PRESENTATION TO THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS 04 SEPTEMBER 2012

BACKGROUND Critical issues raised by the AG are as follows: SCM Human resource Predetermined objectives Information technology/Financial system Quality of AFS(Material misstatements 2

BACKGROUND Challenges/underlying factors Inappropriate/poor skills Poor performance reporting and management with no consequences No ownership of leadership: no appetite to take responsibility 3

PRESENTATION OUTLINE LEGISLATIVE MANDATE OPERATION CLEAN AUDIT PROGRAMME 1.Records Management Project 2.Capacity Development Project 3.MPAC 4.Audit Remedial Plans 4

MFMA LEGISLATIVE MANADATE FOR MEC dlgta Section 25: Failure to approve the budget before the start of the financial year, municipality must report to MEC dlgta. This must be read together with section 55 of MFMA which stipulates that the Mayor must inform MEC dlgta and the MEC shall undertake appropriate provincial intervention in terms of section 139

LEGISLATIVE MAN. CONT. Sec 127[4][b]: The Auditor General must inform the MEC dlgta in the event that the Accounting Officer does not submit Annual Financial Statements Section 131(2) : MEC dlgta to assess all AFS’s and whether municipalities have appropriately addressed the queries raised by the AG and report to the Provincial Legislature 6

LEGISLATIVE MAN: CONT. Section 132(3) : MEC dlgta to monitor whether municipalities have submitted annual performance reports and oversight report to the legislature. Section 136:Provincial intervention: MEC dlgta should act promptly in the event that he becomes aware that financial problems exist within a municipality. He will consult the mayor and also assess the extend of the problem and advice EXCO on appropriate action 7

LEGISLATIVE MAN: CONT. Section 141 :Financial recovery plan. The MEC dlgta must work closely with the MEC Finance for the development, implementation and monitoring of Financial Recovery Plans 8

OPERATION CLEAN AUDIT PROGRAMME RECORD MANAGEMENT CAPACITY BUILDING MPAC ESTALISHMENT AUDIT REMEDIAL ACTION PLAN OTHER INITIATIVES 9

RECORD MANAGEMENT THEME: “PROPER RECORDS MANAGEMENT FOR CLEAN AUDIT 2014 AND BEYOND.” OBJECTIVES: Develop and entrench a culture of proper records management in municipalities Promote good governance to enhance service delivery through proper records and information management Establish processes, mechanisms and procedures for proper records management that will contribute towards the Clean Audit 2014 objective. 10

RECORDS MAN: CONT. Project deliverables Establishment of sustainable and functional records management procedures and practices within the BTO’s of priority municipalities Development and implementation of Approved Municipal Record Management File Plans Improved Municipal Audit outcomes by

RECORD MANAGEMENT (cont.) PROGRESS /ACHIEVEMENT TO DATE PHASE 1- Districts record management workshops for Records Management officials of all 23 municipalities were conducted. 81 officials attended the District wide sessions. The sessions were conducted as follows: June in DRSM DM, 4-5 July in DKK DM, July in NMM DM and 31 July -1 August in BPDM. Phase 1 is completed. 12

RECORD MANAGEMENT (cont.) PHASE 2- Record management awareness drive to politicians and senior officials of municipalities per district. 1 st Consultation with Section 56 managers: BPDM on 15 August 2 nd Consultation with Section 56 managers : 22 August NMMDM 3 RD Consultation: 28 th August DRSMDM Still to confirm with DKKDM 13

CONT. Consultation with political leadership: MuniMEC of 31 st August Phase 3: 3 days Hands on Training for Records Managers Training for 33 officials from 11 priority municipalities: Sept training for 24 officials from 12 non-priority municipalities: Sept. 14

RECORD MANAGEMENT (cont.) PHASE 4 – Record management inspections and physical and intensive support. In partnership with DSAC inspections on 11 priority municipalities to verify needs, challenges and non-compliance issues for intensive support: e.g. an amount of R has been set aside by the department to buy necessary equipment for Records Units in these municipalities. Costed business plans are being finalized to this end. 15

CAPACITY DEVELOPMENT 180 municipal finance officials graduated in April 2012 for an NQF 3 Local Government Accounting Certificate. 111 officials will continue to NQF Level 4 facilitated by SAICA/SESTO starting Sept municipal officials/ unemployed graduates started NQF Level 6 training in April 2011 facilitated by SAICA.[18 months'] Second NQF 6 intake started in April October

