Western Cape Business News

Send  Share  RSS  Twitter  13 Oct 2014

LOCAL GOVERNMENT: Municipal Public Accounts Committees Hold Key to Clean Audit Reports


Recent Western Cape Business News

Improvements in operations and oversight duties within the Municipalities can only be achieved if the technical abilities of Municipal Public Accounts Committees (MPACs) are enhanced.

So says Grant Thornton Head of Public Sector Advisory, Terry Ramabulana, who conducted a South African Local Government Association (SALGA) workshop on Financial Management and Oversight for Councillors recently.

“Municipal Public Accounts Committees (MPACs) – which have the authority to question irregular, fruitless and wasteful expenditure – could dramatically increase municipal financial accountability,” says Ramabulana.  “In addition compliance with the requirements of the Auditor General and assisting in offsetting service delivery protests would also be achieved.”

However, the committees have not yet realised the desired impact in achieving unqualified (clean) audits by the Auditor General, who recorded more than R2billion in irregular municipal expenditure in 2014. In addition, more than R20bn was irregular expenditure and there was also R2.2bn in unauthorised expenditure reported.

According to last year’s Auditor General (AG) reports, 22% of the government departments and public entities that report in terms of the Public Finance Management Act (PFMA) achieved clean audits.  However, just a meagre 5% of those that account under the Municipal Finance Management Act (MFMA) achieved clean audits, which is very concerning.

The establishment of MPACs have been promoted by SALGA (South African Local Government Association), National Treasury and the Department of Cooperative Governance & Traditional Affairs (CoGTA) since 2011, in an effort to improve oversight and accountability in municipal spending.

The two-day SALGA workshop held in Klerksdorp earlier this month, addressed about 100 delegates which served on MPACs at various municipalities across North West province. Ramabulana said that among the key challenges raised by the councillors over the two days of consultation was the urgent need for hands-on support and continuous training to improve the functioning of MPACs.

“There is a distinct lack of technical financial insight which can only be gained through experience, formal education or both. Most of these councillors are not political careerists but have been given an opportunity to govern as the voice of their communities,” said Ramabulana. “When the members are appointed to the committees they do not get support, or the requisite respect from the authorities. They are not aware of the protocols and often are not seen as nothing more than a rubber stamp for municipal business.”

Ramabulana said that the responses from the delegates could be viewed as a sample of what was happening nationally and that improvements to the current system could drastically improve public sector financial management and the related delivery of basic services.

“We sensed a deep frustration from delegates on the inability to manage the processes,” said Ramabulana. “There was clearly a need to understand the meaning and impact of their role within municipalities as well as technical competencies such as the audit process, the submission of financial statements; and the functions of audit and performance management committees among others.”

He said the situation could certainly be remedied by improved cooperation between government bodies including SALGA, CoGTA; the Auditor General and National Treasury who could provide the much-needed structure and guidance to the MPACs through one unified channel.

“It is encouraging to note that delegates’ want to improve skills to better manage these MPAC roles. Training will allow the councillors to think analytically and guide their questioning of the municipal office bearers on for example irregular expenditure or overspending,” he said.

Councillors also needed to be trained in the understanding of project management principles, he advised, as this could directly benefit the wards and communities they represented. The councillors could then effectively report back to their communities and possibly assist in offsetting the continually rising levels of frustration that often boil over into violent service delivery protests.

“MPACs must be advocates of good governance, and in consultation with audit committees, its members should be spearheading the clean audit drive on behalf of their municipalities. If the members of the MPACs can’t then they are not fit to take office. The Public Office Bearer’s Act states that integrity is very important especially in leadership positions,” Ramabulana concludes.




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