Audit outcomes of North West local government 28 May 2013

The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

Audit outcomes over the past three years • All audits (including prior year backlogs) have been completed • Minimal improvement over 2010-11 2011-12 2010-11 2009-10 Unqualified with NO findings Unqualified WITH findings Qualified WITH findings Adverse/ Disclaimer WITH findings

Backlog audits Name of municipality Financial year Comment Dr Ruth Segomotsi Mompati District Municipality 2009/10; 2010/11; 2011/12 Ditsobotla Local Municipality 2010/11; 2011/12 Kagisano Local Municipality In 2011/12 Kagisano and Molopo merged Molopo Local Municipality Kgetlengrivier Local Municipality Lekwa-Teemane Local Municipality Mamusa Local Municipality 2008/09; 2009/10; 2010/11; 2011/12 Moretele Local Municipality Madibeng Local Municipality

Movements of the 27 auditees reported on Unqualified with no findings Unqualified with findings Qualified with findings Adverse/ disclaimer Improved 2 Unchanged 3 1 17 Regressed Total auditees reported on 5 4 18 Movements 4 21 2

Auditees with no compliance findings Auditees with compliance findings Status of compliance with laws and regulations 100% There are material findings at of the auditees 2011-12 2010-11 Auditees with no compliance findings Auditees with compliance findings

Auditees with no PDO findings Auditees with PDO findings Quality of annual performance reports 89% There are material findings on the performance reports of of the auditees 2011-12 2010-11 Auditees with no PDO findings Auditees with PDO findings

What are the areas that should be focused on?

Focus areas to improve audit outcomes Supply chain management Quality of performance reports Human resource management Quality of submitted financial statements Information technology (IT) controls Financial health (going concern) With no findings With findings

Outcome after corrections Quality of submitted financial statements Due to correction of material misstatements during the audit process, of auditees were able to avoid qualifications. 19% Outcome if NOT corrected Outcome after corrections 5 (19%) 27 (100%) 22 (81%) Unqualified Qualified

What vital actions should be taken?

Financial and performance management Intervention required Improving the drivers of key controls will improve audit outcomes Slight improvement in Governance Leadership and Financial and performance management remains largely unchanged Leadership Financial and performance management Governance XX% 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 Good Causing concern Intervention required

… as will addressing the continuing pervasive root causes Key positions vacant or key officials lacking appropriate competencies A major challenge at 26 (96%) of the auditees. Lack of consequences for poor performance and transgressions Slow response by political leadership in addressing the root causes of poor audit outcomes

Which key role players should take action?

Extensive assurance should be provided by the key role players First level of assurance Management/leadership Second level of assurance Internal independent assurance and oversight Third level of assurance External independent assurance and oversight Senior management Municipal manager Mayor Internal audit Audit committee Treasury, Local Government Dept., SALGA, Premier’s office Municipal council Municipal public accounts committee Legislature and portfolio committee External audit Provides assurance Provides some assurance Provides limited/no assurance Not established