Download (opca) hands on support

DEPARTMENT OF LOCAL GOVERNMENT AND
HOUSING ACTION PLAN IN RESPONSE TO THE
AUDITOR GENERAL’S REPORT FOR THE FINANCIAL
YEAR 2010/11
4TH SEPTEMBER 2012
CAPE TOWN
2017-07-04
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OVERVIEW
• Background
• Mandate, Key Outputs, Achievements, Challenges, Possible
Solutions, Key Delivery Agents
• Departmental Plan
– Overview of Qualified Municipalities
– Key Issues of Concern
– Support provided by the DLGH
– Joint Programmes with Gauteng Treasury
• Way Forward
• Challenges
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BACKGROUND
• Core Functions of the Department include the following:– Support and Strengthen the capacity of municipalities to manage
their own affairs; exercise their powers and perform their
functions;
– Draft Provincial Legislation that affects the status, institutions,
powers or functions of Local Government;
– Monitor, support and promote the development of local
government and see to the effective performance by municipalities
of their functions as per Schedule 4 and 5
MANDATE
• Constitutional Mandate:– Section 154(1):- Support and Strengthen the capacity of
municipalities to:• Manage their own affairs,
• Exercise their powers and
• Perform their functions
LEGISLATIVE MANDATE
Act
Purpose
Municipal Structures Act
(No. 117 of 1998)
The Act provides for the establishment of municipalities in
accordance with the requirements relating to categories and types
of municipalities.
Municipal Systems Act
(No. 32 of 2000)
The Act provides a framework for the provision of services, service
delivery agreements and municipal service districts to provide for
credit control and debt collection
Municipal Finance
Management Act (No. 56
of 2003)
The Act establishes norms and standards for the management of
the revenue, expenditure, assets and liabilities, and financial
dealings of municipalities and municipal entities.
Gauteng Traditional
Leadership and
Governance Act (No. 4of
2010)
Provides for the establishment and recognition of traditional
communities in the Province
POLICY MANDATE
Some of the key policy mandates are outlined below:
Policy
Purpose
Local Government Turnaround Strategy (LGTAS)
The LGTAS seeks to implement a comprehensive but
differentiated programme of action to achieve the objective of
enabling municipalities to meet the basic service needs of
communities
The Global City Region
(GCR) Perspective
The key objective is to reduce unemployment and poverty by
promoting economic growth, integrated strategies and joint
planning between the different spheres of government.
Funding model for ward
committees
Provides for and guides the implementation of support of
functionality of ward committees through budgeting for stipend
and other resources required for ward committee operations.
Revised National Capacity
Building Framework Draft 4
The policy recognises three elements of capacity which impacts
on the ability of municipalities to provide services and they are
the individual, institutional and environmental capacity
OUTCOME AND OUTPUTS
• Responsive, accountable, effective and efficient local government
system:–
Differentiated approach to municipal financing, planning and support
–
Improving access to basic services
–
Implementation of the Community Work Programme (Responsibility of DED)
–
Actions supportive of the human settlement outcomes
–
Deepen democracy through a refined ward committee model
–
Administrative and financial capability
–
Improved coordination of interventions impacting on Local Government
KEY DELIVERY AGENTS
• Revenue Enhancement and Debtor management: Department
of Finance
• Operation Clean Audit: Department of Finance
• National Department of Traditional Affairs
• National Department of Cooperative Governance
BACKGROUND – AUDIT OUTCOMES
• Of the 15 audited municipalities,
– 9 Unqualified:- COT, Ekurhuleni, Metsweding, Westrand,
Sedibeng, Midvaal, Lesedi, Westonaria and Merafong
– 6 were qualified:- Mogale City, Emfuleni, COJ, Nokeng,
Randfontein and Kungwini
– 0 disclaimers or adverse
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BACKGROUND – AUDIT OUTCOMES
• 2 Regressions:
– Randfontein and Nokeng Local municipalities regressed
from financially unqualified to qualified.
