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Audit Opinion

28 June 2022 Media Statement: Auditor General clarifies ambiguous reporting

Media Statement: Auditor General clarifies ambiguous reporting

For Immediate Release
28 June 2022

The Auditor General of South Africa (AGSA) recently directed a letter to Garden Route District Municipality (GRDM) Municipal Manager, Monde Stratu, to clarify the ambiguous reporting done on 15 June 2022 during a media briefing session. The AG, during the session, tabled a report outlining the 2020/21 Municipal Finance Management Act (MFMA) audit outcomes of local government.

The AGSA, in its letter to GRDM, stated:

“The GRDM has achieved a clean audit outcome due to the adequacy of the action plans that were instituted to address prior year findings and we commend the municipality on this achievement.”

“We would like to further clarify that:

  • the statement by the Auditor-General, during the tabling press conference, was in relation to municipalities residing within the boundaries of the district and not to the GRDM itself, hence the reference to auditees that had obtained a qualified and unqualified audit outcome, and
  • the paragraph included in the provincial overview of the general report was in reference to the fact that the GRDM had not obtained a clean audit outcome in the prior year (2019-20) and therefore did not sustain/extend their clean audit outcome from the prior year, unlike the other Western Cape district municipalities.”

The GRDM issued a media release about its Clean Audit position in December last year – Media Release: Garden Route DM celebrates Clean Audit and commits to retain it

GRDM remains committed to ensuring that it has all preventative and detective controls in place to ensure good governance continues to be embedded in our organisational culture for years to come. The audit outcome was, therefore, a result of a concerted effort by all officials to ensure that good governance and sound financial management remain at the heart of what we do at the Municipality,” said Monde Stratu.

A copy of the letter is included below:

ENDS

 

Another Unqualified Audit for Garden Route District Municipality

Garden Route District Municipality (GRDM) has received its second consecutive unqualified audit. The Auditor-General (AG) attributed the Western Cape municipalities’ 2018/19 success to “effective leadership culture, the implementation of action plans, and established policies and procedures”.

Monde Stratu, GRDM Municipal Manager said: “we managed to reduce all deviations by almost half when compared to 2017/18 financial year.” This was one of the institution’s goals which was collectively achieved.

“I am proud of my administration and all the work they’ve put into retaining an unqualified audit status. Council’s oversight and support have also been invaluable,” said Stratu.

Putting good governance into practice is one of the reasons why the Western Cape Government has produced the best AG outcomes with 79% clean audits.  Earlier this year, GRDM hosted its first Good Governance Summit where it, among others, discussed topics such as:

  • accountability through the implementation of effective governance structures;
  • enhancing public participation processes through effective good governance structures and new innovations;
  • insulate municipalities against interference from external stakeholders
  • encourage and improve ethics and ethical conduct within municipal leadership

The MEC for Local Government at Western Cape Government, Anton Bredell, also voiced his opinion about audit outcomes and said: “Councils are increasingly struggling with severe ongoing financial constraints due to the country’s economic challenges.” At 74%, the province also had the highest number of auditees with good financial health status and there were no auditees with unauthorised expenditure. From the above, it is evident that there has been a solid and consistent pattern of good audit outcomes in the province.

Definition of various Audit Outcomes

Clean Audit Outcomes:

The financial statements are free from material misstatements and there are no findings on reporting on performance objectives or non-compliance with legislation.

Unqualified Audit Opinions:

The financial statements contain no material misstatements. Findings may have been made on either reporting on predetermined objectives or non-compliance with legislation, or both these aspects.

Qualified Audit Opinions:

The financial statements contain material misstatements in specific amounts, or there is insufficient evidence for us to conclude that specific amounts included in the financial statements are not materially misstated.

Disclaimer of Opinion:

On some occasions, an AQ is unable to complete an accurate audit report. This may occur for a variety of reasons, such as an absence of appropriate financial records. When this happens, the auditor issues a disclaimer of opinion, stating that an opinion of the firm’s financial status could not be determined.