PROGRESS MADE ON THE RECOMMENDATIONS OF THE SELECT COMMITTEE ON FINANCE.
The purpose of this document is to provide a detailed report on the assistance and support provided by the provincial Treasury to all municipalities in the Province.
We highlight in the report the Provincial Treasury tailor made support to specific municipalities in the Province which has been identified as lowest in terms of capacity and also the worst in terms in terms of the Auditor Generals Reports.. PART 1
PART 2 deals with other support provided by Provincial Treasury to all municipalities,
The report further covers issues and recommendations raised by the Select Committee on Finance on the following municipalities in North West Province during their visit from 12-14 October 2011:
In the report below we only respond to issues that affects the Provincial Treasury, others are adequately responded to by the Provincial Department of Local Government and Traditional Affairs. PART 3
PART 1
DETAILED REPORT ON THE SUPPORT PROVIDED BY PTROVINCIAL TREASURY
Due to the North West Province municipality’s history of non submission of annual financial statements to the Auditor General and poor audit outcomes, the Department realised that the municipalities are in dire need of assistance with the annual financial statement preparation and close process.
The Department appointed a panel of 15 service providers to assist with the preparation of annual financial statements at the Municipalities that the Department indentified to require immediate assistance.
The Municipal Financial Management Support Programme (MFMSP) was launched on the 21st June 2012 where the political and administrative leadership of all municipalities were invited, as a result of the continuous negative audit outcomes of municipalities in the Province, coupled with non/late submission of Annual Financial Statement for audit to the Auditor General.
The audit outcomes for the 2010/11 financial year showed that municipalities in the Province performed very poor and there was not much improvement on the 2011/12 outcomes either.
A Technical Project Steering Committee was established, consisting of officials from the department and the lead service provider which monitored the implementation of the project.
Coupled to the above, the Project Political Oversight Committee was also established, consisting of the Mayor, the Speaker, and MEC for Finance and Chairperson of MPAC of the identified municipalities, and chaired by the MEC for Finance.
The first phase of the programme entailed giving basic support i.e. deployment of service providers and trained graduate to municipalities and technical support for assistance with preparation and review of AFS and ensuring that all 23 municipalities in the province submit their AFS in compliance with MFMA, furthermore, ensuring that all prior years outstanding AFS were also submitted. In total 39 sets of annual financial statements was submitted to the Auditor General of South Africa for 23 municipalities.
This was indeed a great success as all municipalities managed to submit the AFS by 31 August 2012 including prior years AFS, all the 23 municipalities signed a Commitment Charter that committed them to submit AFS within the legislated timeframe in future, and to improve the quality of the statements so as to achieve the 2014 Clean Audit objectives.
The Department of Finance decided to provide ongoing support to all the eight municipalities identified in phase One to achieve sustainable improvement in financial management and governance that will yield clean audit opinions by 2014.
The eight identified are:
- Kgetlengrivier Local Municipality
- Ventersdorp Local Municipality
- Tswaing Local Municipality
- Kagisano Molopo Local Municipality
- Ditsobotla Local Municipality
- Moretele Local Municipality
- Mafikeng Local Municipality
- Maquassi Hills Local Municipality
After the completion of phase 1 the Department realised that in order for this project to reap sustainable results at the municipalities, focus have to be placed on ensuring the reliability of underlying data and information contained in the annual financial statements.
To this extend the appointed service providers will continue to assist municipalities in updating their records and completing all the necessary reconciliations up to the end of June 2013.
They are further expected to prepare the 2012/2013 Annual Financial Statement for the submission on the legislated date.
The audit process will be supported until we receive the audit outcome in November 2013.
We anticipate that all the municipalities supported will improve from disclaimer audit opinions to at least qualifications at the end of November 2013
The audit outcomes for the 2011/12 financial year showed that municipalities in the Province where predominately disclaimed or qualified on the basis of lack of implementation of GRAP 17 and the unbundling of infrastructure assets .
