3rdJune 2015
Press Release: Comment on Auditor-General (AG) 2013/14 financial year results for local government [for immediate release]
Positive movements in audit outcomes suggest political commitment to better financial governance
Background: Municipal IQ, a specialised local government data and intelligence organisation is encouraged by positive movements in audit outcomes for the 2013/14 financial year. Kevin Allan, MD of Municipal IQ argues that “the AG’s findingssuggest that the commitment made by senior national, provincial and local leadership to improved financial governance is finally bearing fruit”.
Key trends found by AG:The AG specifically interrogates whether there has been: fair presentation and absence of material misstatements in financial statements, reliable and credible performance information for purposes of reporting on predetermined performance objectives, and compliance with all laws and regulations governing financial matters.
AG, Kimi Makwetu, found that some of the success factors in ensuring good audit outcomes included:
- introducing basic accounting and daily control disciplines;
- enforcing compliance with all legislation;
- employing and retaining staff in accounting and financial management positions with the required level of technical competence and experience;
- allowing the chief financial officer to be in charge of the financial administration function and report thereon to the municipal manager.
Karen Heese, Economist at Municipal IQ is of the view that “while none of these measures are revolutionary, they can be tampered with by political dynamics and require top-level insulation of professionals within councils to get on with their tasks. This is an imperative that has been enshrined in policy and legislation for some years, but finally seems to be filtering through to municipalities.”
Correlation with protests?Heese notes that:“the AG’s opinion is by no means definitive regarding governance, or even financial management within a municipality, but represents a crucially important precondition for positive governance outcomes. It is also intuitive that poor audit outcomes would be mirrored with higher levels of service delivery protests,but this is not necessarily the case. The best-performing provinces in terms of service delivery protests – KwaZulu-Natal, the Western Cape and Gauteng, are all subject to a high proportion of service delivery protests, reflecting other pressures such as pressures of urbanisation”. (See Figure 2). The issue of fruitless, wasteful and unauthorised expenditure is however probably correlated with a number of protests in municipalities in the Free State, Limpopo and North West, all of which have expressed a number of protests over the course of 2015.
The Municipal Hotspots Monitor(see Methodology notes)suggests that 2015 is off the high peaks of 2014, however, suggesting that some of the reforms to local government (including the Back to Basics programme and reflected in audit outcomes) may be yielding some positive outcomes.
Figure 1: Major service delivery protests, by year (2004 – 31st May 2015)
[Source: Municipal IQ Municipal Hotspots Monitor]
Figure 2: Service delivery protests by province (January - May) 2015
[Source: Municipal IQ Municipal Hotspots Monitor]
Methodology: Municipal IQ’s Hotspots Monitor databases major protests staged by community members (who can be identified as living in a particular ward) against a municipality, as recorded by the media (or other public domain sources such as SAPS releases). Such protestors raise issues that are the responsibility or perceived responsibility of local government (such as councillor accountability, the quality and pace of basic service delivery, and in metro areas, housing). These protests may be violent or peaceful, but there is a clear dissatisfaction with the management of a municipality. Not included are issues falling outside of local government’s service delivery mandate such as demarcation, industrial relation disputes or clear party political issues (including candidate lists). Where protests are sustained over several days or weeks, these are recorded as a single entry, with qualitative details updated on the database.
Ends.
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Municipal IQ ranks municipalities according to their relative performance on a number of monitors and indices, with the intention of contributing to an objective, critical assessment of municipal performance. It is hoped that this assessment will highlight both successes and failures in the work of municipalities and in so doing, assist to improve local government delivery.