IMFO 6 th Audit and Risk Indaba Durban 20 – 22 April 2015 Strengthening the Role of Oversight Structures in Municipalities

Introduction Presentation focuses on: –The oversight role of councillors in municipalities –The effectiveness of Audit Committees in strengthening oversight role of councillors 2

Oversight – a background Oversight is an important yet an inadequately discussed and researched area of municipal activity –We have discussed what oversight is and why it is necessary, why it is good from a normative point of view and what conditions might favour effective oversight –Yet less attention has been given on its impact on the functioning of our local government system 3

Quick general definitions: –Oversight – the proactive interaction initiated by a council with the Mayoral Committee and municipal administrative organs…that encourages compliance with the constitutional obligation on the Mayoral Committee and administration to ensure delivery on agreed-to objectives for the achievement of municipal priorities –Oversight is therefore part of enhancing transparency and accountability and the strengthening of local democracy –Distinction between potential oversight vs effective oversight Former – about available oversight instruments irrespective of their use Latter – impact of the utilization of the available oversight instruments Oversight defined

2 Oversight has three general characteristics: 1.Scrutiny by others 2.Regular accounting for one’s actions, and 3.The risk of negative repercussions, if performance is considered unsatisfactory Oversight Elements

2 1.How can objectives be made sufficiently measureable and precise so that policy success and failure can be attributed to the relevant decision makers? 2.How can LG managers be held accountable to elected representatives for actions taken independently of those representatives? 3.Where group decision-making is used to reduce idiosyncratic risk, how can the individuals involved be held to account? 4.How much can openness and transparency fill any gaps in accountability to elected representatives by providing accountability to the wider public? 5.Should obligations to be transparent be formalised and detailed? Oversight – some key questions

Various legislative provisions for Municipal Public Accounts Committees; Audit and Risk Committees, Internal Audit structures, etc. Complementary role to Treasury, Auditor General, and Parliament and the public MPACs – standing committees which help councils oversee activities performed by a municipality Have power to examine all issues referred to it by council Can also investigate specific issues such as municipal accountability to council regarding budgets and expenditure; effectiveness and efficiency of approve policies and by-laws and the quality of the municipality in general MPACs - also have an additional role and authority/power to examine public accounts, comment on these and on the report compiled by the AG Can also conduct investigations, give publicity to its conclusions and report to council Oversight Instruments

Number and percentage of recommendations accepted and executed? Capacity of MPAC members Challenges of partisanship Perception of MPACs as an additional burden Under resourcing Schedule of activities not tied to other key milestones and review timeframes Absence of a clear framework (similar to that of National Parliament and Legislatures – The oversight Model of the SA Legislature Sector, 2012) Publication and access to reports Some Oversight Challenges

Audit and Risk Committees – independent structures comprising of highly qualified, experienced and knowledgeable professionals from outside the municipality Professional integrity and reputation Independent and advisory role Link between the Council, Administration and the AG Strategic and analytical capacity from a multi-disciplinary background – e.g. Accounting, Law, IT, Governance, Strategy, Policy, Stakeholder Relations, Assets, Supply Chain, etc. Provide strategic advice and an independent view on the three audit areas, viz. Performance on pre-determined outcomes Financial Management Legislative compliance Complementary role and dynamic relationship with MPAC MPAC and ARCs

2 Salga and MPACs (and ARCs) General concern about effectiveness of the MPACs and ARC –AG continues to flag issues of governance, leadership, financial management and institutional capacity Various generic and portfolio training initiatives –Basics to interact with information at a high level e.g. analysing a financial report and the AFS Need to develop LG specific MPAC guidelines and operating manuals –Similar to those for the National Parliament and provincial legislatures Periodical effectiveness review and support –Instrument developed and tested Mooted national conference of all the oversight structures –Identify challenges and develop proposals

Thank You 11