Comparative Quarterly Performance Report

COMPARATIVE QUARTERLY PERFORMANCE REPORT

EXECUTIVE SUMMARYON

STRATEGIC RISK MANAGEMENT

FOR THE PERIOD

JULY- SEPTEMBER 2013

QUARTER 1 OF THE 2013/2014 FINANCIAL YEAR

INTRODUCTION

Section 62(i)(c) of the Municipal Finance Management Act requires that a municipality to have and maintain an effective, efficient and transparent risk management system. Risk Management at the Lesedi Local Municipality is taken seriously and are seen as the process whereby the Accounting Officerproactively and purposefully oversee the management of emerging business, financial and operational risks.

Although risk management is primarily an administrative responsibility, it clearly has major political implications. Management therefore at all times strive to keep Council, as the ultimate policy maker, informed on existing and emerging risks that eventually guide council to counter these risks by approving well formulated policies that in turn assist in the operational context of the municipality.

MANAGEMENT OF STRATEGIC RISKS

For the purpose of managing risks in the Lesedi Local Municipality, a dashboard has been developed on which all strategic risks of the approved Municipal Risk Register as well as both the Internal Auditor- and External Auditor queries are recorded.

The recorded risks are then allocated to the respective departmentsfrom where appropriate risk mitigation procedures are recorded. The Senior Management Team, comprising of the Accounting Officer, Chief Financial Officer, Heads of Departments and all Managers meet on a regular basis to monitor the management and results of all recorded riskscollectively.

RISK MANAGEMENT REPORTING

Herewith the comparative performance outcome for the overall risk management in terms Quarter 1 of the 2013/2014 financial year:-

COLLECTIVE RISK MANAGEMENT OUTCOME
PREVIOUS QUARTER
Quarter 4 – 2012/2013 FY / THIS QUARTER
Quarter 1 – 2013/2014 FY
Nr of risks rolled over from previous quarter / 0 / Nr of risks rolled over from previous quarter / 31
Attendance Rate in % / 65.45% / Attendance Rate in % / 60.39%
Total Risks that were managed / 71 / Total Risks that were managed / 114
Total Risks 100% Achieved / 40 / Total Risks 100% Achieved / 48
Performance Outcome in % / 56.34% / Performance Outcome in % / 42.10%
Progress as at : 30 June 2013 / n.a. / Progress as at : 30 Sep 2013 / 63.66%
DEPARTMENTAL RISK MANAGEMENT OUTCOME
EFFORT / RESULTS & PROGRESS / QUARTER 4 - 2012/2013 FY / QUARTER 1 - 2013/2014 FY
MM / CORSER / CFO / IS / CS / DP / MM / CORSER / CFO / IS / CS / DP
RISKS ROLLED OVER / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 7 / 15 / 2 / 3 / 4
ATTENDANCE RATE / 79.25% / 66.80% / 60% / 39.60% / 80.75% / 66.33% / 72.66% / 58.40% / 54.66% / 66.83% / 61.50% / 48.33%
TOTAL RISK MANAGED / 6 / 19 / 30 / 5 / 5 / 6 / 10 / 36 / 40 / 9 / 8 / 11
ACHIEVED / 6 / 12 / 15 / 3 / 2 / 2 / 9 / 13 / 21 / 1 / 1 / 3
RESULTS / 100% / 63.16% / 50% / 60% / 40% / 33.33% / 90% / 36% / 53% / 11% / 13% / 28%
IN-PROGRESS % PER DEPT / 85 % / 72 % / 35 % / 48 % / 74 % / 68 %
DETERMINED RISK
[ FORMULA :2 (Nr Achieved) ÷ 5 (Nr Objectives) x 100 = 40 % ] / ACHIEVED / IN PROGRESS / NOT ACHIEVED
100% / 1-99% / Zero

TOP FIVE(5) RISKS

Herewith the comparative performance outcome in terms of the Top Five Risks deriving from the 2012/2013FY approved Municipal Risk Register:-

IDENTIFIED TOP 5 RISKS FOR ATTENTION DURING THE 2012/2013 FINANCIAL YEAR
NR / IDENTIFIED TOP RISK / ROOT CAUSE / INHERENT RISK / RESIDUAL RISK / PREVIOUS QUARTER
Q4 – 2012/2013 FY / THIS QUARTER
Q1 – 2013/2014 FY
DEPT / % / DEPT / %
1 / Electricity Distribution Losses / Illegal Electricity Connections / 25 / 25 / CFO / 36.6% / CFO / 50 %
2 / Illegal Dumping / Lack of licensed Landfill Site in Devon / 25 / 25 / SD / 70% / SD / 70%
3 / Vandalisation of Municipal Buildings / Service Delivery Protests / 25 / 25 / CS / 90% / CS / 90%
4 / Service Delivery Protests / Poor communication between council & Community / 25 / 25 / DP / CS / 100%
5 / Inability to enforce approved Municipal Policies / Lack of By-Laws / 25 / 20 / CORSER / 100%

CORE REVENUE MANAGEMENT

For the purpose of financial risk management, the financial policies make provision for an essential governance framework within which financial risk management is applied. The purpose of financial and other policies does not only minimise the risk of fraud or mis-management of municipal billings and revenue collection, but it also serves as a clear and transparent basis on which the Lesedi Local Municipality intends to tax our property owners and how consumers are charged for municipal services. We believe that financial policies and by-laws protect our residents against unfair treatment and any form of differentiation by the municipality, in terms of tariffs and charges between different kinds of consumers.

