1. PRESENTATION ON OPERATION CLEAN AUDIT 2014 SALGA FINANCE WEEK 07-08 FEBRUARY 2013

2. PRESENTATION FOCAL AREAS AUDIT OUTCOME STATUS ON FINANCIAL OVERSIGHT MIG EXPENDITURE FORWARD PLANNING

3. Audit outcomes summary.

4. Comparative Overview of the audit outcomes Audit Opinion 2011/122010/112009/102008/ 09 Disclaimer10 919 Adverse0300 Qualified1512119 Unqualified1398 Clean Audt1210 Outstandin g 3000 Total30

5. 2011/12 Key Common Audit Findings Non-compliance with Supply Chain Management An increase in unauthorised, fruitless and wasteful expenditure Assets Management- assets registers not compliant with GRAP Lack of supporting documents Completeness of revenue Ineffectiveness of governance structures Lack of application skills and knowledge of financial systems

6. 2011/12 Annual Financial Statements/ Annual Performance Reports 28 Municipalities submitted on time -Molemole – resubmitted on 31 October 2012 -Sekhukhune- 31 November 2012 -BelaBela- Outstanding -All 30 municipalities submitted their annual performance reports to the AG by the 31 August 2012. 24 municipalities have submitted audit remedial plans to the Department, the due date was on the 21 December 2012. Audit remedial plan must be developed in relation to final management letter. Monitor the implementation of audit remedial plans and ensure supporting documents on issues resolved. 6

7. 2013/14 MPRA Implementation Implementation of MPRA-compilation of valuation roll Application for extension of the validity period of valuation roll must be submitted on time to the Department. Gazetting of property rates by-law New valuation roll compilation – General complies of MPRA especial with regard to inviting property owners to inspect and lodge objections on valuation roll. Appointment of Professional Valuers- appointed Valuers must be registered. Utilisation of Valuation Appeal Board 7

8. Brief update on residents accountants The Department is currently assisting municipalities under “Resident Accountant ” project. CorpMD and Ngubane/Kgorong Consultants are appointed and started June 2012. SAB&T and PWC started in November/December 2012, however, there were challenges with regard to resources. Advertised for additional Service Providers – briefing session held.

9. Project Implementation The Project is monitored through the following structures MEC/Mayors forum, co-chaired by MEC for Coghsta and Provincial Treasury. This includes the Executive Mayors/Mayors, Municipal Managers, Office of the Auditor General and SALGA. Monthly reports of Resident Accountants are signed by Municipal Managers and Chief Financial Officers.

10. Challenges with regard to Project Delayed from the service providers- unavailability qualified resource High vacancy rate in Budget and Treasury Units in Municipalities. Lack of ownership of the project by Municipalities Lack and unavailability of supporting documents. Lack of proper internal controls such as adhering to management policies and treasury regulations, safe guarding of assets, Lack of implementation of audit remedial plans Lack of skills in respect of municipal accounting procedures and standards.

11. Oversight Structures

12. INTERNAL AUDITOR, PERFORMANCE AUDIT COMMITTEE AND RISK MANAGEMENT All municipalities have established Internal Audit Unit and appointed Audit Committees. Prioritise the appointment of Risk Officers. Establishment of functional risk management committees Additional appoint of internal auditors to assist with performance management audit and IT audit Audit Committees must report to council on quarterly basis, AG has raise this non-compliance for many municipalities. Performance Audit Committee must be appointed although Audit Committees are utilised to perform this function. Implementation of internal audit and audit committee recommendations. 12

13. MUNICIPAL PUBLIC ACCOUNTS COMMITTEE (MPAC) Provincial MPAC Forum has been established and the Provincial Executive MPAC committees is elected. Conducted district-based training sessions in- collaboration with Provincial Treasury, Provincial Treasury, Provincial Legislature and SALGA. Internal Auditors should not serve as the coordinator or secretariat of the Committee. Communications between MPAC and Accounting Officers must be in writing. 13

14. MIG EXPENDITURE

15. Expenditure per district as at end of December 2012 15 DistrictAllocation (R) Expenditure (R) % Exp. Sekhukhune578,623,000175,371,98830.3 Mopani503,277,00092,386,27318.4 Vhembe532,740,000246,138,28446.2 Capricorn548,509,000182,772,19733.3 Waterberg299,734,00093,518,34631.2 Province2,462,883,000790,187,08732.1

