‘Plan, do, check and act’ – AG’s ad­vice to mu­nic­i­pal­i­ties

And act’ – A-G’s ad­vice for mu­nic­i­pal­i­ties

Public Sector Manager - - Contents - Writer: Mary Alexan­der

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

in­ter­nal con­trols.

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.”

Au­dit re­sults

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


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