1. District Shared Audit Committee Services Tim Maake Hotel@ Tzaneen 08 February 2013

2. Content Vision District profile Legislative framework Establishment of District wide audit committee Rationale for a shared approach Functionality of the audit committee Achievements on the work of the audit committee Common issues raised by the committee to municipalities Benefits of the shared approach Financial implications Possible challenges and failures Conclusion

3. Vision of the Municipality “To be the food basket of Southern Africa and the` tourism destination of choice.”

4. District profile - population 199620012011 BPM108741131537150637 GGM218752240728244217 GLM203541218874212701 GTM342551375586390095 MLM878719438294857 MDM96245710611071092507

5. District profile - Households 20012011 BPM2745341115 GGM5533463548 GLM5205758261 GTM88556108926 MLM2144924470 MDM244849296320

6. Legislative framework Section 166 (1) of the MFMA requires a municipality to have an audit committee; According to section 166 (2) of the MFMA the audit committee is an independent advisory body and must advise the municipal council, the political office-bearers, the accounting officer and the management staff: Internal financial control and internal audits; Risk management; Accounting policies; Performance management; Effective governance and Review of the AFS of the municipality

7. Legislative framework cont.’ Section 166 (6) of the MFMA indicates that a single audit committee may be established for a district municipality and the local municipalities within a district municipality; Section 166 (4) of the MFMA also states that the audit committee must consist of at least three person with appropriate experience; The audit committee must meet at least four times a year; No councillor may be a member of the audit committee

8. Establishment of a district wide audit committee The first audit committee was established in January 2007 through a resolution of Council as agreed at the District Intergovernmental Forum in 2006; The committee consisted of five (5) members: (1) from the legal field, (1) with public sector experience, (1) with both public sector and internal audit experience, (1) Chartered Accountant and (1) with municipal experience; The term of the audit committee was three years which was extended until June 2011; The current committee has five (5) members and is Chaired by a Chartered Accountant: (1) chartered accountant, (1) IT specialist, (1) legal expert, (1) municipal expert and (1) internal audit expert and The committee was established in August 2011

9. Rationale for a shared approach The audit outcomes for the entire district were not looking good at that time; Three municipalities were under Project Consolidate: GGM, GLM and MLM; Performance management was a shared service as well; Economies of scale and cost sharing Support to one another (collaboration) and Common vision on the improvement of good governance

10. Functionality of the district wide audit committee Contract signed with members of the audit committee with agreed rates; Operates as per approved audit charter; There is also an approved schedule of meetings: quarterly basis – one week booked; Internal audit provides administrative support; Reports per municipality are compiled and submitted to the audit committee; Provincial Treasury, CoGHSTA and Office of the Auditor General also attend these meetings

11. Achievements on the work of the audit committee Reviewed the annual financial statements for the year ending June 2011 and June 2012; Submitted reports to various Councils; Met with the Mayors and Exco’s of different municipalities where there were challenges; Convened quarterly meetings as per schedule; Referred reports back where there was insufficient data and; Where a meeting failed because of late submission of reports, the cost were recovered from the management

12. Common issues raised by the committee to the municipalities Poor internal controls; Compliance with legislative requirements; Effects of vacancy on good governance; The issue of the policy environment; Sustainability of the municipalities; Performance against set targets; Effectiveness of the internal audit units; Budget control and management and; Effectiveness and adequacy of the systems.

13. Benefits of the shared approach Expert advise on matters that cuts across; Uniform approach on matters that are similar; Encourage and promote the spirit of intergovernmental relations; Collective responsibility for the improvement of good governance district wide; Costs sharing – proportional contribution.

14. Financial implications 2011/12 Municipality% ContributionAmount spent BPM14R 319’037.05 GGM10R 227’883.61 GLM10R 227’883.61 GTM14R 319’037.05 MLM10R 227’883.61 MDM42R 957’111.15 TOTAL100R 2’278’836.08

15. Financial implications 2012/13 Municipality% ContributionAmount due BPM14R 196’000.00 GGM10R 140’000.00 GLM10R 140’000.00 GTM14R 196’000.00 MLM10R 140’000.00 MDM42R 588’000.00 TOTAL100R 1’400’000.00

16. Possible challenges and failures Slow implementation of action plans; Cost of specialised services; Risk of loosing the members – improvement of audits Adherence to the scheduled meetings Dedicated staff to provide administrative support to the committee and; Thorough engagement by Councils with the audit committee reports.

17. Conclusion Joseph Murphy in his book entitled “ The Power of your subconscious mind writes as follows: “ Think good and good follows. Think evil and evil follows. You are what you think all day long.”