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Mayors andCouncillors need to take ownership of internal controls

Two municipalities in Limpopo managed to achieve clean audits in the 2010-11 financial year, with the Waterberg District Municipality joining Fetakgomo in celebrating this achievement.
While about 12% of the municipalities received unqualified audit opinions with findings, 82% received qualified, disclaimed or adverse opinions or did not submit financial statements for auditing.
“The province’s latest local government audit results also showed a number of regressions and an increase in unauthorised, irregular as well as fruitless and wasteful expenditure,” remarked Auditor-General Terence Nombembe.
Only 8% of the municipalities have implemented good internal controls that ultimately resulted in good outcomes. At 46% of the municipalities key controls are in the process of being implemented while 44% of the municipalities need serious intervention to implement basic accounting controls. All the areas of internal control (namely supply chain management, management of human resources, information technology controls, reporting against predetermined objectives as well as the quality of financial statements submitted for auditing) reflected a deterioration during the year.
This status of audit outcomes stems from the slow response to the audit recommendations and leadership not implementing the commitments made during the previous year at 87% of the auditees.
The province continues to be plagued by inappropriate skills, especially at chief financial officer level, at 87% of the municipalities. The results are also driven by a lack of implementing consequences for poor performance or regressions at more than 90% of the municipalities.
Nombembe called for better coordination among local government structures. “The effort by the standing committee on public accounts to provide guidance to municipal public accounts committees can be further enhanced through greater coordination between the standing committee on public accounts and other portfolio committees of the legislature that are responsible for municipal oversight.”
“The strengthening of the coordination between the provincial department of cooperative governance and traditional affairs and the provincial treasury could also assist the municipalities,” he said. To give support and guidance to the auditees, the Auditor-General of South Africa is maintaining its quarterly municipal door-to-door visits, with a view to monitoring and evaluating the status of improvements and the sustainability of key internal controls and leadership tone that would be a catalyst for the realisation of clean administration in municipalities in the province. These insights will continue to be shared with the provincial executive and oversight leadership quarterly, to create a platform for forward momentum towards clean audits while also working closely with internal audit units and audit committees. Ends
MEDIA NOTE: The General report on the provincial audit outcomes of Limpopo is available on www.agsa.co.za.
ABOUT THE AGSA: The Auditor-General of South Africa (AGSA) is the country’s supreme audit institution. It is the only institution that, by law, has to audit and report on how government is spending taxpayers’ money. This has been the focus of the AGSA since its inception in 1911 – the organisation celebrated its 100-year public sector auditing legacy in 2011.

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