Department of Cooperative Governance & Traditional AffairsDepartment of Cooperative Governance & Traditional Affairs

OVERVIEW OF OPERATION CLEAN AUDIT OVERVIEW OF OPERATION CLEAN AUDIT (OPCA)(OPCA)

2014 PROGRAMME2014 PROGRAMME

Minister Sicelo ShicekaMinister Sicelo Shiceka07 October 200907 October 2009

Primarily: constitutional obligation to account

To brief MP’s and interested parties on progress made up to date

Status update on the programme and its transformational agenda

PURPOSE OF THE MEETING

To provide an overview of the initiative:

“Operation Clean Audit 2014”Programme

PURPOSE OF THE PRESENTATION

“By 2014, all 283 municipalities and 9 provincial government departments must achieve clean audits on their Annual Financial Statements”.

GUIDING VISION

To provide assistance to all municipalities and provincial government departments in

achieving sustainable improvement systems for maintaining quality financial statements and

management of information.

PROGRAMME GOAL

To address all issues raised by the Auditor General and reduce vulnerability to risks in the provincial departments and municipal financial

management and governance processes through targeted projects

PROGRAMME PURPOSE

Audit queries: raised by AG recurring and not being addressed

Lessons learned from Project Consolidate 5Year LG Strategic Agenda; and Gauteng model of Operation Clean Audit Prioritised municipal and provincial audit

outcomes

CONTEXT AND BACKGROUND

PROGRAMME MILESTONES

No municipality and provincial department with Adverse and Disclaimer audit opinion

Between 2010 and 2011

60%:provincial departments and 283 municipalities achieving unqualified audit opinion

By 2012

75%:provincial departments and municipalities achieving unqualified audit

By 2013

100%: All 283 municipalities and provincial departments achieving unqualified audit opinion with no matters

By 2014

Conceptualised and packaged the programme Taking into account inputs from SALGA,

Auditor-General and Accountant-General Consulted strategic partners: private sector and

public sector institutions National Launch on the 16th July 2009 Provinces are expected to launch and ALL

the Launches are expected to be finalized by 30 October 2009

ROAD TO THE LAUNCH

PROVINCIAL LAUNCHES: REPORT

Province Status Date

NW Launched 11 Sep 2009

Limpopo Launched 23 Sep 2009

NC Launched 01 Oct 2009

WC Launched 20 Aug 2009

KZN Not Yet Awaiting for the date

F State Expected to launch 30 Oct 2009

Mpumalanga Expected to launch Awaiting for the date

Eastern Cape Expected to launch 13 Oct 2009

Gauteng Expected to launch 15 Oct 2009

• Provincial Coordinating Committees

• Led by Ambassadors and supported by COGTA, Auditor General; Accountant General (National Treasury and Provincial Treasuries)

DRIVERS OF THE CAMPAIGN

• Strengthen political oversight;

• MPACs to be established in ALL municipalities

• At APAC conference, the proposed date is 15 December 2009

POLITICAL OVERSIGHT

• All executive authorities from all spheres of government should receive monthly financial statements

• PACs and MPACs should also receive quarterly financial statements

• On yearly basis evaluation summits will take place, starting from municipalities, provinces, and National summit

Monitoring and Evaluation

• We need to strengthen our political oversight

Political message on Operation Clean Audit is critical at parliamentary/legislature portfolio committees

Continuous engagement with Auditor General and Accountant General remains critical for our understanding of issues affecting our vision

CONCLUSION

THANK YOU

SIYABONGA

REALOBOGA

Department of Cooperative Governance & Traditional AffairsDepartment of Cooperative Governance & Traditional Affairs

STATUS REPORT ON OPERATION CLEAN AUDIT STATUS REPORT ON OPERATION CLEAN AUDIT (OPCA) 2014(OPCA) 2014

PROGRAMME PROGRAMME

Dr. Batandwa SiswanaDr. Batandwa Siswana

07 October 200907 October 2009

To provide a contextual analysis and the way forward on “Operation Clean Audit 2014”

Programme

PURPOSE OF THE PRESENTATION

Situational Analysis and assessment: Provincial and Municipalities

Provincial visits and assessment reports

Data analysis: AG reports and AR’s

Previous projects i.e lessons learnt

Best practices - Gauteng model

APPROACH AND STRATEGY

Financial management

Fiscal governance

Quality service to the public

THROUGH OPCA, WE AIM TO ACHIEVE

CHALLENGES

Financial management and leadership Weak internal controls Inadequate financial controls Low culture of risk management Lack of performance management Lack of financial skills Corruption, Fraud and mismanagement Political and administrative interface

INSTITUTIONAL CHALLENGES

Municipalities and their entities: consistent disclaimers, adverse and qualified audit opinions:

• Disclaimers decreased from 105 (36%) in 2006/07 to 90 (31%) in 2007/08

• Adverse audit opinions decreased from 21 (7%) in 2006/07 to 10 (3%) in 2007/08

• Qualified audit opinions regressed from 82 (29%) in 2006/07 to 63 (22%) in 2007/08

• Financial unqualified audit opinions (with other matters) increased from 79 (27%) to 122 (42%) in 2007/08

• Financial unqualified audit opinions (with NO matters) increased from 3 (1%) to 6 (2%) in 2007/08

MUNICIPAL AUDIT OUTCOMES: Programme Trigger (basis for analysis)

Provincial departments and their entities (119) showing steady improvement with few negative cases:

• Disclaimers decreased from 4 (3%) in 2006/07 to 3 (3%) in 2007/08

• Adverse audit opinions decreased from 3 (2%) in 2006/07 to 2 (1%) in 2007/08

• Qualified audits decreased from 56 (47%) in 2006/07 to 38 (32%) in 2007/08

• Financially unqualified audits (with matters) increased from 50 (42%) in 2006/07 to 69 (58%) in 2007/08

