I hereby present to the legislature and municipal councils of the Mpumalanga province my 2011-12 general report on local government audit outcomes. The leadership of the Mpumalanga province committed to achieving clean audits by 2014. However, the year that should have marked a considerable advancement towards achieving the goal of clean audits by 2014 was characterised by a net regression. The 2011-12 outcomes show a year-on-year regression with five improvements in the audit outcomes being overshadowed by seven regressions. Two of the province’s municipalities were unable to retain the clean audit outcomes obtained in the prior year. A total of 66% of the province’s municipalities received qualified or disclaimed audit opinions, marking a 12% regression from the prior year.

The internal control environment in the province’s municipalities continued to weaken, as evidenced by the regression in the design and implementation of the drivers of key controls. This is despite the commitments made by the executives during the quarterly key control visits to address the weaknesses reported. Although governance structures were in place at all the municipalities, their impact on audit outcomes was inhibited by the lack of implementation of their recommendations and the limited depth of internal audit work undertaken.

The root cause of the regression in the internal controls at 53% of the municipalities was the recurring vacancies in key positions, coupled with officials who lacked the appropriate competencies and skills. The relevant checks and balances were not implemented or monitored, as competent officials were not available in key positions to enforce compliance with the relevant policies and procedures, which in turn resulted in a regression in internal controls. At 57% of the municipalities, the executives were very slow in adopting a culture of performance management at all levels to ensure that consequences for poor performance and transgressions became the norm.

Click here to download the full document