• There has been a general regression in Gauteng as can be
seen in the table below
• However, Gauteng municipalities have met the target of
achieving no disclaimers and adverse opinions
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BACKGROUND – AUDIT OUTCOMES
Status Quo of audit Outcomes
FINANCIAL YEAR
2007/8
MUNICIPALITY
2008/9
2009/10
2010/11
CITY OF JOHANNESBURG
UNQUALIFIED
CLEAN AUDIT
QUALIFIED
QUALIFIED
CITY OF TSHWANE
QUALIFIED
QUALIFIED
UNQUALIFIED
UNQUALIFIED
EKURHULENI
QUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
METSWEDING DISTRICT
UNQUALIFIED
CLEAN AUDIT
CLEAN AUDIT
UNQUALIFIED
NOKENG TSA TAEMANE
DISCLAIMER
QUALIFIED
UNQUALIFIED
QUALIFIED
KUNGWINI
DISCLAIMER
DISCLAIMER
QUALIFIED
QUALIFIED
SEDIBENG DISTRICT
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
EMFULENI
DISCLAIMER
QUALIFIED
QUALIFIED
QUALIFIED
MIDVAAL
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
LESEDI
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
WEST RAND DISTRICT
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
MOGALE CITY
QUALIFIED
UNQUALIFIED
QUALIFIED
QUALIFIED
RANDFONTEIN
QUALIFIED
UNQUALIFIED
UNQUALIFIED
QULAIFIED
WESTONARIA
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
MERAFONG
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
UNQUALIFIED
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OVERVIEW OF QUALIFIED MUNICIPALITIES
• The City of Johannesburg (COJ) obtained a qualified audit
opinion on
– revenue and receivables with other matters.
– leave liability was also raised at COJ.
• Kungwini was qualified on
– revenue and consumer debtors.
• Nokeng was qualified on
– lack of monthly reconciliations resulting in unreconciled
differences between the cash book and the financial
statements.
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OVERVIEW OF QUALIFIED MUNICIPALITIES
• Emfuleni, Randfontein, Mogale were qualified on
Capital assets (Property, plant and equipment)
– Randfontein municipality was unable to fulfill the
requirements of GRAP 17 due to lack of adequate
skills to interpret GRAP standards .
– In Emfuleni and Mogale City the qualification on
GRAP 17 compliance related to lack of
documentation to support balances and adjustments
of property plant and equipment.
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OVERVIEW OF QUALIFIED MUNICIPALITIES
• Material adjustment to financial statements
• Reporting on pre-determined objectives (Performance
information)
• Distribution losses: an estimated R3 billion in lost revenue for
all Gauteng municipalities
• Human Resource management: vacancies at some of the
municipalities in key finance units positions
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KEY ISSUES OF CONCERN
• Information Technology: The general control environment
across all municipalities has shortcomings relating to:
• Security management
• Access controls
• IT services continuity ( i.e. the disaster recovery plan)
and
• IT governance.
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KEY ISSUES OF CONCERN
• Supply Chain Management (SCM) findings identified were as
follows:
– Reasons for deviation that do not meet the requirements
of SCM regulation 36,
– Advertisement for tenders less than minimum period
– No competitive bidding process for other awards
• Three quotations not obtained
• Tender process not followed for awards that are required by the
legislation
– Inadequate contract management resulting in deviations
to SCM as contracts are not managed properly towards the
end of their terms.
