Mangaung municipal manager Sello More is next on the chopping block as the auditor-general (AG) has fired the accounting officer with a notice of consideration to issue a certificate of debt [CoD].
If granted, this means that the accounting officer will be personally liable for financial losses caused by material irregularities.
This will be the second time the auditor-general, Tsakane Maluleke, will have enforced her powers, which were introduced in 2018 to address chronic financial mismanagement in state institutions, particularly municipalities.
The last time the AGSA issued a CoD was in November 2025 for R4.6m, to a municipal manager in the North West province, due to failure to recover funds.
This comes as the AG’s office briefed the parliamentary standing committee on public accounts [Scopa] on the various audit outcomes received by municipalities.
AG business unit leader for the Free State, Odwa Duda, presented the report on Mangaung, starting off with a qualified audit opinion with five qualifications, varying from bulk purchases, to property, plant and equipment, as well as employee costs and service charges.
The management of Mangaung does not always go back and read the meter readings, so that if you are charging the estimate to a customer, you are able to use that reliable information that possibly in the last two or three months you’ve read the actual, and base the estimates on the latest reading
— Auditor-general's office
He told Scopa the audit outcomes have been stagnant for three years on qualifications, which is a regression when compared with the last financial year of the previous administration.
“For the past three years, their qualifications were mainly around the management of overtime. Management was unable to provide supporting documentation around the controls of overtime, and whether there are processes to ensure that the overtime is worth it and if there is a need for it.”
About 53% of the municipality’s budget is allocated towards salaries, of which 16% is a line item spent on overtime costs.
The AG’s office raised eyebrows over the need to regulate the granting of overtime to officials. It provided the municipality with recommendations on how to curb this cost.
“The municipality needs to establish standard procedures to confirm the need for overtime, and verify that work that was performed has not yet been fully implemented. Monthly evidence, such as approved timesheets, job cards and supervisor sign-offs is not consistently prepared across departments, resulting in continued audit limitations.
“Further action is required to introduce a uniform verification checklist, regular monitoring by line management and clearer accountability for compliance.”
Mangaung was criticised for its service charges on billing, an area which led to material misstatements.
“The management of Mangaung does not always go back and read the meter readings, so that if you are charging the estimate to a customer, you are able to use that reliable information that possibly in the last two or three months you’ve read the actual, and base the estimates on the latest reading.
“The challenge we have is that some of the customers haven’t been billed for a number of years, some of them to an extent beyond the period of five years. Therefore, we are saying that it can never be a reliable estimate.”
Linked to the qualification of service charges is the municipality being unable to reliably disclose its water distribution losses, according to the AG unit leader.
Currently the AG flagged the inability to verify water revenue from conventional meters due to unreliable consumption data.
“It is difficult to ascertain how much of their water was lost and did not reach the end user, and it was because they are not reading some of the readings.”
The municipality also received a qualification on financial commitments it has entered into, which were understated.
“It means the municipality entered into contractual obligations with suppliers but is unable to disclose all of them in its financial statements. This is a challenge, because when those creditors demand their payments, they [the municipality] would not have set the funds aside to ensure that they meet the obligations to pay for those services.”
Mangaung was battered for its persistent flouting of procurement and financial frameworks.
“They have got a problem with the discipline to comply with laws and regulations. The first is the quality of financial statements. When they submit those financial statements, we have to allow them to make material adjustments, which attract the non-compliance.”
Duda said this means that the financial statements they have submitted for compliance did not meet all the requirements of GRAP, which is their framework for the preparation of financial statements.
In addition, the AG’s office complained that there is continued unauthorised, fruitless and wasteful expenditure, and no consequence management.
The municipality incurred R61,982,962 in fruitless, wasteful expenditure, which the AG’s office attributed to a lack of discipline.
“There is non-compliance on asset management, expenditure management because of the lack of controls. Consequences are not implemented because we continue to report either on poor performance or the transgressions, but we don’t see management taking these matters up or investigating them, or identifying the officials responsible so that appropriate processes can follow.
“This creates a culture of impunity because officials know that even if they continue not performing or to transgress, no recourse will be taken against them.”
It is still a concern that the annual report Mangaung is tabling is not one we can rely on in terms of the performance of the institution, taking into consideration that our focus with the audit of performance information is based on the basic services that they have to provide to citizens.
— AG's office
The Mangaung municipality was found wanting on the management of its funds and income.
“There is non-compliance on revenue management, which is why we end up having qualifications. Strategic management, utilisation of the conditional grants is where the grants are not always used for their intended purposes. Procurement and contract management, HR management as well as environmental management.”
Despite the doom and gloom, the AG’s office did recognise a slight improvement in the area of performance information.
“This looks like one of the worst audit opinions but we acknowledge that with the management of Mangaung, there was some improvement in this area. For a few years, we were unable to even attend to audit this area because of the lack of documentation. They went back last year and took a decision to put a team together to ensure that they collate all the necessary information. They set their key performance indicators appropriately so that we are able to audit.”
This resulted in a move from the disclaimer opinion to adverse opinion in this area.
“We were able to audit the supporting documentation so that we were able to audit their achievements as they’ve reported in their annual report.”
Despite this nod of small progress, the AG disagrees with the contents of the achievements reported.
“It is still a concern that the annual report Mangaung is tabling is not one we can rely on in terms of the performance of the institution, taking into consideration that our focus with the audit of performance information is based on the basic services that they have to provide to citizens. They are not achieving the KPIs that they have set; there is no correlation of the non-achievement to the spending of the budget.”
After years of struggle, the AG commended Mangaung for being able to pass a funded budget. However, the budget priorities raised a number of concerns regarding financial planning and how well the institution spends its money.
“This is a concern because the patterns indicate spend is not geared towards service delivery and improving the lived experience of residents.”
Only 8% of funds were budgeted towards capital expenditure, while only 2% of the budget was allocated for repairs and maintenance.
“Capital expenditure goes towards infrastructure, which they build as an institution so they are able to provide services to the communities.”
TimesLIVE
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