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IMFO women in local government seminar

IMFO women in local government seminar. BEST PRACTICES CLEAN AUDIT PRESENTED BY GLADYS DUBE DEPUTY CFO- EDM. CONTENTS. INTRODUCTION 2014 AUDIT GOALS KEY TO SUCCESS APPROACH CLEAN AUDIT(STRATEGIC AND OPERATIONAL, PREPARATION OF AFS) AUDIT CHALLENGES LESSONS LEARNT AND WAY FORWARD.

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IMFO women in local government seminar

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  1. IMFO women in local government seminar BEST PRACTICES CLEAN AUDIT PRESENTED BY GLADYS DUBE DEPUTY CFO- EDM

  2. CONTENTS • INTRODUCTION • 2014 AUDIT GOALS • KEY TO SUCCESS • APPROACH CLEAN AUDIT(STRATEGIC AND OPERATIONAL, PREPARATION OF AFS) • AUDIT CHALLENGES • LESSONS LEARNT AND WAY FORWARD

  3. Introduction • EDM COVERS FIVE LM’s (NKOMAZI, BBR, UMJINDI,THABACHWEU AND MBOMBELA) • PAST FIVE YEARS – one UNQUALIFIED (2008/9), four CLEAN AUDITS (2009/10;2010/11;2011/12; 2012/13)

  4. 2014 clean audit goal • IDENTIFIED OUR STRENGHTS AND WEAKENESSES (SWOT ANALYSIS) • STRENGTHEN MANAGEMENT TEAM – COMMON GOAL OF CLEAN AUDIT • ZERO TOLERANCE TO NON-PERFORMANCE

  5. Key to success • LEADERSHIP – CENTRE MUST HOLD (POLITICALY AND ADMINISTRATIVELY) • FINANCIAL AND PERFORMANCE MANAGEMENT – SOUND INTERNAL CONTROLS, COMPLIANCE (GO AN EXTRA MILE) • FUNCTIONAL GOVERNANCE STRUCTURES • Informed and effective Finance PORTFOLIO Committee • Independent ,qualified, FUNCTIONAL AND EFFECTIVE Audit Committee • Risk Management Committee IN PLACE AND FULLY FUNCTIONAL

  6. Key to success CONT….. • FUNCTIONAL MPAC-( Ruling party plus all of opposition PARTIES) • Appropriate financial systems –average 10 years experience • Dynamic and competent management- well qualified, relevant experience, zero tolerance to non performance, all critical positions filled at management level

  7. Approach to clean audit- EDM (STRATEGIC)

  8. Approach to clean audit (OPS) • CLEAN ADMINISTRATION – PRIORITY FOR ALL • BEFORE 31 AUGUST ANNUALLY – IDP /BUDGET PROCESS PLAN (COUNCIL APPROVES) – COMPLIANCE REGISTER (RISK. OFF) • MONTLHY FINANCIAL REPORTING INC S 71 REPOTS(PORTFOLIO, MAYORAL,TREASURY AND COUNCIL) • SCM IMPLEMENTATION – COUNCIL (BELOW R200 000 AND ABOVE) INCLUDING DEVIATIONS- council refers to mpac

  9. Approach to clean audit (OPS) cont ..... • MONTLHY RECONCILIATIONS DONE ( VAT, BANK, CREDITORS (ALL PAYMENTS), LOANS (TWICE A YEAR), ETC • POLICIES REVIEWED ANNUALLY INCLUDING THE BUDGET RELATED POLICIES AND SUBMITTED TO COUNCIL – NEED TO UNDERSTAND THEM TO BE ABLE TO IMPLEMENT • AG’S PRIOR YEAR KEY FOCUS AREAS (MASTER) • Risk officers monitors the action plan on ag findings • UNAUTHORISED, IRREGULAR AND FRUITELESS – DISCLOSE IN THE AFS, REPORT TO CONDONE should HAVE BEEN SUBMITTED TO COUNCIL ON DEVIATIONS (SCM)

  10. Preparation of AFS • ONGOING GRAP TRAINING (ALL GRAP STANDARDS) – ALL FINANCE STAFF • MANAGEMENT ACTION PLAN – FULLY IMPLEMENTATED (HOUSEKEEPING MATTERS) • ACCOUNTING POLICIES REVIEWED AND UNDERSTOOD ONCE MORE • YEAR END RECONCILIATIONS- CONTRACT REGISTER, FAR, bank, vat,INVESTMENT, LOANS ETC RECONCILED • Suspense accounts cleared monthly

  11. Preparation of AFS cont…. • REQUEST EXTERNAL CONFIRMATIONS (LOANS, BANK BALANCES, CREDITORS STATEMENTS ETC) • AFS SUBMITTED TO AUDIT COMMITTEE – AFTER SELF REVIEW, GRAP DISCLOSURE CHECKLIST (nt website) , TB TO AGREE TO AFS. FOR QUALITY REVIEW -APPOINTMENT OF SERVICE PROVIDER TO CHECK • PRIOR PERIOD ERRORS - GRAP 3 (ASSETS – REVIEW OF USEFUL LIVES YEAR END, IMPAIREMENT)

