presentation to select committee on appropriations
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PRESENTATION TO SELECT COMMITTEE ON APPROPRIATIONS
16 OCTOBER 2012
PRESENTATION BY Cllr NG HLONGWANEEXECUTIVE MAYOR: EMFULENI LOCAL
MUNICIPALITY
2
CONTENTS
22 MUNICIPAL CASH FLOW FINANCIAL STATUS
33 SOURCE OF REVENUE,COLLECTION AND EXPENDITURE MANAGEMENT
66 COMPLIANCE MATTERS
44 GRANTS EXPENDITURE
88 AUDIT OUTCOMES AND ACTION PLANS
99 CHALLENGES,WAY-FORWARD AND PRIORITIES
55 MUNICIPAL BUDGETS
77 CURRENT ASSETS AND LIABILITIES
11 MUNICIPAL OVERVIEW
CONTEXT AND BACKGROUND
Municipal Assets Value = R 9 billionMunicipal Budget
2011/12 Financial Year = R 3.7 billion2012/13 Financial Year = R 4.5 billion
Municipal Jurisdiction( area size) = 987.45 Square KM’Water and Sanitation Coverage = 98%Electricity Coverage = 97%Portable Water Quality Compliance = 100%Waste Water Discharge Compliance = 97%Refuse Collection Coverage = 100%
3
Top 10 Challenges( institutional)
• Unemployment Rate = 45%
• Water and Sanitation Infrastructure Backlog = R10 billion
• Roads Infrastructure Backlog = R9 billion
• Electricity Backlog = R2 billion
• Payment Levels in Poor Areas = 3%
• Outstanding Debt = R2 billion
• Cash Flow – Unfavorable Status
4
Top 10 Challenges( institutional)
• Water Losses = R180 million Per Annum
• Electricity Losses = R20 million Per Annum
• Billing Functionality
5
Some Key Indicators
6
MUNICIPALITY GEOGRAPHIC AREA
MUNICIPAL BUDGET 2011/12
POPULATION % of NATIONA
L GVA
Buffalo City 2 527 km² R3.9 bn 880 000 2%
Mangaung 6 604 km² R4.0 bn 850 000 2%
Emfuleni 987 km² R3.7 bn 652 819 1.78%
Budget Year on Year
7
• Budget from 2003/04 to 2006/07 was not credible and reflected either a surplus or deficit• Growth in budget is noticed due to increase service delivery demands
Budget Year on Year
8
MUNICIPAL CASH FLOW STATUS
9
Cash Flow Status- Quarter ended September 2012
10
R R Bank opening Balance 13,797,520 Total Receipts 1,084,477,600
Receipts 780,064,498 Grants Equitable Share 248,952,000 Other Grants receipted and spent 55,461,102
Less Expenditure -1,207,746,079 Eskom 571,991,951 Rand Water 163,911,425 Personnel Costs 182,020,692 Other payables 289,822,012
Operating surplus/(Deficit) for the quarter -109,470,959 Overdraft Facility utilized 109,470,959
• Council raised R 150 million overdraft facility as a bridging finance during 2012/13 financial year. Included within the Expenditure, are accruals raised at year-end amounting to +/- R 300 million. Bulk services account to + 60% of expenditure incurred.
Eskom Impact (R)
11
• Eskom bill has a significant effect on the municipality’s cash flow•A R 150 million overdraft was raised as a bridging finance to address, among others, effect of Eskom bill
Performance on Electricity
12
Performance on Water
13
Financial Sustainability
14
• Managing cash flow, debtors’ collections, distribution losses on electricity and water and overall financial sustainability of the municipality
AUDITOR-GENERAL FINDINGS
PLANNED ACTION BY ELM
Stage
INTERNAL AUDIT
COMMENT
Distribution losses on water were incurred due to aging infrastructure, burst pipes etc.
Water loss reduction programme launched. Annual target of 2% water reduction has been set.
Implementation
Smart Metering procurement in progress
Procurement stage
ACTION PLAN
Financial Sustainability (Cont…)
Improving the debtors collection rateCash flow concerns due to debtors write offSocio economic factors affecting payment rates
15
ACTION PLAN
AUDITOR-GENERAL FINDINGS
PLANNED ACTION BY ELM
DUE DATE
INTERNAL AUDIT COMMENT
Managing cash flow, debtors’ collections
Appointment of debt collection agencies at an advanced stage.
June 2012
Restructuting of non performing portion of the debtors book is at an advanced stage.
Establishment of a Revenue Management Agency.
Appointment of the following Heads were done: Debt Management Customer Services
Operations
REVENUE,COLLECTIONS AND EXPENDITURE MANAGEMENT
16
STATEMENT OF FIN.. PERFORMANCE
17
• Included in the Budget is R 364 million for capital expenditure, for which, its spending pattern is not reflected as the expense, as it has been capitalized, disclosed in the following slide. Also the depreciation increased materially due to the Fixed Assets unbundling process (GRAP 17)
Cost Drivers
STATEMENT OF FINANCIAL PERFORMANCE (30 JUNE 2012)
Description Annual Budget (R) Actual (R) % Actual to Budget
YTD REVENUE Assessment Rates 364 497 441 351 966 028 97%Electricity Services 1 491 729 462 1 390 378 935 93%Water Services 553 766 019 492 337 050 89%Sewer Services 220 818 683 197 320 365 89%Refuse Services 98 916 159 96 346 276 97%Rent of Facilities & Equipment 9 442 544 11 439 141 121%Interest Earned – Outstanding Debtors 23 309 052 21 234 644 91%Total Billing 2 762 479 360 2 561 022 439 93%Other Income 1 012 197 109 998 871 858 99%Total Revenue 3 774 676 469 3 559 894 297 94% EXPENDITURE Personeel Cost 699 503 866 722 713 867 103%Remuneration - Councillors 30 960 598 25 133 151 81%Debt Impairment 293 420 256 314 129 108 107%Depreciation 129 684 958 732 772 994 565%Repairs And Maintenance 129 527 911 120 158 199 93%Interest Expense 10 246 139 19 106 887 186%Bulk Purchases Water 370 000 000 411 834 554 111%Bulk Purchases Elect 1 156 161 403 1 162 496 093 101%Contracted Services 88 917 389 83 289 231 94%
General Expenses 866 253 949 455 385 820 53%Capital Expenditure 364 369 940 Total Expenditure 3 774 676 469 4 047 019 904 107%Surplus/(Deficit) - (487 125 607)
CAPITAL SPENDINGS (2011/12 FINANCIAL YEAR)
18
• The under-spending of council funded projects was contributed by the cash-flow restrictions. Most of the projects were rolled over into 2012/13 financial years
Funding Budgeted ( R ) Expenditure ( R ) % Spent
MIG & Counter Funding Projects
156,248,360 144,227,937 92%MIG Projects (Allocation & Roll Over)
143,885,000 144,227,937 100.00%
Council Funded Projects 64,236,580 37,720,844 59.00%
Capital Budget Spending
364,369,940 326,176,718 76.29%
Revenue (2011/12 Financial year)
19
• The billed revenue on all services are on par with the budgeted billing for the current financial year, except for rental of facilities at 121%.
Expenditure (2011/2012 Financial Year)
20
• The realized expenditure is sitting at 12% above the realized revenue and 7% above the budget. Due to the revaluation process of the Fixed Assets (GRAP 17), our assets were re-stated at the net book value of R 13 billion. This led to an increase on Depreciation from anticipated R 130 million to R 733 million in 2011/12 financial year.
