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TABLE OF CONTENTS

TABLE OF CONTENTS

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TABLE OF CONTENTS

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  1. OVERVIEW OF GOVERNANCE AND FINANCIAL MANAGEMENT ISSUES IN EASTERN CAPE MUNICIPALITIESPRESENTED BY: MEC M. QOBOSHIYANA5 – 6 SEPTEMBER 2012

  2. TABLE OF CONTENTS 1.Recruitment status in the filing of posts 2.Audit outcomes for the past three years 3. MPAC establishment and effectiveness 4. Functionality of Audit Committees and Internal Audit Units 5. Debts owed to municipalities by Government Departments and steps taken to collect the outstanding amounts 6. Compliance with Supply Chain Management 7.Functionality of other internal structures 8. IDP assessment

  3. GOVERNANCE ISSUES

  4. SUMMARY OF THE CURRENT RECRUITMENT STATUS AS AT AUGUST 2012

  5. SUMMARY OF THE CURRENT RECRUITMENT STATUS AS AT AUGUST 2012 Province is doing well in the filling of posts for MM’s – the 3 vacant MM posts are being filled; NMBMM, Blue Crane & Kouga Five (5) vacant CFO posts have been advertised & recruitment process underway; (NMBMM, BCMM, Makana, Mbashe & Mnquma) Eight (8) CS posts currently being filled, except for NMBMM, BCMM, Amahlathi & Ikhwezi LM for different reasons The filling of s.54 and s.56 posts reflect a combined vacancy rate of twelve (12%) – 34 posts still need to be filled

  6. FINANCIAL MANAGEMENT ISSUES

  7. AUDIT OUTCOMES FOR THE PAST THREE YEARS

  8. MOVEMENT IN AUDIT OUTCOMES 16 Positive Movement 8 Qualified to Unqualified 2 Adverse to Qualified 5 Disclaimer to Qualified 1 Disclaimer to Adverse 21 No change 5 Unqualified 3 Qualified 13 Disclaimer 8 Regression 3 Unqualified to Qualified 1 Unqualified to Disclaimer 1 Qualified to Adverse 2 Qualified to Disclaimer

  9. PROVINCIAL OVERVIEW OF AUDIT OUTCOMES

  10. PROVINCIAL OVERVIEW OF AUDIT OUTCOMES

  11. MPAC ESTABLISHMENT BACKGROUND The Audit Outcomes of municipalities have been in a bad situation since the establishment of the existing municipalities The issues raised by the Auditor-General in the audit reports showed a lack of oversight at all levels of governance in municipalities The Minister for the Department of Co-operative Governance advocated the establishment of MPACS as a means of strengthening oversight in municipalities

  12. MPAC ESTABLISHMENT Terms of Reference and guidelines were circulated to all municipalities for the establishment and functioning of MPACS The awareness sessions were conducted through district approach By the end of November 2011, 44 municipalities had established MPACS Nxuba LM established MPAC in February 2012

  13. MPAC EFFECTIVENESS MPAC TRAINING The department in collaboration with the Association of Public Accounts Committees (APAC) conducted the training during April and May 2012 EFFECTIVENESS AND FUNCTIONALITY MPACs have improved in their way of functioning in that there have been number of oversight reports submitted to the legislature from 15 to 35 MPAC meetings for oversight are now being held at municipalities MPAC members also attend audit committee AFS review sessions

  14. FUNCTIONALITY OF AUDIT COMMITTEES Of the 45 municipalities, 44 municipalities have functional audit committees Term of office for OR Tambo DM has since expired Recruitment processes for the appointment of OR Tambo Audit Committee have been completed and awaiting council’s approval Reminder circulars are circulated to all municipalities whose term of office is nearing an end Audit Committee meetings are held quarterly

  15. FUNCTIONALITY OF INTERNAL AUDIT UNITS Existing audit function 44 Own audit function 16 Serviced by DM 3 Co-sourced 9 Outsourced 16 Internal Audit Unit for Kouga LM is not existing as the Internal Auditor was acting as a CFO and has since been appointed as a CFO

  16. DEBTS OWED TO MUNICIPALITIES BY GOVERNMENT DEPARTMENTS AS AT 30 JUNE 2012 CURRENT SITUATION The debt owed by Provincial and National Government Departments to municipalities as at the end of June 2012 stood at R151,6M A sum of R53M is owed by National Public Works Eastern Cape Local Government and Traditional Affairs was the first in the country to assist municipalities to facilitate debt payment by Government Departments DLGTA is working with Provincial Treasury to assist municipalities in debt owed by National and Provincial departments.

