Auditor‑general sounds election alarm as all metros fail audit

South Africa’s eight metropolitan municipalities – responsible for more than half of local government spending and serving nearly 25 million people – all failed to achieve clean audits in 2024‑25.

Auditor‑general Tsakani Maluleke’s latest report reveals a worsening picture: five metros received qualified opinions, irregular expenditure ballooned to R73.87 billion over four years and service delivery losses mounted, from R9.89 billion in water to R17.28 billion in electricity.

Maluleke warns no metro achieved clean audits for 2024-25

She warned that weak leadership, poor oversight and a collapsing accountability ecosystem continue to undermine governance, urging urgent reform as the seventh local government administration prepares to take office.

Maluleke said water losses in the metros totalled R9.89 billion, electricity losses amounted to R17.28 billion and the metros’ consumer debt written off or impaired reached R39.33 billion.

“The root causes of continued poor audit outcomes and municipal failures can be traced to persistent accountability ecosystem failures at multiple levels,” she said yesterday.

Maluleke called for urgent action to professionalise local government, strengthen oversight structures, improve skills retention and enforce consequences for misconduct.

She urged political parties to prioritise capable and ethical candidates for municipal councils and mayoral positions.

“The calibre and capability of the elected leaders will determine the success of the seventh administration,” she warned.

Only 39 of 257 municipalities achieved clean audits

Her last local government audit ahead of the November local government elections points to a general worrying state of affairs, with only 39, or 15%, of the 257 municipalities achieved clean audits.

She decried the billions of rands that continue to be lost due to financial mismanagement, irregular expenditure, infrastructure failures and poor governance.

Despite repeated warnings and commitments to improve governance, Maluleke said “limited progress” has been made.

“Residents and businesses continue to experience poor service delivery, environmental hazards and deteriorating infrastructure,” she said.

While 72 municipalities improved their audit outcomes since 2020-21, a total of 38 municipalities relapsed, including three metros – Tshwane, Ekurhuleni and Mangaung – and several councils that previously held clean audits.

The number of municipalities that received a disclaimer, the worst possible audit outcome, declined from 35 in 2019-20 to just eight in 2024-25.

195 municipalities submitted financial statements

Maluleke found that 195 municipalities, or 76%, submitted financial statements containing material misstatements.

Without corrections made during the audit process, only 24% would have qualified for unqualified audit opinions, compared with the 61% that ultimately achieved that status.

She reported that 62 municipalities were in severe financial distress, while more than half lacked sufficient current assets to cover their liabilities.

At year-end, 174 municipalities had no enough cash to pay creditors and 123 municipalities could not cover what they owed.

Maluleke said municipalities jointly wrote off R62.12 billion in unrecoverable debt during the year, while water distribution losses amounted to R14.73 billion and electricity losses reached R21.63 billion.

A total of 98 municipalities spent more than they generated in revenue, resulting in a combined deficit of R17.41 billion.

Growing dependence on financial reporting consultants

She also raised concerns about municipalities’ growing dependence on financial reporting consultants.

A total of 225 municipalities splurged R1.61 billion on consultants in 2024-25, yet despite this expenditure, 61% of municipalities using consultants still submitted financial statements containing material errors.

Since 2021-22, municipalities have accumulated R145.21 billion in irregular expenditure, including R40.14 billion during the 2024-25 financial year alone.

She said procurement failures continue to expose municipalities to fraud and corruption risks.

Auditors reviewed 10 830 contract awards worth R65.12 billion and found that 216 municipalities, or 85%, failed to comply with procurement and contract management legislation.