An assessment of the drivers of unauthorised, irregular, and wasteful expenditure in the City of Tshwane Metropolitan Municipality

Abstract

PurposeThe Auditor-General South Africa (AGSA) identified metropolitan municipalities as the highest contributors to unauthorised, irregular, fruitless and wasteful (UIFW) expenditure in South Africa, prompting the National Treasury (NT) to call for the management there-of, as a top priority. This study aimed to assess the drivers behind UIFW expenditure's ongoing presence in the City of Tshwane Metropolitan Municipality (CoT), despite the AGSA's findings and recommendations, with an extensive oversight role by municipal public account committees (MPAC). Methodology/ApproachThrough qualitative research techniques, the researchers thematically analysed the collected data, using the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework. The analysis of UIFW expenditure trends in metropolitan municipalities over five years, revealed significant problems in the Tshwane metropolitan municipality, leading to the study of the CoT. By employing Atlas.ti software, the coding process identified the primary factors responsible for the prevalence of UIFW expenditure in the CoT. Findings/ResultsUsing eight codes, the study illustrated the primary themes that contribute to irregular spending and the challenges that obstruct internal controls. The research findings attributed the weaknesses of the internal control environment to cultural and behavioural factors as the main driving forces towards incurring the UIFW expenditure, whilst identifying management practices as significant contributors to the lack of oversight. According to the study, the lack of awareness and failure to adhere to established procedures detrimentally impacted the effectiveness of control measures, resulting in the occurrence of UIFW expenditure. Owing to the absence of effective measures to manage and discourage misconduct, the metropolitan municipality had inadvertently provided individuals with opportunities to embezzle funds, leading to a surge in unethical practices. To effectively address these challenges, the study outcomes recommended a range of measures, including enhancing the control environment, increasing accountability, and establishing a consequence management system. The aim of this initiative was to address loopholes that facilitate unwarranted activities and to encourage responsible financial management by the metropolitan municipality, ultimately reducing UIFW expenditure. Heuristic inferencesThe study highlighted that a lack of effective management oversight at an operational level had led to a failure to understand and follow internal controls. Although the AGSA managed to achieve some progress in suggesting measures to address the problem, the underlying causes of the issue remained unknown. Discovering these causes would be instrumental in mitigating UIFW expenditure in the metropolitan municipality. The root causes of these issues can be traced back to the way management operates, the CoT's capacity constraints, and the prevailing culture. In order to tackle this issue, the metropolitan municipality culture should prioritise adherence to and promote awareness of internal controls. Originality/ValueThis study identified the factors behind the persistent incurrence of UIFW expenditure in the CoT, suggesting the need for more research in other municipalities.