Presentation is loading. Please wait.

Presentation is loading. Please wait.

CONTENTS MUNICIPAL OVERVIEW MUNICIPAL CASH FLOW FINANCIAL STATUS

Similar presentations


Presentation on theme: "CONTENTS MUNICIPAL OVERVIEW MUNICIPAL CASH FLOW FINANCIAL STATUS"— Presentation transcript:

0 PRESENTATION TO SELECT COMMITTEE ON APPROPRIATIONS
16 October 2012 PRESENTATION BY Cllr NG HLONGWANE EXECUTIVE MAYOR: EMFULENI LOCAL MUNICIPALITY

1 CONTENTS MUNICIPAL OVERVIEW MUNICIPAL CASH FLOW FINANCIAL STATUS
1 MUNICIPAL OVERVIEW 2 MUNICIPAL CASH FLOW FINANCIAL STATUS 3 SOURCE OF REVENUE,COLLECTION AND EXPENDITURE MANAGEMENT 4 GRANTS EXPENDITURE 5 MUNICIPAL BUDGETS 6 COMPLIANCE MATTERS 7 CURRENT ASSETS AND LIABILITIES 8 AUDIT OUTCOMES AND ACTION PLANS 9 CHALLENGES,WAY-FORWARD AND PRIORITIES

2 CONTEXT AND BACKGROUND
Municipal Assets Value = R 9 billion Municipal Budget 2011/12 Financial Year = R 3.7 billion 2012/13 Financial Year = R 4.5 billion Municipal Jurisdiction( area size) = Square KM’ Water and Sanitation Coverage = 98% Electricity Coverage = 97% Portable Water Quality Compliance = 100% Waste Water Discharge Compliance = 97% Refuse Collection Coverage = 100%

3 Top 10 Challenges( institutional)
Unemployment Rate = 45% Water and Sanitation Infrastructure Backlog = R10 billion Roads Infrastructure Backlog = R9 billion Electricity Backlog = R2 billion Payment Levels in Poor Areas = 3% Outstanding Debt = R2 billion Cash Flow – Unfavorable Status

4 Top 10 Challenges( institutional)
Water Losses = R180 million Per Annum Electricity Losses = R20 million Per Annum Billing Functionality

5 Some Key Indicators Buffalo City 2 527 km² R3.9 bn 880 000 2% Mangaung
MUNICIPALITY GEOGRAPHIC AREA MUNICIPAL BUDGET 2011/12 POPULATION % of NATIONAL GVA Buffalo City 2 527 km² R3.9 bn 2% Mangaung 6 604 km² R4.0 bn Emfuleni 987 km² R3.7 bn 1.78%

6 Budget Year on Year Budget from 2003/04 to 2006/07 was not credible and reflected either a surplus or deficit Growth in budget is noticed due to increase service delivery demands

7 Budget Year on Year

8 MUNICIPAL CASH FLOW STATUS
8

9 Cash Flow Status- Quarter ended September 2012
Bank opening Balance 13,797,520 Total Receipts 1,084,477,600 Receipts 780,064,498 Grants Equitable Share 248,952,000 Other Grants receipted and spent 55,461,102 Less Expenditure -1,207,746,079 Eskom 571,991,951 Rand Water 163,911,425 Personnel Costs 182,020,692 Other payables 289,822,012 Operating surplus/(Deficit) for the quarter -109,470,959 Overdraft Facility utilized 109,470,959 Council raised R 150 million overdraft facility as a bridging finance during 2012/13 financial year. Included within the Expenditure, are accruals raised at year-end amounting to +/- R 300 million. Bulk services account to + 60% of expenditure incurred.

10 Eskom Impact (R) Eskom bill has a significant effect on the municipality’s cash flow A R 150 million overdraft was raised as a bridging finance to address, among others, effect of Eskom bill

11 Performance on Electricity

12 Performance on Water

13 Financial Sustainability
Managing cash flow, debtors’ collections, distribution losses on electricity and water and overall financial sustainability of the municipality ACTION PLAN AUDITOR-GENERAL FINDINGS PLANNED ACTION BY ELM Stage INTERNAL AUDIT COMMENT Distribution losses on water were incurred due to aging infrastructure, burst pipes etc. Water loss reduction programme launched. Annual target of 2% water reduction has been set. Implementation Smart Metering procurement in progress Procurement stage

14 Financial Sustainability (Cont…)
Improving the debtors collection rate Cash flow concerns due to debtors write off Socio economic factors affecting payment rates

15 REVENUE,COLLECTIONS AND EXPENDITURE MANAGEMENT
15

16 STATEMENT OF FIN.. PERFORMANCE
STATEMENT OF FINANCIAL PERFORMANCE (30 JUNE 2012) Description Annual Budget (R) Actual (R) % Actual to Budget YTD REVENUE Assessment Rates 97% Electricity Services 93% Water Services 89% Sewer Services Refuse Services Rent of Facilities & Equipment 121% Interest Earned – Outstanding Debtors 91% Total Billing Other Income 99% Total Revenue 94% EXPENDITURE Personeel Cost 103% Remuneration - Councillors 81% Debt Impairment 107% Depreciation 565% Repairs And Maintenance Interest Expense 186% Bulk Purchases Water 111% Bulk Purchases Elect 101% Contracted Services General Expenses 53% Capital Expenditure Total Expenditure Surplus/(Deficit) - ( ) Cost Drivers Included in the Budget is R 364 million for capital expenditure, for which, its spending pattern is not reflected as the expense, as it has been capitalized, disclosed in the following slide. Also the depreciation increased materially due to the Fixed Assets unbundling process (GRAP 17)

17 CAPITAL SPENDINGS (2011/12 FINANCIAL YEAR)
Funding Budgeted ( R ) Expenditure ( R ) % Spent MIG & Counter Funding Projects 156,248,360 144,227,937 92% MIG Projects (Allocation & Roll Over) 143,885,000 100.00% Council Funded Projects 64,236,580 37,720,844 59.00% Capital Budget Spending 364,369,940 326,176,718 76.29% The under-spending of council funded projects was contributed by the cash-flow restrictions. Most of the projects were rolled over into 2012/13 financial years

18 Revenue (2011/12 Financial year)
The billed revenue on all services are on par with the budgeted billing for the current financial year, except for rental of facilities at 121%.

19 Expenditure (2011/2012 Financial Year)
The realized expenditure is sitting at 12% above the realized revenue and 7% above the budget. Due to the revaluation process of the Fixed Assets (GRAP 17), our assets were re-stated at the net book value of R 13 billion. This led to an increase on Depreciation from anticipated R 130 million to R 733 million in 2011/12 financial year.

