National Treasury’s latest Municipal Finance Management Act (MFMA) compliance report has identified recurring compliance failures and weak oversight as persistent threats to accountability and public finances, despite improvements in some areas of municipal financial management.
In the report, it is revealed that non-compliance with supply chain management (SCM) regulations remains a persistent challenge, with many municipalities either failing to update procurement policies in line with regulations or not implementing corrective measures to address issues repeatedly flagged during audits.
Treasury warned that these shortcomings continue to contribute to irregular and wasteful expenditure.
Non-compliance with supply-chain policies
The report, released on Tuesday, was compiled by National Treasury to monitor and assess compliance by municipalities with the provisions of the Act. It provides the consolidated status of MFMA compliance and implementation by municipalities for the 2024/2025 financial year (01 July 2024 to 30 June 2025).
One of the challenges found by the department is the non-compliance with SCM regulations. “Municipalities either fail to update their SCM policies to ensure compliance with the latest regulations or have not developed them at all,” read the report.
“Although municipalities are required to review their SCM processes and implement corrective measures to resolve issues identified by the Auditor-General in audits, many fail to do so effectively. This has resulted in recurring irregularities, including irregular and wasteful expenditures.”
Failure to hold corrupt individuals accountable
Treasury said the findings in the report are based on information submitted by municipalities through its compliance monitoring systems.
Another key issue highlighted in the report is how the national unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) balance increased from R264.10 billion in 2023/2024 to R268.13 billion in 2024/2025.
It attributed the increase to systemic failures in internal controls and weak consequence management. “Irregular expenditure remains the most significant contributor to the UIFWE balances, reflecting widespread noncompliance with procurement and financial regulations,” read the report.
Treasury highlighted that many municipalities lack effective systems to recover irregular spending. It was noted that more funds are being written off than recovered, raising concerns over accountability for financial misconduct. This also indicates that municipalities fail to hold individuals accountable for financial misconduct.
Disciplinary boards increase
The report found that the number of municipalities with established disciplinary boards increased to 178 in the 2024/2025 financial year.
However, Treasury highlighted that it is concerning that there has been a decline in the reporting of financial misconduct allegations in municipalities, in the number of financial misconduct cases investigated, and in the number of officials against whom disciplinary actions were taken for financial misconduct.
“The regressions may be an indication of various negative factors including delays in instituting and or in proceeding with disciplinary cases, weak enforcement of policies within municipalities and possibly a lack of understanding of disciplinary processes by municipalities,” reads the report.
Vacant senior management vacancies
The report also highlighted that only 84% of critical senior management positions were filled (82% in 2023/2024). The highest number of vacancies nationally was for the positions of chief risk officers (51), chief audit executives (34), and chief financial officers (13).
Free State had the highest number of chief financial officer vacancies (at Kopanong LM, Maluti-APhofung LM, Setsoto LM and Tokologo LM), followed by Eastern Cape (at Chris Hani DM, Port St Johns LM and Mhlontlo LM).
“All these municipalities have stagnated in their audit outcomes; and Maluti-A-Phofung LM has consistently submitted its annual financial statements late,” noted the report.
The province with the highest number of vacancies for chief risk officer was KwaZulu-Natal (13), which also had the highest number of vacancies for chief audit executives (7). Both vacancies existed at uMfolozi LM, Nkandla LM, uMhlabuyalingana LM and uMkhanyakude DM.
