Auditor-General Municipal Audit Results 2023-24: Key Findings & What They Mean for Your Municipality

The Auditor-General municipal audit results for South Africa’s 257 municipalities tell a sobering story. In the 2022-23 cycle, only 34 municipalities achieved a clean audit. The rest received unqualified opinions with findings, qualified opinions, adverse opinions, or disclaimers. The 2023-24 general report, released by the Auditor-General of South Africa (AGSA), shows that progress remains slow. For municipal managers, CFOs, and councillors, understanding these results is not just about compliance — it is about diagnosing why so many municipalities struggle and what can be done differently. This analysis summarises the key figures, the themes the AG continues to emphasise, root causes that drive poor outcomes, and practical steps — including the role of technology — that can put your municipality on a better path.

Auditor-General Municipal Audit Results 2022-23: The Numbers

AGSA’s consolidated report on local government for the 2022-23 financial year gives a clear snapshot of where the sector stands.

Audit outcome	Number of municipalities
Clean audit	34
Unqualified with findings	110
Qualified	90
Adverse	6
Disclaimed	14
Total	257

In other words, about 13% of municipalities received a clean audit. Just over 43% received an unqualified opinion but with findings on compliance, performance, or internal controls. The remaining 43% received qualified, adverse, or disclaimed opinions — meaning the financial statements or performance information were not reliable in one or more material respects, or the auditor could not obtain sufficient evidence. That distribution has not shifted dramatically in recent years, which is why the 2023-24 general report again highlights slow progress and persistent risks.

Revenue and collection remain a critical pressure point. In 2022-23, consumer debt owed to municipalities stood at R427.7 billion. The average collection rate achieved was 72.9%, against a budgeted collection rate of 94.8%. That gap — more than 20 percentage points — reflects both over-optimistic budgeting and weak revenue management. The AG has repeatedly pointed to revenue overstatement and poor collection as drivers of financial stress, cash flow problems, and ultimately audit findings. Municipalities that budget for collection rates they cannot achieve set themselves up for variance explanations, compliance findings, and qualified opinions when the numbers cannot be supported.

What the 2023-24 General Report Emphasises

The Auditor-General’s general report on the 2023-24 audit cycle does not change the overall picture: improvement across the sector is incremental. AGSA continues to stress a small set of themes that explain most poor outcomes.

Financial Management and Reporting Quality

The quality of annual financial statements (AFS) and supporting records remains a leading cause of qualified and adverse opinions. Common issues include material misstatements, incorrect classification of revenue and expenditure, incomplete or inaccurate asset registers, and poor reconciliation between the general ledger, Section 71 monthly reports, and the AFS. Where the mSCOA chart of accounts is not applied consistently, or where month-end disciplines are weak, the likelihood of audit findings rises. The AG’s message is consistent: financial reporting must be accurate, complete, and aligned with the prescribed framework from month one through to year-end.

Service Delivery and Performance Information

The AG also audits the reliability of performance information. Where reported indicators are not supported by evidence, or where the annual performance report (APR) does not tie to the underlying performance management system, the audit outcome on performance information is qualified or worse. Service delivery and financial health are linked: municipalities that cannot report performance reliably often struggle with basic financial controls as well.

Internal Controls: Leadership, Financial and Performance Management, Governance

Material findings on internal controls — leadership, financial and performance management, and governance — appear in a large share of municipal reports. Weak tone at the top, inadequate segregation of duties, missing or late reconciliations, and poor documentation of policies and procedures all contribute. The AG assesses whether management has addressed prior-year findings and whether the audit committee and council provide effective oversight. Where these controls are weak, clean audits are out of reach even when the numbers in the AFS are correct.

Consequences Management

AGSA has repeatedly called for consequences when officials or councillors breach legislation or fail to implement agreed corrective actions. The absence of consequences — no disciplinary action, no recovery of losses, no consistent follow-up on irregular expenditure — undermines accountability and signals that non-compliance is tolerated. The 2023-24 report again stresses that without consequences management, the same failures will recur.

Provincial Picture

Audit outcomes are not evenly distributed across provinces. The Western Cape has historically had the highest proportion of clean audits and the lowest proportion of disclaimed or adverse opinions, followed by Gauteng and KwaZulu-Natal in varying positions. Several other provinces have a higher concentration of qualified, adverse, or disclaimed outcomes. The reasons are multifaceted: capacity, political stability, quality of administrative leadership, and investment in systems and processes. The takeaway for any municipality is that improvement is possible regardless of province — but it requires deliberate focus on the areas the AG flags most often.

Root Causes: Why Do Municipalities Keep Getting Poor Audits?

The same root causes appear in AG reports year after year.