2011/12 Financial Year
GRANTS SPENDINGS
21
National Grants (2011/12 financial year)
22
Opening Balance
Total Receipts
Total Expenditure Surrendered
% Spent
Closing Balance
Restructuring Grant 18,249,475 0 0 18,249,475 0 0Equitable Share 0 539,842,000 539,842,000 0 100 0Financial Management Grant
750,000 8,750,000 8,750,000 750,000 100 0Regional Sewer Scheme Grant
-1,862,813 26,298,099 23,300,618 0 95 1,134,668National Electrification Grant 673,525 16,256,000 16,256,000 673,525 100 0Electricity Demand Site Management Grant 0 6,000,000 3,912,860 0 65 2,087,140Municipal Systems Improvement Grant
500,000 800,000 800,000 500,000 100 0DWAF Grant 1,096,474 0 165,990 0 2 930,484DACE Grant
728,627 500,000 0 0 0 1,228,627EPWP Grant 1,290,258 3,049,000 6,734,674 +100 -2,395,416Sedibeng Regional Sewer Scheme Grant
9,953,530 11,553,375 12,396,780 0 58 9,110,125
Municipal Infrastructure Grant 17,242,937 126,985,000 126,985,000 0 88 17,242,937 48,622,013 740,033,474 739,143,922 20,173,000 96 29,338,565
Provincial & District Grants (2011/12 Financial Year)
23
Opening Balance
Total Receipts
Total Expenditure Surrendered
% Spent
Closing Balance
Library Grant 2,802,216 7,200,000 7,206,589 0 72 2,795,627
HIV Aids Grant 37,346 524,160 561,506 0 100 0
Health Grant 68,239 0 68,239 0 100 0
Bontle - ke - Botho Grant 743,368 4,090 930 0 0 746,528
Ex- District Grant 2,704,127 0 0 0 0 2,704,127
Social Development Grant 5,102,498 9,000,000 14,102,498 0 100 0
Sports Grant 1,118,853 0 558,722 0 50 560,131
Debtors Book Project (ALOECAP) 0 2,300,000 2,080,048 0 90 219,952
Asset Management Project (GRAP 17) 0 1,800,000 1,800,000 0 100 0
Security services subsidy(evictions) 0 26,330,339 26,330,339 0 100 0
MSIG Sedibeng 50,000 0 0 0 50,000
12,626,647 47,158,589 52,708,871 0 88 7,076,365
MUNICIPAL BUDGET
24
Budget preparation process
Establishment of effective Budget Steering CommitteeApproval of the IDP and Budget Process Plan, highlighting:
o Key Stakeholderso Key deadlineso Consultation processes
Mid term budget and performance review-January 2012Adjustment budget 2011/12 February 2012Draft 2012/13 Multiyear Budget - March 2012Public participation process Final MTREF Budget adopted 28 May 2012
25
Subsequent Activities considered
Experienced Water losses in 2010/11Inflation hikes, guidelines from budget circularsIDP prioritiesInput costs v/s Output costs (Tariffs)Achieved collection rates True Cost of Service Delivery
Direct cost Indirect overhead cost
26
Tariff Modelling
Policy Shiftso Recognition of Indigents – Property value below R150 000o Free Basic Water – Only to Indigentso Equalisation of tariffs
Restructuring of Water Tariffs – Encourage water savingResidential Sewerage tariffs dependent on water consumption
27
Tariff Modelling- 2012/13 Fin... Year
Tariff structures approved by council together with Budget-May 2012Tariff Increases approved with the Budget were:
Property Rates – 10% Electricity – 13.3% Water – 21.6% (13.5% + 8.1%) Sewerage – 19.37% (13.5% + 70% of 8.1%) Refuse – 10% Sundry Tariffs – 10%
Eskom Tariff increase – 13.5%Rand Water Tariff increase – 13.5%
28
Tariff Modelling - WATER
Business - Restructuring of tariffs proposed - Watero Inclining block tariff (DBT) for watero IBT in compliance with Circular 58 and s10 of the Water Services Acto Circular 58 – prescribes IBTo S10 (2)(d) of the Water Services Act – tariffs should promote or achieve
water conservationo Tariffs cheaper for initial usage but higher with increased consumption
29
Tariffs – Business (Continue)
Restructuring of tariffs proposed - Sewerage Equalisation of tariffs
Due to Impact it – proposed to equalize in 2012/13 and move towards Water consumption based in 2013/14
Additional tariffs in respect of type of business to be included in 2012/13 – Fat Traps, etc.
30
Tariffs – Business (Continue)
Refuseo Rendered at a significant loss o Previously subsidised through other tariffso Breakeven tariff calculated at 18% increase
Electricity tariffo Nersa approved an average tariff increase of 13.3 %o Emfuleni pays 13.5% towards Eskom
31
Tariffs – Residential
Restructuring of tariffs proposed - Watero Inclining block tariff (IBT) for water, electricity, sewerageo IBT in compliance with Circular 58 and s10 of the Water Services Acto Circular 58 – prescribes IBTo S10 (2)(d) of the Water Services Act – tariffs should promote or achieve
water conservationo Tariffs cheaper for initial usage but higher with increased consumption
32
Tariffs – ResidentialRestructuring of tariffs proposed - Sewerage
o Waterborne Sewerage principle to be followedo Basic Plus Sewerage tariff (billing units) linked to 50% of Water
consumptionRefuse
o Rendered at a significant loss o Previously subsidized through other tariffso Breakeven tariff calculated at 18% increase
Electricity tariffo NERSA approved a average tariff increase of 13.3 %o Emfuleni pays 13.5% more towards Eskom
33
Tariff Structure - Residential
Water Tariff Structure Tariff increase per block (Incremental) Maximum Water consumption block – Currently 30kl Restructuring proposal (Tariff increments) Additional Blocks – 30kl-45kl and 45kl + Punitive tariff
Sewerage – Consideration of water based tariff Basic + 50% of water consumption
34
Revenue & Collections – Budget 2012/13
35
REVENUE BY SOURCEADJUSTMENT BUDGET
2011 / 2012 (R) BUDGET 2012 / 2013 (R) % OF BUDGET
Electricity Sales 1,298,781,712 1,489,734,764 33,0%
Grants 844,253,184 901,185,934 20,0%
Water Sales 553,766,019 695,224,834 15.4%
Assessment Rates 343,684,023 396,524,977 8,8%
Sewer 220,818,683 303,809,802 6.7%
Pre-paid Electricity 192,947,750 213,000,798 4,7%
Refuse Removal 98,916,159 125,222,157 2.8%
Other Income 169,859,395 315,865,423 7,0%
Tariff Charges Other 25,234,002 47,489,427 1.0%
Fines 26,415,543 32,399,049 0.7%
Total 3,774,676,469 4,520,457,165 100%
Expenditure –Budget 2012/13
36
ITEMADJUSTMENT BUDGET
2011 / 2012 (R)BUDGET 2012 / 2013
(R) % OF BUDGET
Employee Costs 699,503,868 693,341,946 15,3%Remuneration of Councilors 30,960,598 32,841,255 0,7%Depreciation and Asset Impairment 129,684,958 351,444,059 7,8%
Bulk Purchase – Electricity 115,616,1403 1,360,317,000 30,1%
Bulk Purchase – Water 370,000,000 380,918,643 8,4%
Provision for Doubtful Debts 293,420,256 596,271,005 13,2%
Contribution to CAPEX 364,369,940 367,488,750 8,1%
Repairs and Maintenance 158,301,955 141,545,790 3,1%
Other 572,273,491 596,288,617 13,2%
TOTAL 3,774,676469 4,520,457,165 100%
Key Expenditure Budget components
Bulk purchases 38.5 % Electricity 30.1 % Water 8.4 %
Personnel Costs 16 %Repairs and Maintenance 3.1 %Capital expenditure 8.1 %
Total 2012/13 MTREF BudgetR 4.5 billion
37
LEGISLATIVE COMPLIANCE
38
Compliance with Audit Processes & the Law
Municipal Structures ActSection 79 Establishment – (1) The Council has appointed a functional Audit Committee and MPAC for the effective and efficient performance of its functionalities.Audit Committee members appointed has requisite skills as follows:
Financial Accounting and Management Internal and External Audit Performance and Risk Management Engineering Legal and Governance
39(Final)
Compliance with Audit Processes & the Law (Cont)
Emfuleni Local Municipality is in the process to appoint an IT Specialist to serve as a member to further capacitate the Committee.Audit Committee and MPAC co-ordinate their efforts on oversight as per MFMA Circular 32 and COGTA and National Treasury Instructions.
40(Final)
Compliance with Audit Processes & the Law (Cont)
Municipal System Act
Section 45 – The results of the performance measurements are audited by Internal Audit in terms of section 41(1).
Internal audit is auditing 100% not on a SAMPLE basis as other municipalities, the reason for that is to reflect the total service delivery efforts of the municipality; it is the ONLY municipality which does this in the country.
The AG audited the performance measurements annually as required (part of OPCA).
41(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Systems ActSection 46 – The municipality has prepared a performance report which was subjected to IA and AG audits.Municipal Systems Act – Regulations 14(1)(a)(c)(i)The Municipality has developed and implemented mechanisms, systems and processes for auditing the results of performance measurements as part of its internal auditing process as already alluded to before.
42(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Systems Act – Regulations 14(1)(a)(c)(ii)The Internal Audit Department of Emfuleni Local Municipality submits quarterly reports to the Municipal Manager and Performance Audit CommitteeMunicipal Systems Act – Regulations14(2) (a)Emfuleni Local Municipality has appointed Performance Audit Committee which meets quarterly, reports to Mayoral Committee (Mayco) on issues of Performance, and in so doing keeps Mayco informed in that respect
43(Final)
Compliance with Audit Processes & Law (Cont)
The Performance Audit Committee reports to the Council on matters of Performance, three reports have already been submitted to Council for this financial year.
