The Western Cape Provincial Parliament in Wale Street
Image: JEFFREY ABRAHAMS
The Auditor-General of South Africa (AGSA) has cautioned that certificates of debt should not be viewed as the primary mechanism for enforcing accountability in municipalities, warning that their issuance signals a broader failure of oversight structures.
Yesterday, AGSA Western Cape deputy business unit leader Thomas Mamogwe told legislators in Wale Street that the issuance of the certificates of debt was not a sign of accountability, but evidence of a systemic failure.
The AGSA was briefing the committee on municipal audit outcomes, with particular focus on the troubled municipalities of Kannaland and Knysna.
Kannaland has repeatedly been flagged for material irregularities involving financial losses and procurement failures, compounded by poor record-keeping and a pattern of unfunded budgets dating back to 2018.
The committee heard that material findings relating to the upgrading of a water treatment plant and the maintenance of water meters, first identified in 2023, remain unresolved.
Since 2021, political instability linked to shifting coalition arrangements has resulted in four municipal managers and six chief financial officers, while the municipality has only one internal auditor.
Knysna has experienced similar instability, having had six chief financial officers over the same period and no permanent municipal manager.
Although the municipality received an unqualified audit opinion on its 2024/25 financial statements, it continues to record findings relating to compliance and performance reporting.
The provincial government has previously sought to place the municipality under administration.
Responding to questions from committee members on whether AGSA could do more to hold councils accountable and whether any certificates of debt had been issued, Mamogwe stressed that the auditor-general was the final actor in the accountability chain.
"If we get to a certificate of debt, it means the system has failed," he said.
"It's not something to celebrate. A certificate of debt means a mayor failed to do something, or an MEC failed to do something. We have these powers, and we exercise them very cautiously and very responsibly as an audit office."
Mamogwe said existing legislation provides several opportunities for intervention long before the auditor-general is required to act.
"Our mandate is to audit reports and provide independent assurance on issues we identify in municipalities," he said.
He pointed to several reporting mechanisms available to legislatures, including Section 71 reports under the Municipal Finance Management Act (MFMA), Section 47 reports submitted by the MEC for local government, and Section 131 reports.
"Mayors must also include corrective measures in their annual reports, indicating where targets were not achieved and how they intend to address those shortcomings," he said.
"We often ask ourselves what questions legislatures are asking municipalities when these reports come before them. The auditor is not there yet."
Mamogwe said more rigorous oversight by legislatures could help detect procurement and contract management failures before they are identified during audits.
"The question of who the suppliers are, whether the process was followed correctly, those are issues that fall within your oversight responsibilities and not necessarily the audit process," he said.
To date, only the Ngaka Modiri Molema District municipal manager has been hit with the certificate since the Public Audit Act’s (PAA) extended powers came into effect in 2019.
"It is a legal process by its very nature. It involves legal costs and legal procedures. We must give affected parties an opportunity to respond and ensure every requirement has been met before issuing a certificate of debt. It takes time," he said, " Mamogwe.
"In the first year, if we identify that a mayor is not taking the necessary action, we include recommendations in the audit report. In the second year, we issue binding remedial action. If there is still no compliance, we move to the next stage, which could include issuing a certificate of debt."