The certificate of debt, is a powerful enforcement tool introduced through the Public Audit Amendment Act 5 of 2018.

The AG, as a Chapter 9 institution, has the constitutional mandate to audit all state institutions, including municipalities. Its audit for municipalities covers financial audits, compliance with legislation, and performance management. Historically, however, the AG could only report problems and recommend improvements. Whether a municipality acted on those findings was largely voluntary.

That changed decisively in 2019. The amendments to the Public Audit Act empowered the AG to issue binding remedial directives when a material irregularity is detected. A material irregularity includes unlawful conduct, fraud, theft, or a breach of fiduciary duties that results in, or is likely to result in, financial or other significant harm to the municipality or the public. Crucially, if the accounting officer fails to implement the AG’s remedial actions, the AG may issue a certificate of debt requiring the official to repay the financial loss personally. The amounts recovered under a certificate of debt is paid to the municipality which suffered the loss.

A process that unfolds in stages

Once the AG identifies a material irregularity, the accounting officer is given an opportunity to propose and implement measures to stop further losses and, where applicable, recover funds. In other words, the accounting officer determines what steps to take to address the material irregularity. If the AG concludes that the response is inadequate, it issues a formal directive (called remedial action) instructing the accounting officer to determine the loss and pursue recovery from the responsible individuals. Therefore, at this stage, the AG decides what the steps are that should be taken. Failure to do so triggers the next step: the AG issues a certificate of debt. Before this happens, the official is entitled to make written and oral representation, and the AG must consider any relevant investigations or factors. Once issued, the certificate is referred to the relevant executive authority (for a municipality, the mayor), who is obligated to ensure recovery of the amount specified.

A crucial procedural detail has emerged in practice: liability attaches to the person, not the office. If an accounting officer leaves after a certificate of debt is issued, they remain responsible for repayment. If they leave before it is issued, they will no longer be liable to implement the remedial action. This is a gap some municipalities have exploited by rotating municipal managers and senior managers to evade personal consequences. Conversely, if a new accounting officer assumes the role during the process, they become responsible for implementing the remedial action, although the AG typically allows a reasonable period for them to take corrective steps.

The first certificate of debt illustrates the accountability system in action

In June 2018, Ngaka Modiri Molema District Municipality appointed a service provider for water tankering as part of its drought relief efforts. In its audit, the AG found that the service provider was overbilling the municipality during that financial year and issued a material irregularity. In its subsequent audits, the AG uncovered persistent overbilling — excessive claims for hours and kilometres — that continued across three consecutive financial years, despite repeated audit findings. The accounting officer acknowledged the findings but failed to implement any effective controls or recover the losses. After providing the required opportunities for corrective action, the AG issued a certificate of debt amounting to R4.6 million against the accounting officer. This was the amount that the AG determined was lost by the municipality due to the continued overbilling of the service provider. The AG simultaneously informed the mayor of the duty to ensure recovery in terms of the debt.

Commentary

While the first certificate of debt is an important milestone, it is necessary to approach it with measured optimism. Certificates of debt may prove to be a powerful accountability tool in theory, but their practical impact will depend entirely on how enforcement unfolds. South Africa already has experience with debt recovery through court orders, where sheriffs attach movable or immovable property, or where lengthy payment arrangements are negotiated. If the implementation of certificates of debt follows a similar path, the Ngaka Modiri Molema District Municipality should not expect immediate access to the R4.6 million.

What this means in practice is that issuing a certificate of debt is not the end of the story, it may simply be the start of another long, technical, and potentially contested recovery process. Municipalities and councils must be prepared for that reality, rather than assuming that financial losses will be instantly recouped.

It is also important to recognise the human and political dimension behind these cases. While the certificate of debt marks a victory for public accountability, municipalities must take care not to place the full weight of financial misconduct solely on the shoulders of municipal managers. In many municipalities, municipal managers operate under intense pressure, often caught between administrative obligations and political instructions. Mayors and councillors constitute the executive leadership of municipalities; they wield enormous influence over appointments, procurement directions, and strategic decisions. Yet, when accountability mechanisms are triggered, the legislation places the burden overwhelmingly on administrative heads, leaving the political actors who shape, and sometimes distort, decision-making largely untouched.

This imbalance must remain part of the broader conversation. Strengthening accountability cannot rely on municipal managers alone, especially in environments where political interference is entrenched.

Even with these cautions, the issuing of the first certificate of debt is more than a procedural milestone — it is a signal. For municipalities accustomed to audit findings without consequences, the certificate of debt represents a shift toward real personal accountability. Financial misconduct and non-compliance now carry tangible risks for individual decision-makers. If implemented consistently and supported by political oversight structures, certificates of debt may become an effective tool for curbing persistent audit failures, protecting public resources, and gradually rebuilding trust in municipal governance.

By Johandri Wright