Committee Oversight reports & Minutes: Deliberations (adoption deferred)

Standing Committee on Auditor General

09 September 2010
Chairperson: Adv M Masutha (ANC)
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Meeting Summary

The Committee considered and verified the minutes of the 24 February 2010, 30 March 2010, 31 March 2010, 14 May 2010 and 19 May 2010. However, as there was not a quorum the minutes could not be formally adopted at this meeting. Those present would recommend the adoption at the next meeting.

The Committee then tabled and considered the Draft Committee Reports on its oversight visits to the Mpumalanga and Limpopo Province. The findings and challenges in regard to the  municipalities of Mbombela, Bushbuckridge and Nkomazi were set out. The first two had received qualified audit reports, while Nkomazi had received an audit disclaimer. Improvements had been made in all three, with the Bushbuckridge Mayor being particularly proactive. A recurrent problem emerging from the oversight visits to all municipalities was capacity of staff, the suspension of senior officials, or lack of support given to some officials.
The draft Committee Report on the oversight visit to Limpopo Province highlighted the problems that had been reported in Polokwane generally, including the audit disclaimer for the local Department of Education, which then had a knock-on effect as it was slow to pay municipalities for services rendered, and suspected fraud. Municipalities experienced influx of foreigners, burgeoning numbers of municipalities and shifting of staff. The oversight report included observations and the challenges highlighted in the municipalities of Phalaborwa,  Makhado, Capricorn and Mosemole. Members present agreed that the Draft Reports seemed to be an accurate reflection, and would recommend their adoption at the next meeting where a quorum was established.

Meeting report

Committee minutes
The Chairperson noted that there was no quorum, but asked those Members present to consider and verify the minutes, so that they could be formally adopted at the next meeting when a quorum was reached.

Mr M Steele (DA)  and Ms J Sosibo (ANC) agreed to this suggestion.

Mr Steele provided editorial input to the minutes.

The Chairperson asked the Committee Secretary, Mr Johnny Ramrock, to introduce the Minutes.

Mr Ramrock tabled the draft minutes of 24 February 2010, which pertained to the discussion that the Committee had had on the five year strategic plan. The meeting had resolved that a workshop on the five year strategic plan should be held at a venue outside of Parliament. This
workshop needed to be facilitated by the Office of the Auditor-General. He and another person had been tasked to oversee the logistical arrangements for the workshop, as well as the oversight visits.

Members verified that the Minutes of 24 February were an accurate reflection of the meeting.

Mr Ramrock tabled the Minutes of 30 March 2010 and 31 March 2010. These pertained to the workshop on the Committee's five year strategic plan, held at the Lagoon Beach Hotel in Milnerton. The Chairperson had made a presentation on 30 March. This related to the mandate of the Committee on the Auditor-General) and the Parliamentary environment in which it operated. The key points made by the Committee were outlined. The second part of the presentation was given by Mr Mbuyiselo Hlekiso, the Committee Researcher, on the purpose of the Public Audit Act No 25 of 2004, the mandate, functions and activities of the Committee, the annual Committee calendar and its performing mandate. The Committee Secretary had then also given a presentation on the mandate of the Committee. The fourth presentation was given by Mr Kimi Makwetu, the Deputy Auditor- General, who had described the mandate of the Auditor-General South Africa (AGSA) and its stakeholders. The responses to these presentations were also contained in the minutes.

Members agreed that these minutes were a true reflection of the workshop.

Mr Ramrock tabled the draft minutes of 14 May 2010. These minutes dealt with the finalisation and adoption of the Committee's five year strategic plan, the consideration of the letter from the Remuneration Committee of AGSA on the remuneration of the Auditor-General (AG) and the report back by the Chairperson on meetings and workshops that had been attended.

Members unanimously agreed to recommend the adoption of these minutes.

