Meeting SummaryAlthough the Departments of Cooperative Governance and Traditional Affairs (COGTA) in the Eastern Cape and Limpopo were scheduled to present their plans to the Committee, they sent apologies for non-attendance and only the department from Mpumalanga presented.
In terms of clean audits, Mpumalanga had made a slight improvement on the previous year, with four municipalities recording this achievement in 2010/11, compared to only three in 2009/10. Each of the 21 municipalities had developed an action plan to improve governance, covering areas such as supply chain management, asset management and internal controls. The audit outcomes were that seven municipalities had received disclaimers, three had qualified audits and 11 were unqualified (52%), four of which had clean audits. One of the disclaimer municipalities was Dr J S Moroka, in which a large volume of original records required for audit purposes had been lost in a building fire.
Of particular concern had been the large number of vacancies at the beginning of the term. COGTA was supporting municipalities to recruit chief financial officers (CFOs), and 14 were now in position. In some municipalities this meant that there had been a lack of monitoring and reconciliations had not been performed. In many instances, there had been a high number of consultants filling positions.
At a leadership level, the report found that skills levels were low and the incumbents were not suitably qualified. They also did not provide enough oversight. Clean audits had happened where there was strong leadership.
COGTA presented the steps that the department had taken to support improvements, including focussing on human resource management, information technology improvements and eliminating the misstatements of data. A timeline for COGTA support was presented, which included the development of comprehensive remedial action plans and readiness audits. Agreements had been reached with the groups of municipalities in each audit category to ensure they did not regress and were committed to improve results in the next audit.
Members asked questions on whether the financial improvements had been made at the expense of performance targets, mindful of the recent service level protests. They also asked about executive oversight, staff qualifications, the withholding of bonuses, staff retention, and skills transfers from consultants.
Mpumalanga Department of Cooperative Governance and Traditional Affairs
The Chairperson advised that apologies had been received from the Departments of Cooperative Governance and Traditional Affairs (COGTA) in the Eastern Cape and Limpopo. Therefore only the Mpumalanga Department of COGTA would make a presentation.
Mr David Mahlobo, Head of Department, Mpumalanga COGTA, advised that the MEC had sent his apologies for not attending. As the meeting was scheduled to last one hour, he would deal only with the key issues of the presentation.
Only two of the 21 district and local municipalities had failed to submit financial statements on time, but the audit of one of these had been completed for this report. In terms of clean audits, the province had made a slight improvement on the previous year, with four in 2010/11 compared to only three in 2009/10. Each municipality had developed an action plan to improve governance, covering areas such as supply chain management, asset management and internal controls.
The audit outcomes were that seven municipalities had received disclaimers, three had qualified audits and 11 were unqualified (52%), four of which had clean audits. One of the disclaimer municipalities was Dr J S Moroka, in which a large volume of original records required for audit purposes had been lost in a building fire.
Mr Mahlobo advised that a particular concern had been the large number of vacancies at the beginning of the term. COGTA was supporting municipalities to recruit chief financial officers (CFOs), and 14 were now in position. In some municipalities this meant that there had been a lack of monitoring and reconciliations had not been performed. In many instances, there had been a high number of consultants filling positions.
At a leadership level, the report found that skills levels were low and the incumbents were not suitably qualified. They also did not provide enough oversight, in particular during the submission of section 71 reports. Clean audits happened where there was strong leadership. Financial issues primarily reflected the misstatement of information and a lack of internal controls and record keeping. Mpumalanga was the first province to have established all their Municipal Public Accounts Committees (MPACs). Where these were functioning well, the municipality normally undertook an interim financial statement prior to the Auditor General’s (AG’s) visit. However, those municipalities without CFOs were not able to achieve this.
COGTA and the Provincial Treasury had supported the municipalities in developing remedial action plans and had met with all mayors and relevant bureaucrats to discuss these issues. COGTA had focussed on the three qualified and seven with disclaimers, to ensure that these municipalities were brought up to the level of the others. Action plans included provincial support on the ground to prepare the audit files prior to the AG’s visit.
The provincial interventions in the municipalities included tackling human resource management issues, such as addressing the high volumes of ‘acting’ roles, developing the competences of key staff and performance management. The second area of intervention was Information technology (IT). This included a number of IT systems that could not communicate with each other, a lack of IT governance, weaknesses in user account management and the need to ensure business continuity through planning for IT breakdowns. COGTA had worked with SITA (State Information Technology Agency) to support contingency planning within municipalities. The third area was around misstatements across all accountancy areas, including current assets, non-current assets, liabilities, revenue and expenditure. This had led to the qualifications for unauthorised, irregular or fruitless and wasteful expenditure.
All those municipalities with clean audits had agreed that they could not regress. Mr Mahlobo confirmed that in those four municipalities, the administration was stable and the oversight committees were functioning. In addition, all municipalities with unqualified audits had agreed that they would not regress to a qualified audit in future. Some would seek to achieve clean audits, but it was not expected that all would be able to reach this level within the current audit year.
Those with bad outcomes had had individual plans developed and readiness audits undertaken. Mr Mahlobo confirmed that these interventions might have been undertaken late in the year. It had also been agreed that during the auditing period no officials would take leave, and that there would be consequences for officials should supporting documents not be found. Bonuses would not be paid to officials if a qualification or disclaimer were received, including those in the provincial department. Annual financial statements would all be submitted on time and could not be withdrawn. Additionally, up to the audit period, all municipalities would focus on filling vacant positions with the support of COGTA.