16. The Provincial expenditure is R923.513m (32.08%) Of concern regarding the expenditure in the 2012/2013 financial year: Late registration of projects to be implemented in the current financial year. We still have municipalities registering projects. Having projects earmarked for implementation in the current financial year being advertised for procurement of consultant to do designs, projects where tenders have closed and validity period expired, requiring re-advertising. Expenditures for municipalities with approved roll over very low, 16 Provincial Overview: 2012/13 MIG Expenditure

17. Expenditure per municipality as at end of December 2012 SEKHUKHUNE DISTRICT 17 MunicipalityAllocation (R) Expenditure (R) % Exp. Ephraim Mogale21,678,0006,895,61732 Elias Motsoaledi35,223,00025,206,92672 Makhuduthamaga41,436,0004,818,64012 Fetakgomo18,690,0008,869,69347 Greater Tubatse44,048,0009,957,91623 Sekhukhune417,548,000119,623,19529

18. Expenditure per municipality as at end of December 2012 MOPANI DISTRICT 18 MunicipalityAllocation (R) Expenditure (R) % Exp. Greater Giyani36,331,0001,173,7533.2 Greater Letaba40,027,00013,978,08535 Greater Tzaneen56,665,00013,930,96025 Ba-Phalaborwa20,778,0008,151,32439 Maruleng30,174,00010,097,28134 Mopani319,302,00045,054,86914

19. Expenditure per municipality as at end of December 2012 VHEMBE DISTRICT 19 MunicipalityAllocation (R) Expenditure (R) % Exp. Musina14,604,000888,8696 Mutale16,977,0009,361,14455 Thulamela74,355,00043,439,26558 Makhado67,400,00013,143,88620 Vhembe359,404,000179,305,12050

20. Expenditure per municipality as at end of December 2012 CAPRICORN DISTRICT 20 MunicipalityAllocation (R) Expenditure (R) % Exp. Blouberg30,904,0002,002,3826 Aganang26,371,00013,473,05351 Molemole23,916,00019,377,73081 Polokwane221,514,00095,036,81143 Lepelle- Nkumpi 34,836,00022,845,74566 Capricorn210,968,00030,036,47714

21. Expenditure per municipality as at end of December 2012 WATERBERG DISTRICT 21 MunicipalityAllocation (R) Expenditure (R) % Exp. Thabazimbi42,153,00026,869,17264 Lephalale43,557,00011,925,25927 Mookgophong16,420,0008,426,77951 Modimolle41,437,0008,645,94421 Bela-Bela18,824,00011,298,00660 Mogalakwena137,346,00026,353,18619

22. Expenditure in municipalities with high under spending in 2011/2012 financial year is very low; Sekhukhune (28.65%), Mopani (14.11)%, Capricorn (14.24%) and Mogalakwena (19.19%). –Further note : Capricorn and Mogalakwena have their 2011/2012 roll over applications approved. COGHSTA engaged with DWA to expedite approval of technical reports. Currently the meetings for such approvals are being held every week on Tuesdays. 22 2012/13 MIG exp. per municipality as at end of December 2012

23. Forward Planning 23

24. FORWARD PLANNING OBJECTIVES OF FORWARD PLANNING: –To ensure that allocated MIG is spend to alleviate backlogs and improve access to service delivery. –Planning is conducted in the preceding year for implementation to commence earnestly in the beginning of the approaching year. –To ensure that prescripts of the Division of Revenue Act (DoRA) are adhered to. 24

25. FORWARD PLANNING CONT…. PRESCRIPTS OF DORA REQUIREMENTS: MUNICIPALITIES MUST: –Submit technical reports to respective sector department on sanitation, water, roads and storm water, sports and recreation projects by 31 May. –Submit registration forms of all planned projects for the approaching year for approval to COGHSTA by 01 August. –Submit detailed project implementation plans to the National department (through COGHSTA), including project designs, procurement process, and EIA approvals timelines by 31 October. 25

26. FORWARD PLANNING CONT…. IMPLEMENTATION OF CAPITAL PROJECTS: –Based on the DoRA prescripts, municipalities are ready to commence with Supply Chain Management process by November. –Appointment of Service Providers can be effected by March. –Contractors can take site between April and June and payments for work completed can commence in July. 26

27. COMMENTS BENEFITS OF FORWARD PLANNING INCLUDE: –Expenditure of more than 95% of MIG allocations. –Improved access to basic services by Limpopo people and/or alleviation of backlogs. 27

28. Conclusion Operation clean audit can be attained only if Council plays its role in terms of oversight. Strengthen support needed by the residents accountants when performing their functions. Institutionalize PMS and ensure that all section 56 managers prioritise clean audit as part of their performance plan. Deal with under/unacceptable performance. 28

29. THANK YOU 29