Limpopo Improved Municipal Audit

Limpopo Provincial Treasury appreciates improved municipal audit outcomes due to dedicated support and guidance from the department in line with the set legal mandates which need to be taken into consideration at all times. As a department, we remain hopeful that other municipalities will learn best practices from best performing municipalities and improvement will then be realized.

Evidently, the province managed to improve the audit outcomes from 18 qualifications to 10 qualified opinions with 15 unqualified outcomes during the previous audit cycle. We have again managed to maintain a clean audit opinion achieved during 2018/19 and this encourages us to continuously support and capacitate municipalities to effectively and efficiently discharge their constitutional obligations. We are working tirelessly to see further improvements in municipal audits within the province and to align such achievements with service delivery.

Coordination with other Stakeholders

Both LPT and CoGHSTA have a constitutional mandate to support and capacitate municipalities within the province in line with relevant legislations and applicable policy provisions. Most of our municipalities are experiencing financial, administrative and service delivery challenges and this requires a more focused intervention in terms of support mechanisms.

THE FOLLOWING IS THE SUMMARY OF SUPPORT OF THE LPT AND COGHSTA TO MUNICIPALITIES:

Revenue Management Support to Municipalities

As LPT, we support municipalities on revenue management related functions in accordance with applicable legislation. This is achieved through capacity building, planning, implementation and monitoring of revenue management processes. All municipalities are supported in the development and review of revenue related by-laws and policies annually. We conduct trainings on the reconciliation of the General Valuation Roll and the billing system and monitor implementation for accurate billing. Training is also facilitated in other revenue focused areas. All municipalities have revenue enhancement strategies, and these are assessed and monitored regularly.

We also support municipalities in the development of payment agreements and facilitate relations with creditors e.g., Eskom, Water Boards and other public institutions. LPT conducts municipal cash flow assessments monthly to determine the financial position of municipalities and advise accordingly. Municipalities with unfunded budgets, financial difficulties or placed under interventions are supported to develop and implement Financial Recovery Plans. Municipalities are also monitored and supported in the implementation of indigent policies to ensure that legible indigent customers have access to basic services.

Accounting and Reporting Support to Municipalities

LPT reviews accounting related policies and procedures to ensure compliance with relevant legislation. We provide monitoring and support to municipalities on Asset Management, Audit Action Plans, preparation of Annual Financial Statement’s (AFS’s), Audit progresses and Financial Health assessments.

We assess asset registers, asset management policies and procedures, and support municipalities in addressing identified gaps and findings by the Auditor-General of South Africa (AGSA). Assessment is done through support in resolving technical queries, participating in Audit Steering Committee meetings, participating in Audit Committee meetings and any other relevant municipal meetings in collaboration with other stakeholders. LPT determines the Financial Health of municipalities through assessment of investment, loan registers and provide feedback to municipalities. We also review loan applications, monitor and support municipalities with the submission of In-year reconciliations (Bank reconciliations, Debtor’s reconciliations, Creditors reconciliations).

Municipalities are supported in the development of audit process plans and implementation and are closely monitored. LPT reviews municipal draft AFS’s prior to submission to the AGSA, to ensure compliance to legislation and monitor/assist with the preparation of the audit file.

MEC: Seaparo Sekoati

LPT supports and ensures that all municipalities comply with AFS’ legislative submission requirements.

Guidance to Municipalities on Budget Matters

LPT provides guidance on the preparation of credible municipal budgets by municipalities. To this effect, we provide technical support and further conducting of budget engagement sessions with all municipalities in the province and advise through our assessment on both tabled and adopted budgets. We conduct regular monitoring of municipal budget implementation through assessment of s71 reports, midyear budget and performance assessment engagements sessions. All municipalities with unfunded budgets are supported to develop and implement funding plans.

Municipalities that did not spend all their conditional grant allocations are supported with the preparation of applications for roll over for consideration and approval by National Treasury. All municipalities in the province are transacting on mSCOA through our consistent support and monitoring through various forums facilitated by LPT.

Support on Governance and Supply Chain Management

Based on 2019/20 AGSA’s audit outcomes for municipalities in Limpopo Province, LPT noted an increase in Unauthorized, Irregular and Fruitless and Wasteful (UIFW) Expenditures. As a result, LPT engaged affected municipalities to develop UIFW reduction strategies to assist municipalities in the reduction of UIFW expenditures. Quarterly meetings are held with municipalities to monitor the implementation of the UIFW reduction strategies, with the top ten municipalities with the highest expenditure being closely monitored on a monthly basis.

Continuous training of Supply Chain Management regulations are provided to municipalities in the province. SCM policies are reviewed to assess compliance with the applicable legislations. Municipalities are supported in the development of procurement plans and these are monitored during implementation. Municipal Public Accounts Committees and Financial Misconduct Boards are supported and monitored on a quarterly basis.

Improvement and Anticipated Risks

From the accountability point of view, municipalities have improved their audit outcomes for 2019/20 financial year. It is anticipated that this improvement will be sustainable for all stakeholders if they continue to support municipalities and all matters raised in the previous audit are resolved in a sustainable manner including compliance with the necessary legislative requirements.