipalities, including three metropolitan municipalities, had regressed since the 2020/21 financial year.
“Regressions in audit outcomes should be a rare occurrence, particularly in the absence of significant changes to legislation or reporting requirements,” she said.
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Maluleke did, however, highlight what she described as “positive shoots”, with the number of municipalities receiving disclaimed audit opinions – the worst possible audit outcome – dropping significantly from 29 in 2020/21 to only eight in 2024/25.
There was also a notable increase in municipalities receiving unqualified audit opinions, rising to 61%, while the submission rate for financial statements reached 98%, the highest ever recorded by the Auditor-General’s office.
It is encouraging that municipalities, as well as national and provincial governments, paid attention to our messages over the years to collaborate with the aim of driving timely submission of financial statements and eradicating disclaimed audit opinions.
Despite these gains, the report found that many municipalities remain financially distressed, with more than half not having sufficient current assets to meet their obligations, while 72% lacked enough cash to pay creditors.
Maluleke also raised concerns about a growing dependence on consultants. With municipalities spending R1.61 billion on financial reporting consultants during the year under review, Maluleke warned against the growing dependence on consultants.
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The country’s eight metropolitan municipalities also continued to perform poorly, with none achieving a clean audit, while audit outcomes among metros continued to deteriorate.
The encouraging signs of improvement, Maluleke said, would have little impact unless accountability structures became more effective and political leaders acted decisively.
“These commendable efforts need to be doubled and replicated with all accountability ecosystem roleplayers steadfastly delivering on their respective mandates,” she said.