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OPERATION CLEAN AUDIT (OPCA)
HANDS ON SUPPORT
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OPCA HANDS ON SUPPORT
•
OPCA targeted Hands on support to address AG issues is being
implemented across Gauteng Local Municipalities. Particular focus was
give to, Randfontein, Westonaria, Mogale City, City of Tshwane and
Emfuleni municipalities
• Primary focus areas of support are:– Internal Controls
– Assets
– Oversight
– Revenue Management
– Capacity Building – Scarce and Critical Skills
– Performance Information and;
– Annual Financial Statements
– Integration of the Financial system data- City of Tshwane
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PROGRESS ON OPCA HANDS ON
SUPPORT
Randfontein local municipality:
The Municipality has identified capacity needs in various areas
where resources were made available to provide hands on support. To
date, support was provided in the following areas:
-
Capitalization of Moveable Assets
Debtors data clean up and Revenue Analysis
Audit of Action Plans
Revenue Data Capturing
Data clean up and inactive debtors’ analysis and write offs
Capturing of backlog traffic fines into the system to ensure completeness
of revenue
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PROGRESS ON OPCA HANDS ON SUPPORT
Tshwane Metro Municipality (CoT):
The Municipality identified capacity needs in various areas where resources were
made available to provide hands on support. To date, support was provided in the
following areas:
-
Analysing revenue exception reports generated by Computer Assisted Auditing
Techniques program
-
Development of a Compliance checklist
-
Creditor’s Reconciliations
-
Asset verification on movable assets and operational leases
-
15 deployees were allocated to assist with verification of over 100 000 movable
assets for the city of Tshwane at different locations in the period June / July 2012
OPCA PROVINCIAL COORDINATING
COMMITTEE
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OPCA PROVINCIAL COORDINATING COMMITTEE (OPCC)
• The OPCA PCC was established by the premier within the IGR
framework act.
• It was established to monitor the implementation of OPCA
within municipalities as well as provincial departments within
the province.
• All Gauteng Municipalities are required to present to the
OPCA PCC on the progress made in addressing AG issues as
well as progress towards achieving clean audits.
OPCA PROVINCIAL COORDINATING
COMMITTEE (OPCC)
•
The OPCA PCC also serves to streamline the support from
various stakeholders to municipalities.
• The stakeholders that sit in the OPCA PCC are
–
–
–
–
Local Government and Housing,
Gauteng Treasury,
National COGTA and;
SALGA
• The stakeholders also present the progress made in
supporting municipalities to achieve clean audits
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INTERNAL AUDIT AND AUDIT COMMITTEE
SHARED SERVICES – PROGRESS TO DATE
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SHARED SERVICES – PROGRESS TO DATE
Purpose of project.
• To establish the feasibility and viability of implementing
shared services for internal audit units and audit committee
within the West Rand Region.
SHARED SERVICES – PROGRESS TO DATE
• The study concluded that it is feasible and cost effective to establish
a shared services model in the Westrand.
• The outcomes of the study were then presented to the municipal
managers and mayors within the West Rand Region.
• The findings were also presented to the regional transformation
committee, which is made up of mayors, MMCs finance, and
municipal managers of all the municipalities in the Westrand.
• The transformation committee approved that the shared services
be established, however the individual municipalities need to take
council resolutions to implement .
ASSET MANAGEMENT SUPPORT
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ASSET MANAGEMENT SUPPORT –
PROGRESS TO DATE
• The Department identified assets management (with focus on
GRAP 17 compliance) as a high risk area in Emfuleni and
Westonaria.
• Financial support was provided to the municipalities in this
regard.
• Service providers were contracted by the respective
municipalities to compile a GRAP 17 asset registers for both
infrastructure and movable assets. Both the asset registers
were completed in 2011.
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ASSET MANAGEMENT SUPPORT –
PROGRESS TO DATE
• In Emfuleni there were still areas that needed to be resolved regarding
the calculation methodologies as well as supporting documentation for
opening balances. As a result the municipality was qualified in the area of
asset management
– Consequently, the Price Water Coopers contract was extended to
address the issues of qualification as well as to update the asset
register with new assets that the municipality procured post the
compilation as well as library books.
– Significant progress has been made in this regard
• The Westonaria project fully achieved its objective and the municipal
audit outcome was positive.
