Select Committee on Cooperative Governance and Traditional Affairs Operational Response Plan Audit Outcome of Municipalities 16 August 2011 1

Introduction Strategic Plan 22 Introduction Strategic Plan Operational Structure and other key Stakeholders Support Programme Audit Action Plans 22

Strategic Plan 33 Legislative Mandates Chapter 13 of Constitution - PFMA, MFMA, Budget, Divisions of Revenue, Intergovernmental Fiscal Relations, transparency and effective management of financial and fiscal resources Public Finance and Budget Management Intergovernmental Policy and Planning Infrastructure Budget Analysis Conditional Grant monitoring Financial Systems and Accounting PFMA and MFMA Accounting Support and Reporting SCM, Internal Audit and Risk Management Technical Support Financial Management Grant Technical Assistance 33

Operational Structures 44 Operational Structures Improve ability to offer guidance and support through effective coordination, monitoring and reporting MFMA Coordinating Structure ( NT, DCOG, PT, LG, SALGA, AG) – meet quarterly and update progress on all MFMA related activities Provincial Accountant-General Forums Municipal Regional MFMA CFO Forums (Chaired by PT) Provincial OPCA Committees focusing on audit outcomes Assist with audit action plans, monitor audit action plans Structure made up of representatives from Provincial Treasuries and Provincial LG departments Regular meetings with Office of Auditor-General 44

National Treasury 55 MFMA & FM Support Support to municipalities on a wide range of MFMA financial management reforms Budgeting, Reporting, AFS, AR, SCM, Internal Audits, Risk Management, compliance For macro economic, fiscal and operational purposes municipalities ito MFMA implementation have been allocated differently - Largest 17 non delegated municipalities report directly to NT while the rest report to PT (consolidated reports are shared) Officials from NT and PT render direct support, where resources allow Further support rendered through Technical Assistance Programme - MFIP Advisors - currently 67 municipalities Conditional Grant support rendered to all municipalities NT and DCoG share information on a regular basis 55

MFMA Support MFMA Helpdesk facility used for all enquiries MFMA Guides and Circulars AFS Templates, Accounting Policies, Asset Registers, Audit File, SCM, Banking and Cash Management, Budgeting, Oversight, MPAC Training Asset Management, Preparation of AFS, Budget FM minimum competencies – NT, 42 accredited service providers, PALAMA, SAICA NT Support Teams geared for 17 large municipalities MFIP TA Advisors supporting 67 municipalities 1300 FM graduate interns appointed in municipalities Outcome 12 - Implement System of Delegations on FM, undertake FMCMM development and rollout 66

Support Plans - FMG 263 municipalities have submitted FMG Support Plans addressing MFMA implementation Follow-up made with 15 municipalities to confirm FM support plans Support plans monitored consistent with DORA requirements NT and PTs to monitor the implementation of the support plans as confirmed with municipalities 77

Support Plans – FMG Appointment of municipal officials in BTO Appointment and training of Interns Appointment of Internal Audit officials and Audit Committee Training Minimum Competency levels Supply Chain Management Development of FM policies Upgrading or acquisition of FM Systems to automate in-year reporting, management revenue and expenditures Updating Municipal Asset Registers Compilation of AFS and undertake GRAP Conversions Compilation of Audit Action Plans Preparation and Implementation of Financial Recovery Plan 88

STATUS OF ACTION PLANS – OPCA 2014 National Treasury 99 STATUS OF ACTION PLANS – OPCA 2014 Province Municipalities Number of Municipalities with action plans Comments Gauteng 12 11 CoJ audit released in June 2011. Northern Cape 32 23 Mainly due to audits still taking place due to late submission of annual financial statements. North West Audits not yet finalised due to late submission of annual financial statements. Western Cape 30 25 1 audit still in place. Eastern Cape 45   Limpopo 29 Mpumalanga 21 20 KZN 61 Free State 24 5 Non-compliance by municipalities reported to the MEC for Cooperative Governance, Traditional Affairs and Human Settlement by FS officials. Total 278 230 99

Conclusion Programme of support for FM established National Treasury, Provincial Treasuries working together with Depart of Cooperative Governance, SALGA and AG Weaknesses identified in Audit Outcomes also inform support and action plans Major challenges remain wrt municipal capacity, readiness to report on service delivery performance information - may impact on achievement of 2014 outcome targets Conditions of all support; must be absorbed by municipal officials for continuous improvements, appointment of MM, qualified CFOs, and all FM graduate interns once training programme completed Municipalities are encouraged to replicate similar capacity strategies for all service delivery functional areas 1010