FINANCIAL POSITION OF LOCAL GOVERNMENT Financial Statements Auditor’s General Reports Audit Fees

Financial Statements Annual financial statements of municipalities have to be completed within 3 months of year-end (i.e. 30 September) Per Auditor-General Report as at 31 March 2001: there was an improvement in the submission of 1999/2000 financial statements in relation to the submission rate of the 1998/99 financial statements

Financial Statements Per Project Viability Statistics @ 31 December 2001: Over 70% of financial statements for 2000/01 financial year had been completed, however only 53% had been approved by Council and only 51% submitted to the office of the Auditor-General Statistics based on 93% response rate from municipalities

Auditor-General Reports Per the Auditor-General’s report of 31 March 2001: During 1 October 2000 to 30 September 2001, 806 audit reports were issued, 485 relating to the 1999/00 financial year, the rest for previous years. 106 (or 22% of the 485) of the audit opinions for the 1999/00 financial year received unqualified audit opinions This reflects a deterioration from the 1998/99 financial year where 150 (29%) of the 524 opinions given were unqualified

Auditor-General Reports Reasons for qualification of reports were predominantly Recoverability of Debtors Applicability of the going concern principle Per Project Viability Statistic @ 31 December 2001: 26,98 % of reports unqualified 52,38% qualified 20,63% opinion withheld

Audit Fees Per the Auditor-General report @ 31 March 2001: Municipal Audit fees of R20,3 million were in arrears for more than 90 days as at 30 November 2001 This figure was R14,371 million as at 30 November 2000 Alternative methods for recovery of these fees are being pursued: e.g. withhold a portion of the equitable share as outlined in terms of the Division of Revenue Act

Audit Fees Per the Project Viability Statistics @ 31 December 2001: Total amounts outstanding to the Auditor-General, as estimated by the Municipal Managers, equalled R16 800 964 The majority of amounts outstanding were in the Free State (R8,88 million). Numerous payment plans have been negotiated between municipalities and the office of the Auditor-General to pay off these amounts in instalments

Audit Fees The Estimated Audit fees owing, per Province, as at 31 December 2001 were reported as follows: Eastern Cape R 3 307 659 Free State R 8 884 081 Gauteng R 243 180 KwaZulu Natal R 1 727 305 Mpumalanga Nothing Reported Northern Cape R 1 666 000 Limpopo (Northern Prov) R 113 000 North West R 438 570 Western Cape R 421 168