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IMPLEMENTATION OF THE SCARCE AND
CRITICAL SKILLS STRATEGY
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IMPLEMENTATION OF THE SCARCE AND CRITICAL
SKILLS STRATEGY – PROGRESS TO DATE
• The training embarked on in partnership with AAT and SAICA
resulted in approximately 550 financial professionals being trained
in basic finance
• Training and mentoring in the areas of municipal officials and
politicians in auditing, supply chain management, finance for
oversight committees, Integrated Development Planning with
focus on linking budget to the IDP
• Fully established and trained MPAC members. The format of the
training was workshops with the AG and Provincial SCOPA and a
formal accredited training with Regennesys.
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HUMAN RESOURCE AND PERFORMANCE
MANAGEMENT
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HUMAN RESOURCE AND PERFORMANCE MANAGEMENT –
PROGRESS TO DATE
• Hands on support was provided to implement the
Human Resource Development and Management
strategy in the Westrand region and the City of Tshwane.
• Hands on support to implement Performance
management systems in identified municipalities
• The department is monitoring of the filling of critical
posts with special focus on the top six posts (MM, CFO
and Executive Directors)
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JOINT DEPARTMENT OF LOCAL
GOVERNMENT AND HOUSING AND
GAUTENG TREASURY INITIATIVES
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JOINT DLGH AND GDF SUPPORT
• Coordinate CFO and MEC/MMC forum meetings which are aimed
at:– strengthening the oversight capability of the MMCs for Finance, as well as;
– providing a platform for sharing of better practice between Gauteng
municipalities.
• Monitor the implementation of the Gauteng approach to achieving
clean audits to ensure that Operation Clean audit is driven from
the top through the office of the mayor, MMC finance, Municipal
manager and CFO
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JOINT DLGH AND GDF SUPPORT
• The establishment of Operation Clean Audit steering committees at
individual municipal level.
– The committees are attended by Heads of Departments as per
functional units in the municipalities and chaired by the CFO,
– The committees are established to monitor and ensure that all
responsible heads of departments address issues raised by the AG in
their respective areas.
– OPCA hearings are also held in some municipalities to address those
HODs that are not performing in terms of addressing the AG issues in
their respective areas.
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WAY FORWARD
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WAY FORWARD
• The Department will continue to implement
the support highlighted above.
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WAY FORWARD
• Improve the quality of financial statements and facilitate a
more efficient and effective interim audit by:
– Ensuring that municipalities prepare Monthly/quarterly
financial statements with supporting notes and disclosure
(including reconciliations).
– Ensure an independent review of Financial statements by
internal audit before submission to external audit.
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WAY FORWARD
Hands on Support towards improving the Information
technology controls:– Assist municipalities in establishing a Chief Information Officers’
forum
– Assist with ensuring that municipalities monitor the
development and implementation of IT policies and
procedures e.g. user account management, change
management, security management, service continuity, etc.
– Ensure ownership within municipalities of these policies.
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WAY FORWARD
• Assist with following up on IT issues raised on the
previous reports to ensure that they have been
adequately addressed.
• Assist with reviewing the IT organizational structures
and provide advice to the municipalities on to
which IT positions are critical and should be filled as
soon as possible.
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WAY FORWARD
• Assist with ensuring that adequate service level agreements
are drafted and signed as municipalities mostly use
vendors/consultant for IT services.
• Develop best practice guidance for initiating a compliance
process among all municipalities and thereby standardizing
the approach.
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WAY FORWARD
• Provide enterprise Risk management support
• Strengthening the implementation of M&E and
assessment of Key controls recommendations
• Internal controls with special focus on HR and Supply
Chain Management
• Support to improve reporting on Performance
information
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WAY FORWARD
• Support to reduce Distribution losses (Water and Electricity)
• Provide additional support regarding revenue enhancement
with a particular focus on the revenue value chain (integrity of
data, metering, billing etc)
• Embed the successes and impact of support and
achievements
• Strengthen the Provincial Departmental Capacity to support
Municipalities
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CHALLENGES
• Resources to roll-out support to reduce water
and electricity losses.
• Sustaining the achievements within the
respective municipalities (turnover of staff
and leadership)
• Consistent leadership and oversight.
• Skills and capacity in municipalities and at a
support level
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