The auditor-general’s office on Tuesday told MPs on parliament’s standing committee on public accounts (Scopa) Mangaung metro’s finances were in terrible shape.
It said the metro was overspending its budget while delivering only half of its service targets, while unauthorised expenditure had remained above R1.3bn over the past three years.
Irregular expenditure increased to R324m, and fruitless and wasteful expenditure rose to R190m.
The AG also identified 27 material irregularities, including 12 cases involving financial losses estimated at R112m and 14 cases causing substantial harm to the public.
This formed part of the AG’s briefing to Scopa on Tuesday, where members were presented with the latest municipal audit outcomes for four metros: Mangaung, Ekurhuleni, Tshwane and eThekwini.
South Africa’s metros remain unable to produce clean audits. Audit outcomes for the 2024/25 financial year show no metropolitan municipality achieved a clean audit, with most receiving qualified or unqualified-with-findings opinions, reflecting persistent weaknesses in governance, financial management and accountability.
Acting head of audit Thami Zikode led the presentation and told the committee AGSA has introduced a formal dispute resolution process to address disagreements with municipalities before audit outcomes are finalised, ensuring parliament engages with settled audit findings rather than contested positions.
Mangaung recorded the most severe audit outcome among the metros. The municipality received a qualified audit opinion on its financial statements and an adverse outcome on performance information, meaning its reported service delivery results are not reliable.
Auditors identified five key qualification areas, including unreliable water revenue due to inaccurate or missing meter readings, an inability to verify water losses, failure to properly impair infrastructure assets, inadequate controls over overtime payments and the understatement of contractual commitments.
The audit showed a clear disconnect between spending and outcomes.
Mangaung achieved only 50% of its service delivery targets while spending 113% of its budget. It also recorded material non-compliance across procurement, asset management, revenue management, expenditure management and performance reporting, indicating systemic failures in governance and control systems.
The municipality spent 53% of its operating budget on salaries, allocated only 8% to capital expenditure and 2% to repairs and maintenance, and recorded electricity losses of R282m and water losses of R496m. It also faces Eskom arrears of R1.6bn and water board debt of R642m, while its debt collection period averages 111 days.
The AG said widespread project mismanagement, including poor planning, weak contract oversight and persistent delays, was linked to late payments. A major water infrastructure project remained only 26% complete after extended delays, limiting the municipality’s ability to stabilise water supply.
These failures translate directly into service delivery breakdowns.
Wastewater treatment works were found to be non-operational in some areas, untreated sewage is discharged into rivers, and water quality monitoring is inconsistent, exposing communities to health risks.
Zikode told the committee “internal control is not embedded as a performance responsibility”, resulting in reactive compliance rather than continuous control.
The City of Ekurhuleni forms part of the same pattern of weak audit outcomes.
The AG identified failures in procurement controls, contract management and compliance systems, with weaknesses in supply chain processes increasing the risk of irregular expenditure and undermining value for money in service delivery.
The metro remains within the group of municipalities receiving audit findings, reflecting ongoing governance and financial management challenges.
The City of Tshwane similarly remains within the group of metros with qualified or unqualified-with-findings audit outcomes.
The AG indicated the municipality continues to face weaknesses in financial reporting and internal controls, including failures to produce credible financial statements without audit intervention and persistent non-compliance with procurement regulations.
The eThekwini metropolitan municipality also forms part of this broader trend.
While separate audit reporting indicates some improvement in financial reporting in recent years, the AG continues to highlight ongoing challenges in procurement controls, consequence management and infrastructure maintenance which continue to affect service delivery reliability.
Across all four metros, the AG said consistent root causes are driving poor audit outcomes.
These include weak internal controls, failure to embed compliance into daily operations, ineffective oversight by councils and municipal public accounts committees and the absence of consequence management.
Zikode told the committee these failures are systemic and recurring rather than isolated incidents.
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