1. FETAKGOMO MUNICIPALITY CLEAN AUDIT PRESENTATION FOR THE YEAR ENDED 30 JUNE 2011 Sustainable Financial Systems and Appropriate Fiscal Framework for Local Government Prepared by: Fetakgomo Mun for SALGA 21 February b2011

2. STRUCTURE OF THE PRESENTATION 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. COUNCIL STRUCTURES Council Executive Committee Portfolio Committees Oversight Committee Audit Committee Administration Prepared by: Fetakgomo Local Municipality

5. FUNCTIONAL & EFFECTIVE OVERSIGHT STRUCTURES 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. STATUTORY REPORTS AS REQUIRED BY MFMA & MBRR 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. Business Process and Internal Control Systems. 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. BUSINESS PROCESS AND INTERNAL CONTROL SYSTEMS. 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. MEASURES APPLIED IN ADDRESSING AUDIT RELATED MATTERS 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. COMMITMENT TOWARDS AUDIT 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. HOW TO SUSTAIN CLEAN AUDIT STATUS 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 “Never be satisfied with what you achieve because it all pales in comparison with what you are capable of doing in future” R Nochem Kaplan Any questions? Realeboga, Nkhensile, Thank You., Dankie….. Prepared by: Fetakgomo Local Municipality