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Pietermaritzburg – Auditor-General (AG) Terence Nombembe has encouraged the KwaZulu-Natal leadership to continue their efforts in the province of improving its audit outcomes to achieve the ideal of clean audit reports in future. It is noteworthy that a proactive energy prevails in the province to support and set the right tone for non-performing municipalities under the leadership of the premier.
Announcing the 2009/10 audit results of 60 municipalities and seven municipal entities, Nombembe said leadership involvement was critical in driving improved audit outcomes and this can be seen in the province where the financial statements of 60 municipalities and municipal entities were financially unqualified.
Furthermore, the province was able to improve the audit outcomes of 12 municipalities and entities, including reducing the number of disclaimed audit opinions from nine in the previous year to one in 2009/10.
In response to the AG, the Premier has committed himself, the MEC for Cooperative Governance and Traditional Affairs and the MEC for Finance to intensify their efforts in monitoring the implementation of action plans aimed at addressing previous years’ audit recommendations.
The Premier also undertook to ensure that improved audit outcomes are sustainable by ensuring strict adherence to proper internal controls and compliance with laws and regulations, whilst sharing his concerns relative to municipal supply chain management prescripts and IT governance frameworks and controls.
Audit outcomes
An improvement from disclaimer in 2008/09 to financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations, was achieved by Nkandla, KwaNongoma and Ubuhlebezwe.
Mfolozi, Nquthu and Ukhahlamba improved from a disclaimer of audit opinion in 2008/09 to a qualified audit opinion.
Six municipalities improved from a qualified audit opinion in 2008/09 to financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations. These are Amajuba District municipality, The Big Five False Bay, Dannhauser, eMadlageni, Emnambithi/Ladysmith and Mpofana.
There was no regression of audit opinions for municipalities from the 2008/09 financial year.
With regard to compliance with laws and regulations, the AG’s report highlighted the significant increase in the amounts of irregular, unauthorised and fruitless and wasteful expenditure as a concern. Irregular expenditure primarily related to instances of non-adherence to the municipal supply chain management process.
Significant general control weaknesses were also reported in almost all instances where information systems controls were tested. Municipalities, in general, did not achieve significant progress in addressing the 2008/09 findings. This is attributed to lack of IT governance frameworks, user access controls, security control and capacity to manage their financial and performance information.
Service delivery findings
Reporting on service delivery is an area with which most municipalities in the province are struggling, primarily due to inadequate allocation of dedicated human resources to manage this function. There is limited alignment of service delivery priorities to the performance agreements of senior management and staff, which in turn limits the ability of leadership at provincial and municipal level to monitor the status of service delivery objectively and transparently.
“The few municipalities that have adopted these disciplines have consistently recorded successes in the reporting and auditing of this area. It is our belief that such breakthroughs can also be achieved by the greater number of municipalities in the province if they can learn from and adopt the practices of the few successful ones. From our side we will continue to make ourselves available and provide timely and concise audit recommendations to support leadership in their efforts to boost their key internal controls and systems,” says Nombembe.