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A recent survey by Munsoft, a fintech and leader in municipal financial management solutions, has revealed that many senior municipal officials in South Africa are prioritising service delivery over achieving clean audits. The study, which surveyed around 95 municipalities out of South Africa’s total 257, found 65% of respondents ranked addressing core community needs as a higher priority than obtaining clean audit results.
“While clean audits are crucial, they do not inherently guarantee effective service delivery. Several municipalities with clean audits still face substantial challenges in areas such as infrastructure maintenance, water supply and sanitation. This highlights that financial compliance must work in tandem with robust operational management to improve service delivery outcomes effectively,” said Nicholas Maweni, CEO of Munsoft.
Overlooking financial controls in the pursuit of service delivery can lead to irregular expenditure and financial mismanagement. The auditor-general’s reports have repeatedly highlighted instances where a strong focus on service delivery has resulted in unauthorised and wasteful expenditure, a consequence of insufficient financial oversight.
In her recent Consolidated General Report on Local Government Audit Outcomes, Tsakani Maluleke, the auditor-general of South Africa, stressed: “I remain convinced that service delivery improvements in local government will be enabled by stable, capable, cooperative, accountable and responsive municipalities delivering on their mandates, and by leadership creating a culture that values excellence and continuous improvement to bring about positive change in the lives of all South Africans.”
Audit outcomes, as outlined by the AG, are based on a municipality’s compliance with financial reporting standards, performance objectives and legislative requirements. A clean audit, therefore, indicates not only an unqualified financial opinion but also an absence of significant findings on both performance reporting and legal compliance.
Complex landscape
When municipalities neglect financial management, the delivery of critical services and government priorities suffers. Maweni notes that while focusing on service delivery is essential, it must be supported by strong financial management to ensure sustainable operations. “In the long run, sustainable service delivery relies on a robust financial management system, which ultimately contributes to improved audit outcomes,” Maweni explained.
“As municipalities navigate the complex landscape of service delivery, financial management and governance, it’s vital to strike a balance that meets community needs while upholding sound financial practices,” Maweni concluded. “This survey underscores the importance of strategic partnerships and innovative solutions to promote sustainable growth across our municipalities.”
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