1. Standing Committee on Appropriations
Audit Outcomes
City of Tshwane
16 October 2012

2. Reputation promise/mission
The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

3. Brief to AGSA
To give a overview on the audit outcomes of of the following municipality:
City of Tshwane Metropolitan Municipality

4. MFMA audit outcomes Municipality 2010-11 2009-10 2008-09 2007-08
City of Tshwane Metropolitan Municipality
Financially unqualified with findings
Qualified

5. Highlights of concerns/ interventions
Mayors and Councillors need to take ownership of key controls
Supply chain management
Some improvement
Predetermined objectives
Some improvement HR
No material findings
IT controls
No improvement
Material errors in AFS submitted for audit
No Improvement
Supply chain management – Minimal improvement. Irregular expenditure identified compared with prior year reduced, however legacy issues (multi-year contracts) remained a challenge for the City
Predetermined objectives – 2009/10 the AOPO findings related to City of Tshwane. In 2010/11 the AOPO findings included in the reports related to the findings on PO for entities. COT managed to address their AOPO findings.
IT controls – same findings have been reported and not adequately addressed.
AFS subject to material adjustments.
Lack of consequence for non-adherence/ lack of accountability to achieve clean audits as opposed to financially unqualified with findings
City of Tshwane Metropolitan Municipality remained unchanged.
Compliance with laws and regulations were not adequately reviewed and monitored, financial statements were subject to material amendments and AOPO findings on entities prevented a clean audit opinion.

6. Status of key focus areas for oversight and governance structures - City of Tshwane Metropolitan Municipality
Supply chain management
Some
Improvement
Awards were made to providers who are persons in service of the municipality (41 employees) or other state institutions (127 instances)
Irregular expenditure incurred as results of non-compliance with section 36(1) of SCM policy
Predetermined objectives
Some improvement
AoPO findings were raised at Housing Company and Sandspruit works, on presentation and usefulness of planned and reported targets (70% of targets were not measurable and time bound) as well as the reliability of actual reported performance (29% were not valid and accurate when compared to source information. HR
No material findings
IT controls
No improvement
At Tshwane the general control environment has shortcomings relating to security management, user access controls, IT service continuity (i.e. the Disaster Recovery Plan for IT department) and network review process.
Material errors in AFS submitted for audit
No improvement
Material corrections to the annual financial statements included:
Incorrect classification of investment property
Unrecorded liabilities
Unrecorded intangible assets

7. Progress towards clean audits – City of Tshwane Metropolitan Municipality
Leadership
Mayor continues to chair the OPCA committee and OPCA officials have been appointed in the city.
Implement effective oversight over municipal entities through internal audit function and internal audit is involved in preparation of quarterly key controls.
Financial and performance management
Training on Audit of Predetermined Objectives was provided by Auditor-General to internal auditors of Tshwane
Monthly financial statements are tabled at the audit committee and Mayoral committee
Monthly reporting on unauthorised, irregular and fruitless and wasteful expenditure and deviations to council.
 Training for municipal officials was provided to raise awareness about compliance with SCM legislation. SCM has drafted an action plan to address prior year findings. CAAT’s procedures used by Tshwane to identify possible conflict of interests for employees in service of the municipality.

8. Concerns from latest key control assessment
Leadership
Performance reporting is not being done on a timely basis by all departments within the city.
IT findings are still in process of being addressed.
Financial and Performance Management
Revenue reconciliations on assessment rates are not done on a regular basis.
IT access controls to SAP systems remains a problem.
Governance
Fraud prevention plan have not yet been communicated to employees to create awareness

9. End of presentation
Thank you