20 2011/12 Financial Year GRANTS SPENDINGS

21 National Grants (2011/12 financial year)
Opening Balance Total Receipts Total Expenditure Surrendered % Spent Closing Balance Restructuring Grant 18,249,475 Equitable Share 539,842,000 100 Financial Management Grant 750,000 8,750,000 Regional Sewer Scheme Grant -1,862,813 26,298,099 23,300,618 95 1,134,668 National Electrification Grant 673,525 16,256,000 Electricity Demand Site Management Grant 6,000,000 3,912,860 65 2,087,140 Municipal Systems Improvement Grant 500,000 800,000 DWAF Grant 1,096,474 165,990 2 930,484 DACE Grant 728,627 1,228,627 EPWP Grant 1,290,258 3,049,000 6,734,674 +100 -2,395,416 Sedibeng Regional Sewer Scheme Grant 9,953,530 11,553,375 12,396,780 58 9,110,125 Municipal Infrastructure Grant 17,242,937 126,985,000 88 48,622,013 740,033,474 739,143,922 20,173,000 96 29,338,565

22 Provincial & District Grants (2011/12 Financial Year)
Opening Balance Total Receipts Total Expenditure Surrendered % Spent Closing Balance Library Grant 2,802,216 7,200,000 7,206,589 72 2,795,627 HIV Aids Grant 37,346 524,160 561,506 100 Health Grant 68,239 Bontle - ke - Botho Grant 743,368 4,090 930 746,528 Ex- District Grant 2,704,127 Social Development Grant 5,102,498 9,000,000 14,102,498 Sports Grant 1,118,853 558,722 50 560,131 Debtors Book Project (ALOECAP) 2,300,000 2,080,048 90 219,952 Asset Management Project (GRAP 17) 1,800,000 Security services subsidy(evictions) 26,330,339 MSIG Sedibeng 50,000 12,626,647 47,158,589 52,708,871 88 7,076,365

23 MUNICIPAL BUDGET 23

24 Budget preparation process
Establishment of effective Budget Steering Committee Approval of the IDP and Budget Process Plan, highlighting: Key Stakeholders Key deadlines Consultation processes Mid term budget and performance review-January 2012 Adjustment budget 2011/12 February 2012 Draft 2012/13 Multiyear Budget - March 2012 Public participation process Final MTREF Budget adopted 28 May 2012

25 Subsequent Activities considered
Experienced Water losses in 2010/11 Inflation hikes, guidelines from budget circulars IDP priorities Input costs v/s Output costs (Tariffs) Achieved collection rates True Cost of Service Delivery Direct cost Indirect overhead cost

26 Tariff Modelling Policy Shifts
Recognition of Indigents – Property value below R Free Basic Water – Only to Indigents Equalisation of tariffs Restructuring of Water Tariffs – Encourage water saving Residential Sewerage tariffs dependent on water consumption

27 Tariff Modelling- 2012/13 Fin... Year
Tariff structures approved by council together with Budget-May 2012 Tariff Increases approved with the Budget were: Property Rates – 10% Electricity – 13.3% Water – 21.6% (13.5% + 8.1%) Sewerage – 19.37% (13.5% + 70% of 8.1%) Refuse – 10% Sundry Tariffs – 10% Eskom Tariff increase – 13.5% Rand Water Tariff increase – 13.5%

28 Tariff Modelling - WATER
Business - Restructuring of tariffs proposed - Water Inclining block tariff (DBT) for water IBT in compliance with Circular 58 and s10 of the Water Services Act Circular 58 – prescribes IBT S10 (2)(d) of the Water Services Act – tariffs should promote or achieve water conservation Tariffs cheaper for initial usage but higher with increased consumption

29 Tariffs – Business (Continue)
Restructuring of tariffs proposed - Sewerage Equalisation of tariffs Due to Impact it – proposed to equalize in 2012/13 and move towards Water consumption based in 2013/14 Additional tariffs in respect of type of business to be included in 2012/13 – Fat Traps, etc.

30 Tariffs – Business (Continue)
Refuse Rendered at a significant loss Previously subsidised through other tariffs Breakeven tariff calculated at 18% increase Electricity tariff Nersa approved an average tariff increase of 13.3 % Emfuleni pays 13.5% towards Eskom

31 Tariffs – Residential Restructuring of tariffs proposed - Water
Inclining block tariff (IBT) for water, electricity, sewerage IBT in compliance with Circular 58 and s10 of the Water Services Act Circular 58 – prescribes IBT S10 (2)(d) of the Water Services Act – tariffs should promote or achieve water conservation Tariffs cheaper for initial usage but higher with increased consumption

32 Tariffs – Residential Restructuring of tariffs proposed - Sewerage
Waterborne Sewerage principle to be followed Basic Plus Sewerage tariff (billing units) linked to 50% of Water consumption Refuse Rendered at a significant loss Previously subsidized through other tariffs Breakeven tariff calculated at 18% increase Electricity tariff NERSA approved a average tariff increase of 13.3 % Emfuleni pays 13.5% more towards Eskom

33 Tariff Structure - Residential
Water Tariff Structure Tariff increase per block (Incremental) Maximum Water consumption block – Currently 30kl Restructuring proposal (Tariff increments) Additional Blocks – 30kl-45kl and 45kl + Punitive tariff Sewerage – Consideration of water based tariff Basic + 50% of water consumption

34 Revenue & Collections – Budget 2012/13
REVENUE BY SOURCE ADJUSTMENT BUDGET 2011 / 2012 (R) BUDGET 2012 / 2013 (R) % OF BUDGET Electricity Sales 1,298,781,712 1,489,734,764 33,0% Grants 844,253,184 901,185,934 20,0% Water Sales 553,766,019 695,224,834 15.4% Assessment Rates 343,684,023 396,524,977 8,8% Sewer 220,818,683 303,809,802 6.7% Pre-paid Electricity 192,947,750 213,000,798 4,7% Refuse Removal 98,916,159 125,222,157 2.8% Other Income 169,859,395 315,865,423 7,0% Tariff Charges Other 25,234,002 47,489,427 1.0% Fines 26,415,543 32,399,049 0.7% Total 3,774,676,469 4,520,457,165 100%

35 ADJUSTMENT BUDGET 2011 / 2012 (R)
Expenditure –Budget 2012/13 ITEM ADJUSTMENT BUDGET 2011 / 2012 (R) BUDGET 2012 / 2013 (R) % OF BUDGET Employee Costs 699,503,868 693,341,946 15,3% Remuneration of Councilors 30,960,598 32,841,255 0,7% Depreciation and Asset Impairment 129,684,958 351,444,059 7,8% Bulk Purchase – Electricity 115,616,1403 1,360,317,000 30,1% Bulk Purchase – Water 370,000,000 380,918,643 8,4% Provision for Doubtful Debts 293,420,256 596,271,005 13,2% Contribution to CAPEX 364,369,940 367,488,750 8,1% Repairs and Maintenance 158,301,955 141,545,790 3,1% Other 572,273,491 596,288,617 TOTAL 3,774,676469 4,520,457,165 100%

36 Key Expenditure Budget components
Bulk purchases % Electricity % Water 8.4 % Personnel Costs 16 % Repairs and Maintenance 3.1 % Capital expenditure % Total 2012/13 MTREF Budget R 4.5 billion