44(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act
121(i) Preparation and adoption of annual reports:The Annual Report for Emfuleni Local Municipality was prepared and adopted by Council.121(3)The Annual report Complied with Legislation required as per Section 121(3)(a) and (b). 122 Preparation of Financial statements: Emfuleni Local Municipality has compiled the
annual financial statements on the basis as required by this Section basis.
45(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)
123 Disclosure on intergovernmental and otherallocations
124 Disclosure of Interest concerning Councillors, Directors and Officials
125 Other compulsory disclosuresThe Annual Financial Statements of Emfuleni Local Municipality complied with these abovementioned Sections
46(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)
126 Submission and auditing of Annual Financial Statements The Annual Financial Statements of the Municipality was submitted within two months after the end of Financial Year to the Auditor-General for auditing purposes.
47(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)Section 62(1)(c)(ii) and 165(1)(a)
The municipality has established a functional internal audit department which have prepared a risk based annual audit plan as approved by the Audit Committee.
Section 165(1)(b) The Internal Audit department has continuously advised the Accounting Officer and
reported to the Audit Committee on the implementation of the plan in relation to internal controls, accounting procedures and practices, risk and risk management, performance, loss and compliance with other legislation.
48(Final)
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)
166 Audit Committee-166(a)The committee was established as already alluded.166(b) Audit Committee reviewed the AFS.166(c) Audit Committee responded to the Council on issues raised by AG.
49(Final)
Reporting and other compliance requirements
Compliance with reporting requirement MFMA compliance reporting timelines adherence
Other Compliance issues Establishment of Risk Management Framework and registers Performance management System Formulation of risk-based audit plans
50
CURRENT ASSETS AND LIABILITIES
51
Current Assets
ITEM2011/12
(Unaudited) 2010/11
Cash and cash equivalents 12,857,572 18,497,047
Trade and trade receivables from exchange transactions
237,843,335 255,423,565
Trade and other receivables from non-exchange transactions
139,166,698 44,585,250
Inventories 20,536,147 19,886,954
Investments 114,928,212 106,269,517
Value added tax receivable 71,033,304 21,649,624
TOTAL 596,365,268 466,311,957
52
Current Liabilities
ITEM 2011/12 (unaudited) 2010/11
Trade and other payables from exchange transactions
701,169,997 526,816,744
Unspent conditional grants and receipts 21,567,411 61,248,661
Borrowings 5,268,984 6,858,622
Finance lease liability 23,161,407 62,193,495
TOTAL 751,167,799 657,117,522
• Included in the Trade payables is the Eskom billing for R175 million (2011/12) and R 136 million (2010/11), Rand Water bill for portable water amounted to R 23 million (2011/12)•The municipality managed to settle the raised Overdraft facility amounting to R 90 million during 2011/12
53
Outstanding debtors June 2012
54
84% debt in
residential
• Goverment Debt in the Region of R44 million• Total Debt Stand at almost R2.7 billion (84% is Residential)
Outstanding Government Debt
55
NAME OF DEPT AMOUNT OUTSTANDING AS AT JUNE 2012GOV - EDUCATIONAL R 5,749,717.89 GOV - EDUCATIONAL RATES R 962,864.54 EDUCATIONAL (SECTION 21 SCHOOLS) R 2,994,929.25 EDUCATIONAL (SECTION 21 SCHOOLS) RATES R 100,166.38 HOSPITALS AND HEALTH R 10,100,069.93 HOSPITALS AND HEALTH RATES R 1,167,329.82 GOV - HOUSING R 2,354,086.49 GOV - HOUSING RATES R 1,363,365.86 POLICE R 924.72 S.A POST OFFICE R 21,968.11 S.A POST OFFICE RATES R 839.38 PROVINCIAL HOUSING R 532,611.13 PROVINCIAL HOUSING RATES R 394,039.77 GOV - PUBLIC WORKS NATIONAL R 233,375.07 GOV - PUBLIC WORKS NATIONAL RATES R 2,347,307.08 GOV - PUBLIC WORKS PROVINCIAL R 11,314,035.10 GOV - PUBLIC WORKS PROVINCIAL RATES R 3,428,035.26 GOV - ROADS R 39,629.32 GOV - ROADS RATES R 21,907.90 GOV - TELKOM R 4,856.92 GOV - TELKOM RATES R 8,351.83
Grand total R 44,179,411.75
Risk ManagementRisk Management
56
ELM Fully functional Risk Management, Anti-Fraud & Anti-Corruption Committee
Quaterly meetings are held and report is presented to Audit Comm and Council
Risk Management represented at SMT level through the CRO being appointed on 15/10/2011
Risk Management is aligned to Strategic Planning through the IDP, whereby strategic & high level risks are identified
A Risk Management register has been developed ans approved by the Audit Committee and Council
Whistle blowing policy is in placeA reviewed Risk Management Framework & Strategy has been approved
by AC and RMAAC & is ready for next Council meeting for approvalRisk matury has improved from 3 to 4.8 maturity level (NT assesment)
Top 10 Risks of ELMTop 10 Risks of ELM
57
Risk Ref ELM Strategic Objective
Risk Description Root Cause Consequences Risk Category
Risk Priority
MM.HL.01
Viable and sustainable municipal government
Inadequate Leadership Sustainability (Lack of Continuity at Senior Management)
Senior Manager contracts l imited to 5 years; lack of retention strategies;
Lack of continuity in terms of organisational direction; Lack of accountability; Organisatinal instabil ity- new management recreating the wheel;
Strategic Risk
High
MM.HL.02
Viable and sustainable municipal government
Diminishing Revenue Base (Poor Cash Flow)
High Unemployment rates; Increasing Debtors Book; Ageing Infrastructure; Lack of Urban renewal;
Inability to adequately sustain operations; Inability to carry out service delivery effectively and effi ciently;
Financial Risk
High
HIGH LEVEL ORGANISATIONAL RISKS
Top 10 Risks of ELM (Cont…)Top 10 Risks of ELM (Cont…)
58
Risk Ref ELM Strategic Objective
Risk Description Root Cause Consequences Risk Category
Risk Priority
MM.HL.03
Accountable and clean municipal government
Lack of Clear Predetermined Performance Criteria.
Key Performance indicators not SMART (Specific, Measurable, Achievable, Relevant & Time-bound); Lack of agreed upon pre-determined performance outputs; Lack of assessment criteria for Performance measurement in Senior Management Contracts;
Miss-alignment between Organisational Performance and Individual/Management Performance; Inability to adequately and precisely determine levels of performance; Under accounting of good performance; Inability to correct organisational deficiencies;
Strategic Risk
High
MM.HL.04
Effective and efficient municipal government
Mis-alignment of business functions and delegations of authority;
Lack of clarification of roles and responsibilities and required level of authority; Poorly designed organisational structure (disfunctional reporting lines);
Failure to make timely decisions; Loss of opportunities; Delayed service delivery; Strategic
RiskHigh
HIGH LEVEL ORGANISATIONAL RISKS
Top 10 Risks of ELM (Cont…)Top 10 Risks of ELM (Cont…)
59
Risk Ref ELM Strategic Objective
Risk Description Root Cause Consequences Risk Category
Risk Priority
MM.HL.05
Quality rendered, accessible, sustainable and reliable municipal services
Ageing Municipal infrastructurePoor collection rates; Lack of maintenance and maitenance plans; Inadequate Captial Budgeting; Shortage of skil led technical staff; Inadequate funding of Capital budget on own funds;
High electricity and water distribution losses; Loss of revenue; Poor service delivery; Costly provision of basic services (high municipal tariffs);
Service Delivery Risk
High
MM.HL.06
Effective and efficient municipal government
Lack of documented procedures, controls and processes
Management avoidance; Negative perceptions on limitations placed by controls; Management need to override controls (easier if not in place);
Opportunity for fraud and corruption; mismanagement of funds and missuse of assets; Non-accountability by managers in enforcing controls and rules; Inability to successfully hold employees accountable and to institute disciplinary actions where no controls are placed and well communicated;
Operational Risk
High
HIGH LEVEL ORGANISATIONAL RISKS
Top 10 Risks of ELM (Cont…)Top 10 Risks of ELM (Cont…)
60
Risk Ref ELM Strategic Objective
Risk Description Root Cause Consequences Risk Category
Risk Priority
MM.HL.07
Effective and efficient municipal government
Weak Procurement Processes
Shortage of Staff; Cashflow Constratints; Lack of adequate controls; Lack of organisation-wide education and training on SCM issues;
Delays in processing of orders; Non-compliance with SCM policy and legislation; Delayed/Poor Service Delivery; Fraud & Corruption; Procurement via deviations
Procurement Risk
High
MM.HL.08
Viable and sustainable municipal government
Loss of Key Personnel Misplacement of qualified and/or experienced employees (Missalignment of Employee Skil ls with assigned job function); Lack of advancement opportunities/succession planning; Lack of performance recognition and reward; Lack of on-the job/off-the job training and continued education;
Brain drain; Reduced productivity; Poor service delivery; Low staff morale;
Human Resource Risk
High
HIGH LEVEL ORGANISATIONAL RISKS
Top 10 Risks of ELM (Cont…)Top 10 Risks of ELM (Cont…)
61
Risk Ref ELM Strategic Objective
Risk Description Root Cause Consequences Risk Category
Risk Priority
MM.HL.09
Effective and efficient municipal government
Non-compliance with rules and regulations (contravention of Acts).
