Transcript Mopani District shared audit committee

District Shared Audit
Committee Services
Tim Maake
Hotel@ Tzaneen
08 February 2013
Content
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Vision
District profile
Legislative framework
Establishment of District wide audit committee
Rationale for a shared approach
Functionality of the audit committee
Achievements on the work of the audit committee
Common issues raised by the committee to municipalities
Benefits of the shared approach
Financial implications
Possible challenges and failures
Conclusion
Vision of the Municipality
“To be the food basket of Southern Africa
and the` tourism destination of choice.”
District profile - population
1996
2001
2011
BPM
108741
131537
150637
GGM
218752
240728
244217
GLM
203541
218874
212701
GTM
342551
375586
390095
MLM
87871
94382
94857
MDM
962457
1061107
1092507
District profile - Households
2001
2011
BPM
27453
41115
GGM
55334
63548
GLM
52057
58261
GTM
88556
108926
MLM
21449
24470
MDM
244849
296320
Legislative framework
• Section 166 (1) of the MFMA requires a municipality to
have an audit committee;
• According to section 166 (2) of the MFMA the audit
committee is an independent advisory body and must
advise the municipal council, the political office-bearers,
the accounting officer and the management staff:
 Internal financial control and internal audits;
 Risk management;
 Accounting policies;
 Performance management;
 Effective governance and
 Review of the AFS of the municipality
Legislative framework cont.’
• Section 166 (6) of the MFMA indicates that a single audit
committee may be established for a district municipality
and the local municipalities within a district municipality;
• Section 166 (4) of the MFMA also states that the audit
committee must consist of at least three person with
appropriate experience;
• The audit committee must meet at least four times a
year;
• No councillor may be a member of the audit committee
Establishment of a district wide audit
committee
• The first audit committee was established in January 2007 through a
resolution of Council as agreed at the District Intergovernmental
Forum in 2006;
• The committee consisted of five (5) members: (1) from the legal
field, (1) with public sector experience, (1) with both public sector
and internal audit experience, (1) Chartered Accountant and (1) with
municipal experience;
• The term of the audit committee was three years which was
extended until June 2011;
• The current committee has five (5) members and is Chaired by a
Chartered Accountant: (1) chartered accountant, (1) IT specialist, (1)
legal expert, (1) municipal expert and (1) internal audit expert and
• The committee was established in August 2011
Rationale for a shared approach
• The audit outcomes for the entire district were
not looking good at that time;
• Three municipalities were under Project
Consolidate: GGM, GLM and MLM;
• Performance management was a shared service
as well;
• Economies of scale and cost sharing
• Support to one another (collaboration) and
• Common vision on the improvement of good
governance
Functionality of the district wide audit
committee
• Contract signed with members of the audit
committee with agreed rates;
• Operates as per approved audit charter;
• There is also an approved schedule of meetings:
quarterly basis – one week booked;
• Internal audit provides administrative support;
• Reports per municipality are compiled and
submitted to the audit committee;
• Provincial Treasury, CoGHSTA and Office of the
Auditor General also attend these meetings
Achievements on the work of
the audit committee
• Reviewed the annual financial statements for the
year ending June 2011 and June 2012;
• Submitted reports to various Councils;
• Met with the Mayors and Exco’s of different
municipalities where there were challenges;
• Convened quarterly meetings as per schedule;
• Referred reports back where there was insufficient
data and;
• Where a meeting failed because of late submission
of reports, the cost were recovered from the
management
Common issues raised by the
committee to the municipalities
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Poor internal controls;
Compliance with legislative requirements;
Effects of vacancy on good governance;
The issue of the policy environment;
Sustainability of the municipalities;
Performance against set targets;
Effectiveness of the internal audit units;
Budget control and management and;
Effectiveness and adequacy of the systems.
Benefits of the shared approach
• Expert advise on matters that cuts across;
• Uniform approach on matters that are similar;
• Encourage and promote the spirit of
intergovernmental relations;
• Collective responsibility for the improvement of
good governance district wide;
• Costs sharing – proportional contribution.
Financial implications 2011/12
Municipality
% Contribution
Amount spent
BPM
14
R 319’037.05
GGM
10
R 227’883.61
GLM
10
R 227’883.61
GTM
14
R 319’037.05
MLM
10
R 227’883.61
MDM
42
R 957’111.15
TOTAL
100
R 2’278’836.08
Financial implications 2012/13
Municipality
% Contribution
Amount due
BPM
14
R 196’000.00
GGM
10
R 140’000.00
GLM
10
R 140’000.00
GTM
14
R 196’000.00
MLM
10
R 140’000.00
MDM
42
R 588’000.00
TOTAL
100
R 1’400’000.00
Possible challenges and failures
• Slow implementation of action plans;
• Cost of specialised services;
• Risk of loosing the members – improvement of
audits
• Adherence to the scheduled meetings
• Dedicated staff to provide administrative support
to the committee and;
• Thorough engagement by Councils with the
audit committee reports.
Conclusion
• Joseph Murphy in his book entitled “ The Power
of your subconscious mind writes as follows:
“ Think good and good follows. Think evil and evil
follows. You are what you think all day long.”