CONT. The department is in a process of ensuring that all the graduates are optimally utilised in the BTO of municipalities to address Audit queries and revenue enhancement projects amongst others. 17

Dept. Finance Project Project Purpose The department launched a Municipal Financial Support Programme in June 2012 The project aims to improve financial governance and build technical capability in municipalities The programme is to ensure improvement with the submission of AFS by all 23 municipalities by end August The technical support will be provided to municipalities over a period of 2 years 18

Cont. Project Deliverables/ Achievements to date 22 B.Com graduates have been deployed to 14 municipalities since March The graduates have gone through an Internal Audit Learnership in PT 16 Service Providers have been deployed to 13 municipalities to assist with the preperation of AFS and Grap compliant asset registers All 23 municipalities submitted AFS for 2011/12 including backlogs dating from 2008/09 19

MPAC All 23 MPACS were established by November 2011 The department in partnership with AG conducted induction and orientation work sessions for all 23 MPACs per district from November March 2012 The department in partnership with PT and APAC, conduct another round of work sessions for MPACs in May-June 2012 Annual Work plans have been provided for each MPAC for adoption and implementation by Council District Based forums to support MPACs will commence in DRSMDM on 28 August 20

State of MPAC establishment and functionality cont… PROGRESS PER DISTRICT Dr Kenneth Kaunda DM MPAC Visited the projects that are implemented in local municipalities to check progress. MPAC had interviews with management to discuss monthly, quarterly and annual reporting, MPAC budget, MPAC support staff, Internal controls Annual report was perused and subsequent to that, the oversight report was drafted and tabled in council. Investigations were conducted against officials with criminal charges and the process is still unfolding. The entity [Development Agency] was also investigated and findings were presented to council. 21

State of MPAC establishment and functionality cont… City of Matlosana LM MPAC came into effect during February Annual program drafted and approved by council. Nine meetings were held in the preparation of the oversight committee. There were several community consultations and feedback was presented. MPAC made clear recommendation on both the annual report and oversight reports. MPAC managed to have the meetings with AG, most issues were clarified. MPAC will engage management to discuss IDP and budget issues. It was indicated that Municipal Managers contract have not yet been signed but the matter will be addressed as soon as possible. 22

State of MPAC establishment and functionality cont… Tlokwe City Council LM MPAC was established on 27 November /13 work program will be tabled to council soon. Several meetings were held since MPAC was established. Annual report was not tabled in time therefore oversight by MPAC was compromised. Several reports were perused by MPAC and findings were tabled to council. MPAC is still engaging with the oversight report Code of conduct and laws for MPAC is approved by council. Sec 71 and 72 reports are not yet attended to. 23

Ventersdorp MPAC established but not functional. Annual workplan developed but not adopted MPAC was not involved in the IDP/budget process. Maquassi Hills MPAC established but not functional Only one meeting was held Annual workplan developed but not adopted MPAC was not involved in the IDP/budget process 24 State of MPAC establishment and functionality cont…

Ngaka Modiri Molema District Work programme adopted Internal Audit is functional and provide adequate support Some members of MPACs were not invited to the strategic planning meeting One meeting was held Officials are not supportive to the MPAC 25

State of MPAC establishment and functionality cont… Tswaing Work programme adopted Administrative staff is supportive Annual Report not completed All position for section 57 are filled and 46 managers have signed performance agreements (Although they have not submitted them to dlgta) Shared services is working properly Local Labour Forum (LLF) is performing well 26

State of MPAC establishment and functionality cont… Ratlou Workplan was adopted on 31/11/2011 Four meetings were held Municipal Manager provides assistance Capital projects are not completed Section 57 position are filled except CFO post 27

State of MPAC establishment and functionality cont… Ramotshere Work programme was adopted One meeting was held Annual Report was tabled on 31/01/2012 MPAC members are allocated functions according to the programme On 18/04/2012 and 02/05/2012 meeting was postponed because the members were not forming a quorum. This was resolved with the intervention by the Speaker Challenges Attendance, not forming a quorum Delay from Directors to submit information, counci lors are in other portfolio committees 28

