CIGFARO ANNUAL CONFERENCE 09 OCTOBER 2018 EFFECTIVE POLITICAL OVERSIGHT ROLE ON FINANCIAL MANAGEMENT CIGFARO ANNUAL CONFERENCE

PRESENTATION OUTLINE 1. INTRODUCTION 2. FINANCIAL GOVERNANCE:OVERVIEW 3. ROLE PLAYERS IN A MUNICIPAL 4. CONSEQUENCES MANAGEMENT 5. WAY FORWARD: Media reports

INTRODUCTION 3

Municipalities are over burden by increasing legislations, INTRODUCTION Municipalities are over burden by increasing legislations, Political oversight should not only be on service delivery; but oversee that everything happen within the parameters of the law. The council is entrusted to make strategic governance decisions on behalf of communities and those decisions can even affect society as a whole if taken without an effective oversight from Council and its role players. Councillor requires a level of expertise to be able to play their oversight; hence SALGA has various capacity building to assist councillor play their role.

Council; Finance Portfolio Committee , MPAC and Audit Committee INTRODUCTION Oversight Committees: Council; Finance Portfolio Committee , MPAC and Audit Committee Monitoring of performance, policy implementation, outputs and outcomes on a continuous basis Making recommendations to address deficiencies Legislatively defined responsibilities in terms of annual reports, strategic plans and budgets Acting as enablers of good governance to ensure that financial and administrative objectives are attained Municipal administration is governed by legislation, norms and standards which they must champion to ensure organizational compliance.

FINANCIAL GOVERNANCE:OVERVIEW

FINANCIAL GOVERNANCE:OVERVIEW

ROLE PLAYERS IN A MUNICIPALITY 8

ROLE PLAYERS IN A MUNICIPALITY: COMBINED ASSURANCE Section 42 and 43 of the Local Government: Municipal Structures Act No. 117 of 1998 (the Structures Act) provides for the establishment and composition of executive committees. Section 79 of the Structures Act provides for the establishment of other committees of municipal councils e.g. MPAC, Section 80 of the Structures Act provides for the establishment of committees to assist executive committee- e.g. Committees to assist the Executive Committee The Finance Portfolio Committee

ROLE PLAYERS IN A MUNICIPALITY The Finance Portfolio Committee: Monitor and ensure that the required financial reporting as per legislation are submitted to relevant structures Monitor proper compilation and submission of financial statements of Council and its entities for internal and external auditing purposes Take relevant steps and devises whatever measures as may be deemed necessary to ensure that the municipality is financially sustainable to delivery the required services Monitor the development, implementation and review of the Municipality’s Supply Chain Management Policy,

CONSEQUENCES MANAGEMENT General Financial Management Functions - MFMA – s62(1)(d) The Accounting officer is supposed to take all reasonable steps to ensure that unauthorised, irregular or fruitless and wasteful expenditure and other losses are prevented; In case this happens: effective and accountable leadership in municipalities, and consequences for failure: Minimum standards set for both councillors and senior managers and consequences for non-compliance and the lack thereof Both the effectiveness of the council and its structures in terms of oversight and the operational efficacy of the council should be considered Failures by the municipality, its political leadership as well as administrative leadership should result in direct consequences to ensure standards are met

CONSEQUENCES MANAGEMENT The purpose of the consequences and accountability framework is not only to highlight the consequences of the failure of political and administrative leadership in municipalities, but to propose measures to strengthen governance and accountability in municipalities, with clear consequences for non-performance.

WAY FORWARD 13

Media Reports City budget cuts millions Municipality X has adjusted its 2018/19 budget to reduce its operating expenditure by R103 million following recommendations by the National Treasury. In a report that came before council, the budget manager said during the first two months of the financial year, which began in July, the municipality experienced a drop in the revenue collection rate. The newspaper previously reported that the municipality needed revenue of at least R400 million monthly but it had been collecting around R330 million, forcing the municipality to dig into its reserves to cover some of the expenses. Continuous Monitoring by Council and its Committees in imperative. Re-prioritization where necessary Focus on revenue collection

Media Reports: cont. City gets advice to trim budget The City is spending millions of Rands more than it makes each month and has been forced to dip into its depleting reserve funds. This was revealed by the acting City manager who recently told the financial services portfolio committee that while the municipality was not yet bankrupt their spending habits needed to change. Turnaround strategies Interim Finance Recovery Committee

WAY FORWARD Development of adequate Terms of Reference for different Council committees Continuous Capacity Building Programs Key performance indicators- Ratios for Cash Coverage etc. Differentiation between IFC and FPC and their TOR’s Council must be deliberate when dealing with the issues of Revenue and Expenditure management Managing the expenditure incurred in revenue collection effort No appointment of Service Providers without proper SLA’s; e.g. debt collectors that collect nothing but claiming monthly from the Municipalities.

Thank you