Transcript The City of Cape Town’s Role in Creating a Better Life for All

IMFO Conference – Cape Town
“Implementing Financial Best
Practice”
Presented by:
Mike Richardson
Chief Financial Officer
September 2011
What is “Best Practice?”- Wikipedia
Generally-accepted techniques, methods or processes
Often based upon common sense
Used where no specific formal methodology exists
Used as an alternative to mandatory legislated standards
Featured as part of accredited management standards – ISO 9000
Not always appropriate to an organization’s needs
Key strategic talent is needed when applying best practice to identify
an organization’s unique qualities with the practices that it has in
common with others
One size may not fit all
Objectives of “Financial Best Practices”
in Municipalities
Financial viability
Basis for clean audits
Sound credit rating
Investor confidence
Ability to borrow for capital investment
Economic growth and development
Business approval
Community confidence
Sustainability
City of Cape Town –
Financial Background
Unqualified audit reports for 7 years
“Clean audit “ reports for past 2 years
Stable international credit rating for 3 years ( Moodys Aa2 )
Strong cash flow
Bond issues at competitive interest rates
Inflation linked rates increases
Improving community perception surveys
Improving staff perception surveys
One Size Fits All?
City of Cape Town
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Population 3,7 million
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Area 2500 square kilometres
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300kms of Coastline
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Operating Budget R22,1 billion
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Capital Budget R5,1 billion
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One ME ( CTICC )
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Staff complement 27 000
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Geographical constraints
City of Cape Town – Growth and
Development Challenges
Growing urbanisation
Widespread poverty
Land availability for low cost housing scarce
Climate change demands
Basic service provision for the poor
Biodiversity protection
Public transport systems out-dated
Financial viability is the key to addressing these challenges
Financial Viability – Conditions
Precedent
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Political stability
Political commitment to sound management
Adequate revenue streams
Supporting strategies and policies
Appropriate financial systems
Dynamic and competent management leadership
Sound governance structures
Governance Structures –
Oversight and Compliance
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Informed and effective Finance Committee
Independent and qualified Audit Committee
Risk Management Committee
SCOPA
Open and transparent reporting mechanisms
Tools to Deliver Strong Revenue
Streams - Policies
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Debt Management Policy
Indigent Policy
Rating Policy
Tariff Policies
System of delegations
Performance management
Processes to Support Clean Audit
Reports
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Integrated financial accounting
Management information systems
Accurate billing system
Data management controls
Supply chain management
Internal control processes
Clean Audit Reports - Approach to
Annual Audit
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Coordination of audit process by CFO
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Constructive interaction with the auditors and appropriate
committee structures to deal with audit issues
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Keeping Executive Management informed of audit
progress
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Detailed file of audit working papers in support of the
compilation of the annual financial statements
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Availability of key personnel during the audit process
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Early resolution of issues and audit queries
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Challenge to unreasonable demands and findings
Financial Best Practices
Conclusions
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Discipline based upon good management principles
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Involves all stakeholders - inclusivity
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Package aligned to the needs of the organisation
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Provides the foundation for financial sustainability
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Basis for service delivery ……… How this achieved is
another story……
Thank you
Email address:
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083 629 1236