The steady progress reflected in the 2024/25 Municipal Audit Outcomes released by the Auditor General of South Africa (AGSA) this morning (24 June 2026) provides a stable foundation upon which the incoming the 7th Administration of local government can build.
This is the view of the South African Local Government Association (SALGA) following the release of the consolidated general report on local government audit outcomes by the AGSA.
Welcoming the report, the association commended the work of the AGSA in its ongoing efforts to promote transparency, accountability, and good governance within local government.
“The sector is not yet where we want it to be in so far as municipal audit outcomes are concerned, however, we do take note of what the AGSA calls ‘positive shoots’ that are emerging and the tailored recommendations and insights the report provides on areas of intervention,” commented SALGA President Bheke Stofile.
Notable improvements
In reviewing the 6th administration’s term, SALGA observes several notable improvements attributable to sustained reforms and collaborative efforts by stakeholders. There has been a marked reduction in disclaimers of audit opinion – the most adverse audit outcome – from 29 municipalities in 2020/21 to just 8 in 2024/25. The next term of local government should strive towards the complete eradication of disclaimers.
Furthermore, compliance with financial reporting deadlines has improved dramatically: over 98% of municipalities submitted their annual financial statements on time in 2024/25 and for the first time ever, all 257 municipalities produced annual performance reports. This demonstrates that the sustained focus on improving sound financial management and governance over the term is yielding encouraging results.
SALGA’s Municipal Audit Support Programme (MASP) has been a key contributor to these gains. Since 2021/22 SALGA financial year, the MASP has progressively expanded from supporting just 3 municipalities to 18 municipalities and 2 municipal entities by 2025/26 SALGA financial year.
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Participating municipalities in the MASP have shown measurable improvements, reducing their audit findings by up to 47% and achieving improved audit outcomes in at least five municipalities, with no MASP-supported municipality suffering a regression in its audit status over the five-year term. This tangible progress underscores how targeted support and capacity-building interventions are effectively strengthening municipal financial oversight.
Building on Success
SALGA celebrates the beacon municipalities that have sustained clean audits year after year since 2016/17, including Midvaal Local Municipality (Gauteng) and Cape Winelands, Overstrand, Witzenberg, and Cape Agulhas all in the Western Cape.
These consistently well-performing municipalities serve as benchmarks of excellence in governance and financial management, offering valuable lessons that should be replicated across the country.
Key drivers of positive audit outcomes SALGA agrees with AGSA’s findings that the key drivers of positive audit outcomes are stable and capable leadership, strong accountability, and adequate capacity in critical positions. All councillors and officials should take note that filling posts with skilled, ethical professionals and enforcing effective oversight (by mayors and speakers) are vital steps to sustain and expand these gains.
Addressing weaknesses
Despite the positive trends, SALGA remains deeply concerned that 39% of municipalities still received audit outcomes below the unqualified audit standard. This ongoing underperformance highlights persistent shortcomings in areas such as financial health, governance, and compliance with legislation.
It is particularly concerning that even some major metropolitan municipalities regressed in 2024/25, slipping from previously positive audit outcomes to lower ratings due to issues like supply chain management failures, financial sustainability challenges, and non-compliance with laws and regulations.
These setbacks reinforce the urgent need for strengthened accountability and rigorous consequence management. The poor quality of financial statements in struggling municipalities, along with repeated non-compliance with the Municipal Finance Management Act (MFMA), must be decisively addressed without delay.
Zero tolerance to financial misconduct
SALGA reiterates its call for zero tolerance toward the persistent lack of consequences for financial misconduct. By the end of the 2025/26 financial year, all municipalities must take concrete action to recover mismanaged funds and ensure every instance of irregular, unauthorised, fruitless, or wasteful expenditure is met with appropriate sanctions in line with the law.
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Tackling Financial Health Risks and Structural Challenges SALGA is also acutely aware that underlying financial risks must be mitigated if the gains in audit outcomes are to be sustained. Municipal consumer debt has swelled to over R484 billion as of 31 March 2026, severely undermining municipalities’ ability to pay for essential services like electricity and water.
SALGA urges strict enforcement of credit control policies and implores residents, businesses, and government departments to settle outstanding municipal bills so that municipalities can remain financially viable. Moreover, the structural funding gap in local government remains a concern: municipalities are expected to deliver nearly 46% of government services but receive only 9.1% of national revenue.
Addressing this fiscal imbalance, along with unfunded mandates and payment arrears by other spheres of government, is essential to empower municipalities to fulfil their obligations to communities.
Reform agenda and Outlook for the 7th Administration
As we near the end of the current local government term, SALGA reaffirms its unwavering commitment to work with municipalities overcome challenges confronting the local government sector and build on recent progress.
In partnership with the AGSA and other stakeholders, SALGA will continue to strengthen leadership, governance, financial management and oversight through its programmes, such as MASP, thereby ensuring that the foundations laid in this term carry into the seventh administration.
SALGA will engage even more actively with municipalities to bolster institutional capacity – leveraging experienced former leaders to enhance council oversight – and to entrench a culture of accountability and consequence management across local government. By expanding and refining support initiatives SALGA aims to contribute significantly to increase the number of municipalities attaining clean audits in the coming term.
As a key pillar of its outlook for the 7th administration, SALGA is putting political leadership capacity-building front and centre. The Association working with the National School of Government and other institutions has put together an Integrated Councillor Induction Programme (ICIP).
The training intervention will be rolled out immediately after the 2026 local government elections to orient and upskill newly elected and returning councillors across the country, instilling sound governance practices, ethical leadership, effective oversight and financial accountability from the outset.
The ICIP features a blended learning approach and unified curriculum, combining interactive in-person orientation with digital learning tools, as well as targeted leadership development modules (including portfolio-based training and skills audits), to strengthen the governance and oversight capabilities of new council members.
Through this proactive investment in councillor development, SALGA aims to ensure that the seventh term of local government begins with a higher level of competency and institutional Confidential readiness than ever before, laying the groundwork for sustained improvements in clean governance and effective service delivery.
“By equipping the incoming cohort of councillors with essential knowledge and skills, SALGA aims to directly address the leadership and oversight gaps that have contributed to past governance shortcomings and ensure that municipalities begin the next term with a solid foundation for improved accountability and performance,” points out Stofile.
SALGA extends its appreciation to all municipalities that submitted their Annual Financial Statements on time and notes with encouragement the overall stability in the audit results, with 157 municipalities (62%) achieving unqualified or clean audits. These municipalities collectively manage around R361 billion, roughly 58% of the local government budget, indicating that the majority of public funds are handled with a commendable degree of accountability.
SALGA remains optimistic that the collective actions of all stakeholders have set a strong trajectory of improvement. With sustained political will and support, the forthcoming generation of local councils can deliver even stronger financial governance and better services for communities, cementing public trust in local government.