State of MPAC establishment and functionality cont… Ditsobotla MPAC is functional Attempted to hold two meetings but were postponed Annual report submitted Work closely with LLF Asked assistance from DLGTA so as to function properly Challenges No administrative staff Year Plan not approved 29

State of MPAC establishment and functionality cont… Mafikeng Awaiting Audit Report There is no cooperation between council and LLF Work plan not adopted by council They are using a provisional programme MPAC were concerned about invitation sent to AG, LG&TA and PT for a sitting on February, all of them did not attend. It was clarified that the invitation was not clear. 30

State of MPAC establishment and functionality cont… Bojanala Platinum District Municipality MPAC was established on the 24 January 2012 There is a work plan for MPAC which will be tabled to council Public participation meetings held as follows: 19 January 2012 = Moretele LM 19 January 2012 = Madibeng LM 22 March 2012 = Kgetleng LM 22 March 2012 = Moses Kotane There have been meetings with locals to deliberate on critical issues Members attended most workshops including those coordinated by dlgta One legal adviser appointed to assist MPAC Challenges No budget to carry out MPAC duties There is no supporting staff to carryout admin functions 31

State of MPAC establishment and functionality cont… Moses Kotane LM MPAC was established on the 28 October 2011 There are 11 MPAC members MPAC drafted their first quarterly report All members attended the MPAC induction No support staff, a request was made to council to that effect Challenges No budget to carry out MPAC duties There is no supporting staff to carryout admin functions Not all councilors fully comprehend the roles of MPAC and its duties. Therefore there is a need to capacitate council. Request was made to Provincial Treasury and dlgta to support MPAC 32

State of MPAC establishment and functionality cont… Madibeng LM 2009/10 and 2010/11 annual report were not submitted on time The above reports were submitted to Auditor General but rejected since financial matters were not included. Annual reports were scrutinized, and recommendations were tabled to council After the corrections were made, the report was approved by council and published. Comments by the public are still to be obtained. Resolution was taken that two officials will be supporting MPAC with admin work. No hearing or investigations were made or recommended by MPAC as yet 33

State of MPAC establishment and functionality cont… Moretele LM MPAC members attended all workshops facilitated by DLG&TA Several meetings and Imbizos were held during March MPAC consulted the community with regard to the annual report. Summoned different departments within municipality to clarify and resolve various burning issues. No budget for MPAC and currently utilizing budget of speakers’ office. One official was seconded to do MPAC secretariat duties. MPAC appreciates the support by Province. 34

MPAC CONT. DRSM DISTRICT MUNICIPALITY – Conducted detail analysis of the SCM Reports- Supply Chain Management Report for the period ended 31 June – Conducted detail analysis of the Management Reports (Section 71 Report) for the period ended 30 June 2012 e.g. Departmental expenditure performance – Planning, Budgeting, and Performance ManaConducting of the 3 rd Quarterly Review of the implementation of the 2011/2012 IDP Process Plan/District gement Programme – 2012/

CONT. – Conducting the Quarterly Review of the performance and effectiveness of the District Public Accounts Committee (DPAC). – Review of the Annual Work Programme – Review of the Service Delivery Budget Implementation Plan (SDBIP) – Review of the Performance Agreements – MM and Section 56 Managers – Amendments of the Terms of Reference – change of name from DPAC to MPAC – The DPAC members and officials attended the training on the Oversight Role of Councillors organized by the Institute of Municipal Finance Officers (IMFO) from the January

CONT. Kagisano Molopo LM MPAC members are lacking skills and capabilities to deal with reporting issues. There are nine members. Many meetings were called but members did not attend. MPAC is not functional. Three Service Providers are appointed by PT to assist municipality to prepare AFS, therefore hope is that municipality will submit on time. 37

CONT. Greater Taung LM MPAC consist of ten members Chairperson was only appointed in July There is lack of corporation between MPAC and administration. There is political instability that hampers the duties of MPAC. Oversight committee still exist therefore there is clash between their roles and MPAC roles. Appointed chairperson promised that they will report on their functionality during September

Cont. Naledi LM MPAC’s annual work plan was approved by council. Six meetings were held. No reports received from MM. No corporation between MPAC and administration. There was a meeting with MM and MPAC requested that in the next meeting MM must bring along reports. 39

