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District Shared Audit Committee Services . Tim Maake Hotel@ Tzaneen 08 February 2013. Content. Vision District profile Legislative framework Establishment of District wide audit committee Rationale for a shared approach Functionality of the audit committee
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District Shared Audit Committee Services Tim Maake Hotel@ Tzaneen 08 February 2013
Content • 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.”
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 • 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.
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.”
