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SA Fakie Auditor-General

Presentation to Select Committee on Finance 9 June 2006. SA Fakie Auditor-General. Background. Municipalities & Municipal Entities - 284 Municipalities - 77 Municipal Entities - 20 must prepare Consolidated FS. Provincial Spread of Municipalities. Eastern Cape 45

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SA Fakie Auditor-General

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  1. Presentation to Select Committee on Finance 9 June 2006 SA Fakie Auditor-General

  2. Background • Municipalities & Municipal Entities • - 284 Municipalities • - 77 Municipal Entities • - 20 must prepare Consolidated FS

  3. Provincial Spread of Municipalities • Eastern Cape 45 • Free State 25 • Gauteng 15 • KwaZulu-Natal 61 • Limpopo 31 • Mpumalanga 21 • Northern Cape 31 • North West 25 • Western Cape 30 • TOTAL 284

  4. 3. Legislative reforms & Transformation • L.G. Municipal Demarcation Act • L.G. Municipal Structures Act • L.G. Municipal Systems Act • L.G. Municipal Property Act • MFMA • 3 sets of Accounting standards • - IMFO • - GAMAP (Old & New) • - GRAP • Ordinances & Treasury regulations • Challenge – repeal absolute ordinances to enable coherent legal framework

  5. 4. Macro Challenges • Legislation does not automatically mean better service delivery – means to an end • Rapid ratio of urbanisation • Rapid development & growth • Inadequate and deteriorating infrastructure

  6. 5. Audit Outcomes 2004 • National Treasury Classification • - High Capacity Municipalities 50 • - Medium Capacity Municipalities 107 • - Low Capacity Municipalities 127

  7. 6. Submission of Financial Statements • 2004 • 17 (6%) end of August • 83 (29%) end of September • 144 (51) after September • 40 (14%) Not submitted by end April 2005 • Top 50 Municipalities • 25 (50%) end of September • 23 (46%) end of April • 2 (4%) Not submitted by end April 2005

  8. 7. Submission of Financial Statements as at 30 June 2005 • 133 (47%) submitted by end of August • 124 (44%) submitted between April and March 2006 • 27 (9%) outstanding at March 2006

  9. 8. Audit Opinions - 2004 • Only 95 of 284 audit finalised by end April 2005 • Only 23 of Top 50 audit finalised by end April 2005 • 58 (61%) where qualified • 3 (3%) Disclaimers • 10 (11%) Adverse Opinions

  10. 9. Transversal Issues Reported on (Top 50) • Asset Management (24) • Debtors (33) • Personal Expenditure (31) • Internal Audit (13) • Unauthorised Expenditure (5) • ICT (29) • Other Internal Control Issues (28)

  11. 10. Financial Performance (Top 50) • Debt Collection period • Provision for Bad debt • Liquidity

  12. 11. Debt Collection • For 23 of the top 50 municipalities – average is 136 days • Total debtors – R19.2 billion • 9 collect within 100 days • 14 collect longer than 100 days

  13. 12. Provision for Bad Debt • Average provision 59% • Total provision R11,4 billion • City of JHB R7,2 billion

  14. 13. Liquidity • Benchmark 2:1 • Average 1,2:1 • Whilst below norm = acceptable

  15. 14. Performance Management Only 22 of top 50 Performance Audit been done * Although a fully fledged PMS report had been issued, only compliance issues were addressed during the audit and not the effectiveness and efficiency of the inputs, processes, outputs and outcomes.

  16. 15. Service Delivery Initiatives • Improve accountability arrangements (IDP) • Project Consolidate (136 municipalities identified) • - Develop capacity • - Improve financial position • - Improve service delivery

  17. Thank you. Any questions?

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