Introduction & Background Council Structures Functional & Effective Oversight Structure

1. Prepared by: Fetakgomo Mun for SALGA 21 February b2011

2. Introduction & Background • Council Structures • Functional & Effective Oversight Structure • Statutory Reports • Business Processes & Internal Control Systems • Measures Applied in Addressing Audit Related Matters • Commitment Towards Audit • Challenges • How To Sustain Clean Audit Status • Conclusion Prepared by: Fetakgomo Local Municipality

3. INTRODUCTION AND BACKGROUND • A population of 112 000 and 31 000 households • Annual budget R 80 million. R 58 million operating and R22 million capital budget. • Powers and functions: street lights, cemeteries, refuse removal, storm water, internal roads, …… • Staff compliment 71 • Councilors 25 • Grade 2 • Under Sekhukhune District Municipality Prepared by: Fetakgomo

4. Prepared by: Fetakgomo Local Municipality

5. Council met more than four as required by the Act. • EXCO & Portfolio Committee met more than four times. • Audit Committee was appointed with clear terms of references and it met more than four times . • Audit Committee reported directly to Council • FTM had internal audit that reviewed all the business processes and related activities. • Internal Audit performed risk based approach audit in line with internal audit three year plan. Prepared by: Fetakgomo Local Municipality

6. Both original budget & adjustment budget were approved by the Council and submitted to National & Provincial Treasury on time. • Adjustment budget was done in line with Mid-Year Performance Review. • Monthly and quarterly financial reports were submitted on time to Treasury throughout the year. • GRAP compliant Financial Statement was subjected to Audit Committee for noting and submitted to Treasury and Auditor General on time(31 August ). Prepared by: Fetakgomo Local Municipality

7. All the key municipal policies were reviewed to address business related risk. • Asset Register was updated regularly and comprehensive asset register was performed. • Segregation of duties were maintained at all times in BTO • All the key reconciliations were performed. • Effective Budget monitoring was in place to prevent unauthorized ,fruitless and wasteful expenditures. Prepared by: Fetakgomo Local Municipality

8. All expenditures incurred during the year under the review were informed by IDP and SDBIP as the results unfunded mandates were avoided. • All the journals above R30000 were authorized by the CFO or delegated personnel. • Creditors were paid within 30 days after the receipts of the invoice. • Monthly reconciliations performed timeously Prepared by: Fetakgomo Local Municipality

9. External audit implementation plan was developed and formed part of senior management agenda. • Internal Audit made follow up on the external audit implementation plan and reported to audit committee thereof about the progress. • Internal audit implementation plan was developed and followed up on a regular basis. • Audit file was prepared and submitted to AG on time. • Monitoring mechanism to track information requested by the auditor to avoid repetition. Prepared by: Fetakgomo Local Municipality

10. Political Head(Mayor) had interest in the audit process and also formed part of the Audit Steering Committee meeting. • All Senior Managers were always present in the Audit Steering Committee meetings. • Staff within BTO & Corporate Services were present during the audit. • Turnaround time for submission of documents to auditors was less than half a day. Prepared by: Fetakgomo Local Municipality

11. CHALLENGES • High unemployment which impact adversely on the revenue collection. • Communal land which impact adversely on the revenue strategies due to difficulty in implementing property rates. • Huge demand of compliance on GRAP Standard. • New reforms in local government e.g. introduction of PPPFA 2011. • Poor project management which results in projects being finished late. Prepared by: Fetakgomo

12. Maintain sound relationship with SALGA Limpopo ,CoGHSTA, Provincial Treasury & Other sectors for their support toward the attainment of clean audit. • Submission of quality assured documents to council • Discipline and adherence towards internal control systems. • Quarterly Asset verification and monthly asset reconciliation. • Stringent contract management and adherence to demand management plan. • Investment in IT related infrastructure e.g. servers. • In-year budget monitoring • Continuous data cleansing and accurate billing • Accounting practice in line with GRAP • Unbundling of assets in accordance with GRAP 17 • Regular review on the municipal polices and procedure manuals • Capacitating Internal Audit. • Functional and effective Audit Committee. • Political and administrative commitment. • Continuous benchmarking. • Follow up on the quarterly key internal control questionnaire issued by Auditor General. • Credible IDP/Budget (sustaining high IDP credibility rating) Prepared by: Fetakgomo Local Municipality

13. CONCLUSION • Sound financial management practices are essential to the long-term sustainability of any institution; • Sound financial management underpins the process of democratic accountability; • Weak or opaque financial management results in the misdirection of resources and increase risk of unwanted activities; Prepared by: Fetakgomo

14. QUESTION AND ANSWERS Prepared by: Fetakgomo Local Municipality