The AG's 2024-25 report reveals stagnant municipal audit performance, with only 15% clean audits and 24% of local government spend now in regressed municipalities. This signals heightened procurement risks—particularly in metros—where financial instability and governance failures may trigger spending freezes or irregular expenditure investigations.
Why This Matters for Procurement
Bidders face higher risk of contract delays, non-payment, or cancellations in municipalities with poor audits, while clean-audit municipalities remain safer targets for tenders.
Key Points
Only 15% of municipalities achieved clean audits, indicating persistent governance and compliance risks in most municipalities.
38 municipalities (15%) regressed since 2020-21, representing 24% of the total local government expenditure budget, signaling financial instability.
Audit outcomes for all eight metros continue to decline, impacting service delivery and procurement reliability.
Reduction in repeat disclaimed audit opinions and an increase in unqualified audit opinions (61%) show marginal improvements but risks remain high.
Deteriorating financial health and unreliable service delivery in municipalities may lead to procurement delays, suspended tenders, or irregular expenditure investigations.
Industry Impact
Municipal audit outcomes for 2024-25 show limited improvement, with 61% now unqualified but only 15% clean, and 38 municipalities regressing.
Industry-Wide Effect
Systemic municipal financial weakness may lead to National Treasury imposing stricter procurement controls (e.g., centralised approvals), slowing down tender processes across all local governments. Expect more bid challenges and disputes as municipalities face audit scrutiny.
Affected Sectors
Local GovernmentFinance & TreasuryInfrastructure & ConstructionService Delivery
All South African municipalitiesEight metropolitan municipalities
Supplier Opportunity Signal
Suppliers should prioritize bids in the 39 clean-audit municipalities and monitor regressed municipalities for potential interventions (e.g., Treasury support) that may unlock stalled projects. Metros remain high-risk but high-reward due to scale.
Risk / Compliance Signal
Increased likelihood of PFMA/MFMA violations being flagged in active contracts, requiring stricter due diligence on municipal financial health before bidding.
From the Original Source
AG tables local government outcome reports for 2024-2025 Auditor General (AG) Tsakani Maluleke has noted that while there are some green shoots, municipalities have made limited progress in improving audit outcomes. The AG spoke on the 2024-2025 financial year audit outcomes for municipalities while tabling the general report for that year in Parliament. “Over the past four years, mayors and…