Standing Committee on Appropriations Emfuleni Local Municipality

2 Reputation promise/mission 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.

3 Brief to AGSA To give a overview on the audit outcomes of of the following municipalities: Emfuleni Local Municipality

4 MFMA audit outcomes Municipality Emfuleni Local Municipality Qualified with findings Disclaimer

5 5 Highlights of concerns/ interventions Lack of consequence for non-adherence/ lack of accountability to achieve clean audits as opposed to financially unqualified with findings Improved risk management processes and the capacity constraints of internal audit (iro IT & Assets), lack of adequate skills in finance units impacted negatively on the achievement of clean audit outcomes significantly. Emfuleni Local Municipality audit outcome unchanged Mayors and Councillors need to take ownership of key controls IT controls Minimal improvement HR Minimal improvement Predetermined objectives Minimal improvement Supply chain management Minimal improvement Material errors in AFS submitted for audit No Improvement

6 6 Status of key focus areas for oversight and governance structures - Emfuleni IT controls Minimal improvement HR Minimal improvement Predetermined objectives Minimal improvement Supply chain management Minimal Improvement Invitations for competitive bidding were not always advertised for a required minimum period of days. Predetermined information not useful (93% of selected objectives not verifiable) unreliable (61% of the indicators with no source information) Consultants to prepared financial statement due to lack of adequate skills. A key dependency was identified on the asset management accountant Auditee found to still have poor user access controls and no formal program change management controls Material errors in AFS submitted for audit No improvement Annual financial statements for audit with material misstatements Awards were made to providers who are persons in service of other state institutions The providers failed to declare that they were in the service of the state as required by SCM regulation Investigation of procurement process underway 50% of approved structure had vacant positions Employees worked more than the maximum hours of overtime allowed in terms of Basic conditions of employment act

7 Progress toward unqualified opinions/clean audit - Emfuleni Leadership Code of conduct and disciplinary code circulated and distributed to all employees Performance evaluation of section 56 employees conducted Key vacancies of Chief Financial Officer and Director of Corporate Services filled Leadership followed up on action plans to address audit findings identified in the previous audit cycle through internal audit Disaster recovery plans for the IT systems in place Financial and performance management Register is in place to record and monitor unauthorised, irregular, fruitless and wasteful expenditure Engaged the Auditors, Engineers and Consultants to draft new asset register (from April 2012) Revised and adopted a new performance system

8 Progress toward unqualified opinions/clean audit - Emfuleni Financial and performance management There are no users with super user access on IT systems Governance Audit and Performance and Risk committees monitored quarterly the progress on resolving audit qualifications

9 End of presentation Thank you