Mr Ramrock also tabled the minutes of 19 May 2010. These dealt with the finalisation and adoption of the Committee's five year strategic plan and the nomination of Task Team members for the consideration of the AG's remuneration package. Issues pertaining to international and local oversight visits, and the Committee programme, were also discussed.

Members agreed that these minutes were an accurate reflection of the meeting.

Committee’s Draft Oversight Reports: Mpumalanga municipalities and Limpopo municipalities
Mr Ramrock tabled the draft Committee Report on its Oversight visit to Municipalities in Mpumalanga between 26 and 30 July 2010. These visits covered the Mbombela Local Municipality, the Bushbuckridge Municipality and the Nkomazi Municipality.

Mr Ramrock indicated that issues addressed in regard to the Mbombela Local Municipality included the segregation of duties, the physical security of assets, supervision and monitoring, personnel, performance information and reconciliation and comparisons. This municipality had received a qualified audit opinion for the 2008/2009 financial year and had under spent R48.2 million of the conditional grant. Challenges in this municipality included the dismissal of the previous mayor by the Council, staff capacity challenges, and the suspension of the Municipal Manager. However, some issues raised by the AG in the previous audit report had been corrected, and an Audit Performance Committee had been established.

The Bushbuckridge Municipality had received a qualified report for the 2008/2009 financial year. The Mayor had also described the challenges to the Committee during the oversight visit, which included the fact that some projects had not been budgeted for, the suspension of the Municipal Manager, staff capacity problems and the issues that arose as a result of under spending on the conditional grant. The oversight delegation had been impressed with the proactive role of the Mayor.

In the Nkomazi Municipality, the oversight delegation had also met with its Mayor. The Chairperson had explained to the Mayor that the reason for the oversight visit was to support the functions of the Auditor-General (AG) and the “Clean Audit by 2014” campaign. The AG’s office had also spoken to the Mayor on issues that had resulted in past negative audit opinions, and had itself made proposals to the Mayor that could work towards achieving progress of “Clean Audit 2014”. This municipality had received a disclaimer audit opinion for the 2008/2009 financial year. Some of the challenges included the staff capacity problem in the finance section, the poor registration of assets, as well as the suspension of the Municipal Manager. The Mayor had said that improvements had been made since the AG’s last report. In addition, an Internal Audit Committee was formed, and there had been training of staff members. Assistance had also been sought from the Committee on Cooperative Governance and Traditional Affairs. The projects that had been budgeted for had been implemented.

Mr Ramrock then tabled the draft Committee Report dealing with the oversight visit to the municipalities of Limpopo Province between 2 and 6 August 2010. The Auditor-General had given some adverse findings in respect of the municipalities of Polokwane, Phalaborwa, Makhado, Capricorn and Molemole.

Mr Ramrock pointed out that some of the problems in this province were that the local Department of Education, in Polokwane, had received a disclaimer, fraud was suspected, and there had been a problem with the provision of documents. Other issues pertained to the burgeoning number of municipalities in the Province, introductory meetings, and the shifting of staff that had led to instability. The large influx of foreigners to the municipalities in Limpopo also contributed to the problem.

Some of the problems faced by the Phalaborwa municipality related to the struggle with legacy problems, the role of the local ratepayers association, the collection of revenue and the incredibly slow payment by the Department of Education for services rendered.

The Makhado municipality faced the challenges of a new Municipal Manager that had joined in April 2010, high turn-over of the Chief Financial Officers, and political issues that had been raised by the local rate payers association.

The Capricorn Municipality, during the oversight visit, had highlighted the high turnover of Chief Financial Officers, staff capacity issues and leave encashment as its major problems.

The Molemole municipality was experiencing issues relating to the major shortage of senior staff, delays in the filling of vacancies and irregular meetings held with the AG. The other challenge was that the Municipal Manager and the Mayor had not been supportive of the Chief Financial Officer.

The Committee Members present agreed that the draft oversight reports seemed to be in order, and would recommend their adoption at the next meeting with a quorum.

The meeting was adjourned.


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