An analysis of audit outcomes and service delivery at the local government sphere in South Africa

Abstract

Section 4(1) of the Public Audit Act 25 of 2004 stipulates that the Auditor-General (AG) is responsible for auditing and reporting on the accounts, financial statements as well as the financial management of national and provincial government departments, Parliament and all municipalities, among others. In this regard, at the end of every financial year, the AG issues a report on the audit outcomes of the various public institutions that are listed in section 4(1) of the Public Audit Act. At the same time, an impression is given that if a public institution gets a 'clean' audit, or an unqualified audit opinion, that institution is achieving its objectives. Public institutions exist for the sole reason of providing goods and services, which mainly cannot be provided by the private sector. Therefore, this should be the test of whether a public institution is achieving its objectives or not. This paper used secondary sources of information to analyse whether an unqualified audit opinion by the AG equates to satisfactory service delivery by looking at the provincial audit outcomes of several municipalities in South Africa over a period of time vis-à-vis these municipalities' performance when it comes to service delivery. The 2016/17 financial year of the Western Cape government came first in comparison to other provinces in obtaining 'clean' audits in 70% of its municipalities. However, the province still experiences service delivery protests on a frequent basis, largely related to a perceived lack of service delivery when in the provision of housing. The findings show the provinces with municipalities that have received less unqualified audit opinions, such as the Eastern Cape and Gauteng, have at the same time spent more money in an irregular manner, and have also experienced the most service delivery protests. The paper contributes a framework that provides the key conditions that have to be in place for effective service delivery to take place.