Poor planning and scheduling;
Penalties; Imprisonment; Withholding of funds; Financial loss/Irregular/Fruitless/ Wasteful expenditure,
Compliance/ Legislative Risk
High
MM.HL.10
Effective and efficient municipal government
Poor Access Control and Safeguarding of Municipal Assets
Lack of Security Management Systems; Inadequate funding for security controls; Lack of application of policies and controls in place; Lack of accountability over asset management by Departmental Managers; Lack of documented controls for staff usage;
Theft and vandalism of municipal property; Financial Loss; Endangerment of employees;
Security Risk High
HIGH LEVEL ORGANISATIONAL RISKS
Risk Management (Cont…)Risk Management (Cont…)
62
A Risk-based Internal Audit Plan was developed determining high risk areas of ELM based on the risk registers
Operational risks are identified through the SDBIP’s & assessed quarterly and reported to Audigt Commitee and Council
Risk Champions has been appointed for each cluster to monitor and report on each cluster risks
IT Risks were identified and Action Plans are in place to remedy some risks which include: Overall IT Assessment (hardware and software) Disaster Recovery Plan Business Continuity Plan IT Governance Framework & Control IT Policies & Procedures
AUDIT MATTERS
63
Audit Report
Audit Opinion:
2006/2007 – Disclaimer2007/2008 – Disclaimer2008/2009 – Qualification2009/2010 – Qualification2010/2011 – Qualification
Basis of Qualification 2010/2011:
Property, plant and equipment Valuation of Property, Plant and Equipment (PPE)
Statement of changes in net assets 2007/08 misstatements of service charges and employee costs that affects
the 2010/11 accumulated surplus/deficit64
Audit Report (Cont…)
Matters of Emphasis:
Significant uncertainties - Civil matters Restatement of corresponding figures - GRAP 17 implementation Material losses - Water 51% and Electricity 11% Material Impairments – Irrecoverable debt
SCM Deviations: 20 deviations due to urgency. 12 Irregularities reported of providers in service of the state.
65
Status of Audit Action Plan for 2010/2011
Appointment of same service provider to finalize GRAP 17 implementation.
Establishment of OPCA steering Committee (Senior Management Team)
Action Plan-Addressing Audit findings 2010/2011
Quarterly Internal Control assessments(dash board reports) –AG
OPCA progress report presented quarterly to Audit Committee (CAE), MAYCO and Council (by Chairperson of Audit Comm)
66
67
SUMMARY OF FINDING!!
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
68
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewin
g Remarks
N/A1. Infrastructure assets- No supporting documents for cost recorded on the financialstatements
Financial Services/Infrastru
cture Planning and Asset
Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
2. Information not submittedFinancial
Services/Infrastructure Planning
and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/A
The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
3. Assets incorrectly valuedFinancial
Services/Infrastructure Planning
and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/A
The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
4. Newly identified assetsFinancial
Services/Infrastructure Planning
and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/A
The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
69
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A5. Assets recorded at incorrect amount Financial
Services/Infrastructure Planning and
Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/A The audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
6. Understatement of depreciation Financial Services/Infrastructu
re Planning and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
7. Assessment of Impairment for assets Financial
Services/Infrastructure Planning and
Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
8. Assets not considered for write off Financial
Services/Infrastructure Planning and
Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
9. Assets not bar-coded on the asset register Financial
Services/Infrastructure Planning and
Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
10. Valuation of newly identified assets- differences on supporting documents
Financial Services/Infrastructu
re Planning and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
11. Valuation methods for assets Financial Services/Infrastructu
re Planning and Asset Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
70
Audit Findings€ Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remarks
N/A12. Asset Register not GRAP Compliant Financial
Services/Infrastructure Planning and Asset
Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
13. Assessment of residual values Financial Services/Infrastructure Planning and Asset
Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
14. Impairment of transport assets
Financial Services
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
15. Valuation of newly identified assets Financial
Services/Infrastructure Planning and Asset
Management
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
16. Intangible assets- Classification
Financial Services
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
17. Overstatement of landfill site
Financial Services
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
18. Post balance sheet-events after reporting date
Financial Services
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG.
Tsietsi Rafube Nil Nil Nil The audit finding was resolved during the AG audit process. Portfolio of evidence was provided and verified.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
71
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewing Remarks
N/A19. The specifications were not approved by the accounting officer prior to publication of the invitation of bids.
Financial Services
Supply Chain Management functions have been decentralized and different clusters have delegated powers in terms of section 8 of SCM policy were by the Bid Specification Committee get appointed by the Accounting Officer and Bid Specification Committee is delegated to draft the specification and other requirements including approving and determining advertising methods.
Thabo Thwala Nil Nil Nil
The audit finding was resolved. An approved letter of delegation authority by the Accounting Officer was provided for as Portfolio of evidence was verified.
20. Registered address of the contractors is different to the one disclosed in the biddocumentation Financial Services
Bid Document (MBD 4 & MBD 8) requires the bidder to indicate the address where the business is operating and also declarations. The bidder is required to include Municipal Account or lease agreement to indicate were the business is operating.
Thabo Thwala Nil Nil Nil Resolved
21. Register of bids is not published on the municipality website Financial Services The awarded bids will be
published on the website Thabo Thwala Nit Nil Nil
The audit finding was resolved. Printout from Website was provided as Portfolio of Evidence and Verified.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
72
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewing Remark
N/A
22. Non compliance with Section 32(2) of the MFMA
Municipal Manager
Irregular or fruitless and wasteful expenditure Register will be developed and monitored by delegated personnel (CFO) and feedback will be provided on a quarterly basis.
ALL DMM
Nil Nil Nil
Irregular or Fruitless and Wasteful expenditure Register was developed and submitted to the relevant management, monthly monitoring and evaluation process will be implemented with effect from 1st July 2012.Furthermore it is recommended that MFMA 32(2) must observe at all times in respect of unauthorized, irregular or fruitless and wasteful expenditure.
23. Suppliers not on the database
Financial Services
SCM department encourage suppliers to register on the data base and also our website have database forms were suppliers can print and submit to our offices during working hours
Thabo Thwala Nil Nil Nil N/A Management did not agreed with the AG audit finding.
24. Operating expenditure -Transactions recorded in incorrect period Financial Services
Year End procedures(SOP) will be work shopped to the Creditors personnel by Mid June
Derrick Maaroganye Nil Nil Nil N/A
Creditors list will be ready on the 25 July 2012. Therefore this finding will be subjected to AG processes.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
73
Audit Findings Cluster Action Plan TakenEmployee in charge
ResolvedPartially Resolved
Not Resolved
Not Applicable for Reviewing Remarks
N/A25. Understatement and Overstatement of Creditors Listings
Financial Services
SCM is supposed to complete GRN first to enable the fin system to accrue automatically. Year-end procedures to be followed up by SCM. Inter-departmental communication channels with be enhanced and regular strategic meetings with SCM will be held going forward
Derrick Maaroganye Nil Nil Nil N/A
Creditors list will be ready on the 25 July 2012. Therefore finding will be subjected to AG processes.
26. Expenditure-Information not submitted for audit
Financial Services
Documents were misfiled. An investigation of root causes is undertaken and proper record keeping is in place to prevent recurrence of such events.
Derrick Maaroganye Nil Nil Nil
The finding was resolved, Documents selected from the Register was duly filed and were verified.
27. Predetermined objectives No evidence that IDP and budget are aligned
Municipal Manager/Performance Management System
Budget Sheets SA4, SA5 and SA6 which reconcile the budgeted amounts to the strategic objectives in the IDP will be completed and submitted with the final budget for approval.
Budget Manager
Nil Nil Nil
Partially resolved, the core strategic objectives are reflected in the IDP2011/12 and Budget (SA4, SA5 and SA6) as aligned and verification was done. Further verification will be subjected to AG processes.
Communicate coding convention with Budget Office and IPAM IDP Manager
Budget Office to include IDP codes into Budget Budget Manager
28. IDP does not include core components
Municipal Manager/Performance Management System
MSA determines 9 core components for the IDP. Two were not included - disaster management plan, and financial plan (7/9=78%)
Nil Nil Nil
The audit finding partially resolved, Disaster Management Plan was provided as portfolio of evidence however the financial plan is still in a draft.
