2011-12

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2.4 Findings arising from the audit of compliance with laws and regulations 2.4.1 Overall outcomes from the audit of compliance with laws and regulations Common areas of non-compliance Movement in number of auditees with findings on compliance Material misstatement / limitations in submitted Annual Financial Statements 14 54% 18 69% Regression Unauthorised, irregular as well as fruitless and wasteful expenditure 12 46% 21 80% Decreased, still high Unchanged with findings 21 (80%) Improved 3 (12%) Unchanged with no findings 2 (8%) Procurement management Audit committees Internal audit 10 38% 10 38% 10 38% 9 35% 11 42% 22 Remains high Decreased, still high 85% Decreased, still high Budgets 8 8 31% 31% Remains high Overall decrease of 12% over 2010-11 Asset and liability management 6 8 23% 31% Regression 2012 2011 Cape Town Metro District municipalities Local municipalities Total auditees 100% 80% 20% 80% 20% 80% 20% Auditees with no compliance findings Auditees with compliance findings 37
The PAA requires the AGSA to audit on an annual basis compliance with laws and regulations applicable to financial matters, financial management and other related matters. The compliance audit was limited to the following focus areas: ■ Material misstatements in submitted annual financial statements ■ asset and liability management ■ audit committees ■ budget management ■ expenditure management ■ prevention of unauthorised, irregular as well as fruitless and wasteful expenditure ■ financial misconduct ■ internal audit ■ revenue management ■ strategic planning and performance management ■ transfer of funds and conditional grants ■ procurement and contract management (SCM) ■ human resource management and compensation. Annexure 1 lists all auditees where material non-compliance was reported in one or more of the AGSA’s compliance focus areas. Depicted previously are the overall outcomes from the audits which show an overall decrease in the number of auditees that had findings on compliance. Table 9: Key trends in non-compliance findings Indicator No compliance findings Two areas decreased significantly Top three areas Material misstatements Other noncompliance Key findings Auditees with no findings on compliance with laws and regulations improved from two (8%) to five (20%). Two auditees (Cape Winelands District and Hessequa) addressed all prior year compliance findings and are one step away from clean audit outcomes with only material misstatements in submitted financial statements remaining as a non-compliance finding. Two areas of non-compliance decreased significantly: • Unauthorised, irregular as well as fruitless and wasteful expenditure from 21 to 12 auditees (80% to 46%) • Procurement management from 22 to 10 auditees (85% to 38%). Compliance findings were prevalent across all three types of municipalities, the metro, district municipalities and local municipalities. Twenty-one (80%) of the auditees had findings in one or more of the top three areas of non-compliance, namely (i) material misstatements in submitted financial statements, (ii)unauthorised, irregular as well as fruitless and wasteful expenditure and (iii) procurement management. Material misstatements in submitted financial statements regressed from 14 to 18 auditees (54% to 69%). Non-compliance related to audit committees, internal audit and budgets remained high with internal audit showing slight improvement. Good Concerned Poor 38
Page 1 and 2: 2011-12 General report on the audit
Page 3 and 4: General report on the audit outcome
Page 5 and 6: KEY ROLE PLAYERS NOT PROVIDING ASSU
Page 7 and 8: In working towards sustainable clea
Page 9 and 10: Aspect Indicator Key outcomes and t
Page 15 and 16: Table 2: Summary of audit outcomes
Page 17 and 18: It is clear from the audit outcomes
Page 19 and 20: Indicator Key outcomes and trends c
Page 21 and 22: Indicator Key outcomes and trends L
Page 23 and 24: Indicator Key outcomes and trends A
Page 25 and 26: In 2011-12, one district municipali
Page 27 and 28: 2.1.4 Status and outcomes of audits
Page 29 and 30: Swellendam experienced a breakdown
Page 31 and 32: The purpose of the annual audit of
Page 33 and 34: The three most common qualification
Page 35 and 36: The Public Audit Act, 2004 (Act No.
Page 37: Findings on reliability relate to w
Page 41 and 42: Table 10: Summarised findings in ot
Page 43 and 44: The AGSA audits included an assessm
Page 45 and 46: Table 12: Prohibited awards to empl
Page 47 and 48: Table 13: Awards to close family me
Page 49 and 50: Suppliers were required to submit a
Page 51 and 52: eap the required benefits. More emp
Page 53 and 54: The MFMA requires accounting office
Page 55 and 56: The previous figure reflects the th
Page 57 and 58: The previous figure reflects the th
Page 59 and 60: Figure 11: Nature of and overall tr
Page 61 and 62: Indicator Auditors identify a large
Page 63 and 64: Root cause number 1: Slow response
Page 65 and 66: Root cause number 3: Key positions
Page 67 and 68: 3.2 Significant deficiencies in aud
Page 69 and 70: Good Concerned Poor The status of t
Page 71 and 72: Driver no. 1: Leadership Movement A
Page 73 and 74: the requirement of the MFMA. Driver
Page 75 and 76: 3.3 Human resource management Effec
Page 77 and 78: Indicator Vacant CFO positions Vaca
Page 79 and 80: Indicator minimum competencies CFO
Page 81 and 82: Unqualified with no findings (5) Un
Page 83 and 84: A lack of discipline, an absence of
Page 85 and 86: Indicator Key findings Allegations
Page 87 and 88: 3.4.2 Summary of the overall audit
Page 89 and 90:
3.4.3.1 Metropolitan municipalities
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Figure 15: Security management audi
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Minimal improvement Controls not de
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3.4.6 Information technology servic
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3.4.7 Quick wins and recommendation
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3.5 Audit committees and internal a
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Governance structure aspect Audit c
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Figure 21: Level of assurance provi
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Table 32: Comments on the level of
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Provincial role players do have a n
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Auditee Coordinating/ monitoring in
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• The role players within the mun
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4.3 Interactions with mayors In res
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4.4 Initiatives and commitments of
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Key role players Outline of initiat
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Key role players Outline of initiat
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ecome standard practice to brief th
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Management is responsible for the s
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69% (18) 100% (1) 60% (3) 70% (14)
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35% write-off of debts. Only three
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The following figure elaborates on
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5.2.4 Financial performance and pos
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2011-12 audit outcome 2010-11 audit
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ANNEXURE 3: Auditee’ audit opinio
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2011-12

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