Abstract:
This article posits that financial management systems that function well and that
have been developed based on collective international and national experience can
be an important deterrent to corruption in both the private and public sectors. The
various weaknesses identified in the Auditor-General’s and the National Treasury’s
recent reports are analysed in relation to municipalities and are examined in a
comparative overview which includes research that identifies key elements of
financial management essentials.
The article identifies and explores various interrelated steps, systems and models
that form the basis of solid financial management, as well as the basic elements
of the accountability systems and governance arrangements that are meant to
act as a shield against corrupt practices. These strategies focus on preventing
management fraud and fraudulent financial reporting as key elements to ensure
good financial management.
The Auditor-General’s 2012 report is used as a recent forensic report on major
financial mismanagement in South African municipalities to relate the conceptual
and theoretical framework with empirical manifestations of the corruption it aims
to combat.