Develop disaster management plan Manager Public Safety
Submit disaster management plan Manager Public Safety
Develop financial plan Manager BudgetSubmit financial plan Manager Budget
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
74
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewing Remarks
N/A29. KPI's and targets not set for all the core strategies
Municipal Manager/Performance Management
System
The 2011/12 IDP and OSDBIP, as amended, addressed and resolved this finding
Performance Specialist and IDP Manager Nil Nil Nil
The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified
30. IDP does not include general KPI's as per regulation requirements
Municipal Manager/Performance Management
System
The 2011/12 IDP, as amended, addressed and resolved this finding
Performance Specialist and IDP Manager Nil Nil Nil
The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified.
31. KPI's and targets are not well-defined and verifiable
Municipal Manager/Performance Management
System
The 2011/12 IDP and OSDBIP, as amended, addressed and resolved this finding
Performance Specialist and IDP Manager Nil Nil Nil
The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified.
32. IDP not aligned to the SDBIP
Municipal Manager/Performance Management
System
The 2011/12 IDP and OSDBIP, as amended, addressed and resolved this finding
Performance Specialist and IDP Manager Nil Nil Nil
The audit finding was resolved. Copy of Council Resolution was provided as Portfolio of evidence and was verified.
22A. IDP not aligned to the annual performance report
Municipal Manager/Performance Management
System
The 2011/12 IDP and OSDBIP, as amended, partially addressed and resolved this finding
Performance Specialist and IDP Manager
Nil Nil Nil N/A Audit finding will form part of AG processes
33. Lack of performance management system for predetermined objectives as per the IDP
Municipal Manager/Performance Management
System
Drafting the 2011/12 performance report Specialist PM Nil Nil Nil N/A Audit finding will form part of
AG processes
34. Targets in the performance contracts are not based on KPI's in the IDP.
Municipal Manager/Performance Management
System
The creation and commissioning of the M & E solution for the 2011/12 OSDBIP addressed and resolved this matter
Nil Nil Nil
The finding was resolved. Performance of section 56 employees is aligned with SDBIP and was verified.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
75
Test Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewing Remark
N/A
35. Annual performance report is not prepared in terms of Municipal Systems Act S46
Municipal Manager/Performance Management
System
Annual performance report must reflect comparative performance information of previous reporting period
Nil Nil Nil N/A Audit finding will form part of AG processes
Determine existence of comparative performance data from 2010/11 reporting period
Specialist PM
Determine performance data gap analysis Specialist PM
Report on performance data gap analysis Specialist PM
36. Annual performance report not supported by evidence
Municipal Manager/Performance Management
System
Annual performance report is based on Q4 OSDBIP assessment with PoE
Specialist PM Nil Nil Nil N/A Audit finding will form part of AG processes
37. The prescribed process to amend the IDP was not followed.
Municipal Manager/Performance Management
System
Deficiency: not properly advertised and SDM not properly consulted
IDP Manager
Nil Nil Nil
The audit finding was resolved. Advert and Letter to Sedibeng was provided as portfolio of evidence and verification was done.
2011/12 IDP amendment was properly advertised and SDM formally consulted
IDP Manager
38. Lack of community involvement in the setting of KPI's, targets and the performance management process
Municipal Manager/Performance Management
System
KPIs and targets of Basic Services and IPAM and EDP to be communicated during public participation process
Specialist PM Nil Nil Nil N/A Audit finding will form part of AG processes
39. Cash and cash equivalents-None compliance with the Act Financial Services
A letter stipulating banking details of the Municipality will be compiled and submitted to AG and Dept of Finance.
Tsietsi Rafube Nil Nil Nil
Resolved, Letter stipulating banking details of the municipality was provided as portfolio of evidence
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
76
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing
Remark
N/A
40. Debt management not effective
Financial Services
C. Review Credit Control and Debt Collection Policy and By-laws
Debt Manager Nil Nil Nil N/A Management did not agreed with the AG audit finding.
D. Indigent process1. Write off of arrears prior to 2011/2012 financial year2. Write off of arrears in abeyance on a monthly basis7. Finalization of Legal agreements8. Report to Council for approval of process
41. Differences between grant amount on the financial statements and the amount on the trial balance Financial
Services
Grants Management Committee to be established to ensure among others the correctness of grant amounts on a monthly basis.
Dobe Mokgethi Nil Nil Nil
The audit finding is partially resolved. Grants Reconciliation from July 2011 to May 2012 was provided as portfolio of evidence. Review of completeness and accuracy of Trial balance will be performed by CFO to ensure that the AFS agreed to the trial balance.
42. Information not provided for Clearance Certificates
Financial Services
The clearance certificate costs are paid directly into applicable vote number. These payments are done when a bank guarantee is received for the capital amount payable for clearance certificate. The current receipting system does not generate the property description on the direct payment.
Sam Mokoena/Laura Schmidt
Nil Nil Nil
Finding was resolved. Clearance Certificate Register was established. A sample was selected and the requested portfolio of evidence was provided to support the Clearance Certificate Register.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
77
Audit Findings Cluster Action Plan TakenEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing
Remarks
N/A43. Incorrect and incomplete calculation of VAT Financial
Services
1. Calculate the VAT apportionment rate at the end of June 2012 and affect the recalculated rate from the 1st of July 2012. 2. To run a report on all transactions zero rated, i. o.t find transactions which VAT was mistakenly not calculated.
Tsietsi Rafube Nil Nil Nil N/AManagement has appointed Service Provider to address the matter raised by Auditor General.
44. Incomplete disclosure of fruitless and wasteful expenditure Financial
Services
Post dated payments control for third parties payments is in place on Business Integration system (ABSA) on the 7th of each month.
Derrick Maaroganye Nil Nil Nil N/A
Fruitless and wasteful register was developed the monthly monitoring and evaluation will be effected from 1st July 2012/13.This finding will form part of AG processes.
45. Non compliance with Section 65(2)(e) Financial
Services
It is an on-going issue institutional challenge. First-in-first out paid principle will be enhanced on tax invoice receipt.
Derrick Maaroganye Nil Nil Nil N/A
The audit findings may not be resolved due to the financial constrains
46. Information not provided for audit - Grant Expenditure
Financial Services
Documents were misfiled. Investigations of root causes are undertaken and proper record keeping is in place to prevent recurrence of such events.
Derrick Maaroganye Nil Nil Nil
The finding was resolved selected sample was performed.
47. Some municipal councilors did not declare their interest
Municipal Manager
Register of Declaration of interest was developed and were issued on every Council meeting
Manager: Speaker Nil Nil Nil
Not all Councillorship and Personnel declare their interest.
48. Differences in amount disclosed in the financial statement and invoices Financial
Services
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG.
Tsietsi Rafube Nil Nil Nil The audit finding was resolved during the audit. Audit finding will form part of AG processes
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
78
Audit Findings Cluster Action Plan TakenEmployee in
charge
Resolved
Partially Resolved
Not Resolved
Not Applicabl
e for Reviewin
g Remarks
N/A49. Incomplete disclosure of Environmental Rehabilitation provisions
Financial Services
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG.
Tsietsi Rafube Nil Nil Nil
The audit finding was resolved during the audit. Audit finding will form part of AG processes
50. Difference between Venus and Pay Day
Financial Services
Reconciliation of salaries suspense control account on monthly basis including review and supervision i.o.t prevents the re- occurrence of variances.
Derrick Maaroganye Nil Nil Nil
The funding is partially resolved, Currently service provider has been appointed to address the reconciliation between Venus and Payday System
Total 51 16 6 0 29 Percentage 73% 27% 0%
Number of audit findings remaining for retesting. 0
Percentage 0%
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
79
Audit Finding Action Plan Taken Cluster/DepartmentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A51. Bank account balances not properly disclosed
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG.
Financial Services Tsietsi Rafube Nil Nil Nil
The audit finding was resolved during the audit. Audit finding will form part of AG processes
52. Control environment: Shortcomings with regards to audit committee
Finding was resolved, Clause was included in the Reviewed Audit Committee Charter.
Internal Audit JS Masite Nil Nil Nil
The audit finding was resolved; the relevant clause was included in the charter.
53. Risk assessment: Implementations of internal audit findings
The finding was resolved. Internal Audit Js Masite Nil Nil Nil The audit finding was resolved.
54. Control environment: Performance of deputy municipal managers not monitored
Monitoring and evaluation of performance is done on a quarterly basis. 1st Q informal , half yearly
Municipal Manager/Performance Management System
Henre de Hart Nil Nil Nil
Half yearly assessment was conducted; however there is one senior manager performance assessment conducted still outstanding however, management has put process is in place to finalize the performance assessments of all senior managers.
