The South African Local Government Association (Salga) has called on municipalities which paid more than R1 billion to consultants for financial reporting to pay back the money or face the wrath of the law.
The association said in a statement that municipalities across the country have paid more than R1.2 billion to consultants, which they hired to audit their books before they were sent to the office of the auditor-general (AG) .
This despite municipalities having appointed chief financial officers or charted accountants for a similar job.
“There is a worrying and growing trend for the use of consultants in municipalities for financial reporting purposes. Yet some of the municipalities using consultants have nothing to show for it,” said the association in a statement.
The association said the AG’s report revealed that money used to pay consultants in municipalities amounted to R1.02 billion last financial year.
About 59% (102) of financials submitted for auditing included material misstatements.
“This means that even when they hired consultants, these municipalities could not complete financial statements. This practice of using consultants for financial reporting must be stopped as it yields no results.
“Salga will again be writing to all municipalities implicated to conduct investigations and act against any wrongdoing. Where nefarious intentions are found, people must be held to account,” said the association.
The association claimed it suspected some auditing firms were colluding with municipal employees in high positions to defraud government.
“Municipalities must name and shame those companies that are found to have robbed municipalities, report them to the professional bodies, blacklist them and demand that the stolen money be refunded,” said the statement.
During the national executive committee meeting of Salga on 24 June, the association resolved to communicate directly with mayors and accounting officers of municipalities who have transgressed in terms of relevant legislation, in order to demand that accountability and consequence management be actioned.
It also resolved to communicate directly with mayors and accounting officers of municipalities to advise them not to unnecessarily or extensively utilise consultants but to rather use their own staff.
Salga said yesterday that 43 letters had been sent to the accounting officers of the municipalities that incurred the highest amounts of irregular expenditure.