Lack of skills to blame for local authorities’ imploding

THE South African Institute of Chartered Accountants (SAICA) has pointed to a lack of appropriate competencies by chief financial officers as one of the reasons for continued poor financial management of municipalities. The National Treasury minimum competency-levels database from September 2018 shows that Gauteng was the province with the least percentage of CFOs meeting minimum competency at 12 percent. The database shows that out of a total of 257 municipalities with 218 CFOs across the country, only 79 CFOs were meeting minimum competency, a low level of 36.2 percent. The Municipal Finance Management Act (MFMA) and the Public Finance Management Act (PFMA) require that the CFO be responsible for the effective financial management of the institution. This includes the exercise of sound budgeting and budgetary control practices, the operation of internal controls and the timely production of financial reports.

Natashia Soopal, SAICA project director for the public sector, said the auditor-general has over the years identified that one of the root causes for poor audit outcomes in both the PFMA and MFMA audits is key officials lacking appropriate competencies. Soopal said that the municipal regulations on minimum competency levels address the minimum higher education qualifications, work-related experience and core managerial and occupational competencies that are required by financial and supply chain management officials.

“The municipal regulations on minimum competency levels seeks to professionalise the local government sector and to make it a career choice for talented officials and to some extent mitigate some of the root causes of poor financial management and service delivery,” Soopal said.

“The regulations state that the CFO of a municipality or municipal entity must generally have skills, experience and capacity to assume and fulfil their responsibilities and exercise the functions and powers assigned to them in terms of the MFMA.” According to National Treasury’s database, the vacancy rate for CFOs at municipalities was 15.2 percent as at August 30, 2018 and only 36.2 percent of CFOs appointed at municipalities met the minimum-competency level. This meant that 63.8 percent of municipalities who had CFOs appointed as at August 30, 2018 were not complying with the MFMA in terms of the competency levels, which has a potential negative impact on the effective financial management of municipalities. Soopal urged councils to appoint CFOs who meet the minimum competency levels to improve the effective financial management of municipalities. “Municipalities should also follow in the footsteps of the cities of Tshwane and Joburg to register as training offices.”