COGTA had drawn up a timeline for supporting the audit process. During the period from 15 December 2012 to the 15 January 2013, COGTA would have a better idea of what needed to be done for the coming 2012/13 audit and would draw up comprehensive remedial support plans for implementation.
Mr Mahlobo concluded that the department was aware that the province was not doing well and confirmed that it could improve, provided there was strong leadership and administration. It was on track to improve performance from the current 48% negative audit outcome. He admitted that the province could not hope to achieve 100% clean audits so soon, but would aim for at least 50% clean and the remainder unqualified.
Mr J Gunda (Northern Cape, ID) asked whether the clean audits had been achieved at the expense of value-for-money and service delivery.
Mr A Matila (Gauteng, ANC) acknowledging that progress had been made, asked if they were sure it was due to the issues they were tackling.
Mr L Nzimande (KwaZulu-Natal, ANC) asked whether the IT improvements were more than just achieving compliance, but would also improve service delivery through developing registers and databases to manage service distribution more effectively. He suggested that a timeline for achieving improvements in IT would be welcome.
Mr Mahlobo replied that COGTA was integrating performance information into its financial measurements, to avoid any reduction in service delivery as a consequence of improving accountability and governance. COGTA was completing its section 47 report, which acknowledged service delivery protests. These were often in former homeland municipalities, due to a historic lack of infrastructure development. Disturbances were mainly water related, for example in Bushbuckridge and Chief Albert Luthuli. In Mbombela, the protests related to inequalities in the region and an infrastructure that had been developed for industrial water use rather than domestic supply. The province was therefore focussing strategic infrastructure plans on water and sanitation. There was a also a need to improve payment for supplies, including government departments. Many of the former homelands were unlikely to achieve full service delivery without national financial infrastructure support.
Mr Nzimande asked what powers MPACs (Municipal Public Accounts Committees) had to maintain oversight of the executive.
Mr Mahlobo assured the Committee that there was a strong oversight in the province and that the provincial treasury had received a clean audit. However, the separation of duties between local and provincial governments was a legislative grey area.
Mr D Joseph (Western Cape, DA) asked how improvements had been achieved in the supply chain management of municipal offices.
Mr Mahlobo replied that the department was providing support for supply chain and asset management improvements, including training for relevant committees.
Mr Joseph asked what had caused the municipal building to burn down in the Dr J S Moroka – whether it was due to service protests, and whether there was a data back up in place for all records in case of such incidents.
Mr D Bloem (Free State, COPE) asked whether anyone had been charged for causing the fire in Dr J S Moroka.
Mr Mahlobo replied that there was a forensic investigation underway and that the department could forward the police case number to the Committee. The fire had not been due to service delivery protests. There were back up copies of much of the information, but insubstantial original documentation had been lost, which could not be replaced with copies.
Mr Joseph asked whether the province could withhold bonuses of staff in poorly performing municipalities.
Mr Mahlobo replied that the law allowed the provincial government to withhold bonuses in cases of underperformance. This, however, did not impact on annual cost of living salary increases.
Mr Joseph asked whether compiling the comprehensive remedial action plans during 15 December 2012 and 15 January 2013 was realistic, given that this was generally a holiday period.
This question was not covered in the responses.
Mr Joseph questioned whether expecting consultants to transfer skills was realistic, as they were employed to complete a task, not improve the skills of staff.
Mr Mahlobo replied that consultants’ contracts included conditions for the transfer of skills. Contractors were often used where skills were lacking and therefore transfer was an integral part of their duty. However, this had not been well managed and in the past, the difficulty being that there had simply been too many vacancies and therefore no one in posts to learn the skills.
Mr V Manzini (Mpumalanga, DA) asked what had been done to remedy the situation of people in municipal positions, but without the necessary qualifications? A municipal manager in Dr Pixley Ka Isaka Seme had allegedly not been acting within the law. Had this manager been arrested and were there any other cases?
Mr Mahlobo replied that all relevant staff had undertaken competency-based interviews and that all new managers were now kept on a long probationary period. Municipalities undertook skills audits to implement training programmes, where staff could be trained to meet the competencies required for their roles.
Mr Mahlobo confirmed that many cases had been opened and in one year, 79 people had been fired. However arrests were being made only after three years, so although progress was being made, it was clearly too slow.
Mr Nzimande acknowledged that 57% of staff were now permanent, but asked for more detail on retention and turnover rates.
Mr Mahlobo replied that the retention rate had improved, and that municipalities were paying well.
Mr Mahlobo concluded that the department would want to present the comprehensive support plans to the Committee, as well as the performance and financial reports.
The Chairman thanked the department for their presentation.
The meeting was adjourned.
- PC Coop: 2010/11 Municipal Audit Outcomes in Local Government & action plans by Eastern Cape, Mpumalanga & Limpopo departments
- SC Coop: 2010/11 Municipal Audit Outcomes in Local Government & action plans by Eastern Cape, Mpumalanga & Limpopo departments
- SC Coop: 2010/11 Municipal Audit Outcomes in Local Government & action plans by Eastern Cape, Mpumalanga & Limpopo departments
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