37 LEGISLATIVE COMPLIANCE
37

38 Compliance with Audit Processes & the Law
Municipal Structures Act Section 79 Establishment – (1) The Council has appointed a functional Audit Committee and MPAC for the effective and efficient performance of its functionalities. Audit Committee members appointed has requisite skills as follows: Financial Accounting and Management Internal and External Audit Performance and Risk Management Engineering Legal and Governance (Final)

39 Compliance with Audit Processes & the Law (Cont)
Emfuleni Local Municipality is in the process to appoint an IT Specialist to serve as a member to further capacitate the Committee. Audit Committee and MPAC co-ordinate their efforts on oversight as per MFMA Circular 32 and COGTA and National Treasury Instructions. (Final)

40 Compliance with Audit Processes & the Law (Cont)
Municipal System Act Section 45 – The results of the performance measurements are audited by Internal Audit in terms of section 41(1). Internal audit is auditing 100% not on a SAMPLE basis as other municipalities, the reason for that is to reflect the total service delivery efforts of the municipality; it is the ONLY municipality which does this in the country. The AG audited the performance measurements annually as required (part of OPCA). (Final)

41 Compliance with Audit Processes & Law (Cont)
Municipal Systems Act Section 46 – The municipality has prepared a performance report which was subjected to IA and AG audits. Municipal Systems Act – Regulations 14(1)(a)(c)(i) The Municipality has developed and implemented mechanisms, systems and processes for auditing the results of performance measurements as part of its internal auditing process as already alluded to before. (Final)

42 Compliance with Audit Processes & Law (Cont)
Municipal Systems Act – Regulations 14(1)(a)(c)(ii) The Internal Audit Department of Emfuleni Local Municipality submits quarterly reports to the Municipal Manager and Performance Audit Committee Municipal Systems Act – Regulations14(2) (a) Emfuleni Local Municipality has appointed Performance Audit Committee which meets quarterly, reports to Mayoral Committee (Mayco) on issues of Performance, and in so doing keeps Mayco informed in that respect (Final)

43 Compliance with Audit Processes & Law (Cont)
The Performance Audit Committee reports to the Council on matters of Performance, three reports have already been submitted to Council for this financial year. (Final)

44 Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act 121(i) Preparation and adoption of annual reports: The Annual Report for Emfuleni Local Municipality was prepared and adopted by Council. 121(3)The Annual report Complied with Legislation required as per Section 121(3)(a) and (b). 122 Preparation of Financial statements: Emfuleni Local Municipality has compiled the annual financial statements on the basis as required by this Section basis. (Final)

45 Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont) 123 Disclosure on intergovernmental and other allocations 124 Disclosure of Interest concerning Councillors, Directors and Officials 125 Other compulsory disclosures The Annual Financial Statements of Emfuleni Local Municipality complied with these abovementioned Sections (Final)

46 Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont) 126 Submission and auditing of Annual Financial Statements The Annual Financial Statements of the Municipality was submitted within two months after the end of Financial Year to the Auditor-General for auditing purposes. (Final)

47 Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont) Section 62(1)(c)(ii) and 165(1)(a) The municipality has established a functional internal audit department which have prepared a risk based annual audit plan as approved by the Audit Committee. Section 165(1)(b) The Internal Audit department has continuously advised the Accounting Officer and reported to the Audit Committee on the implementation of the plan in relation to internal controls, accounting procedures and practices, risk and risk management, performance, loss and compliance with other legislation. (Final)

48 Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont) 166 Audit Committee- 166(a)The committee was established as already alluded. 166(b) Audit Committee reviewed the AFS. 166(c) Audit Committee responded to the Council on issues raised by AG. (Final)

49 Reporting and other compliance requirements
Compliance with reporting requirement MFMA compliance reporting timelines adherence Other Compliance issues Establishment of Risk Management Framework and registers Performance management System Formulation of risk-based audit plans

50 CURRENT ASSETS AND LIABILITIES
50

51 Current Assets 51 ITEM 2011/12 (Unaudited) 2010/11
Cash and cash equivalents 12,857,572 18,497,047 Trade and trade receivables from exchange transactions 237,843,335 255,423,565 Trade and other receivables from non-exchange transactions 139,166,698 44,585,250 Inventories 20,536,147 19,886,954 Investments 114,928,212 106,269,517 Value added tax receivable 71,033,304 21,649,624 TOTAL 596,365,268 466,311,957 51

52 Current Liabilities 52 ITEM 2011/12 (unaudited) 2010/11
Trade and other payables from exchange transactions 701,169,997 526,816,744 Unspent conditional grants and receipts 21,567,411 61,248,661 Borrowings 5,268,984 6,858,622 Finance lease liability 23,161,407 62,193,495 TOTAL 751,167,799 657,117,522 Included in the Trade payables is the Eskom billing for R175 million (2011/12) and R 136 million (2010/11), Rand Water bill for portable water amounted to R 23 million (2011/12) The municipality managed to settle the raised Overdraft facility amounting to R 90 million during 2011/12 52

53 Outstanding debtors June 2012
84% debt in residential Goverment Debt in the Region of R44 million Total Debt Stand at almost R2.7 billion (84% is Residential)

54 Outstanding Government Debt
NAME OF DEPT AMOUNT OUTSTANDING AS AT JUNE 2012 GOV - EDUCATIONAL R ,749,717.89 GOV - EDUCATIONAL RATES R ,864.54 EDUCATIONAL (SECTION 21 SCHOOLS) R ,994,929.25 EDUCATIONAL (SECTION 21 SCHOOLS) RATES R ,166.38 HOSPITALS AND HEALTH R ,100,069.93 HOSPITALS AND HEALTH RATES R ,167,329.82 GOV - HOUSING R ,354,086.49 GOV - HOUSING RATES R ,363,365.86 POLICE R S.A POST OFFICE R ,968.11 S.A POST OFFICE RATES R PROVINCIAL HOUSING R ,611.13 PROVINCIAL HOUSING RATES R ,039.77 GOV - PUBLIC WORKS NATIONAL R ,375.07 GOV - PUBLIC WORKS NATIONAL RATES R ,347,307.08 GOV - PUBLIC WORKS PROVINCIAL R ,314,035.10 GOV - PUBLIC WORKS PROVINCIAL RATES R ,428,035.26 GOV - ROADS R ,629.32 GOV - ROADS RATES R ,907.90 GOV - TELKOM R ,856.92 GOV - TELKOM RATES R ,351.83 Grand total R ,179,411.75

55 Risk Management ELM Fully functional Risk Management, Anti-Fraud & Anti-Corruption Committee Quaterly meetings are held and report is presented to Audit Comm and Council Risk Management represented at SMT level through the CRO being appointed on 15/10/2011 Risk Management is aligned to Strategic Planning through the IDP, whereby strategic & high level risks are identified A Risk Management register has been developed ans approved by the Audit Committee and Council Whistle blowing policy is in place A reviewed Risk Management Framework & Strategy has been approved by AC and RMAAC & is ready for next Council meeting for approval Risk matury has improved from 3 to 4.8 maturity level (NT assesment)