  12. Approach to clean audit (during audit) • DISCUSSION OF ENGAGEMENT LETTER PRIOR TO COMMENCEMENT OF AUDIT • Coordination of audit process by CFO AND MM • FUNCTIONAL AUDIT STERING COMMITTEE (2X / M) • Constructive interaction with the auditors and appropriate committee structures to deal with audit issues • Keeping Executive Management informed of audit progress • Detailed file of audit working papers in support of the compilation of the annual financial statements

  13. Approach to clean audit (during audit) cont… • Availability of key personnel during the audit process (NO LEAVE DURING AUDIT) • Early resolution of issues and audit queries – COMMUNICATION OF FINDINGS • Challenge to unreasonable demands and findings – LAST WEEK OF NOVEMBER (PRE ISSUANCE REVIEW)

  14. Approach to clean audit (during audit) cont… EXCEPTION RAISED – EARLY RESOLUTION RECOMMENDED CLEARED WITH AUDITORS NOT CLEARED DEPUTIES/ ASSISTANTS CLEAR THE QUERY COMMUNICATION OF FINDINGS (FORMAL) MANAGER INFORMED SUBMISSION TO MM DISCUSSED – AUDIT STEERING COMMITTEE MEETING CORRECTION MADE / AFS ADJUSTED ETC TO A-GSUBMISSION BY MM

  15. Organisational performance management • IDP-Objectives-priorities linked to national and province---budget---scorecard FOR DEPT----SDBIP • Do not under-estimate the importance of planning processes (align all departments and business units to the strategy of the organisation) • Leadership (administrative and political) critical for successful OPMS in terms of buy-in and ownership • Quarterly performance reports ( 15th of first month after the quarter)

  16. Organisational performance management cont …. • Poe’s submitted with the quarterly reports – substantiating information on all reports essential • Iaaudit quarterly report--- reportSto audit committee- recommendations implemented BY THE MUNICIPALITY • Keep proof of all processes, specifically the public participation processes in terms of OPMS • Monitoring done regularly, whilst reporting is done at least quarterly • Create a compliance calendar and monitor regularly

  17. Challenges- current and future • MINIMUM COMPETENCY LEVELS--- EXTENSION GRANTED UNTIL 30 JUNE 2014. TWO TEAMS ATTEND CLASSES--- I TEAM ATTENDS IN PRETORIA AND ANOTHER IN NELSPRUIT. STAFF NOT AVAILABLE AND AFFECTS PERFORMANCE OF DEPARTMENT AND MUNICIPALITY • MAINTAINING CLEAN AUDIT – NEW GRAP STANDARDS TO BE IMPLEMENTED (specialized) • RETENTION / RECRUITMENT OF SKILLED STAFF • ANNUAL ROTATION OF AUDITORS – NEW AUDITORS YEARLY • AG ARE specialists and ARE improving every year- what are the municipalities doing to keep up ???? • Are municipalities’ AFS prepared by specialist ????

  18. Challenges- current and future CONT… • RATHER ARGUE OVER INTERPRETATION THAN BASIC ACCOUNTING WITH AG- GRAP KNOWLEDGE • AG HAS SCM SPECIALISTS- DO MUNICIPALITIES HAVE SCM SPECIALIST WHO KNOW ALL THE SCM POLICIES AND REGULATIONS ?????? IS THE SCM SKILLED???? • MUNICIPALITIES ARE REACTIVE AND NOT PRO ACTIVE- FOCUS ON MANAGEMENT REPORT FINDINGS. FIX THE PROBLEM AND NOT THE CAUSE. AG FOCUS CHANGES EVERY YEAR

  19. Lessons learnt and way forward • IN-HOUSE COMPILATION OF AFS – IMPROVES CHANCES OF GETTING CLEAN AUDIT( OWNERSHIP) • MANAGEMENT TO PERFORM ROUTINE MANAGEMENT WORK (CFO---- PREPARES AFS) • FUNCTIONAL GOVERNANCE STRUCTURES • COMPLIANCE WITH LAWS AND REGS – REPORT NON COMPLIANCE TO COUNCIL, AG, PT AND NT (ASK FOR ADVICE WHERE NECESSARY)

  20. Lessons learnt and way forward • ON-GOING MANAGEMENT MEETINGS – CLEAN AUDIT TO BE A STANDING ITEM THROUGHOUT • RETENTION / RECRUITMENT OF SKILLED STAFF – TO FILL CRITICAL POSITIONS • ON-GOING TRAINING OF STAFF MEMBERS (GRAP, ASSETS ETC)

  21. THANK YOU

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