The report also estimated that about 850 million rand was wasted last year with Eastern Cape, Free State, Limpopo and North West provinces failing to avail clean audits.

The South African Local Government Association (SALGA) has stepped forward and offered to assist the struggling municipalities so as to produce clean audits in the future.

“A clean audit basically means three things which includes municipalities complying with laws and regulations, reporting correctly on their financial records and municipalities spending based on targets set,” Simphiwe Dzengwa, executive director of finance at SALGA told CNBC Africa.

“As SALGA we say a clean audit has nothing to do with service delivery hence we have been calling for a citizen satisfactory barometer to accompany an audit of a municipality, there has to be a balance of the two.”

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Dzengwa said that when clean audit targets were set in 2009 it was with good intentions but the complexity of the situation at the municipal level had proven to be more daunting and demanding.

“We are saying perhaps the targets were too ambitious and that we need to be realistic and focus on an incremental strategy of supporting municipalities,” he added.

According to the findings established in the report, there are chiefly three factors influencing negative performance of municipalities.

Dzengwa said the problems includes slow reaction by political leadership when problems have been detected, pervasive capacity problem as people are appointed without requisite skills to run municipalities effectively and also lack of capacity as most key positions in municipalities such as chief financial officer takes time to be filled by competent skills.  

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Dzengwa is positive that the minister of Cooperative Governance and Traditional Affairs Pravin Gordhan has ideas on how he wants to bring transformation within the local government space.