56 Top 10 Risks of ELM

57 Top 10 Risks of ELM (Cont…)

58 Top 10 Risks of ELM (Cont…)

59 Top 10 Risks of ELM (Cont…)

60 Top 10 Risks of ELM (Cont…)

61 Risk Management (Cont…)
A Risk-based Internal Audit Plan was developed determining high risk areas of ELM based on the risk registers Operational risks are identified through the SDBIP’s & assessed quarterly and reported to Audigt Commitee and Council Risk Champions has been appointed for each cluster to monitor and report on each cluster risks IT Risks were identified and Action Plans are in place to remedy some risks which include: Overall IT Assessment (hardware and software) Disaster Recovery Plan Business Continuity Plan IT Governance Framework & Control IT Policies & Procedures

62 AUDIT MATTERS 62

63 Audit Report Audit Opinion: 2006/2007 – Disclaimer
2008/2009 – Qualification 2009/2010 – Qualification 2010/2011 – Qualification Basis of Qualification 2010/2011: Property, plant and equipment Valuation of Property, Plant and Equipment (PPE) Statement of changes in net assets 2007/08 misstatements of service charges and employee costs that affects the 2010/11 accumulated surplus/deficit

64 Audit Report (Cont…) Matters of Emphasis:
Significant uncertainties - Civil matters Restatement of corresponding figures - GRAP 17 implementation Material losses - Water 51% and Electricity 11% Material Impairments – Irrecoverable debt SCM Deviations: 20 deviations due to urgency. 12 Irregularities reported of providers in service of the state.

65 Status of Audit Action Plan for 2010/2011
Appointment of same service provider to finalize GRAP 17 implementation. Establishment of OPCA steering Committee (Senior Management Team) Action Plan-Addressing Audit findings 2010/2011 Quarterly Internal Control assessments(dash board reports) –AG OPCA progress report presented quarterly to Audit Committee (CAE), MAYCO and Council (by Chairperson of Audit Comm)

66 Total Findings needed to be address during this financial year
SUMMARY OF FINDING!! Cluster Number of findings Not Applicable Total Findings needed to be address during this financial year Resolved Partially Resolved Not Resolved N/A J % K L Internal Audit 2 100% 0% Basic Services 1 Corporate Services Economic Development and Planning Public Safety and Community Development 50% Municipal Manager 26 6 20 11 55% 8 40% 5% Infrastructure Planning and Assets Management. 15 14 Finance 67 34 33 25 76% 24% Cross Cutting findings 118 55 63 17% 22 35% 2%

67 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 1. Infrastructure assets- No supporting documents for cost recorded on the financial statements Financial Services/Infrastructure Planning and Asset Management Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. Bernard Langa Nil The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register. 2. Information not submitted 3. Assets incorrectly valued 4. Newly identified assets

68 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 5. Assets recorded at incorrect amount Financial Services/Infrastructure Planning and Asset Management Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. Bernard Langa Nil The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register. 6. Understatement of depreciation 7. Assessment of Impairment for assets 8. Assets not considered for write off 9. Assets not bar-coded on the asset register 10. Valuation of newly identified assets- differences on supporting documents 11. Valuation methods for assets

69 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings€ Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 12. Asset Register not GRAP Compliant Financial Services/Infrastructure Planning and Asset Management Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. Bernard Langa Nil The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register. 13. Assessment of residual values 14. Impairment of transport assets Financial Services 15. Valuation of newly identified assets 16. Intangible assets- Classification 17. Overstatement of landfill site 18. Post balance sheet-events after reporting date The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG. Tsietsi Rafube The audit finding was resolved during the AG audit process. Portfolio of evidence was provided and verified.

70 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 19. The specifications were not approved by the accounting officer prior to publication of the invitation of bids. Financial Services Supply Chain Management functions have been decentralized and different clusters have delegated powers in terms of section 8 of SCM policy were by the Bid Specification Committee get appointed by the Accounting Officer and Bid Specification Committee is delegated to draft the specification and other requirements including approving and determining advertising methods. Thabo Thwala Nil The audit finding was resolved. An approved letter of delegation authority by the Accounting Officer was provided for as Portfolio of evidence was verified. 20. Registered address of the contractors is different to the one disclosed in the bid documentation Bid Document (MBD 4 & MBD 8) requires the bidder to indicate the address where the business is operating and also declarations. The bidder is required to include Municipal Account or lease agreement to indicate were the business is operating. 21. Register of bids is not published on the municipality website The awarded bids will be published on the website Nit The audit finding was resolved. Printout from Website was provided as Portfolio of Evidence and Verified.

71 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 22. Non compliance with Section 32(2) of the MFMA Municipal Manager Irregular or fruitless and wasteful expenditure Register will be developed and monitored by delegated personnel (CFO) and feedback will be provided on a quarterly basis.  ALL DMM Nil Irregular or Fruitless and Wasteful expenditure Register was developed and submitted to the relevant management, monthly monitoring and evaluation process will be implemented with effect from st July 2012. Furthermore it is recommended that MFMA 32(2) must observe at all times in respect of unauthorized, irregular or fruitless and wasteful expenditure. 23. Suppliers not on the database Financial Services SCM department encourage suppliers to register on the data base and also our website have database forms were suppliers can print and submit to our offices during working hours Thabo Thwala Management did not agreed with the AG audit finding. 24. Operating expenditure -Transactions recorded in incorrect period Year End procedures(SOP) will be work shopped to the Creditors personnel by Mid June Derrick Maaroganye Creditors list will be ready on the 25 July Therefore this finding will be subjected to AG processes.

72 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 25. Understatement and Overstatement of Creditors Listings Financial Services SCM is supposed to complete GRN first to enable the fin system to accrue automatically. Year-end procedures to be followed up by SCM. Inter-departmental communication channels with be enhanced and regular strategic meetings with SCM will be held going forward Derrick Maaroganye Nil Creditors list will be ready on the 25 July Therefore finding will be subjected to AG processes. 26. Expenditure-Information not submitted for audit Documents were misfiled. An investigation of root causes is undertaken and proper record keeping is in place to prevent recurrence of such events. The finding was resolved, Documents selected from the Register was duly filed and were verified. 27. Predetermined objectives No evidence that IDP and budget are aligned Municipal Manager/Performance Management System Budget Sheets SA4, SA5 and SA6 which reconcile the budgeted amounts to the strategic objectives in the IDP will be completed and submitted with the final budget for approval. Budget Manager Partially resolved, the core strategic objectives are reflected in the IDP2011/12 and Budget (SA4, SA5 and SA6) as aligned and verification was done. Further verification will be subjected to AG processes. Communicate coding convention with Budget Office and IPAM IDP Manager Budget Office to include IDP codes into Budget 28. IDP does not include core components MSA determines 9 core components for the IDP. Two were not included - disaster management plan, and financial plan (7/9=78%) The audit finding partially resolved, Disaster Management Plan was provided as portfolio of evidence however the financial plan is still in a draft. Develop disaster management plan Manager Public Safety Submit disaster management plan Develop financial plan Manager Budget Submit financial plan

73 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 29. KPI's and targets not set for all the core strategies Municipal Manager/Performance Management System The 2011/12 IDP and OSDBIP, as amended, addressed and resolved this finding Performance Specialist and IDP Manager Nil The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified 30. IDP does not include general KPI's as per regulation requirements The 2011/12 IDP, as amended, addressed and resolved this finding The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified. 31. KPI's and targets are not well-defined and verifiable 32. IDP not aligned to the SDBIP 22A. IDP not aligned to the annual performance report The 2011/12 IDP and OSDBIP, as amended, partially addressed and resolved this finding Audit finding will form part of AG processes 33. Lack of performance management system for predetermined objectives as per the IDP Drafting the 2011/12 performance report Specialist PM 34. Targets in the performance contracts are not based on KPI's in the IDP. The creation and commissioning of the M & E solution for the 2011/12 OSDBIP addressed and resolved this matter The finding was resolved. Performance of section 56 employees is aligned with SDBIP and was verified.

