PRESENTATION ONOPERATION CLEAN AUDIT 2014

SALGA FINANCE WEEK07-08 FEBRUARY 2013

PRESENTATION FOCAL AREAS

• AUDIT OUTCOME• STATUS ON FINANCIAL OVERSIGHT• MIG EXPENDITURE• FORWARD PLANNING

Audit outcomes summary

.Audit opinion Improvement Unchanged Regressed

Financially unqualified with no findings

Financially unqualified with findings

Qualified

Disclaimer/ Adverse

Total 2 13 9

5

22

6

1

1

7

Comparative Overview of the audit outcomes

Audit Opinion

2011/12 2010/11 2009/10 2008/09

Disclaimer 10 10 9 19Adverse 0 3 0 0Qualified 15 12 11 9Unqualified 1 3 9 8Clean Audt 1 2 1 0Outstanding 3 0 0 0Total 30 30 30 30

2011/12 Key Common Audit Findings

• Non-compliance with Supply Chain Management• An increase in unauthorised, fruitless and wasteful

expenditure• Assets Management- assets registers not compliant

with GRAP• Lack of supporting documents • Completeness of revenue• Ineffectiveness of governance structures• Lack of application skills and knowledge of financial

systems

2011/12 Annual Financial Statements/ Annual Performance Reports

• 28 Municipalities submitted on time- Molemole – resubmitted on 31 October 2012- Sekhukhune- 31 November 2012- BelaBela- Outstanding- All 30 municipalities submitted their annual performance reports to

the AG by the 31 August 2012.

• 24 municipalities have submitted audit remedial plans to the Department, the due date was on the 21 December 2012.

• Audit remedial plan must be developed in relation to final management letter.

• Monitor the implementation of audit remedial plans and ensure supporting documents on issues resolved.

6

2013/14 MPRA Implementation• Implementation of MPRA-compilation of valuation roll

• Application for extension of the validity period of valuation roll must be submitted on time to the Department.

• Gazetting of property rates by-law

• New valuation roll compilation – General complies of MPRA especial with regard to inviting property owners to inspect and lodge objections on valuation roll.

• Appointment of Professional Valuers- appointed Valuers must be registered.

• Utilisation of Valuation Appeal Board

7

Brief update on residents accountants

The Department is currently assisting municipalities under “Resident Accountant” project.• CorpMD and Ngubane/Kgorong Consultants

are appointed and started June 2012.• SAB&T and PWC started in

November/December 2012, however, there were challenges with regard to resources.

• Advertised for additional Service Providers – briefing session held.

Project ImplementationThe Project is monitored through the following structures• MEC/Mayors forum, co-chaired by MEC for

Coghsta and Provincial Treasury. This includes the Executive Mayors/Mayors, Municipal Managers, Office of the Auditor General and SALGA .

• Monthly reports of Resident Accountants are signed by Municipal Managers and Chief Financial Officers.

Challenges with regard to Project• Delayed from the service providers- unavailability

qualified resource • High vacancy rate in Budget and Treasury Units in

Municipalities.• Lack of ownership of the project by Municipalities• Lack and unavailability of supporting documents.• Lack of proper internal controls such as adhering to

management policies and treasury regulations, safe guarding of assets,

• Lack of implementation of audit remedial plans• Lack of skills in respect of municipal accounting

procedures and standards.

Oversight Structures

INTERNAL AUDITOR, PERFORMANCE AUDIT COMMITTEE AND RISK MANAGEMENT

• All municipalities have established Internal Audit Unit and appointed Audit Committees.

• Prioritise the appointment of Risk Officers.

• Establishment of functional risk management committees

• Additional appoint of internal auditors to assist with performance management audit and IT audit

• Audit Committees must report to council on quarterly basis, AG has raise this non-compliance for many municipalities.

• Performance Audit Committee must be appointed although Audit Committees are utilised to perform this function.

• Implementation of internal audit and audit committee recommendations.

12

MUNICIPAL PUBLIC ACCOUNTS COMMITTEE (MPAC)

• Provincial MPAC Forum has been established and the Provincial Executive MPAC committees is elected.

• Conducted district-based training sessions in-collaboration with Provincial Treasury, Provincial Treasury, Provincial Legislature and SALGA.

• Internal Auditors should not serve as the coordinator or secretariat of the Committee.

• Communications between MPAC and Accounting Officers must be in writing.

13

MIG EXPENDITURE

Expenditure per district as at end of December 2012

15

District Allocation(R)

Expenditure(R)

% Exp.

Sekhukhune 578,623,000 175,371,988 30.3

Mopani 503,277,000 92,386,273 18.4

Vhembe 532,740,000 246,138,284 46.2

Capricorn 548,509,000 182,772,197 33.3

Waterberg 299,734,000 93,518,346 31.2

Province 2,462,883,000 790,187,087 32.1

The Provincial expenditure is R923.513m (32.08%)

Of concern regarding the expenditure in the 2012/2013 financial year:

• Late registration of projects to be implemented in the current financial

year. We still have municipalities registering projects.

