Shake up mu­nic­i­pal fi­nances

The Star Early Edition - - LETTERS - Danny Naidoo

THE lo­cal gov­ern­ment au­dit out­comes re­port for the 201516 fi­nan­cial year was re­leased by Au­di­tor-Gen­eral (AG) Kimi Mak­wetu on Wed­nes­day, re­veal­ing that only 49 of the 263 mu­nic­i­pal­i­ties re­ceived a clean au­dit.

It is dis­ap­point­ing to note that over­all, lo­cal gov­ern­ment has failed to main­tain the mo­men­tum of prior years.

The AG re­ported that fol­low-through on au­dit ac­tion plans re­quired at­ten­tion.

For those in­stances, it is im­por­tant that lo­cal gov­ern­ment lead­er­ship takes own­er­ship of what is com­monly re­ferred to as the au­dit find­ings ma­trix re­port.

They need to track and in­flu­ence de­ci­sion-mak­ing to im­prove con­trols that would ul­ti­mately lead to bet­ter fi­nan­cial man­age­ment and im­proved ser­vice de­liv­ery.

This does not mean key de­ci­sion-mak­ers should wait for as­sur­ance providers to tell them what the in­ter­nal con­trol short­com­ings are.

Mu­nic­i­pal­ity man­age­ment at lo­cal gov­ern­ment level is the first line of de­fence in iden­ti­fy­ing risks and im­ple­ment­ing prac­ti­cal con­trols.

The AG’s re­port found that mu­nic­i­pal­i­ties with clean au­dit opin­ions in 2015-16 rep­re­sented only 19% of the to­tal R378 bil­lion ex­pen­di­ture bud­get for lo­cal gov­ern­ment.

In 2015-16, 14 mu­nic­i­pal­i­ties also lost their clean au­dit sta­tus.

Those charged with gover­nance must in­sist on reg­u­lar feed­back on th­ese find­ings and chal­lenge the timeous res­o­lu­tion of find­ings.

They must also en­quire of man­age­ment as to the iden­ti­fi­ca­tion and for­ward plan­ning on emerg­ing risks.

Man­age­ment also needs to en­sure that the fun­da­men­tals of in­ter­nal con­trols are em­bed­ded in poli­cies and pro­ce­dures.

Job pro­files should be aligned to the re­spon­si­bil­i­ties re­quired that ul­ti­mately as­sist in achiev­ing the over­all ob­jec­tives at a lo­cal gov­ern­ment level. Part­ner at Mazars, a global au­dit, ac­count­ing and con­sult­ing group.

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