74 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Test Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 35. Annual performance report is not prepared in terms of Municipal Systems Act S46 Municipal Manager/Performance Management System Annual performance report must reflect comparative performance information of previous reporting period Nil Audit finding will form part of AG processes Determine existence of comparative performance data from 2010/11 reporting period Specialist PM Determine performance data gap analysis Report on performance data gap analysis 36. Annual performance report not supported by evidence Annual performance report is based on Q4 OSDBIP assessment with PoE 37. The prescribed process to amend the IDP was not followed. Deficiency: not properly advertised and SDM not properly consulted IDP Manager The audit finding was resolved. Advert and Letter to Sedibeng was provided as portfolio of evidence and verification was done. 2011/12 IDP amendment was properly advertised and SDM formally consulted 38. Lack of community involvement in the setting of KPI's, targets and the performance management process KPIs and targets of Basic Services and IPAM and EDP to be communicated during public participation process 39. Cash and cash equivalents-None compliance with the Act Financial Services A letter stipulating banking details of the Municipality will be compiled and submitted to AG and Dept of Finance. Tsietsi Rafube Resolved, Letter stipulating banking details of the municipality was provided as portfolio of evidence

75 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 40. Debt management not effective Financial Services C. Review Credit Control and Debt Collection Policy and By-laws Debt Manager Nil Management did not agreed with the AG audit finding. D. Indigent process 1. Write off of arrears prior to 2011/2012 financial year 2. Write off of arrears in abeyance on a monthly basis 7. Finalization of Legal agreements 8. Report to Council for approval of process 41. Differences between grant amount on the financial statements and the amount on the trial balance Grants Management Committee to be established to ensure among others the correctness of grant amounts on a monthly basis. Dobe Mokgethi The audit finding is partially resolved. Grants Reconciliation from July 2011 to May 2012 was provided as portfolio of evidence Review of completeness and accuracy of Trial balance will be performed by CFO to ensure that the AFS agreed to the trial balance. 42. Information not provided for Clearance Certificates The clearance certificate costs are paid directly into applicable vote number. These payments are done when a bank guarantee is received for the capital amount payable for clearance certificate. The current receipting system does not generate the property description on the direct payment. Sam Mokoena/Laura Schmidt Finding was resolved. Clearance Certificate Register was established A sample was selected and the requested portfolio of evidence was provided to support the Clearance Certificate Register.

76 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 43. Incorrect and incomplete calculation of VAT Financial Services 1. Calculate the VAT apportionment rate at the end of June 2012 and affect the recalculated rate from the 1st of July To run a report on all transactions zero rated, i. o.t find transactions which VAT was mistakenly not calculated. Tsietsi Rafube Nil Management has appointed Service Provider to address the matter raised by Auditor General. 44. Incomplete disclosure of fruitless and wasteful expenditure Post dated payments control for third parties payments is in place on Business Integration system (ABSA) on the 7th of each month. Derrick Maaroganye Fruitless and wasteful register was developed the monthly monitoring and evaluation will be effected from 1st July 2012/13.This finding will form part of AG processes. 45. Non compliance with Section 65(2)(e) It is an on-going issue institutional challenge. First-in-first out paid principle will be enhanced on tax invoice receipt. The audit findings may not be resolved due to the financial constrains 46. Information not provided for audit - Grant Expenditure Documents were misfiled. Investigations of root causes are undertaken and proper record keeping is in place to prevent recurrence of such events. The finding was resolved selected sample was performed. 47. Some municipal councilors did not declare their interest Municipal Manager Register of Declaration of interest was developed and were issued on every Council meeting Manager: Speaker Not all Councillorship and Personnel declare their interest. 48. Differences in amount disclosed in the financial statement and invoices The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG. The audit finding was resolved during the audit. Audit finding will form part of AG processes

77 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings Cluster Action Plan Taken Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 49. Incomplete disclosure of Environmental Rehabilitation provisions Financial Services The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG. Tsietsi Rafube Nil The audit finding was resolved during the audit. Audit finding will form part of AG processes 50. Difference between Venus and Pay Day Reconciliation of salaries suspense control account on monthly basis including review and supervision i.o.t prevents the re- occurrence of variances. Derrick Maaroganye The funding is partially resolved, Currently service provider has been appointed to address the reconciliation between Venus and Payday System Total 51 16 6 29 Percentage 73% 27% 0% Number of audit findings remaining for retesting.

78 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 51. Bank account balances not properly disclosed The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG. Financial Services Tsietsi Rafube Nil The audit finding was resolved during the audit Audit finding will form part of AG processes 52. Control environment: Shortcomings with regards to audit committee Finding was resolved, Clause was included in the Reviewed Audit Committee Charter. Internal Audit JS Masite The audit finding was resolved; the relevant clause was included in the charter. 53. Risk assessment: Implementations of internal audit findings The finding was resolved. Js Masite The audit finding was resolved. 54. Control environment: Performance of deputy municipal managers not monitored Monitoring and evaluation of performance is done on a quarterly basis. 1st Q informal , half yearly Municipal Manager/Performance Management System Henre de Hart Half yearly assessment was conducted; however there is one senior manager performance assessment conducted still outstanding however, management has put process is in place to finalize the performance assessments of all senior managers. 55. Control environment: Weakness pertaining to preventative measures on environmental factors affecting the municipality The Environmental By-Laws are at the 3rd Draft and the ELM is assisted by Sedibeng and DEA. The target date for submission to ELM Legal Department is 31 August The report regarding the Environmental Plan of Action will be resubmitted to the Sec. 80 Committee and thereafter to Mayor and Council. Should be approved by 30 June Implementation will follow approval subject to funding. All the other matters raised in the Management Letter are subject to funding. The indications are that nothing will be approved for the 2012/13 financial year. Public Safety Nnete Makhubo and Benny Mhlanga The audit finding is partially resolved. Draft Air Quality Management By law, Climate Change Tools and draft Environment education and awareness strategy and action plan were provided as portfolio of evidence.

