Pretoria – 01 June 2016: Cooperative Governance & Traditional Affairs Minister Des van Rooyen has welcomed the Auditor-General’s (AG) Report on the audit of municipal finances for the 2014-15 financial year.
“The AG’s report shows that the department’s interventions over the past few years, from Operation Clean Audit to the Back to Basics (B2B) programme, are starting to bear positive results,” said Minister van Rooyen. “This report is quite encouraging in that it shows that there has been a considerable improvement in Audit Outcomes in the past 5 financial years, from 2010/11 to 2014/15.”
In 2010/11 only 16 municipalities and entities receiving unqualified audits with no findings; this has increased to 72 municipalities. The number of municipalities receiving disclaimers and adverse opinions decreased from 102 in 2010/11 to 43.
With the Auditor-General having identified areas of mismanagement, we have pinpointed actions that the ministry can take to extenuate the effects of this.
Firstly, we plan on working more closely with the AG to mitigate areas of potential mismanagement, especially irregular, fruitless and wasteful and unauthorized expenditure.
This will include instituting a cooperative relationship with the AG, specifically in the troubled provinces and municipalities. As an immediate stopgap measure, the B2B team will identify low-hanging fruit interventions that will reduce some of the financial mismanagement that has been identified.
Cogta will intensify its financial management support at identified problematic municipalities, in conjunction with the AG. This will entail proper quarterly or monthly reporting by provinces to support financial management and governance, especially in those provinces that have consistently showed breaches of Supply Chain Management (SCM) policies.
We also plan on monitoring the performance of key officials against the improvement in irregular, unauthorized and wasteful expenditure and steps will be taken to ensure proper consequence management, where targets are deteriorating, or where there is no consistent feedback on reporting requirements.
Minister van Rooyen reiterated that, “We haven’t felt the comprehensive impact of the B2B programme, as it was only launched in September 2014, midway through the 2014/15 financial cycle. We believe our interventions through the B2B programme will go a long way in mitigating the challenges identified by the AG.”
In the past financial year the department implemented the following measures through the Back to Basics (B2B) programme, to exercise oversight:
- B2B Provincial coordinators were appointed at National CoGTA
- All provinces have established Back to Basics multi-sectoral Provincial Task Teams;
- MECs present reports on B2B implementation at MinMecs where their challenges and requests for assistance are addressed;
- MECs also indicate at MinMecs how municipalities in their provinces are performing.
It bears mentioning that irregular expenditure occurs when expenditure is not compliant with SCM policies, and is not an indication of corruption in itself. Irregular expenditure can occur for a number of reasons, including the failure to obtain three quotes. Non-compliance with procurement processes accounted for 70% of irregular expenditure. Through the B2B programme we will ensure proper quarterly or monthly reporting of by co-ordinating structures in the provinces, as a key measures to support financial management and governance.
The B2B programme has formed the core element in government’s response to improving service delivery in municipalities. Responses were developed along the five B2B pillars. Under the pillar of Good Governance 2 665 disciplinary and dismissal cases were captured on the database of dismissed staff, and staff who resigned prior to the finalisation of disciplinary proceedings. This database also serves as a central repository of information pertaining to disciplinary proceedings and enables municipalities to “blacklist” staff members who have been dismissed for misconduct.
In accordance with the pillar of Sound Financial Management, a national audit outcomes response plan was developed and implemented to guide provinces and municipalities on the focus areas and quarterly deliverables in response to audit outcomes. Municipalities were supported to develop credible post audit action plans. The implementation was monitored through provincial intergovernmental structures.
In addition to this, National Treasury provided financial assistance, through the Financial Management Grant, to all municipalities in order to implement corrective actions to address audit findings. This was augmented by additional support provided by Provincial Treasuries in reviewing and enhancing action plans for implementation.
Our long-term initiative in terms of the B2B pillar of Building Institutional Capability has resulted in the establishment of a Competency Assessment Centre. The Centre will oversee the implementation of the Competency Framework and Assessment Batteries, including operations in all provinces and municipalities.
We will continue to work closely with all stakeholders, including the Auditor-General, National Treasury, SALGA, the MECs, Mayors, Councillors, officials, business, labour, civil society and other non-government organizations.
Under the banner of “Local Government is everybody’s business,” we commit to ensuring that the recommendations set out in this report as well as the priorities set out in Back to Basics are achieved. This will ensure that we attain our goal of improving service delivery and building a better life for all.
Legadima Leso: 083 378 9495
Issued by Ministry of Cooperative Governance and Traditional Affairs