Weak month-end and year-end discipline. When Section 71 reports are submitted late or prepared from data that does not reconcile to the general ledger, the foundation for reliable AFS is missing. When reconciliations are incomplete or unreviewed, misstatements go undetected.
Inadequate systems and processes. Many municipalities still rely on spreadsheets, legacy systems, or fragmented tools that do not enforce MFMA compliance requirements or the mSCOA structure. Manual re-keying and ad hoc workarounds introduce error and make it difficult to close the books on time.
Skills and capacity gaps. Finance and revenue staff may lack training on mSCOA, GRAP, and MFMA reporting. Where key roles are vacant or turnover is high, institutional knowledge is lost and consistency suffers.
Revenue and receivables management. Overstated revenue budgets and poor collection (as reflected in the 72.9% vs 94.8% gap) lead to cash flow crises and audit findings. Credit control, billing accuracy, and indigent management are often under-resourced or poorly integrated with the rest of finance.
Supply chain and procurement. Irregular expenditure and SCM non-compliance remain among the most common findings. Weak documentation, inadequate segregation of duties, and deviations that are not properly motivated and approved all attract AG attention.
Governance and oversight. Where the audit committee is under-resourced or council does not hold management to account for prior-year findings, the same issues repeat. Accountability must be visible and consistent.

Addressing these causes is not a one-year project. It requires a sustained commitment to how to achieve a clean municipal audit: baseline assessment, gap closure, stronger processes, and the right systems.

What Municipalities Can Do Differently

The Auditor-General municipal audit results are a call to action, not a verdict. Municipalities that have improved from qualified to unqualified with findings, or from unqualified with findings to clean, have typically done the following.

Treat audit readiness as a 12-month discipline. Do not wait for year-end. Run a baseline assessment at the start of the financial year, assign owners to every prior-year finding and every high-risk area, and track progress in management and audit committee meetings. Use a structured clean-audit roadmap so that month-end close, Section 71, reconciliations, and year-end AFS are aligned.
Lock down financial reporting quality. Ensure the chart of accounts is fully mSCOA-compliant, that every transaction is validated at entry, and that Section 71 and Section 72 are generated from the same source data as the general ledger. Reconcile all material accounts before submission and document the process.
Strengthen revenue and collection. Budget for achievable collection rates. Invest in billing accuracy, credit control, and indigent management. The R427.7 billion consumer debt figure is a signal: revenue management must be a priority, not an afterthought.
Enforce consequences. Implement disciplinary and recovery processes for irregular expenditure and non-compliance. Show that the organisation takes accountability seriously.
Invest in skills and systems. Train staff on MFMA, mSCOA, and internal control requirements. Where systems are outdated or fragmented, evaluate solutions that are built for South African municipal finance and that enforce compliance by design.

How Technology Can Help

Technology cannot replace sound governance or skilled people, but it can reduce the friction that leads to audit findings.

mSCOA-aligned systems. Software that enforces the mSCOA chart of accounts and valid segment combinations prevents many of the classification errors that cause material misstatements. When every transaction is validated at entry, the general ledger and Section 71 reports are consistent and compliant by design.
Automated Section 71 and Section 72. When monthly and mid-year reports are generated from the same ledger that feeds the AFS, reconciliation errors and late submission risk fall. Finance staff can focus on analysis and control instead of manual re-keying and spreadsheet reconciliation.
Integrated revenue and billing. Systems that link billing, credit control, and general ledger improve the accuracy of revenue recognition and the reliability of collection data. That supports both better budgeting and fewer audit findings on revenue.
Audit trails and documentation. Systems that maintain clear audit trails for approvals, reconciliations, and segment classification make it easier to respond to AG requests and demonstrate that controls are operating.

Dolobha is built for South African municipalities and supports mSCOA-aligned chart of accounts, Section 71 and Section 72 reporting, and the disciplines that underpin MFMA compliance. For municipalities asking what they can do differently after another difficult audit cycle, the answer starts with honest assessment, a clear plan, and systems that support rather than hinder compliance.

Conclusion

The Auditor-General municipal audit results for 2022-23 and the messaging in the 2023-24 general report are clear: progress is slow, and the same themes — financial management quality, service delivery and performance information, internal controls, and consequences management — dominate. The numbers (34 clean audits, 110 unqualified with findings, 90 qualified, 6 adverse, 14 disclaimed, and a 72.9% collection rate against a 94.8% budget) reflect systemic challenges, not bad luck. Municipalities that want to improve must treat audit readiness as a year-round priority, fix root causes in reporting and revenue, strengthen governance, and invest in the right people and technology. For detailed guidance, use our guide on how to achieve a clean municipal audit, the MFMA compliance requirements for 2026, and the mSCOA chart of accounts guide. To see how Dolobha can support your municipality’s journey toward a better audit outcome, explore Dolobha or get in touch with the team.