79 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 56. Control environment: Remuneration policy outdated Review the salary scales for and replace them with current salary percentage Corporate Services Mr. Vincent Phalange Nil The audit finding is partially resolved. Management will have an addendum to the policy to address the AG finding 57. Monthly budget statements not placed on the municipality's website The Manager: Communications will be engaged in writing and the monthly budget statements will be placed on the website from February 2012. Financial Services Doe Mokgethi The audit finding was resolved. Print out from Emfuleni Local Municipality website was provided as Portfolio of evidence verification was conducted. 58. Monthly budget statements do not include variances and projections for the remainder of the year 1. Monthly statements to be completed on the new template (C-Schedule). 2. Comments on material variances to solicited and recorded in the template. Senior Management Team The finding is partially Resolved. Template of C schedule was introduced with effect from January 2012, explanation of variance and corrective action was given, starting from May Furthermore management to ensure that the explanation for material variance and corrective actions are submitted to Budget so as to comply with Section 71 of MFMA. 59. Non compliance with section MFMA 62(1) (d). Irregular or fruitless and wasteful expenditure Register was developed and monitored by delegated personnel (CFO) and feedback is provided on the quarterly bases. The Irregular or Fruitless and Wasteful expenditure Register was develop effective date for monthly monitoring and evaluation will is 1st July 2012.

80 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 60. Fixed assets: No evidence obtained of periodic review of asset register A Consultants (PWC) has being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. Financial Services Bernard Langa Nil The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register. 61. Unidentified library books during physical verification of library books 62. Expenditure: Contracts not available for inspection The invoice will be submitted to Internal Audit Basic Services Manager The audit finding was resolved. The invoice was submitted to internal audit for verification which was conducted. 63. Amount on the invoice does not agree to the amount as per General Ledger Invoices are adjusted by user depts. for CREDITOR'S section to effect payment. A letter from supplier confirming the changes on the invoice will have to be attached before processing pmt. Derrick Maaroganye Audit finding will form part of AG processes 64. The final award of above R5 million may only be sub delegated only to the Chief Financial Officer Supply Chain Management functions have been decentralized and different clusters have delegated powers in terms of SCM policy. Adherence to SCM Policy will be encouraged. In terms of section 8 (7.3), The Accounting Officer or delegate may review and reconstitute the members of the Bid Adjudication Committee periodically. Thabo Thwala Will be subjected to AG process.

81 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remarks J K L N/A 65. Non Compliance with Division of Revenue Act regarding the reporting of unspent conditional grants Grants Management Committee to be established to ensure among others the correctness of grant amounts on a monthly basis. This will enable the correct reporting of grants at the end of the financial year. Financial Services Dobe Mokgethi Nil 1. Reconciliation of Grants were performed up to May Reconciliations up to June 2012 will be performed and submitted to the grants committee once the financial system is running. (Year end processes are in progress) An application for all unspent grants to be rolled over into the / 2013 financial year will then be made to the National treasure Audit finding will be form part of AG processes. 66. Trade Payables: Overstatement of Midvale Local Municipality liability Creditor's sec didn't have all the invoices as Midvale at the time of request. The matter was resolved with the inter-council indebtedness account reconciling. The department will vet recons prior submission of info for AFS preparation. Derrick Maaroganye The audit finding was resolved. The copy of the invoices and payments were provided as portfolio of evidence and were verified. 67. Non-disclosure of Operating Leases Ensure full compliance with GRAP 13. The excise can only be performed during the compilation of 2011/12 AFS Tsietsi Rafube Audit finding will form part of AG processes 68. Budget is not based on the development priorities and targets Tables SA4 to SA6 in the annual budget reconcile the strategic objectives in the IDP to the Budget. The tables indicate the funding for all strategic objectives as per the IDP. The Schedule will be completed again in the 2012 / 13 financial year and will be verified for correctness. The finding was resolved, SA4 to SA6 which reflect how strategic objectives are funded by the budget was completed and that was approved by Council. Portfolio of evidence was provided

82 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 69. Monthly budget statements not submitted in terms of S71 of MFMA S 71 reports have been submitted on a monthly basis. Starting January 2012 both the old formats as well as the format prescribed by the Municipal Budget and Reporting Regulations will be submitted to the National Treasury. Strict measures will be implemented to ensure that these reports will continue being submitted on a monthly basis. Financial Services Dobe Mokgethi Nil The audit finding was resolved. Copies of S71 report were provided as Portfolio of evidence (Letter from Provincial Treasury that outline the information that was supported). 70. Unauthorized expenditure Transfer of amounts to relevant votes on a monthly basis to ensure that votes and sub-votes are not overspent. Audit finding will form part of AG Processes. 71. Incorrect allocation of the provision amounts The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the as will be undertaken before the submission to AG. Tsietsi Rafube The audit finding was resolved during the audit and verification will be performed after tabling of Annual Report. 72. Deposit register not reconciled to the General Ledger The deposit register is updated daily as new leases or vacations are received and Reconciliation was perform on the monthly basic Sam Mokoena/Gawie The finding was resolved and verification was conducted. 73. Vacant land charged refuse It is the basis of the valuation and the technical indication as (VL) that gives the status of the property as improved. Sam Mokoena/Shakes The finding still not resolved, Management should review Rates Policy so as to address the tariff of Vacant land charged refuse.

83 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding Action Plan Taken Cluster/Department Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 74. Duplication in valuation roll Properties within the jurisdiction which are registered appear on the valuation roll. In community of property, both names will appear and only one account will be generated on the billing system. Financial Services Sam Mokoena/Laura Nil Audit finding will form part of AG processes. 75. Meters in the upload file not linked to any meter number in the transaction file Errors corrected when picked up on the deviation report Sam Mokoena/Nerina 76. Difference in readings as per upload file and the transaction file. Deviation report and test readings done monthly. 77. Disclosure for Property, Plant and Equipment The matter will be resolve during the preparation of Financial statement for 2011/12 Tsietsi Rafube 78. Asset count not submitted to the CFO Assets verification will be conducted and report will be prepared. Bernard Langa Progresses of the assets verification were conducted. Currently PWC has been appointed to assist Emfuleni with Property Plant and Equipment. Total 28 10 6 12 Percentage 63% 37% Number of audit findings remaining for retesting. 0%

84 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 80 79. Control environment: Information requested but not submitted for audit Financial Services 1. The Budget Office has a Budget Policy which is used as a guideline in the compilation of budgets The MFMA, MFMA Circulars and the Budget Regulations are guidelines to the Budgeting Process as well The IDP and Budget Process Plan detailing timeframes and deadlines for events within the budget cycle was also approved by Council in August The Budget Policy, MFMA Circulars 58 and 59, The Budget Regulations and the IDP/Budget Process Plan are attached as evidence. Dobe Mokgethi Nil 1. Copy of Budget Policy and Council Resolution was provided as portfolio of evidence. 81 80. Quarterly reports were not submitted to the mayor In terms of standing orders of Emfuleni Local Municipality The quarterly SCM reports serves at SMT, Section 80, MAYCO, and Council All this committees have different dates which overlap beyond the 10 of every quarter. The Executive Mayor is the member of MAYCO and Council and the quarterly report serve in those committees. Thabo Thwala Partially Resolved. Quarterly reports were submitted to the Mayor, however the reports are not submitted within ten working days framework stated in the Supply Chain Management regulations 7 (3) 82 81. Monthly reports were not submitted to the accounting officer In terms of standing orders of Emfuleni Local Municipality The SCM reports serves at SMT, Section 80, MAYCO, and Council. The Accounting Officer is the member of SMT, MAYCO and Council and the reports serve in those committees. Partially Resolved. Monthly reports were submitted to the Accounting Officer, however the reports are not submitted within five working days framework stated in the Supply Chain Management regulations 5 (3)

