‘Plan, do, check and act’ – AG’s advice to municipalities
And act’ – A-G’s advice for municipalities
Auditor-General Kimi Makwetu advises municipal leaders to embrace accountability, good governance and strong internal controls
In his recent report on audit outcomes for local government, Auditor General Kimi Makwetu said municipalities would be well geared to serve their communities if they
embraced principles of accountability, good governance and strong
Auditor-General Kimi Makwetu recently released his 2015-16 local government audit outcomes report, which recorded limited improvements in the audit results of South Africa's municipalities.
In his report, the Auditor-General highlighted the importance of accountability in managing municipal affairs. He stressed proper planning, focused on the needs of citizens, as well as internal controls and supervision to ensure proper financial and performance management.
With these in place, municipalities would be able to live up to the expectations of their communities, he said.
“The accountability that the municipal leadership must take for their actions, decisions and policies (including being answerable to the community) is critical for financial and performance management as well as respect for the law in local government.”
Improvements show the way
The Auditor-General pointed to reasons for better performance in different provinces as examples of how good audit outcomes could be achieved.
“Improvements in the Eastern Cape can be attributed
to improved record keeping, the support provided by the provincial treasury and the provincial department responsible for cooperative governance (provincial Cogta), the leadership attending to audit recommendations, the implementation of the minimum competency levels, and the use of consultants,” he said.
“The improvements in Limpopo were as a result of increased focus to resolve audit findings in response to a strong stance taken by the premier that steps will be taken against municipal managers if audit outcomes are poor.
“In Mpumalanga, strong leadership, accountability and good human resource management at an increased number of municipalities had the desired effect.”
In 2015-16 the expenditure budget for municipalities was R378 billion.The report shows that municipalities with clean audit opinions made up R70.9 billion (19 per cent) of this amount, and those with unqualified opinions with findings R218 billion (57 per cent).
Municipalities with qualified audit opinions made up R53.4 billion (14 per cent), those with adverse and disclaimed opinions R15.2 billion (5 per cent), and municipalities with outstanding audits constituted R20.5 billion (5 per cent) of the total budget.
“The audit opinions on the financial statements only slightly improved from 60 per cent to 62 per cent unqualified opinions, while disclaimed and adverse opinions decreased from 13 per cent to 10 per cent,” Auditor-General Makwetu said.
He added that this meant targets were within reach. “The revised Medium-Term Strategic Framework targets of 65 per cent unqualified opinions, 20 per cent qualified opinions and a maximum of 15 per cent disclaimed or adverse opinions by 2018-19 can therefore be achieved.”
Strong internal controls
Strong internal controls were key to ensuring that municipalities deliver to communities effectively, economically and efficiently, the Auditor-General said.
This would also ensure that municipal leaders produced quality financial statements and performance reports, and complied with legislation.
Makwetu advised municipalities to follow these guidelines to strengthen internal controls:
Leadership creating a culture of honesty, ethical business practices and good governance.
Proper record-keeping to ensure that accurate information is available to support financial reports.
Instilling basic controls to ensure the processing of transactions in an accurate, complete and timely manner.
Monitoring of compliance with legislation, rules and regulations.
Filling vacancies in critical areas such as municipal managers, chief financial officers, heads of supply chain management and chief information officers.
In general, always ensuring an appropriate level of financial management capacity in a municipality.
Instilling appropriate information technology controls, with emphasis on security management, user access management and business continuity.
Following through on audit action plans.
“Our country's Constitution stipulates that local government should provide a democratic and an accountable government for local communities,” Auditor-General Makwetu said.“We believe that the newly elected mayors and councillors and the administration that supports them are ready to accept their responsibilities and are willing to be held accountable for the performance of the municipalities they now govern.”
“We believe the newly elected mayors and councillors and
the administration that supports them are ready to accept their responsibilities and are willing to be held accountable for the performance of the municipalities they now