Consolidated Local Government audit outcomes 2009-10 Municipalities and municipal entities 13 April 2011

MFMA audit outcomes 2009-10 Summary of audit outcomes as at 31 January 2011 Municipalities* Municipal entities 2009-10 2008-09 Disclaimer 53 103 5 8 Adverse 7 10 Qualified 50 4 Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations 120 113 29 42 Financially unqualified with no findings on predetermined objectives or compliance with laws and regulations 1 Total number of audits reported on 237 280 49 55 Number of audit reports not issued by 31 January 2011 46 3 Total number of audits 283 54 56 Findings arising from the AGSA’s other legal reporting responsibilities: Predetermined objectives 219 257 27 30 Compliance with laws and regulations 224 231 38 * Municipalities: based on consolidated financial statements where applicable

MFMA audit outcomes 2009-10 Movement in audit outcomes over 2008-09 financial year – Municipalities * Findings on predetermined objectives and compliance with laws and regulations

MFMA audit outcomes 2009-10 Movement in audit outcomes over 2008-09 financial year – Municipal entities

MFMA audit outcomes 2009-10 Provincial analysis of audit outcomes – Municipalities and municipal entities as at 31 January 2011

MFMA audit outcomes 2009-10 Movements in financial statement qualification findings – Municipalities (110) 58 * Municipalities: based on consolidated financial statements where applicable

MFMA audit outcomes 2009-10 Findings arising from the AGSA’s other legal reporting responsibilities – Municipalities* * Municipalities: based on consolidated financial statements where applicable ** Findings on predetermined objectives and/or compliance with laws and regulations

MFMA audit outcomes 2009-10 Predetermined objectives reporting findings – Municipalities (219) Late/non-submission: 2009-10: 25% 2008-09: 37% Non-compliance: 2009-10: 88% 2008-09: 88% Compliance with the MFMA, MSA and Municipal Planning and Performance Management Regulations pertaining to the planning, management, monitoring, review and reporting of performance Inadequate presentation of reported information, reported information not submitted in time for audit purposes and non-existence and/ non-functioning of a performance audit committee. Not useful: 2009-10: 68% 2008-09: 58% Consistency, relevance and measurability of planned and reported performance information. Information is not being consistent with targets and indicators as set in the strategic/ corporate/ annual performance plans and targets which are not specific, measurable and time bound. Not reliable: 2009-10: 47% 2008-09: 55% Reported information not accurate, complete and consistent in relation to the source data, evidence or documentation. Lack of sufficient appropriate audit evidence in relation to reported performance information and source information not adequately supporting the accuracy and completeness of the reported facts.

MFMA audit outcomes 2009-10 Top findings on compliance with laws and regulations – Municipalities* * Municipalities: based on separate financial statements

MFMA audit outcomes 2009-10 Unauthorised, irregular, and fruitless and wasteful expenditure – Municipalities and municipal entities Municipalities: based on consolidated financial statements where applicable

MFMA audit outcomes 2009-10 The impact on audit outcomes of management being given the opportunity to correct material misstatements during the audit

MFMA audit outcomes 2009-10 Assistance provided by consultants (Financial statement-related)

MFMA audit outcomes 2009-10 Findings on information systems audits – Municipalities Percentages (%) are out of number of auditees where IT focus areas was tested

MFMA audit outcomes 2009-10 Municipalities and municipal entities with funding concerns

MFMA audit outcomes 2009-10 Analysis of drivers of improved audit outcomes at the time of the audit Municipalities: based on separate financial statements

MFMA audit outcomes 2009-10 Drivers of improved audit outcomes – Leadership Municipalities: based on separate financial statements

MFMA audit outcomes 2009-10 Drivers of improved audit outcomes – Financial and performance management Municipalities: based on separate financial statements

MFMA audit outcomes 2009-10 Drivers of improved audit outcomes – Governance Municipalities: based on separate financial statements

MFMA audit outcomes 2009-10 Assessment of commitments from key role players to address audit outcomes Role players Assessment of monitoring capacity and effectiveness since the audit Supply chain management Predetermined objectives Financial management Turnaround plans IT Controls Human resource management Use of consultants Municipalities under administration (Section 139 of MFMA) Governance structures Provincial executive leadership (Provincial CoGTA and Provincial Treasury, Operation Clean Audit, Premier, MEC Local Government and MEC Finance) EC FS GP KZN LP MP NC NW WC   Coordinated Provincial oversight (Provincial standing committees, Provincial Speakers Forum, and MPACs)   Intervention required In progress Good progress Not applicable

MFMA audit outcomes 2009-10 Areas of focus needed from national key role players to address audit outcomes at the time of the audit Role players Assessment of monitoring capacity and effectiveness Supply chain management Predetermined objectives Financial management Turnaround plans IT Controls Human resource management Use of consultants Municipalities under administration Governance structures Executive leadership (COGTA, National Treasury, DPSA, Presidency)   Legislative oversight (NCOP, NA Portfolio Committees) SALGA   Intervention is required In progress

Supply chain management Predetermined objectives MFMA audit outcomes 2009-10 Recommendations and action plans from NA-NCOP -1 Supply chain management   Predetermined objectives

MFMA audit outcomes 2009-10 Recommendations and action plans from NA-NCOP-2 Financial management   Turnaround plans

Human resource management MFMA audit outcomes 2009-10 Recommendations and action plans from NA-NCOP-3 IT Controls   Human resource management

Municipalities under administration Governance structures MFMA audit outcomes 2009-10 Recommendations and action plans from NA-NCOP Use of consultants   Municipalities under administration Governance structures

MFMA audit outcomes 2009-10 Recommendations and action plans from NA-NCOP Supply chain management   Predetermined objectives Financial management Turnaround plans IT Controls Human resource management Use of consultants Municipalities under administration Governance structures