a) Lack of funds in low-capacity municipalities and the fact that the National Treasury is unable to cater for all defaulting debtors because of budget constraints. Section 23(4) of the Public Audit Act (PAA) 25 of 2004 prescribes that if an auditee defaults on the payment of audit fees, the Auditor- General must promptly notify the National Treasury, and when applicable notify the relevant provincial treasury. b) The economic recession has also resulted in the revenue base of some municipalities declining which, in turn, affects their ability to pay their audit fees. Section 23(6) of the PAA prescribes that, if the audit fee exceeds one percent of the total current and capital expenditure of such auditee for the relevant financial year, such excess must be defrayed from the National Treasury's vote, provided that the National Treasury is of the view that the auditee has financial difficulty to settle the cost. This excludes national and provincial departments.