As part of effective risk management, the Lesedi Local Municipality fully implement the credit control and revenue collection policy as from 16September 2013 whilst the Senior Management Team(Risk Management Committee) monitors the actions taken as well as the results obtained. The LesediLocalMunicipality also provide ward-based information on credit control actions that allow councillors and ward committees to become constructively involved in the implementation of risk management.

The effective implementation of credit control and revenue collection is a significant part of effective risk management within the Lesedi Local Municipality and the Executive Mayor (Mayoral Committee) as well as Ward Councillors and ward committees are actively involved in overseeing the administration of the relevant programs.

In terms of Sec 54 of the Municipal Finance Management Act (MFMA), the information in terms of revenue allows the Lesedi Council to assess it’s budget performance and to determine whether the council is collecting revenue as anticipated. For that purpose management would like to report on the following information:-

SUMMARY : PROJECTED REVENUE vs ACTUAL BILLED
PROJECTED REVENUE / ACTUAL BILLED / SUMMARY
Approved
Budget / Adjustments / Final
Budget / JUL ’13
Expected
(To bill ±8%) / AUG ‘13
Expected
(To bill ±16%) / SEP ‘13
Expected
(To bill ±25%) / YTD OF PROJECTION / YTD
IN
% / EXPLANATION OF
VARIANCE >10%
Property Rates / 64 801 000 / - / 64 801 000 / 5 191 723 / 5 226 276 / 5 224 948 / 15 642 947 / 24.14
Electricity – Basic / 40 511 820 / - / 40 511 820 / 3 077 264 / 3 079 651 / 3 081 658 / 9 238 573 / 22.80
ElectricityConsumed / 188 218 180 / - / 188 218 180 / 11 869 575 / 12 300 456 / 10 776 124 / 34 946 155 / 18.57
Water – Basic / 5 721 588 / - / 5 721 588 / 440 170 / 440 183 / 441 634 / 1 321 987 / 23.11
Water Consumed / 60 799 412 / - / 60 799 412 / 5 383 672 / 5 367 715 / 5 234 975 / 15 986 362 / 26.29
Sanitation / 19 808 000 / - / 19 808 000 / 1 536 424 / 1 538 695 / 1 537 568 / 4 612 687 / 23.29
Refuse / 23 123 000 / - / 23 123 000 / 2 004 472 / 2 004 320 / 2 003 881 / 6 012 673 / 26.00
Other / 295 000 / - / 295 000 / 179 671 / 183 786 / 208 377 / 571 834 / 193.84 / Council billed more than budgeted
12 MONTH SUMMARY : BILLING vs COLLECTION
ACTUAL BILLINGS / ACTUAL COLLECTED
MONTH / BILLED / CASH RECEIVED / 1Month
Split (c/-1b) % / 12 Month
Straight %
Jun 12 - BASELINE / 27 743 662.09 / 20 617 286.33 / 83.181 % / 82.060 %
Jul 12 / 29 683 746.92 / 22 178 412.17 / 79.940 % / 81.742 %
Aug 12 / 35 900 711.73 / 24 353 205.39 / 82.042 % / 80.132 %
Sep 12 / 35 007 059.98 / 25 069 219.90 / 69.829 % / 78.972 %
Oct 12 / 31 370 850.42 / 28 944 660.47 / 82.682 % / 79.520 %
Nov 12 / 31 239 126.27 / 25 941 464.75 / 82.693 % / 78.853 %
Dec 12 / 30 527 971.96 / 23 785 645.10 / 76.141 % / 79.064 %
Jan 13 / 29 173 055.83 / 23 409 011.52 / 76.681 % / 81.063 %
Feb 13 / 29 597 021.28 / 27 154 977.88 / 93.082 % / 79.765 %
Mar 13 / 28 922 871.40 / 22 011 156.84 / 74.370 % / 78.747 %
Apr 13 / 33 574 954.08 / 23 744 211.88 / 82.095 % / 79.663 %
May 13 / 30 608 989.04 / 25 251 209.01 / 75 208 % / 78.334 %
Jun 13 / 30 229 012.40 / 21 621 953.50 / 70.639 % / 78.083 %
Jul 13 / 33 054 106.35 / 31 685 831.54 / 104 819 % / 79.897 %
Aug 13 / 33 565 631.26 / 25 844 825.06 / 78 189 % / 80.787 %
Sep 13 / 31 703 286.61 / 26 908 562.19 / 80 167 % / 82.60 %

DEBT COLLECTION

The Debtors Book of the municipality amounts to R286 971 556.92 as at 30 September 2013.

For that purpose, the Lesedi Council have appointed a Debt Collector in June 2013 in terms of Sec32 of the Supply Chain Management Regulations pertaining to the Municipal Finance Management Act. The appointed service provider will provide debt collection services to the LesediLocalMunicipalityover a period of 18 months for accounts older than ninety (90) days.

Currently we are in the process of updating the developed Debt Management Plan to be in line with the provisions as stipulated in the Service Level Agreement (SLA).

Feedback on achievement milestones will be reported to council on a quarterly basis.

WAY FORWARD

Lesedi Local Municipality believe that good cornerstones for risk management arebasic requirements for good governance accountability and transparency.

Thecouncil is aware of Lesedi’s financial crisis but will continue to strive towards effective collection in terms of our reliable billing system and to disregard dishonesty, negligence and incompetence in the form of mismanagement of resources and responsibilities to avoid furtherdeterioration.

MR A MAKHANYA

MUNICIPAL MANAGER

Date: 4 October 2013