The Swartland Municipality and the West Coast District Municipality attained clean audits in the current year, due to the sustained efforts of the municipal leadership to effectively monitor the implementation of a credible action plan to address past audit findings. The majority (73%) of other Western Cape’s municipal audit outcomes for 2010-11 were characterised by stagnation at the level of unqualified audit opinions, while 9% were still qualified and 12% did not submit financial statements in time for audit purposes.
Auditor-General (AG) Terence Nombembe remarked that the stagnant audit outcomes are a clear indicator that the leadership needs to increase their level of oversight in line with their commitment to move towards clean audit outcomes. In addition, a clear commitment is required from the leadership to reduce the frequency of changes at the levels of municipal manager and chief financial officer.
The key obstructions to clean audits in the province are control weaknesses in supply chain management, human resource management, information technology controls and significant errors in financial reports, most of which are identified and corrected at the time of conducting the audits.
The province showed minimal improvement in service delivery reporting; yet it remains a significant control area for clean audit outcomes. This situation is underpinned by the status of key internal controls that require urgent intervention at 29% of the municipalities, with 27% being in the process of improving their internal controls and 44% having good internal controls that need to be sustained and consistently observed throughout the year to avoid instances of errors that are picked up by the audit process at year-end.
Nombembe further attributed the stagnant audit results to a failure to take corrective action on internal control shortcomings at 63% of the municipalities, a lack of consequences for poor performance and transgressions at 50% of the municipalities, and a lack of appropriate skills at senior official level at 47% of the municipalities. Greater coordination between the public accounts committees and the portfolio committees responsible for municipalities would promote the frequency of municipal monitoring by the province’s committees.
He urged mayors and municipal managers to enhance their oversight and also to implement all elements of key controls. Strengthening the coordination between the Provincial Department of Cooperative Governance and Traditional Affairs and the provincial treasury could also benefit municipalities.
To give support and guidance to the auditees, the AGSA 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 the Western Cape 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 last year (2011).