  17. STEPS TAKEN TO COLLECT OUTSTANDING AMOUNTS Bi-monthly meetings are held between Government Departments and municipalities Special meetings are held in order to resolve one-on-one problems Government officials visit municipalities and perform reconciliations Monthly billing by municipalities is monitored Amount paid by Government Departments as at end of July 2012 stood at R122M

  18. COMPLIANCE WITH SUPPLY CHAIN MANAGEMENT Adherence to SCM processes in municipalities remains a challenge 2010/11 Financial Year as per Audit Report Unauthorised expenditure R 566,49 Million Irregular expenditure R 1,848,41 Billion Fruitless and wasteful expenditure R11,08 Million

  19. FUNCTIONALITY OF STRUCTURES In 44 municipalities in the Eastern Cape Council and committee meetings are convened in terms of the adopted schedule of meetings. Therefore, it is evident that these structures are functional Portfolio Committees have not been established in Cacadu DM, and in the absence of committees the matters are referred to Mayoral Committee for recommendations to Council Portfolio Committees have not been established at Inkwanca LM, and in the absence of committees the matters are referred to the full Council

  20. FUNCTIONALITY OF STRUCTURES Portfolio Committees have not been established at Ndlambe LM, and in the absence of committees the matters are referred to EXCO for recommendations that will go to the Council Despite the fact that committees in the above three municipalities have not established, the EXCO / Mayoral Committee and Council meetings are convened accordingly and are functional

  21. NON FUNCTIONALITY OF STRUCTURES Since the council meeting that was adjourned in 30 March 2012, Mnquma municipality never convened any council meetings thereafter, as a result the MEC has conducted a fact finding and a detailed report regarding this matter has since been tabled by the MEC to Council on 14 August 2012 The municipal council has been asked to respond to the findings and recommendations of the fact - finding team and the municipality is expected to respond in thirty days time

  22. IMPLEMENTATION OF ADOPTED ADMINISTRATIVE SYSTEMS 43 municipalities in E.C. have adopted the Rules of Order; 31 municipalities in E.C. have adopted the Delegation of Powers; Councillors in 37 municipalities of E.C. have declared their financial interests; All Councillors in 39 municipalities in E.C. have signed the Code of Conduct; 37 municipalities in E.C. have promulgated their reviewed by-laws.

  23. OPERATION CLEAN AUDIT

  24. AUDIT RESULTS OVER THREE YEARS

  25. AUDIT RESULTS PER MUNICIPALITY (P2)

  26. CONSISTENTLY UNQUALIFIED

  27. IMPROVED OUTCOMES

  28. CONSISTENTLY BAD

  29. THE GOOD TURNED BAD

  30. BULK INFRASTRUCTURE

  31. EC Infrastructure Backlogs

  32. Cost Estimates per Category 32

  33. EC MIG Funding Trends 33

  34. MIG EXPENDITURE AS AT END JUNE 2012

  35. MIG EXPENDITURE AS AT END JUNE 2012

  36. MIG EXPENDITURE AS AT END JUNE 2012

  37. MIG EXPENDITURE AS AT END JUNE 2012

  38. EC MIG Funding Trends Please note the following: The Households for water excluded Bulk infrastructure. The current funding trends are only based on MIG, other Grants and other sources of funding, although minimal, have not been factored in to have a holistic view in terms of backlog eradication. Municipalities need to declare all capital funding for government (all relevant sectors / stakeholders) to accurately monitor backlogs eradication trends.

  39. Cont…..EC MIG Funding Trends • There is a need to also undertake research to understand the impediments, capacity constraints, and consider alternative services, to improve on the eradication trends. • Only 3 (three) funding streams are available to deal with water services backlog that is MIG, RBIG and RHIP, which are very limited to improve on the backlog eradication trands • If the funding trends remain the same, to achieve universal access, the target will be met in 2025 or beyond. • To bring forward the universal access closer to 2016/17 FY, the current funding needs to be tripled i.e. from R3 billion to 10 billion annually on MIG only.

  40. EC Households Backlog

  41. MUNICIPAL DEVELOPMENT AND PLANNING

  42. MEETING WITH THE PC ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS

  43. investigations conducted at municipalities

  44. Investigations conducted during the 2010/11 Financial Year

  45. Categories of matters reported

  46. PROCLAMATIONS There are no proclamations for 2010/2011

  47. Statistics The above is therefore summarised as follows:

  48. Implementation of igr in the province

  49. ROLE OF DISTRICT, PROVINCE & NATIONAL DEPARTMENTS IN INTERGOVERNMENTAL RELATIONS

  50. ROLE OF DISTRICT, PROVINCE & NATIONAL DEPARTMENTS IN INTERGOVERNMENTAL RELATIONS