The office of the Auditor General South Africa (AGSA) has released its
report on the 2011/2012 municipal audit results, and it is clear that
most of our municipalities still have serious challenges to address.
Only 48% managed to achieve financially unqualified audits, and only 5%
were deemed “clean”; i.e. financially
unqualified and devoid of any other findings that require corrective action. Auditor General Terence Nombembe identified two areas contributing to the poor performances: a lack of skills and capacity at local government level, and a lack of consequences for poor performances or transgressions.
Both of these problems are addressed in government’s National Development Plan (NDP), which, among other areas, aims to “focus on key capabilities of people and the state” and “build a capable and developmental state.” Nombembe is addressing the second challenge by calling on political leaders and municipal officials to implement procedures that address poor performance and non-compliance, and AGSA has compiled a handbook on the legislation they can use, “as a starting point for responsible leaders to set the correct tone,” which is another critical requirement of the NDP.
Regarding the acute skills shortage that is hobbling municipal capacity, Nombembe admits that government alone cannot solve the problem. Private sector involvement, at school and tertiary level, is essential if we are to produce enough financial professionals to bring proper oversight to the public sector. “The lack of capacity in local government is affecting its ability to account for the public resources it has to administer on behalf of society,” Nombembe says in the introduction to the report. “At 73% of the auditees, vacancies in key positions and key officials without the minimum competencies and skills continued to make it difficult for these auditees to produce credible financial statements and performance reports. Although capacity building and the professionalisation of local government is an ongoing, multi-year project, I am concerned that municipalities are not using all the opportunities available for skills development.”
Provincial government partners with SAICA
One of these opportunities is the active participation of the South African Institute of Chartered Accountants (SAICA), which runs several initiatives that support the aims of the NDP. SAICA input is particularly important to the provincial government in KwaZulu-Natal, the province with the most municipalities (61), of which 45 received unqualified financial results. In addition, the South African Local Government Association (SALGA), in a 2012 report, indicated that KZN has the highest number of municipalities complying with the Municipal Financial Management Act, in terms of functioning Audit Committees and compliance with the Act. The provincial government has realised that sound financial management is the key to municipalities receiving clean audits, and the KZN treasury has embarked on an ambitious programme in partnership with the Thuthuka Bursary Fund (TBF), aimed at putting a chartered accountant in every KZN municipality within seven to ten years.
TBF, an offshoot of the Thuthuka Education Upliftment Fund (TEUF), is a SAICA initiative to identify talented African and Coloured South African students with an aptitude for mathematics, and then fund, advise and mentor them through university, as they qualify as CAs(SA). The project is donor-funded by SAICA members, although its growing success in transforming the accounting profession has won it the support of national government, in particular that of Minister of Further Education and Training, Blade Nzimande. His ministry now matches TBF donor funding Rand-for-Rand, with a view to ensuring that every Further Education and Training college across the country has a qualified, competent CFO. The KZN treasury is currently funding a total investment of R 16m over a four-year period, which is reserved for candidates drawn from every municipality in the province. On completion of their studies and articles, these chartered accountants will return to their home municipalities to put their financial skills to work in local government.
The province is also partnering with SAICA to address the crisis of mathematics at school level. TEUF programmes supported by the Department of Education are now in place at KZN schools, to assist learners and their parents in choosing the correct subject combinations to maximise their tertiary study options. Mathematics is a priority – specifically, core Mathematics as opposed to Mathematics literacy; to study accounting or any of the professions experiencing critical skills deficits, learners need to achieve a matric mark of at least 50% in core Mathematics. Although 29.6% of KZN matrics who wrote Mathematics in 2012 passed with marks below 50%, 17.3% of them achieved passes above this mark. However, because the province had more than 63 000 learners sitting the mathematics exam – outstripping any other province by at least 25 000 – this translates to more than 11 000 KZN matriculants now qualified to study accounting, law, engineering or other sciences at university.
Will other provinces follow the KZN lead?
The data presents a clear implication: if municipalities want to end financial mismanagement and effect service delivery in accordance with the aims of the NDP, we need a much higher percentage to achieve unqualified audits on an annual basis. To do that, they require all posts to be filled with competent professionals who have the capacity to ensure responsibility and compliance. To find and train those professionals, municipalities need support and skills from the professional private sector. By actively engaging with SAICA and its skills development programmes, the KZN government has shown how effective these partnerships can be. Hopefully, other provinces will follow their example.