55. Control environment: Weakness pertaining to preventative measures on environmentalfactors affecting the municipality
The Environmental By-Laws are at the 3rd Draft and the ELM is assisted by Sedibeng and DEA. The target date for submission to ELM Legal Department is 31 August 2012. The report regarding the Environmental Plan of Action will be resubmitted to the Sec. 80 Committee and thereafter to Mayor and Council. Should be approved by 30 June 2012. Implementation will follow approval subject to funding. All the other matters raised in the Management Letter are subject to funding. The indications are that nothing will be approved for the 2012/13 financial year.
Public SafetyNnete Makhubo and Benny Mhlanga
Nil Nil Nil
The audit finding is partially resolved. Draft Air Quality Management By law, Climate Change Tools and draft Environment education and awareness strategy and action plan were provided as portfolio of evidence.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
80
Audit Finding Action Plan TakenCluster/
DepartmentEmployee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remarks
N/A56. Control environment: Remuneration policy outdated
Review the salary scales for 20072008 and replace them with current salary percentage
Corporate Services Mr. Vincent Phalange Nil Nil Nil
The audit finding is partially resolved. Management will have an addendum to the policy to address the AG finding
57. Monthly budget statements not placed on the municipality's website
The Manager: Communications will be engaged in writing and the monthly budget statements will be placed on the website from February 2012.
Financial Services Doe Mokgethi Nil Nil Nil
The audit finding was resolved. Print out from Emfuleni Local Municipality website was provided as Portfolio of evidence verification was conducted.
58. Monthly budget statements do not include variances and projections for the remainder of the year
1. Monthly statements to be completed on the new template (C-Schedule). 2. Comments on material variances to solicited and recorded in the template.
Financial ServicesSenior Management Team
Nil Nil Nil
The finding is partially Resolved. Template of C schedule was introduced with effect from January 2012, explanation of variance and corrective action was given, starting from May 2012. Furthermore management to ensure that the explanation for material variance and corrective actions are submitted to Budget so as to comply with Section 71 of MFMA.
59. Non compliance with section MFMA 62(1) (d).
Irregular or fruitless and wastefulexpenditure Register was developed and monitored by delegated personnel (CFO) and feedback is provided on the quarterly bases.
Financial ServicesSenior Management Team
Nil Nil Nil
The Irregular or Fruitless and Wasteful expenditure Register was develop effective date for monthly monitoring and evaluation will is 1st July 2012.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
81
Audit Finding Action Plan Taken Cluster/DepartmentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remarks
N/A60. Fixed assets: No evidence obtained of periodic review of asset register
A Consultants (PWC) has being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Financial Services Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
61. Unidentified library books during physical verification of library books
A Consultants (PWC) has being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Financial Services Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
62. Expenditure: Contracts not available for inspection
The invoice will be submitted to Internal Audit Basic Services Manager Nil Nil Nil
The audit finding was resolved. The invoice was submitted to internal audit for verification which was conducted.
63. Amount on the invoice does not agree to the amount as per General Ledger
Invoices are adjusted by user depts. for CREDITOR'S section to effect payment. A letter from supplier confirming the changes on the invoice will have to be attached before processing pmt.
Financial Services Derrick Maaroganye Nil Nil Nil N/A
Audit finding will form part of AG processes
64. The final award of above R5 million may only be sub delegated only to the Chief Financial Officer
Supply Chain Management functions have been decentralized and different clusters have delegated powers in terms of SCM policy. Adherence to SCM Policy will be encouraged. In terms of section 8 (7.3), The Accounting Officer or delegate may review and reconstitute the members of the Bid Adjudication Committee periodically.
Financial Services Thabo Thwala Nil Nil Nil N/A Will be subjected to AG process.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
82
Audit Finding Action Plan Taken Cluster/Department Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remarks
N/A65. Non Compliance with Division of Revenue Act regarding the reporting of unspentconditional grants
Grants Management Committee to be established to ensure among others the correctness of grant amounts on a monthly basis. This will enable the correct reporting of grants at the end of the financial year.
Financial Services Dobe Mokgethi Nil Nil Nil N/A
1. Reconciliation of Grants were performed up to May 2012 2. Reconciliations up to June 2012 will be performed and submitted to the grants committee once the financial system is running. (Year end processes are in progress) 3. An application for all unspent grants to be rolled over into the 2012 / 2013 financial year will then be made to the National treasureAudit finding will be form part of AG processes.
66. Trade Payables: Overstatement of Midvale Local Municipality liability
Creditor's sec didn't have all the invoices as Midvale at the time of request. The matter was resolved with the inter-council indebtedness account reconciling. The department will vet recons prior submission of info for AFS preparation.
Financial Services Derrick Maaroganye Nil Nil Nil
The audit finding was resolved. The copy of the invoices and payments were provided as portfolio of evidence and were verified.
67. Non-disclosure of Operating Leases
Ensure full compliance with GRAP 13. The excise can only be performed during the compilation of 2011/12 AFS
Financial Services Tsietsi Rafube Nil Nil Nil N/A Audit finding will form part of AG processes
68. Budget is not based on the development priorities and targets
Tables SA4 to SA6 in the annual budget reconcile the strategic objectives in the IDP to the Budget. The tables indicate the funding for all strategic objectives as per the IDP. The Schedule will be completed again in the 2012 / 13 financial year and will be verified for correctness.
Financial Services Dobe Mokgethi Nil Nil Nil
The finding was resolved, SA4 to SA6 which reflect how strategic objectives are funded by the budget was completed and that was approved by Council. Portfolio of evidence was provided
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
83
Audit Finding Action Plan TakenCluster/
Department
Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewin
gRemark
N/A69. Monthly budget statements not submitted in terms of S71 of MFMA
S 71 reports have been submitted on a monthly basis. Starting January 2012 both the old formats as well as the format prescribed by the Municipal Budget and Reporting Regulations will be submitted to the National Treasury. Strict measures will be implemented to ensure that these reports will continue being submitted on a monthly basis.
Financial Services Dobe Mokgethi Nil Nil Nil
The audit finding was resolved. Copies of S71 report were provided as Portfolio of evidence (Letter from Provincial Treasury that outline the information that was supported).
70. Unauthorized expenditure Transfer of amounts to relevant votes on a monthly basis to ensure that votes and sub-votes are not overspent.
Financial Services Dobe Mokgethi Nil Nil Nil N/A Audit finding will form part of AG Processes.
71. Incorrect allocation of the provision amounts
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the as will be undertaken before the submission to AG.
Financial Services Tsietsi Rafube Nil Nil Nil
The audit finding was resolved during the audit and verification will be performed after tabling of Annual Report.
72. Deposit register not reconciled to the General Ledger
The deposit register is updated daily as new leases or vacations are received and Reconciliation was perform on the monthly basic
Financial ServicesSam Mokoena/Gawie Nil Nil Nil
The finding was resolved and verification was conducted.
73. Vacant land charged refuse
It is the basis of the valuation and the technical indication as (VL) that gives the status of the property as improved.
Financial ServicesSam Mokoena/Shakes
Nil Nil Nil N/A
The finding still not resolved, Management should review Rates Policy so as to address the tariff of Vacant land charged refuse.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
84
Audit Finding Action Plan TakenCluster/
DepartmentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicabl
e for Reviewin
g Remark
N/A74. Duplication in valuation roll Properties within the jurisdiction
which are registered appear on the valuation roll. In community of property, both names will appear and only one account will be generated on the billing system.
Financial Services Sam Mokoena/Laura Nil Nil Nil N/A Audit finding will form
part of AG processes.
75. Meters in the upload file not linked to any meter number in the transaction file
Errors corrected when picked up on the deviation report Financial Services Sam
Mokoena/Nerina Nil Nil Nil N/A Audit finding will form part of AG processes.
76. Difference in readings as per upload file and the transaction file. Deviation report and test readings
done monthly. Financial Services Sam Mokoena/Nerina Nil Nil Nil N/A Audit finding will form
part of AG processes.
77. Disclosure for Property, Plant and Equipment
The matter will be resolve during the preparation of Financial statement for 2011/12
Financial ServicesTsietsi Rafube
Nil Nil Nil N/A Audit finding will form part of AG processes.
78. Asset count not submitted to the CFO
Assets verification will be conducted and report will be prepared.
Financial Services
Bernard Langa
Nil Nil Nil
Progresses of the assets verification were conducted. Currently PWC has been appointed to assist Emfuleni with Property Plant and Equipment.
Total 28 10 6 0 12Percentage 63% 37%
Number of audit findings remaining for retesting. 0
Percentage 0%
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
85
Number Audit FindingAction Plan
TakenCurrent Management Comment
Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
80
79. Control environment: Information requested but not submitted for audit
Financial Services
1. The Budget Office has a Budget Policy which is used as a guideline in the compilation of budgets. 2. The MFMA, MFMA Circulars and the Budget Regulations are guidelines to the Budgeting Process as well. 3. The IDP and Budget Process Plan detailing timeframes and deadlines for events within the budget cycle was also approved by Council in August 2012. 4. The Budget Policy, MFMA Circulars 58 and 59, The Budget Regulations and the IDP/Budget Process Plan are attached as evidence.