85 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 83 82. Variance between the creditors listing and the financial statements Financial Services Ensure that cut-off procedures are observed and adhered to by issuing out a Memo informing all departments about the yearend cut-off dates. The system must be temporarily closed after the cut-off date to prevent further processing Tsietsi Rafube Nil Creditors list will be ready on the July Therefore finding will be verified after the completion of creditor's list therefore it will be subjected to AG processes. 84 83. Community not invited to make representations in connection with the 2009/2010 annual report Municipal Manager Matter was resolved, Currently ELM invited the community for participation through media (news paper, Local Radio, Emfuleni external News letter, etc) Henry De hart Audit finding will form part of AG processes. 85 84. Completeness of finance lease disclosure Ensure full compliance with GRAP 13. The excise can only be performed during the compilation of 2011/12 AFS 86 85. Differences in amount disclosed as restructuring Grant Withheld and amount as per Correspondence with National Treasury The matter was addressed during the audit. The audit finding was resolved during the audit. This will form part of AG audit processes. 87 86. Differences in Grants opening balances This was resolved during the audit. 88 87. Reconciliation between valuation roll and update on thereof on Venus not made available The matter will be resolve during the preparation of Financial statement for 2011/12 89 88. Differences in grants reconciliation and grants receipts disclosed in the financials The matter was resolved during the preparation of financial Statement for 2010/2011

86 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 90 89. Leave policy in draft Corporate Services Policy has been work shopped by Speaker. Mr. Vincent Phahlane Nil The finding is partially resolved. Policy has been work shopped by Speaker. 91 90. Rentals agreement not signed by both the lessor and lessee EDP Properties: Agreements with outstanding rental amounts be investigated by Debt Collection. Properties: A. Streak Housing: F Human The audit finding is partially resolved. Current status was provided as portfolio of evidence. 92 91. Approval for cancellation of fines Public Safety There was SOP in place when the incidents occurred The SOP will be amended to address the specific error that occurred and will be distributed to all personnel There matter will be discussed with traffic division to inform their personnel about the correct procedure on how to cancel a document Wynand Pretorious The finding was resolved, Copy of Standard Operation Procedures was provided as portfolio of evidence. 93 92. Rental agreements not received Properties: Finance to be informed of agreements not valid anymore Housing: 94 93. Insufficient controls around stock Financial Services Quarterly stock take will continues be done to detect discrepancy with the stock and to improve controls around stock Thabo Thwala The audit finding was resolved, Quarterly stock takings were conducted.

87 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 95 94. No formal appointments of members serving on bid specification, evaluation and adjudication committee Financial Services Appointments of members serving on bid committees are done Thabo Thwala Nil The audit finding was resolved. Copy of formal appointment letter was provided as portfolio of evidence. 96 95. Extensions of contracts Clusters or Department will be encouraged to do proper costs projections when doing planning of the projects. This will help to ensure that extensions of contracts are not encouraged. Internal Audit still verifying the audit finding raised. 97 96. Performance of contractors not monitored on a monthly basis Performance Management System/ Infrastructure Planning and Asset Management Department usually hold Project Steering Committee once a month whereby all Consultants and Contractors report on progress reports and verified all action taken during weekly projects meetings Khulekani Nxumalo Audit finding is partially resolved, not all performance of the contractors was monitored on a monthly basis. 98 97. Bid awarded other than the one recommended by bid evaluation All DMM's Should the Bid be awarded to other than one recommended by Bid Evaluation Committee, section 114 (1) & (2) of MFMA No. 56 of 2003 should be complied with. For this finding the National Treasury, Provincial Treasury and Auditor General were not informed and section 114 (2) of MFMA No. 56 of 2003 was applied to rectify an irregularity. Internal Audit could not provided assurance as the tender file could not be provided by SCM. The file is still with Ratanang 99 98. Balances disclosed on the financial statement with no supporting evidence (Debt Management & Sports and Recreation) The matter will be resolve during the preparation of Financial statement for 2011/12 Tsietsi Rafube Audit finding will form part of AG processes.

88 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 100 99. Assets not bar-coded on the asset register Financial Services Assets Register will be updated by Management after Auditor General express the opinion Bernard Langa Nil The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register. 101 100. Completeness of asset register-other assets Consultants (PWC) has being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. 102 101. Non compliance with section 62(1)(d). Develop a policy on unauthorised, irregular, fruitless and wasteful expenditure. Design a register to populate these expenditure and distribute it to different clusters for identification. Tsietsi Rafube Irregular or Fruitless and Wasteful expenditure Register was developed and submitted to the relevant management however monitoring and evaluation????. 103 102. Non compliance with Section 65(2)(e) Put strategy to improve cash flow through revenue enhancement and cost cutting measures. Derrick Maaroganye The audit findings may not be resolved due to the Financial constrains 104 103. Finance lease - Appendix A not agreeing to the Trial Balance The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG. The audit finding was resolved during the audit. This will form part of AG audit processes. 105 104. Minimum bank accounts not kept Still not in agreement with the AG. Write a correspondence to AG to validate the finding and give appropriate recommendation Management did not agree with the audit finding raised. Therefore the finding is not applicable for verification.

89 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 106 105. Late Submission of the details of new bank account Financial Services Obtain a list of all banking details each month and report new accounts to AG and Provincial Treasury. Tsietsi Rafube Nil Resolved, letter was submitted Provincial Treasury and Auditor-General. (P.O.E sent) 107 106. Incorrect tariffs used Sam Mokoena/Laura Audit finding will form part of AG processes. 108 107. Supporting documentation not provided for audit purposes (Expenditure Management) Proper record keeping procedures are currently implemented and in place to maintain and safeguard information for easy access. Derrick Maaroganye The finding resolved as per our selected sample. 109 108. Mid-year budget and performance assessment report not placed on the municipality's website Municipal Manager Midyear budget and Midterm SDBIP was placed in the Emfuleni Municipality website. Paseka Rakosa The audit finding was resolved. Printout of website was provided as portfolio of evidence. 110 109. Security Management The Issue was raised with BCX who are the vendor of the Venus system. Their response to this issue was forwarded to the AGSA. The IT section cannot do any alterations to the system as they have no rights. BCX felt that this could not be done for reasons. Attached find the documents from BCX Marked as BCX109 CIO Draft security Management policy was developed still awaiting for council approval. Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 106 105. Late Submission of the details of new bank account Financial Services Obtain a list of all banking details each month and report new accounts to AG and Provincial Treasury. Tsietsi Rafube Nil Resolved, letter was submitted Provincial Treasury and Auditor-General. (P.O.E sent) 107 106. Incorrect tariffs used Sam Mokoena/Laura Audit finding will form part of AG processes. 108 107. Supporting documentation not provided for audit purposes (Expenditure Management) Proper record keeping procedures are currently implemented and in place to maintain and safeguard information for easy access. Derrick Maaroganye The finding resolved as per our selected sample. 109 108. Mid-year budget and performance assessment report not placed on the municipality's website Municipal Manager Midyear budget and Midterm SDBIP was placed in the Emfuleni Municipality website. Paseka Rakosa The audit finding was resolved. Printout of website was provided as portfolio of evidence. 110 109. Security Management The Issue was raised with BCX who are the vendor of the Venus system. Their response to this issue was forwarded to the AGSA. The IT section cannot do any alterations to the system as they have no rights. BCX felt that this could not be done for reasons. Attached find the documents from BCX Marked as BCX109 CIO Draft security Management policy was developed still awaiting for council approval.

