1. Audit outcomes of North West local government
28 May 2013

2. 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.

4. Audit outcomes over the past three years
• All audits (including prior year backlogs) have been completed • Minimal improvement over
Unqualified with NO findings
Unqualified WITH findings
Qualified
WITH findings
Adverse/ Disclaimer WITH findings

5. 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

6. 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

7. 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
Auditees with no compliance findings
Auditees with compliance findings

8. 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
Auditees with no PDO findings
Auditees with PDO findings

9. What are the areas that should be focused on?

10. 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

11. 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

12. What vital actions should be taken?

13. 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%
Good
Causing concern
Intervention required

14. … 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

15. Which key role players should take action?

16. 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