The best-run city in South Africa for three years in a row

The City of Cape Town is the only metropolitan municipality to receive a clean audit outcome, keeping the rating for a third year straight. 

This was highlighted by the Auditor-General’s (AG) Consolidated General Report on Local Government Audit Outcomes for 2023/24.

Presenting the report in parliament, AG Tsakani Maluleke slammed the widespread poor financial performance of local governments.

The latest report showed that only 41 of the country’s 257 municipalities received clean audits, with Cape Town standing alone among the major metros. 

Despite the AG’s repeated appeals to national and provincial governments to step in, Maluleke said that audit outcomes continued to reflect systemic failure at the local level.

“Unfortunately, out of the eight metropolitan municipalities, we’ve got only one clean audit, which is the City of Cape Town,” she said. 

Maluleke said this doesn’t make sense given these metros’ budgets and economic positioning. 

“The eight metros across the country look after half of the expenditure budget for local government and provide services to 46% of South African households,” she explained. 

“Their budgets are significant, and they sit in economic activity centres. They should have no difficulty attracting the skills they need to run their environments.”

Despite this, she said most metros failed to meet even basic accounting standards.

Of the R1.47 billion spent by municipalities on consultants to help compile their financial statements, 103 still submitted documents riddled with rudimentary errors. 

“City of Johannesburg did not give us quality financial statements when we began our audits,” said Maluleke. 

“This is the biggest in our country, the biggest on the continent. There should be no difficulty in ensuring you have the skills and the capability to do what you’re supposed to do.”

The report bluntly described the broader failure across metros to maintain institutional integrity. 

It noted that most cities showed poor or concerning control over their audit action plans, often failing to implement or monitor the necessary corrective actions. 

“A lack of control over action plans demonstrates a lack of responsiveness and accountability,” Maluleke warned.

Worse yet, the AG’s office observed frequent non-compliance with legislation, conflicts of interest, and excessive irregular expenditures—R33.29 billion since 2021/22 alone—across nearly all metros, except for Cape Town. 

These failures, the report said, point to a lack of institutionalised controls that ensure leaders and officials act ethically, legally, and in the best interests of their municipalities.

The exception 

In stark contrast, Cape Town was singled out as a model of governance and accountability. 

According to the AG’s report, municipalities that achieve clean audits display strong financial and performance management while adhering to legislative requirements. 

They also maintain institutional integrity through effective leadership and robust administration systems.

In Cape Town’s case, the metro showed a strong leadership tone of accountability, zero tolerance for audit findings, and robust internal controls that were monitored and improved.

“Municipalities that achieve clean audits consistently over the years tend to exhibit strong financial and performance management practices,” the AG said. 

“These entities operate in compliance with relevant legislation, ensuring accountability and transparency in their functions.”

Cape Town has done exactly that, maintaining its clean audit status every year since 2021, after improving from an unqualified opinion with findings in the 2020/21 financial year.

This success has been attributed to strong leadership and skilled personnel, with municipal managers and chief financial officers possessing the required competence and fostering a culture of accountability. 

In Cape Town, the report noted that this was evident through regular meetings of audit and performance audit committees.

This was also shown through the internal audit unit’s proactive role in reviewing performance information and the consistent implementation of audit action plans.

The AG underscored that Cape Town and Ekurhuleni were the only metros where leadership, financial and performance management, and governance were considered “good”. 

Additionally, these two metros were the only ones with effective control over action plans, an essential mechanism for correcting the root causes of audit findings and preventing future lapses.

However, Maluleke cautioned that a clean audit, while critical, does not automatically mean excellent service delivery. 

“It does not always reflect the lived experience of all communities in a municipal area,” she said. 

Despite this, she added that it does create the necessary foundation for effective and transparent governance. 

“Clean audits provide residents, oversight bodies, and other stakeholders with a credible account of a municipality’s performance, where the gaps lie, and what can be done to address them,” the AG said. 

“In Cape Town’s case, this foundation is already translating into tangible planning and performance management.” 

The report praised the city’s use of accurate records and credible reporting to communicate with communities about their needs and timelines for service delivery. 

However, it also noted areas that still require attention, particularly the availability and quality of housing in informal settlements. 

“Improving the living conditions of residents in these areas will foster safer, healthier, and more equitable communities,” the report said.