• Financially unqualified audits (with No matters) increased from 6 (6%) in 2006/07 to 7 (6%) in 2007/08

PROVINCIAL AUDIT OUTCOMES: Programme Trigger (basis for analysis)

SITUATIONAL ANALYSIS: GOVERNANCE AND LEADERSHIP IN

MUNICIPALITIES

NATIONAL TREND ANALYSIS: MUNICIPALITIES

National

19%

33%27%

22% 25%

41%45%

39%33%

9%

23% 18% 19%

6% 9%4%

8%4% 6%

12%

0%

20%

40%

60%

80%

100%

2004/2005 2005/2006 2006/2007 2007/2008

UNQUALIFIED

QUALIFIED

DISCLAIMER

ADVERSE

AUDIT NOT FINALISED

Appointment of CFOs: Sep 2009

Province Filled Vacant

EC 42 3

FS 16 9

Gauteng 14 0

KZN 52 9

Limpopo 22 8

Mpumalanga 20 1

NW 19 6

NC 22 10

Appointment of CFOs: Sep 2009

Province Filled Vacant

WC 27 3

Audit Committees and Internal Audit Units

Audit Committee

206 (73%) Status: Established

46 (16%) Shared

31(11%) Not established

Internal Audit 221(78%) Established

21 (7%) Shared

41 (14%) Not established

Out of 283 Municipalities, 58 have not submitted the AFS, or submitted late.

SUBMISSION OF AFS: 30 AUGUST 2009

WHAT IS THE NEXT STEP?

Development of a logframe: Operation Clean Audit

Analysis of Municipal finance, stellenbocsh agreement on plan of action and agreed on PoA

Situational Analysis and assessment: Provincial and Municipalities: Audit opinions

Integrated logframe developed: Provincial and Municipalities

Consultative process: Provincial visits

PROGRAMME DEVELOPMENT (1)

Integrated logframe developed: Provincial and Municipalities

Provincial consultative process:provincial visits i.e PT, COGTA and OTP; including the OAG (in provinces)

PROGRAMME DEVELOPMENT (2)

Clear trail of supporting documentation that is easily available and provided timely

Quality of financial statements and management information

Timeliness of financial statement and management information

PROGRAMME PILLARS:AG Identified Best Practices for clean audits

Availability of key officials during audits

Development and compliance with risk management and good internal control and governance practices

Supervision / monitoring

PROGRAMME PILLARS: AG Identified Best Practices for clean

audits

IMPLEMENTATION STRATEGY: OPERATION CLEAN AUDIT

To implement the project in all provinces – provinces expected to establish coordinating committees to implement “Operation Clean Audit 2014” campaign.

Committees with representation from National and provincial departments of Cooperative Governance and Traditional Affairs, Premiers’ offices, National Treasury and Provincial Treasuries and Business Executives (Auditor-General-provincial) and provincial SALGA.

PROVINCIAL CO-ORDINATION PROGRAMME

Coordinating committees to embark on or consolidate a situation analysis of provinces, by focusing on three areas:

- Leadership- Governance - Political oversight

PROPOSED APPROACH FOR PCC

Drive the implementation of the Province specific Operation Clean Audit 2014 for municipalities and provincial government departments

Provide regular feedback to the Premiers and MECs on the programme activities and progress

Develop a programme for provincial support on Clean Audits for provincial departments

SCOPE OF REFERENCE FOR PCC

Manage the deliverables of Operation Clean Audit for Municipalities and Provincial departments

Work closely with national department (cgta) to encourage collaboration of programmes and ensure effectively integrated implementation and reporting

Create Provincial platform for Municipalities, Provincial departments and partners’ interactions for knowledge sharing

SCOPE OF REFERENCE FOR PCC

Annual Comprehensive Analysis of issues contributing to negative audit outcomes

Development of Province Wide and District Wide Audit Remedial Plans

No of municipalities and provincial departments implementing Quarterly Financial Statements

Quality of financial statements and timeous submission of financial statements to Auditor General

Establishment and functionality of internal units, audit committees, risk management committees and Audit Committee

Assessment of capacity of budget and treasury offices Capacity building and partnerships

REPORTING PARAMETERS(Central tenets of the Coordinating Commettee reports)

Joint efforts key to Operation Clean Audit – Auditor General, Acc General, Oversight Committees: working together.

The situation is conducive for a turn-around especially with progressive increase in the provincial departments achieving unqualified and clean audits

Financial management is critical to service delivery. The quality of financial statements must improve

drastically. Capacity of departments and officials as well as

partnering service providers must also be scrutinized for continuous improvement.

OPERATIONAL CONSIDERATIONS

Strengthening of Provincial coordinating committees as from November 2009

Provincial visits to discuss turn around strategies with clear milestones, starting in November

Focus on Disclaimers and Adverse audit opinions,as a matter of urgency

Way forward

Development of Capacity Strategies: COGTA, DBSA & NT, especially at local government level

Very close monitoring of implementation of provincial action plans with ‘quarterly meetings’

Conference on corporate governance for local government, June/July 2010

Way forward

Robust campaign against corruption and fraud through Ayihlome (parallel project)

Ayihlome, aims to promote ethics and fight corruption at the same time, working with DPSA and PSC, especially on conflict of interest

Will work with SAPS, the HAWKES

Way forward

Operational Clean Audit 2014 creates single national, provincial and local government agenda

Sustainability of positive audit outcomes beyond 2014

Leadership and governance-paramount

Service delivery and clean audits-critical

“Lets work together to realise the vision, it is possible!”

CONCLUSION

ENKOSI