Dobe Mokgethi N/A Nil Nil Nil
1. Copy of Budget Policy and Council Resolution was provided as portfolio of evidence.
81
80. Quarterly reports were not submitted to the mayor
Financial Services
In terms of standing orders of Emfuleni Local Municipality The quarterly SCM reports serves at SMT, Section 80, MAYCO, and Council. All this committees have different dates which overlap beyond the 10 of every quarter. The Executive Mayor is the member of MAYCO and Council and the quarterly report serve in those committees.
Thabo Thwala Nil Nil Nil
Partially Resolved. Quarterly reports were submitted to the Mayor, however the reports are not submitted within ten working days framework stated in the Supply Chain Management regulations 7 (3)
82
81. Monthly reports were not submitted to the accounting officer
Financial Services
In terms of standing orders of Emfuleni Local Municipality The SCM reports serves at SMT, Section 80, MAYCO, and Council. The Accounting Officer is the member of SMT, MAYCO and Council and the reports serve in those committees.
Thabo Thwala Nil Nil Nil
Partially Resolved. Monthly reports were submitted to the Accounting Officer, however the reports are not submitted within five working days framework stated in the Supply Chain Management regulations 5 (3)
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
86
Number Audit FindingAction Plan
TakenCurrent Management Comment
Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
83
82. Variance between the creditors listing and the financial statements
Financial Services
Ensure that cut-off procedures are observed and adhered to by issuing out a Memo informing all departments about the yearend cut-off dates. The system must be temporarily closed after the cut-off date to prevent further processing
Tsietsi Rafube Nil Nil Nil N/A
Creditors list will be ready on the 25 July 2012. Therefore finding will be verified after the completion of creditor's list therefore it will be subjected to AG processes.
84
83. Community not invited to make representations in connection with the 2009/2010 annual report
Municipal Manager
Matter was resolved, Currently ELM invited the community for participation through media (news paper, Local Radio, Emfuleni external News letter, etc)
Henry De hart Nil Nil Nil N/A Audit finding will form part of AG processes.
8584. Completeness of finance lease disclosure Financial Services
Ensure full compliance with GRAP 13. The excise can only be performed during the compilation of 2011/12 AFS
Tsietsi Rafube Nil Nil Nil N/A Audit finding will form part of AG processes.
86
85. Differences in amount disclosed as restructuring Grant Withheld and amount as per Correspondence with National Treasury
Financial Services The matter was addressed during the audit. Tsietsi Rafube Nil Nil Nil
The audit finding was resolved during the audit. This will form part of AG audit processes.
87
86. Differences in Grants opening balances
Financial Services This was resolved during the audit. Tsietsi Rafube Nil Nil NilThe audit finding was resolved during the audit. This will form part of AG audit processes.
88
87. Reconciliation between valuation roll and update on thereof on Venus not madeavailable
Financial Services The matter will be resolve during the preparation of Financial statement for 2011/12
Tsietsi Rafube Nil Nil Nil N/A Audit finding will form part of AG processes.
89
88. Differences in grants reconciliation and grants receipts disclosed in the financials
Financial ServicesThe matter was resolved during the preparation of financial Statement for 2010/2011
Tsietsi Rafube Nil Nil Nil N/A Audit finding will form part of AG processes.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
87
Number Audit Finding Action Plan Taken Current Management CommentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
90 89. Leave policy in draft Corporate Services Policy has been work shopped by Speaker.
Mr. Vincent Phahlane Nil Nil Nil
The finding is partially resolved. Policy has been work shopped by Speaker.
91
90. Rentals agreement not signed by both the lessor and lessee EDP Properties: Agreements with
outstanding rental amounts be investigated by Debt Collection.
Properties: A. Streak Housing: F Human
Nil Nil NilThe audit finding is partially resolved. Current status was provided as portfolio of evidence.
92 91. Approval for cancellation of fines Public Safety
There was SOP in place when the incidents occurred. The SOP will be amended to address the specific error that occurred and will be distributed to all personnel. There matter will be discussed with traffic division to inform their personnel about the correct procedure on how to cancel a document
Wynand Pretorious Nil Nil Nil
The finding was resolved, Copy of Standard Operation Procedures was provided as portfolio of evidence.
93
92. Rental agreements not received
EDPProperties: Finance to be informed of agreements not valid anymore. Housing:
Properties: A. Streak Housing: F Human
Nil Nil Nil
The audit finding is partially resolved. Current status was provided as portfolio of evidence.
94
93. Insufficient controls around stock Financial Services
Quarterly stock take will continues be done to detect discrepancy with the stock and to improve controls around stock
Thabo Thwala Nil Nil NilThe audit finding was resolved, Quarterly stock takings were conducted.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
88
Number Audit FindingAction Plan
TakenCurrent Management Comment
Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
95
94. No formal appointments of members serving on bid specification, evaluation andadjudication committee
Financial Services Appointments of members serving on bid committees are done Thabo Thwala Nil Nil Nil
The audit finding was resolved. Copy of formal appointment letter was provided as portfolio of evidence.
96
95. Extensions of contracts
Financial Services
Clusters or Department will be encouraged to do proper costs projections when doing planning of the projects. This will help to ensure that extensions of contracts are not encouraged.
Thabo Thwala Nil Nil Nil N/A Internal Audit still verifying the audit finding raised.
97
96. Performance of contractors not monitored on a monthly basis
Performance Management
System/ Infrastructure Planning and
Asset Management
Department usually hold Project Steering Committee once a month whereby all Consultants and Contractors report on progress reports and verified all action taken during weekly projects meetings
Khulekani Nxumalo Nil Nil Nil
Audit finding is partially resolved, not all performance of the contractors was monitored on a monthly basis.
98
97. Bid awarded other than the one recommended by bid evaluation
All DMM's
Should the Bid be awarded to other than one recommended by Bid Evaluation Committee, section 114 (1) & (2) of MFMA No. 56 of 2003 should be complied with. For this finding the National Treasury, Provincial Treasury and Auditor General were not informed and section 114 (2) of MFMA No. 56 of 2003 was applied to rectify an irregularity.
Thabo Thwala Nil Nil Nil N/A
Internal Audit could not provided assurance as the tender file could not be provided by SCM. The file is still with Ratanang
99
98. Balances disclosed on the financial statement with no supporting evidence (DebtManagement & Sports and Recreation)
Financial ServicesThe matter will be resolve during the preparation of Financial statement for 2011/12
Tsietsi Rafube Nil Nil Nil N/A Audit finding will form part of AG processes.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
89
Number Audit FindingAction Plan
TakenCurrent Management Comment Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
100
99. Assets not bar-coded on the asset register
Financial Services Assets Register will be updated by Management after Auditor General express the opinion
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
101
100. Completeness of asset register-other assets Financial Services
Consultants (PWC) has being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/AThe audit finding will be reviewed by Auditor-General after PWC (Consultants) complete the rectification of asset Register.
102
101. Non compliance with section 62(1)(d).
Financial Services
Develop a policy on unauthorised, irregular, fruitless and wasteful expenditure. Design a register to populate these expenditure and distribute it to different clusters for identification.
Tsietsi Rafube Nil Nil Nil
Irregular or Fruitless and Wasteful expenditure Register was developed and submitted to the relevant management however monitoring and evaluation????.
103102. Non compliance with Section 65(2)(e) Financial Services
Put strategy to improve cash flow through revenue enhancement and cost cutting measures.
Derrick Maaroganye Nil Nil Nil N/AThe audit findings may not be resolved due to the Financial constrains
104
103. Finance lease - Appendix A not agreeing to the Trial Balance Financial Services
The matter was resolved during the audit as the statements were updated with the recommendations of the AG. A repetitive review of the AFS will be undertaken before the submission to AG.
Tsietsi Rafube Nil Nil Nil
The audit finding was resolved during the audit. This will form part of AG audit processes.
105
104. Minimum bank accounts not kept
Financial Services
Still not in agreement with the AG. Write a correspondence to AG to validate the finding and give appropriate recommendation
Tsietsi Rafube Nil Nil Nil N/AManagement did not agree with the audit finding raised. Therefore the finding is not applicable for verification.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
90
Number Audit FindingAction Plan
TakenCurrent Management Comment
Employee in charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
106
105. Late Submission of the details of new bank account Financial Services
Obtain a list of all banking details each month and report new accounts to AG and Provincial Treasury.
Tsietsi Rafube Nil Nil Nil
Resolved, letter was submitted Provincial Treasury and Auditor-General. (P.O.E Email sent)
107
106. Incorrect tariffs used
Financial Services Sam Mokoena/Laura Nil Nil Nil N/A Audit finding will form part of
AG processes.