We have identified 4 municipalities to assist with the unbundling of infrastructure assets.
The project is currently fifty percent to completion and it will be concluded before the end of the municipal financial year end.
The municipalities currently assisted are:
Greater Taung Local Municipality
Ventersdorp Local Municipality
Kagisano Molopo Local Municipality
Maquassi Hills Local Municipality
We believe that in at the end of the audit period none of these municipalities will be disclaimed on assets.
PART 2
OTHER SUPPORT INITIATIVES
- Municipal Financial Health Check questionnaire
- Assess the effectiveness of internal Control systems
- Assess the readiness of compilation and timeous submission of 2012/13 Financial statements
- Check the compilation of reconciliations of key control accounts
- Analysis and Assessment of the 2011/12 Audit Action
- Assist municipalities to align the 2011/12 Audit action plan to the 2011/12 Audit outcome
- Monitor the implementation of the 2011/12 Audit action plan
- Engagement with municipalities on financial management assessments
- Assess the midterm budget performance
- Analyze the budget to check if its credible, funded and sustainable over the MTREF.
- MEC’s Engagement with Municipalities to assess their readiness towards clean audit 2012
- MEC engaging on a quarterly basis with municipalities to assess their state of readiness towards clean audit 2014.
- Capacity Building
- Training on MFMA reforms
- Quarterly CFO Forum
PART3
- Ventersdorp Local Municipality
This is one of the municipalities assisted by Provincial Treasury in terms of the MFIP phase 1, 2 & 3 .
- Kgetlengrivier Local Municipality
The matter of the rate payers association has been dealt with by the Courts.
Provincial Treasury is awaiting documents from the municipality to further engage and support the municipality.
The municipality has established all bid committees in terms of regulations.
- Moretele Local Municipality
The municipality has an approved risk management policy.
The municipality has identified, discussed, assessed and documented all the risks facing the components of municipality in the risk register. The register in due for review.
The municipality is using the Shared Audit Committee, shared between the District (BPDM) and two (2) other local municipalities. The shared Audit Committee was appointed by the Council of the District Municipality.
Approved Audit Committee Charter in place and was approved on 27 August 2012.
- Moses Kotane Local Municipality
Council approved the 2011/12 Audit Action Plan in January 2013
•Number of findings as per the management report
•110
•Number of findings resolved
•79
- Mamusa Local Municipality
Municipal Manager , Chief Financial Officer, Director: Corporate Services, Director Community Services, Director Technical Services position interviews to be before end of May.
Capacity of Key Personnel
Municipal Manager: Experience in Local Government 9 yrs, Bachelors Degree and CPMD enrollment.
Director Corporate Service: Experience in Local Government 8 yrs, Bachelors Degree, CPMD completed.
Chief Financial Officer: Experience in Local Government 13 yrs, B Tech , CPMD completed.
BTO structure reviewed positions to be filled in the new year.
Risk Management- An official has been identified for risk management. Risk Management policy and Anti Fraud and Corruption strategy have been tabled in council and undergoing the relevant workshoping. Risk assessments have been done.
Audit Committee – The Audit Committee is functional, is a shared service with the district municipality and the Audit Committee Charter is in place.Internal Audit Function is shared with the district municipality.
- Maquassi Hills Local Municipality
Audit Action plan for 2011/2012 has been approved by Council:
2012/2013 AFS are compiled together with the Consultants Sediesey who provides on the job training.
Submission target date of the Annual Financial Statements will be 31 July 2013.
IMQ and TMDG appointed by Province for GRAP17 unbundling - they committed to supply all data at the middle of July 2013.
Audit file will be presented to Internal Audit and Audit Committee 10 days after the finalisationof the AFS.
All source documents are filed and kept in the safe.
Memorandum of understanding has been signed with our Bulk suppliers in order to avoid fruitless and wasteful expenditure.
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