Implementing auditor-general annual recommendations in South African municipalities : a situational analysis

Abstract

IMPACT :

The authors explain why municipal capacity should be significantly improved for the successful implementation of audit recommendations by the Auditor-General of South Africa (AGSA). Municipalities need robust systems of financial delegation, oversight and internal controls. Such systems should make provision for record-keeping, financial risk assessments, processing and reconciling of financial transactions, regular, accurate, and complete financial and performance reports, as well as the reviewing and monitoring of compliance with applicable legislation. Audit action plans must be developed to outline key details. In addition, municipal councils should adopt a consequence management and accountability framework to enforce due diligence and compliance with council resolutions. Support mechanisms, such as disciplinary boards and municipal misconduct regulations, can add significant value in this regard. The lessons in this article have value beyond South Africa and particularly for senior local government officials, members of audit and risk committees, internal auditors, members of political oversight committees, and senior managers of national and provincial government overseeing municipal financial affairs.

This study is a situational analysis of municipal audit outcomes and key audit findings of the Auditor-General of South Africa (AGSA). It draws on desktop and document analyses, and an empirical survey conducted among randomly sampled local districts and metropolitan municipalities. It delves into the institutional layers within municipalities at governance and administrative levels, shedding light on the responsiveness, accountability, and measures taken to address audit findings. This article concludes with an exploration of remedial measures to best address the AGSA's findings, seeking to contribute to the development of effective solutions for municipalities to improve their financial accountability and responsiveness. As such, it contributes to the existing corpus of knowledge by providing a guide for municipalities to translate theoretical concepts of financial oversight into actionable steps.