108
107. Supporting documentation not provided for audit purposes (ExpenditureManagement)
Financial Services
Proper record keeping procedures are currently implemented and in place to maintain and safeguard information for easy access.
Derrick Maaroganye Nil Nil Nil The finding resolved as per
our selected sample.
109
108. Mid-year budget and performance assessment report not placed on themunicipality's website
Municipal Manager
Midyear budget and Midterm SDBIP was placed in the Emfuleni Municipality website.
Paseka Rakosa Nil Nil Nil
The audit finding was resolved. Printout of website was provided as portfolio of evidence.
110
109. Security Management
Municipal Manager
The Issue was raised with BCX who are the vendor of the Venus system. Their response to this issue was forwarded to the AGSA. The IT section cannot do any alterations to the system as they have no rights. BCX felt that this could not be done for reasons. Attached find the documents from BCX Marked as BCX109
CIO Nil Nil NilDraft security Management policy was developed still awaiting for council approval.
Number Audit Finding Action Plan Taken Current Management CommentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
106
105. Late Submission of the details of new bank account Financial Services
Obtain a list of all banking details each month and report new accounts to AG and Provincial Treasury.
Tsietsi Rafube Nil Nil Nil
Resolved, letter was submitted Provincial Treasury and Auditor-General. (P.O.E Email sent)
107106. Incorrect tariffs used
Financial Services Sam Mokoena/Laura Nil Nil Nil N/A Audit finding will form part of
AG processes.
108
107. Supporting documentation not provided for audit purposes (ExpenditureManagement)
Financial Services
Proper record keeping procedures are currently implemented and in place to maintain and safeguard information for easy access.
Derrick Maaroganye Nil Nil Nil The finding resolved as per our
selected sample.
109
108. Mid-year budget and performance assessment report not placed on themunicipality's website
Municipal Manager Midyear budget and Midterm SDBIP was placed in the Emfuleni Municipality website.
Paseka Rakosa Nil Nil NilThe audit finding was resolved. Printout of website was provided as portfolio of evidence.
110
109. Security Management
Municipal Manager
The Issue was raised with BCX who are the vendor of the Venus system. Their response to this issue was forwarded to the AGSA. The IT section cannot do any alterations to the system as they have no rights. BCX felt that this could not be done for reasons. Attached find the documents from BCX Marked as BCX109
CIO Nil Nil NilDraft security Management policy was developed still awaiting for council approval.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
91
Number Audit Finding Action Plan Taken Current Management CommentEmployee in
charge
ResolvedPartially
ResolvedNot
Resolved
Not Applicable
for Reviewing Remark
N/A
111
110. User Access Control
Municipal Manager/Informatio
n Technology
This will form part of the IT assessment and review and IT strategy development. Current status: Unix, Access control procedures are documented for Payday and Venus. The IT usage approved policy control is available and have been in use since the year 2009.
CIO Nil Nil Nil
The finding was resolved, Adding and Modifying is the same procedure. Removal of users are done when personnel resigns/ retire or deceased upon request form pay office informing IT.
112 111. User Access ControlMunicipal
Manager/Information Technology
The changes to these items were discussed with BCX who is the vendor of this system. As BCX does all changes and database administration on the system this would have been done via an upgrade to Solaris 5.9 operating system. This could not be done for reasons as set out in the letter (Marked as BCX 111) in the attached file.
CIO Nil Nil Nil
IT to discuss the finding with Business Connexion as they are the once having database administration rights.
113 112. Program Change Management
Municipal Manager/Informatio
n Technology
The requested Procedures have been developed and implemented by IT. Proof is marked Change Management112 in attached file
CIO Nil Nil Nil
Change management procedure have been developed and approved by IT Management.
114113. Information Technology Service Continuity
Municipal Manager/Informatio
n Technology
The Disaster recovery plan for PAYDAY was developed, implemented and tested by IT. Finalised The test results and proof is marked PAYDAY DRP113 in the attached file.
CIO Nil Nil Nil
DRP plan was in place for Venus and Payday system and were tested, however BCP was still not developed, Management committed to develop an ogranogram BCP by Service provider (Umnombo)
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
92
Number Audit Finding Action Plan TakenCurrent Management
CommentEmployee in charge
Resolved
Partially
Resolved
Not Resolv
ed
Not Applicable for Reviewing
Remark
N/A
115 114. Information Technology Governance
Municipal Manager/Information
Technology
The IT Steering Committee have not been fully functioning. Only one meeting was held during the current financial year as at May 2012.
CIO
Nil Nil Nil
Resolved, meetings held on 30 September 2011, 9 December 2011, 25 May.2012
The IT Department is still not being fully capacitated. The intenda system has been shut down and no longer in use.
Nil Nil Nil N/A
CIO has been appointed and currently Emfuleni Local Municipality and Sedibeng District still busy negotiating to move IT department to Emfuleni.
Payday user Account Management Nil Nil Nil
Resolved – account management is now done by IT
Asset Management Department
Consultants (PWC) have being appointed to assist in all issues related to the Emfuleni Assets and afterward Auditor-General will retest the Assets Register Methodology.
Bernard Langa Nil Nil Nil N/A
Assets Register of IT department will form part of AG process
Total 39 14 10 1 14Percentage 56% 40% 4% Number of audit findings remaining for retesting. 0
Percentage 0%
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Road Map to an Unqualified Audit
Project Management
93
Road Map to an Unqualified Audit
Project Management
Interventions:• Engagement with AG on compilation of AR during 2011/12 – Completed•Revised asset valuation method - Completed•Submission of Assets register to AG - 30 Aug• Computerized Assets Inf Syst (IQMS) – In progress
94
Road Map to an Unqualified Audit
Project Management
Interventions:• Decentralisation of SCM – Aug Deadline• Capacitation – Skills – In progress• Creation of Contract Mngt – In progress• Review of SCM policy – In progress• Data base clean up – Partially completed• Price benchmark implementation (value for money ) - Completed
74
Road Map to an Unqualified Audit
Project Management
Interventions:• Meter Audit, verification and data clean-up – In progress• Accounts reconciliation – On going• Segment customers – In progress• Appointment of debt collecting agencies - Completed• Restructure the debtors book – Process to be reviewed• Creation of Revenue Agency – in progress (50%)• Review Tariffs and funding model – In progress• DSM interventions (water & elec loss reduction) – in progress• Appointment of key personell in revenue - Complete
96
Road Map to an Unqualified Audit
Project Management
Interventions:• Allignment of KPI’s with IDP• Review of KPI’s• Review of IDP & SDBIP• Submission of Performance Information for Audit by Aug 2012
100% complete
97
Road Map to an Unqualified Audit
Project Management
Interventions:• Functionality of Sect 80 /79 Committees and Other Committees esp MPAC
100% complete
98
Road Map to an Unqualified Audit
Project Management
Interventions:• Establishment of IPAM• Development project mngt framework/system• Implementation of contract mgt• Implementation of ePmLive
70% complete
99
CHALLENGES,WAY-FORWARD AND PRIORITIES
100
CHALLENGES
Billing and non payment of services – R2.6 billion Debtor’s BookHigh Water and Electricity Losses, theft and non payment
Water (66% ) = R241 million Electricity (11%) = R60 million
Skills shortage and high vacancy rate In adequate Funding – High indigence Infrastructure Back log – R20 billionNon payment for Services in former black townships – No MeteringUnfunded Mandates – Provincial Functions (Health, Libraries & Facilities)Arrear Government Accounts – R44 million Insufficient Cash Flow – Overdraft facility of R150 million raised as at 01 July 2012Data IntegrityCustomer Services Ethos Amongst Staff
101
WAY FORWARD & KEY PRIORITIES
Ring-fence the revenue function Establish a customer call and walk in center
Meter verification and data clean up (Meter audit) Installation of meter at un-metered areas Ensuring accuracy of meter readings at the right time. Addressing internal control deficiencies
Improvement of Revenue Collection Impose Stringent Credit Control Measures Appoint collecting Agencies for all debt Restructuring of Debtors’ book
Address all AG Findings Obtain an Unqualified Audit 2011/2012
102
Intend
WAY FORWARD & OTHER PRIORITIES
Upgrade and Maintain infrastructure through MIG – R143 885 000 Allocation for Basic Service Delivery Programs
Enforce all Municipal By-Law by creating a super by-law enforcement unitReview Organizational Structure (People, Processes & Systems) Implement Demand Side Management Partnerships to Reduce Water and
Electricity Losses Water = Reduce by 25% Electricity = Reduce by 5% Waste = Reduce waste to landfill sites by 5 to 10%
103
THANK YOU AND SINCERE APOLOGIES!!
FROM EXECUTIVE MAYOR
104
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