22 May 2014

1. Presentation on OPCA and Governance support to Gauteng Municipalities on clean audit achievements: PCC Case Study 22 May 2014

2. Table of Content • Background • Objectives of the Operation Clean Audit • Provincial Coordinating Committee (PCC) • The composition of the OPCA PCC • Approach and methodology • Challenges • Templates

3. Background • The Gauteng OPCA PCC was officially established by the Premier as requested by the minister of Cooperative Governance and Tradition Affairs • It was established on the 15th of October 2009. • The MEC for COGTA was tasked with the coordination of the committee

4. Objectives of the OPCA PCC • The OPCA PCC was established to monitor and support municipalities towards the achievement and sustenance of clean audits • The overall goal of a clean audit is to return the municipality to an acceptable level of liquidity (the ability to turn short-term assets into cash to cover debts), solvency (the ability to meet long-term fixed expenses and to accomplish long-term expansion and growth) and cash flow (available cash on hand), and ultimately to longer-term financial sustainability,

5. Objectives of the OPCA PCC To achieve its objectives, a clean audit must: • Reverse causes of distress in distressed municipalities, • Resolve the financial crisis, • Achieve a rapid improvement in financial performance, • And regain community and other key stakeholder support

6. The composition of the OPCA PCC • The committee is made up of representatives from the following institutions: • Gauteng municipalities • Gauteng COGTA (Coordination M&E and support) • Gauteng Provincial Treasury (M&E and support), • IMFO (Support: Assessment of Key controls, Internal Audit and Performance management • SALGA, (M&E and Support) • Office of the Premier, (Oversight) • Provincial Office of the Auditor General (Verification and assurance)

7. Approach and methodology • The committee has a technical sub committee that is responsible for performing technical support to municipalities. • Quarterly meetings are held • Meeting for three days divided as follows- • Day 1: metros, • Day 2 Sedibeng district municipalities • Day 3 Westrand district municipalities

8. Approach and methodology January: • Municipal presentation of AG report and management letter remedial plans by municipalities • In-depth assessment and analysis of the AG report and management letter remedial plans by the stakeholders • Presentation of progress made in implementing the plans to date by municipalities • Input into plans and pledge of support by stakeholder to contribute to the achievement of the remedial plans

9. Approach and methodology • Mid June: Assessment of audit readiness which entails: • Presentation of progress made in implementing the remedial plans • Presentation of closing processes and procedures • Presentation of AFS preparation plans • Assessment of AFS preparation plans by stakeholders

10. Approach and methodology • September:Members attend municipal audit steering committee meetings to monitor and support municipalities during audit • All OPCA PCC reports are finally presented to the Premiers Coordinating Forum, which is made up of the premier, MECs for COGTA and Finance, mayors and municipal managers

11. Approach and methodology In addition items that are specific to each quarter, the following issues are presented at all OPCA PCC meetings: • Presentation of the progress made in implementing the key controls deficiencies • Assessment of the key controls dashboards by the stakeholders • Presentation of risks that might impact of audit

12. Approach and methodology • Presentation of challenges in implementing GRAP 17 • Presentation of the Role of municipal political and administrative leadership • Progress on reporting on Pre-determined objectives • Progress on addressing IT issues • Inputs by AG senior managers on the municipality that they audit

13. Approach and methodology Municipal OPCA steering Committees • The municipal OPCA steering committees serve as the technical implementing committees • They are chaired by the CFO or Municipal manager. • They comprise of heads of all departments within municipalities.

14. Approach and methodology • They serve to ensure that all issues raised in the AG report and management letters are effectively addressed • Internal audit is a critical part of these committees as they verify the claims made by the HODs

15. Challenges • Malicious compliance in the development of plans • Solution: interrogation of the plans and engagements on them • Lack of commitment by HODs outside of Finance to timeously implement remedial measures to address issues raised in their areas of responsibility • Escalation to the Municipal Managers • Institutionalization of the OPCA PCCs within Provinces • Provincial COGTAs to be capacitated to perform the coordination task

16. Templates • As part of support by the OPCA PCC, a template was developed to be utilized to develop the remedial plans by municipalities • This is the template that municipalities present at the OPCA PCC meetings as well as at the municipal OPCA steering committee meetings. • These are held weekly, in some case fortnightly • OPCA PCC technical teams attend the municipal OPCA steering committee meetings.

17. Way forward • Inclusion of Internal auditors in the OPCA PCC • One of the key actions that the OPCA PCC will undertake is to seek a slot in the MPAC meetings to present the outcomes of the OPCA PCC meetings. • Continue to ensure that OPCA PCC as a committee adds value to municipal processes by seeking innovative ways to support municipalities • Undertake an independent assessment of how OPCA as a project has enhanced governance and service delivery