Municipal debt to the auditor-general keeps rising
The office of the auditor-general is burdened with outstanding debt of R744m in unpaid audit fees, with nearly half of it being due by municipalities.
The chair of the auditor-general’s audit committee, John Biesman-Simons, expressed concern on Friday over the continued increase in local government indebtedness.
This was during a briefing to parliament’s standing committee on the auditor-general.
The auditor-general is integral in holding to account all government departments and institutions as well as municipalities over their management of public funds and resources.
Auditor-general Kimi Makwetu gave the assurance that the level of outstanding debt does not compromise the work of his office.
Makwetu said the office has also succeeded in ring-fencing the outstanding debt and making arrangements for its incremental repayment.
Municipalities are in dire straits with only 18 out of 257 receiving a clean audit in 2017-18. They notched up irregular spending of R25bn in that year.
The year-end debt of the auditor-general’s office rose 15% to R744m in 2018/2019 compared with R650m in 2017/2018, with local governments’ share rising 29% to R321m from R249m the previous year.
According to the auditor-general’s annual report for 2018-19, R404.5m of the R744m owed by national, provincial, local, statutory and other bodies is current debt, R203m has been owing for 30-120 days, and R137m is older than 120 days.
Debt as a percentage of revenue for the past year is 21.5%.
Auditor-general CFO Sibongiseni Ngoma told MPs that there has been an improvement in the provision for doubtful debt since 2014/2015 when 25% of the debt was at risk compared with 18% in 2018/2019.
Despite the outstanding debt the auditor-general was able to generate a surplus of R71.5m for the 2018/2019 year on revenue of R3.5bn. It is self-funding, financing its operations from audit fees.
It conducted 1,063 audits during the year.
Audit work to the amount of R595m was outsourced to private audit firms of which 83% was outsourced to firms that had a broad-based BEE score of level one or two.