90 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 111 110. User Access Control Municipal Manager/Information Technology This will form part of the IT assessment and review and IT strategy development Current status: Unix, Access control procedures are documented for Payday and Venus. The IT usage approved policy control is available and have been in use since the year 2009. CIO Nil The finding was resolved, Adding and Modifying is the same procedure. Removal of users are done when personnel resigns/ retire or deceased upon request form pay office informing IT. 112 111. User Access Control The changes to these items were discussed with BCX who is the vendor of this system. As BCX does all changes and database administration on the system this would have been done via an upgrade to Solaris 5.9 operating system. This could not be done for reasons as set out in the letter (Marked as BCX 111) in the attached file. IT to discuss the finding with Business Connexion as they are the once having database administration rights. 113 112. Program Change Management The requested Procedures have been developed and implemented by IT. Proof is marked Change Management112 in attached file Change management procedure have been developed and approved by IT Management. 114 113. Information Technology Service Continuity The Disaster recovery plan for PAYDAY was developed, implemented and tested by IT. Finalised The test results and proof is marked PAYDAY DRP113 in the attached file. DRP plan was in place for Venus and Payday system and were tested, however BCP was still not developed, Management committed to develop an ogranogram BCP by Service provider (Umnombo)

91 ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number Audit Finding Action Plan Taken Current Management Comment Employee in charge Resolved Partially Resolved Not Resolved Not Applicable for Reviewing Remark J K L N/A 115 114. Information Technology Governance Municipal Manager/Information Technology The IT Steering Committee have not been fully functioning. Only one meeting was held during the current financial year as at May 2012. CIO Nil Resolved, meetings held on 30 September 2011, 9 December 2011, 25 May.2012 The IT Department is still not being fully capacitated The intenda system has been shut down and no longer in use. CIO has been appointed and currently Emfuleni Local Municipality and Sedibeng District still busy negotiating to move IT department to Emfuleni. Payday user Account Management Resolved – account management is now done by IT Asset Management Department Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology. Bernard Langa Assets Register of IT department will form part of AG process Total 39 14 10 1 Percentage 56% 40% 4% Number of audit findings remaining for retesting. 0%

92 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance - Aug 2012 Financial Sustainability & Revenue Completeness PMS & Capacity - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management 92

93 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance Financial Sustainability & Revenue Completeness PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management Interventions: Engagement with AG on compilation of AR during 2011/12 – Completed Revised asset valuation method - Completed Submission of Assets register to AG Aug Computerized Assets Inf Syst (IQMS) – In progress 93

94 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance Financial Sustainability & Revenue Completeness PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management Interventions: Decentralisation of SCM – Aug Deadline Capacitation – Skills – In progress Creation of Contract Mngt – In progress Review of SCM policy – In progress Data base clean up – Partially completed Price benchmark implementation (value for money ) - Completed 74

95 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance Financial Sustainability & Revenue Completeness - Aug2012 PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management Interventions: Meter Audit, verification and data clean-up – In progress Accounts reconciliation – On going Segment customers – In progress Appointment of debt collecting agencies - Completed Restructure the debtors book – Process to be reviewed Creation of Revenue Agency – in progress (50%) Review Tariffs and funding model – In progress DSM interventions (water & elec loss reduction) – in progress Appointment of key personell in revenue - Complete 95

96 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance Financial Sustainability & Revenue Completeness PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS – Aug 2012 Strengthening Governance Project Management Interventions: Allignment of KPI’s with IDP Review of KPI’s Review of IDP & SDBIP Submission of Performance Information for Audit by Aug 2012 100% complete 96

97 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance - Aug2012 Financial Sustainability & Revenue Completeness PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management Interventions: Functionality of Sect 80 /79 Committees and Other Committees esp MPAC 100% complete 97

98 Road Map to an Unqualified Audit
GRAP 17 Compliant Assets Register - Aug 2012 SCM capacity and Regulatory Compliance Financial Sustainability & Revenue Completeness PMS & Capacity - June 2012 - Sumission of Annual report - On time submission of AFS Strengthening Governance Project Management Interventions: Establishment of IPAM Development project mngt framework/system Implementation of contract mgt Implementation of ePmLive 70% complete 98

99 CHALLENGES,WAY-FORWARD AND PRIORITIES
99

100 CHALLENGES Billing and non payment of services – R2.6 billion Debtor’s Book High Water and Electricity Losses, theft and non payment Water (66% ) = R241 million Electricity (11%) = R60 million Skills shortage and high vacancy rate In adequate Funding – High indigence Infrastructure Back log – R20 billion Non payment for Services in former black townships – No Metering Unfunded Mandates – Provincial Functions (Health, Libraries & Facilities) Arrear Government Accounts – R44 million Insufficient Cash Flow – Overdraft facility of R150 million raised as at 01 July 2012 Data Integrity Customer Services Ethos Amongst Staff

101 WAY FORWARD & KEY PRIORITIES
Ring-fence the revenue function Establish a customer call and walk in center Meter verification and data clean up (Meter audit) Installation of meter at un-metered areas Ensuring accuracy of meter readings at the right time. Addressing internal control deficiencies Improvement of Revenue Collection Impose Stringent Credit Control Measures Appoint collecting Agencies for all debt Restructuring of Debtors’ book Address all AG Findings Obtain an Unqualified Audit 2011/2012 Intend

102 WAY FORWARD & OTHER PRIORITIES
Upgrade and Maintain infrastructure through MIG – R Allocation for Basic Service Delivery Programs Enforce all Municipal By-Law by creating a super by-law enforcement unit Review Organizational Structure (People, Processes & Systems) Implement Demand Side Management Partnerships to Reduce Water and Electricity Losses Water = Reduce by 25% Electricity = Reduce by 5% Waste = Reduce waste to landfill sites by 5 to 10%

103 THANK YOU AND SINCERE APOLOGIES!! FROM EXECUTIVE MAYOR


Download ppt "CONTENTS MUNICIPAL OVERVIEW MUNICIPAL CASH FLOW FINANCIAL STATUS"

Similar presentations


Ads by Google