• Having projects earmarked for implementation in the current financial

year being advertised for procurement of consultant to do designs,

• projects where tenders have closed and validity period expired,

requiring re-advertising.

• Expenditures for municipalities with approved roll over very low,

16

Provincial Overview: 2012/13 MIG Expenditure

Expenditure per municipality as at end of December 2012SEKHUKHUNE DISTRICT

17

Municipality Allocation(R)

Expenditure(R)

% Exp.

Ephraim Mogale 21,678,000 6,895,617 32

Elias Motsoaledi 35,223,000 25,206,926 72

Makhuduthamaga 41,436,000 4,818,640 12

Fetakgomo 18,690,000 8,869,693 47

Greater Tubatse 44,048,000 9,957,916 23

Sekhukhune 417,548,000 119,623,195 29

Expenditure per municipality as at end of December 2012MOPANI DISTRICT

18

Municipality Allocation(R)

Expenditure(R)

% Exp.

Greater Giyani 36,331,000 1,173,753 3.2

Greater Letaba 40,027,000 13,978,085 35

Greater Tzaneen 56,665,000 13,930,960 25

Ba-Phalaborwa 20,778,000 8,151,324 39

Maruleng 30,174,000 10,097,281 34

Mopani 319,302,000 45,054,869 14

Expenditure per municipality as at end of December 2012VHEMBE DISTRICT

19

Municipality Allocation(R)

Expenditure(R)

% Exp.

Musina 14,604,000 888,869 6

Mutale 16,977,000 9,361,144 55

Thulamela 74,355,000 43,439,265 58

Makhado 67,400,000 13,143,886 20

Vhembe 359,404,000 179,305,120 50

Expenditure per municipality as at end of December 2012CAPRICORN DISTRICT

20

Municipality Allocation(R)

Expenditure(R)

% Exp.

Blouberg 30,904,000 2,002,382 6

Aganang 26,371,000 13,473,053 51

Molemole 23,916,000 19,377,730 81

Polokwane 221,514,000 95,036,811 43

Lepelle-Nkumpi 34,836,000 22,845,745 66

Capricorn 210,968,000 30,036,477 14

Expenditure per municipality as at end of December 2012WATERBERG DISTRICT

21

Municipality Allocation(R)

Expenditure(R)

% Exp.

Thabazimbi 42,153,000 26,869,172 64

Lephalale 43,557,000 11,925,259 27

Mookgophong 16,420,000 8,426,779 51

Modimolle 41,437,000 8,645,944 21

Bela-Bela 18,824,000 11,298,006 60

Mogalakwena 137,346,000 26,353,186 19

• Expenditure in municipalities with high under spending in

2011/2012 financial year is very low; Sekhukhune (28.65%),

Mopani (14.11)%, Capricorn (14.24%) and Mogalakwena

(19.19%).

– Further note : Capricorn and Mogalakwena have their 2011/2012

roll over applications approved.

• COGHSTA engaged with DWA to expedite approval of

technical reports. Currently the meetings for such

approvals are being held every week on Tuesdays.

22

2012/13 MIG exp. per municipality as at end of December 2012

Forward Planning

23

FORWARD PLANNING

• OBJECTIVES OF FORWARD PLANNING:

– To ensure that allocated MIG is spend to alleviate

backlogs and improve access to service delivery.

– Planning is conducted in the preceding year for

implementation to commence earnestly in the

beginning of the approaching year.

– To ensure that prescripts of the Division of Revenue

Act (DoRA) are adhered to.

24

FORWARD PLANNING CONT….

• PRESCRIPTS OF DORA REQUIREMENTS: MUNICIPALITIES

MUST:

– Submit technical reports to respective sector department on

sanitation, water, roads and storm water, sports and

recreation projects by 31 May.

– Submit registration forms of all planned projects for the

approaching year for approval to COGHSTA by 01 August.

– Submit detailed project implementation plans to the National

department (through COGHSTA), including project designs,

procurement process, and EIA approvals timelines by 31

October. 25

FORWARD PLANNING CONT….

• IMPLEMENTATION OF CAPITAL PROJECTS:

– Based on the DoRA prescripts, municipalities are

ready to commence with Supply Chain

Management process by November.

– Appointment of Service Providers can be effected

by March.

– Contractors can take site between April and June

and payments for work completed can commence in

July.

26

COMMENTS

• BENEFITS OF FORWARD PLANNING INCLUDE:– Expenditure of more than 95% of MIG

allocations. – Improved access to basic services by

Limpopo people and/or alleviation of backlogs.

27

Conclusion

• Operation clean audit can be attained only if Council plays its role in terms of oversight.

• Strengthen support needed by the residents accountants when performing their functions.

• Institutionalize PMS and ensure that all section 56 managers prioritise clean audit as part of their performance plan.

• Deal with under/unacceptable performance.

28

THANK YOU

29