Senqu Municipality Clean Audit best

Practice

BACKGROUND Senqu Municipality is a semi rural Municipality

situated in the Joe Gqabi District of the Eastern Cape.

The Municipality has a total population of 134 150 people.

The municipality constitute of the following towns:

Rossouw, Rhodes, Barkly East, Sterkspruit and Lady Grey where the seat of the council is situated

BACKGROUND CONTINUES…

Before achieving this Clean Audit , the municipality had a record of 5 Unqualified Audit opinions

This achievement of a “CLEAN AUDIT” came as a process and not an event

The municipality had a lot of changes to make and systems to adjust in order to achieve this objective.

BACKGROUND CONTINUES…

A Clean Audit was only possible when it was made a key Organisational Objective with Council and the Accounting Officer setting the tone at the top.

A Conducive Municipal Environment with the following minimum norms must exists to ensure the achievement of a Clean Audit

Conducive Municipal Environment

Proper Oversight Function performed by Municipal Councils

The Accounting Officer must ensure that each Director is held responsible for different responsibilities assigned to them

Creating a Deadline Orientated Culture with consideration given for effective corrective action and accountability

Conducive Municipal Environment

Clear and Effective Interdepartmental Communication must exists

Effective and uniform Document management and Filling Systems

Adherence to Good Financial Management Principles and effective Internal Controls

Effective Monitoring and Reporting Functions

Compliance with applicable laws and regulations.

OPCAR

The Operation Clean Audit Report is of Great Importance.

A tool to address All issues raised in Audit Report and Management Report from AG.

Also ensure that issues raised in previous years reports is addressed sufficiently

This was backed up by evidence that passed internal audit tests

Key Technical Performance Issues

Annual controls

Develop pre-determined objectives that are SMART (specific, measurable, achievable, realistic and time-bound)

Audit committee and internal audit to monitor the Strategic and Annual Performance Plans and make comments on progress.

Systems to be developed to report achievement against pre-determined objectives on a monthly basis. This involves aligning the performance reporting systems to extract the required information from the financial reporting systems.

Audit committee and internal audit to review final report of performance against pre-determined objectives together with financial information prior to submission to MM/Mayor.

Key Technical Performance Issues Quarterly Controls

Quarterly performance and financial reports are prepared against predetermined objectives and approved by the MM before they are submitted to the Mayor.

Audit committee and internal audit to review the actual performance against pre-determined objectives and financial information on a quarterly basis and should submit their reports thereon to MM/Mayor for further action.

Council to ensure that the corrective measures recommended by the audit committee are implemented.

Key Technical Performance Issues

Monthly controls

Record management of supporting documentation relating to predetermined objectives and financial information.

Monthly financial and performance reporting to MM by programme leaders on predetermined objectives

Key Issues for Performance & Finance

Principles to Adhere to:

Timelines (Daily, Weekly, Monthly)

Accuracy

Separation of Duties ( Prepare , Review and Approve)

Sufficient Supporting Evidence –that can be produced

Preparation of Audit File.

Key PAF Issues (Finance & Other)

Everything needed by the AG must be in the Preparation of Audit File (PAF)

PAF deals with the detail substantiation of information between different sources.

OPCAR is the monitoring tool relating to correct previous years findings and is forming an important part of the PAF

Documents in the PAF • Documents from the Administration

• Documents from the Budget Division

• Documents from Compliance & Performance

• Documents from Finance

• Documents from Corporate

• Documents from the Internal Audit

Administration Docs

Addresses of all units of operations

Contacts of key staff

Any changes that presents a difference from the previous year

Docs from the Budget Division

Approved SDBIP ( current & previous year)

Adjustment Budget

Approved Budget

Budget Reports

Docs from Compliance & Performance

New legislation

Details of Legal council

List of investigation & criminal behaviour

Appoved IDP

IDP & Budget Preparation Schedule

Performance scorecards & Agreements

Risk Assessment

Documents from Finance

Current and previous years AFS

Investments register

Listing of funds received

Finance related policies

Accounting policy

Accounting system Details ( any changes)

Accounting business processes

Other Registers

Documents from Corporate

Minutes of all political & admin structures

Council

Executive Committee

SCM Evaluation & Adjudication

HR policies

Organogram (incl vacant positions)

Details of all Council members

Documents from the Internal Audit

Audit Committee Minutes

Audit Committee Members

Internal Audit Committee Charter

Internal Audit Plan

List of and Internal Audit Reports

Internal Audit Team

Finance Accounting Schedules & Docs

Accumulated Surplus (Reconciled)

Grants register Register of all Grants (eg: MSIG, MIG, ES, MFMG ..)

Reserves Schedules (cash backed!) Capital Replacement Reserve

All related Journals and Reconciliations

Liabilities & Provisions

Loans Register

Loans Repayment Schedules

Any other Loan Agreements

Lease & Finance contracts & calculations

Landfill sites ( lifespan cost & provision)

Consultant - Qualifications and Valuations

Employee Costs Analysis

Post Retirement Benefits

Long Service Awards

Bonusses & Performance Bonusses

Leave Provisions

Reconciliations

Current portions

Compensation Commissioner

S57 & Councilor remuneration Schedules

Debtors – Creditors - Taxes

Balanced deposits register

Connections & Disconnections Register

List of Creditors

Also list of Debtors with Credit balances

VAT Recon (EMP201’s)

EMP 501 (Submitted to SARS)

Registration Document

Assets & PPE Asset register

Additions

Disposals & council resolutions thereto

Depreciation

Residual Values

Useful lives review & condition assessment

Capital projects

Infrastructure unbundling

Electrical Infrastructure unbundling

Restated Assets Recon

Assets & PPE

Land held for sale

Auction (notice & resolution)

Investment Property Register

Valuers movements & journals

Intangible Assets

Schedules of additions & disposals

Cash & Valuation Roll Monthly Bank Reconciliations

Bank Statements

Any Cash Advances

Valuation Roll

Property Tax Recon

Valuations by Type

Tax Clearances

Advert & Notices

Service Charges & Income

Approved Tariff Structure

NERSA letter of approved tariffs

Electricity losses

Notice of advert (date of tariff application)

Fines (Reconciliation)

Agency services income (SLA & reports)

Rental Charges (registers)

Any other Income

Expenses

General Expenses

Backed up by vouchers duly authorized

Audit fees (schedule)

Notes to AFS (Detail)

SCM declarations, wasteful & unauthorized

& Irregular expenditures

Third party transactions, minor breaches

Contingent liabilities

PAF Dependent on the following Stable political and administrative municipal

environments

Accountable administration with appropriate & reliable accounting systems.

Thorough planning and monitoring of activities

AG & other critical relationship value adds.

Year end, AFS & annual report preparation plan.

Financially sustainable to deliver services.

Employ credible consultants where necessary

CONCLUSION

IT CAN BE DONE!

KEY PRINCIPAL PLAYERS

Mayor: Cllr N Mtyali

Municipal Manager: Mr. MM Yawa

Directors :Mrs. P Bushula

Mr. CR Venter

Mr. R Crozier

Mrs. L Gologolo

Mr. Wonga

THANK YOU!!!