Abstract:
This article examines the effect of governance on the degree to which clean audits
have been achieved in South African municipalities. Its pertinence lies in the
context of two endemic public management performance weaknesses, namely, the
elusive target set by the COGTA and Auditor-General to achieve clean audits in all
South African municipalities by 2014, and the ubiquitous service delivery failures
in South African municipalities. These failures are now widespread and apparently
negates the national goal of an inclusive socioeconomic development process for
the country. Thus, the article makes a contribution, by identifying cost-effective
measures for improved governance (and subsequent improved audit outcomes),
by addressing the seeming scarcity of empirical investigation into the effect of
governance on the achievement of clean audits. The methodological approach
employs a panel data study of audit performance of all municipalities in South
Africa hence, a quantitative approach – the panel data regression analysis, was
used to analyse the data The data comprises the Auditor- General of South Africa’s
(AGSA) consolidated annual municipal reports for the financial years 2009/10 to
2013/14 for the country’s nine provinces. The data was retrieved from the AGSA’s
archives of consolidated municipal audit reports. A panel data analysis gave a total
of 45 observations which were subjected to regression analysis. The statistical
findings show that quality of governance significantly affects the achievement of a
clean audit at a significance value of P < 0.02. This finding suggests that a declining effectiveness in governance may well have played the key role in derailing the
public sector’s intended journey to universal clean audits by 2014. In its conclusion
this article recognises the need to evaluate the specific effectiveness of governance
relative to the impact of the other variables that were understood to affect clean
audit, namely financial management and leadership. Furthermore, this article
identifies the major variables within governance that underlie and drive its key
position, in the hope of guiding the AGSA in directing resources most effectively.
