Supply chain management (SCM) is one of five significant risks affecting whether municipalities receive a clean audit, said South Africa’s auditor general Terence Nombembe.
The risk within SCM is demonstrated by the growing trend of irregular expenditure said Nombembe, commenting after the publication of the latest audit results for the financial year, in which only 13 municipalities achieved a clean audit.
Other significant risks preventing a clean audit include ineffective internal IT controls; failure to provide services municipalities are meant to; poor human resource management resulting in a skills gap; and errors in financial statements.
Internal controls also remain an issue, with 70% of municipalities lacking necessary controls, with the remaining 30% making progress to address the issue.
“We are seeing the impact of the lack of skills, the slow response of leadership to owning key controls, as well as the absence of managing poor performance and the risks that municipalities continue to face. At the moment these risks are beyond tolerable levels,” added Nombembe.
The auditor general called upon leaders from municipalities and provinces to partner with the South African Local Government Association in initiatives which would improve the accountability of authorities.