END
Distributed by TerraNova Strategic PR
unqualified and devoid of any other findings that require corrective action. Auditor General Terence Nombembe identified two areas contributing to the poor performances: a lack of skills and capacity at local government level, and a lack of consequences for poor performances or transgressions.
Both of these problems are addressed in government’s National Development Plan (NDP), which, among other areas, aims to “focus on key capabilities of people and the state” and “build a capable and developmental state.” Nombembe is addressing the second challenge by calling on political leaders and municipal officials to implement procedures that address poor performance and non-compliance, and AGSA has compiled a handbook on the legislation they can use, “as a starting point for responsible leaders to set the correct tone,” which is another critical requirement of the NDP.
Regarding the acute skills shortage that is hobbling municipal capacity, Nombembe admits that government alone cannot solve the problem. Private sector involvement, at school and tertiary level, is essential if we are to produce enough financial professionals to bring proper oversight to the public sector. “The lack of capacity in local government is affecting its ability to account for the public resources it has to administer on behalf of society,” Nombembe says in the introduction to the report. “At 73% of the auditees, vacancies in key positions and key officials without the minimum competencies and skills continued to make it difficult for these auditees to produce credible financial statements and performance reports. Although capacity building and the professionalisation of local government is an ongoing, multi-year project, I am concerned that municipalities are not using all the opportunities available for skills development.”
Provincial government partners with SAICA
One of these opportunities is the active participation of the South African Institute of Chartered Accountants (SAICA), which runs several initiatives that support the aims of the NDP. SAICA input is particularly important to the provincial government in KwaZulu-Natal, the province with the most municipalities (61), of which 45 received unqualified financial results. In addition, the South African Local Government Association (SALGA), in a 2012 report, indicated that KZN has the highest number of municipalities complying with the Municipal Financial Management Act, in terms of functioning Audit Committees and compliance with the Act. The provincial government has realised that sound financial management is the key to municipalities receiving clean audits, and the KZN treasury has embarked on an ambitious programme in partnership with the Thuthuka Bursary Fund (TBF), aimed at putting a chartered accountant in every KZN municipality within seven to ten years.
TBF, an offshoot of the Thuthuka Education Upliftment Fund (TEUF), is a SAICA initiative to identify talented African and Coloured South African students with an aptitude for mathematics, and then fund, advise and mentor them through university, as they qualify as CAs(SA). The project is donor-funded by SAICA members, although its growing success in transforming the accounting profession has won it the support of national government, in particular that of Minister of Further Education and Training, Blade Nzimande. His ministry now matches TBF donor funding Rand-for-Rand, with a view to ensuring that every Further Education and Training college across the country has a qualified, competent CFO. The KZN treasury is currently funding a total investment of R 16m over a four-year period, which is reserved for candidates drawn from every municipality in the province. On completion of their studies and articles, these chartered accountants will return to their home municipalities to put their financial skills to work in local government.
The province is also partnering with SAICA to address the crisis of mathematics at school level. TEUF programmes supported by the Department of Education are now in place at KZN schools, to assist learners and their parents in choosing the correct subject combinations to maximise their tertiary study options. Mathematics is a priority – specifically, core Mathematics as opposed to Mathematics literacy; to study accounting or any of the professions experiencing critical skills deficits, learners need to achieve a matric mark of at least 50% in core Mathematics. Although 29.6% of KZN matrics who wrote Mathematics in 2012 passed with marks below 50%, 17.3% of them achieved passes above this mark. However, because the province had more than 63 000 learners sitting the mathematics exam – outstripping any other province by at least 25 000 – this translates to more than 11 000 KZN matriculants now qualified to study accounting, law, engineering or other sciences at university.
Will other provinces follow the KZN lead?
The data presents a clear implication: if municipalities want to end financial mismanagement and effect service delivery in accordance with the aims of the NDP, we need a much higher percentage to achieve unqualified audits on an annual basis. To do that, they require all posts to be filled with competent professionals who have the capacity to ensure responsibility and compliance. To find and train those professionals, municipalities need support and skills from the professional private sector. By actively engaging with SAICA and its skills development programmes, the KZN government has shown how effective these partnerships can be. Hopefully, other provinces will follow their example.
END
Distributed by TerraNova Strategic PR
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