Cont. Mamusa LM MPAC is composed of five members. There is no assistance or support staff. Only one meeting was held. MPAC is not functional. Municipality was advised report their frustrations to MEC dlgta, Council, and District municipality. 40

Cont. Lekwa Teemane MPAC was established during Sep 2011 There is no support staff provided. Meetings are held after bi-monthly but reports are not submitted. Most senior managers are acting. Audit committee does not engage MPAC when dealing with important issues. MPAC is considered dysfunctional. 41

State of MPAC establishment and functionality cont… RECOMMENDATIONS All MPACs to finalise their workplans and table for adoption Establishment and launching of District and Provincial MPAC Chairpersons Forum MEC for local government to review the reporting protocols of MPACs [To ensure that MPAC recommendations are tabled to before councils] 42

AUDIT REMEDIAL PLANS 10 municipalities that have received 2010/11 audit outcomes have completed and submitted Audit Remedial Plans to the department The department is in the process of finalizing section 131[2] reports for the 2010/11 audit The department has already submitted section 131[2] reports for 2007/08,2008/09 and 2009/10 as required by legislation. 43

OTHER ACHIEVEMENTS The department has appointed 2 Deputy Director’s, each responsible for Operation Clean Audit and Revenue Management respectively. Deployed AD Municipal Finance to Lekwa Teemane as acting CFO, since February to date.He has assisted the municipality to move from disclaimer to qualified audit opinion. 44

The way forward is however best captured by our Former State President: “Our actions as local government should make an invaluable contribution to the important task of creating a humane society and a humane city where we work selflessly for the betterment of local communities where we fully understand that our responsibilities are to the people, and we are every step of the way, accountable, sensitive and responsive to the needs of the people”. P President Thabo Mbeki

The people own the car The Executive Mayor drives the car for the owners - The Municipal Manager looks after the engine of the car THE MUNICIPALITY IS LIKE A MOTOR VEHICLE

To keep going the car needs OIL & PETROL

Political LeaderManagers & Administrators The Municipality needs Governors & Administrators

VISION MISSION Where the Country desires to be. Using CLEAN AUDIT as intervention Municipal Excellence Democratic Governance Basic Service Delivery Infrastructure Development Financial Sustainability Economic Growth

Current reality Current future Little risk in small steps DesiredfutureDesiredfuture Municipal Excellence Democratic Governance Basic Service Delivery Infrastructure Development Financial Sustainability Economic Growth A big leap will make a difference! CLEAN AUDIT 2014

MUNICIPAL EXCELLENCE Achieve the goals of:  Municipal Excellence  Democratic Governance  Basic Service Delivery  Infrastructure Development  Financial Sustainability  Economic Growth

CLEAN AUDIT 2014 – Municipal Basic Service Delivery & Infrastructure – Local Economic Development – Good Governance, Community Participation & WCs – Financial Viability and Management Drivers of the Municipal Clean Audit 2014 Mayoral / Exec Comm. Municipal Manager Community Participation Municipal Transformation & Organizational Development Local Government Strategic Agenda

CLEAN AUDIT 2014 CURRENT DEVELOPMENT REALITY VISION AND MISSION VALUE SYSTEM AND CORPORATE CULTURE CURRENT DESTINATION FUTURE DESTINATION CLEAN AUDIT BUS

 Process Plan  Integrated Development Plan CLEAN AUDIT

Executive Mayor / Mayoral Committee Municipal Manager / Senior Managers CLEAN AUDIT

 Mayoral Committee & Councillors  Senior Management and Staff  Ward Committees  Community Development Workers  Ward Field Workers  Stakeholders and Community  MPAC CLEAN AUDIT

 Key Performance Areas (KPA’s)  Strategies and Development Objectives  Key Performance Indicators (KPI’s)  Performance Targets  Projects/Programmes/Plans  Operational Business Plans CLEAN AUDIT

 Finance  Equipment / Material  Performance Management  Communication CLEAN AUDIT

 Municipal Council (Institution)  Committees  Decision-making process  Organisational Structure  Systems  Policies / Procedures  By-laws  Delegated Powers & Functions CLEAN AUDIT

Monitoring, Evaluating and Reporting

Thank you. 61