The importance of oversight and protecting the public purse

PRESENTED BY: HON T GODI

11 MAY 2011

1. Introduction & State of Local Government

2. MFMA provision on MPACs3. Importance of oversight4. Role of SCOPA in Oversight5. Scopa oversight activities & vision

Contents of the Presentation

Introduction on State of Financial Management at Local Government

• The local government system is faced with enormous challenges in its pursuit to live up to its increasingly complex and widening role in service delivery

• Municipalities are increasingly challenged by ineffective municipal governance structures.

• Poor financial management is one of the major concerns

• Lack of ethical leadership is increasing polluting the local government environment

• Governance structures are ineffective

MFMA audit outcomes 2009-10Summary of audit outcomes as at 31 January 2011

* Municipalities: based on consolidated financial statements where applicable

Audit outcomesMunicipalities* Municipal entities

2009-10 2008-09 2009-10 2008-09

Disclaimer 53 103 5 8

Adverse 7 10 0 0

Qualified 50 50 5 4

Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations

120 113 29 42

Financially unqualified with no findings on predetermined objectives or compliance with laws and regulations

7 4 10 1

Total number of audits reported on 237 280 49 55

Number of audit reports not issued by 31 January 2011 46 3 5 1

Total number of audits 283 283 54 56

Findings arising from the AGSA’s other legal reporting responsibilities:

Predetermined objectives 218 257 27 30

Compliance with laws and regulations 223 230 36 43

Legislative provisions on municipal accountability

• Provisions of intergovernmental relations ( Chapter 3 of the Constitution);

• Ministerial accountability to Parliament on activities of provincial & local government ( Section 134 of the MFMA);

• Section 129 (4)(b) of the MFMA provides for the National Treasury to issue guidelines on the functioning and composition of any public accounts or oversight committees;

• The universal principles of good governance as in King Report on Corporate Governance; and

• COGTA guidelines on Municipal Public Accounts Committees 2010 ( Still to be gazzetted)

Constitutional Provisions• Section 55 (1) & (2) of the Constitution

outlines the powers of the National Assembly and any of its Committees.

• Section 195 of the Constitution outlines the basic values and principles governing Public Administration.

• Section 196 of the Constitution outlines the powers and functions of the Public Service Commission.

Legislative Mechanisms on Parliamentary Oversight

Public Finance Management Act of 1999• Regulates the system of financial management in the public sector.

Municipal Finance Management Act of 2003• Places sound financial governance framework on municipalities to

deliver services to all its residents and other stakeholders.

Public Service Act of 1994• Provides for the organization & administration of the public service and

regulates the conditions of service for members of the public service.

Public Service Commission Act of 1997• Provides for the regulation of the Public Service Commission.

Legislative Mechanisms on Parliamentary Oversight Cont…

• To detect and prevent abuse, arbitrary behavior or illegal and unconstitutional conduct on the part of the government and public agencies.

• To hold the government to account in respect of how the tax payers money is used.

• To ensure that policies announced by government and authorised by Parliament are actually delivered.

• To improve the transparency of government operations and enhance public trust in the government, which is itself a condition of effective policy delivery.

Importance of Oversight at local government

• The Constitution in section 55 enables the National Assembly to maintain oversight over all organs of state and

• Section 92 enables Parliament to hold the Cabinet accountable

• Operationally organs of state at National level and Ministers and their departments are generally held to account to Parliament

SA Public Sector Accountability Cont…

Rules of the National Assembly• SCOPA established i.t.o rule 204 of the

National Assembly.• Functions and powers outlined in rule

206• Rule 208 encourages co-operation

between SCOPA & other Portfolio Committees (PCs) when dealing with a matter that falls within the PCs competence.

Role of SCOPA in oversight

Role of SCOPA in oversight cont…

• Rule 206 confers the following powers & functions to SCOPA which require the committee to consider the following:I. The financial statements of all Executive Organs of State

and constitutional institutions when they are submitted to Parliament;

II. Any audit reports issued on those statements;III. Any reports issued by the Auditor-General on the affairs

of any executive Organ of State, constitutional institution or other public body; and

IV. Any other financial statements or reports referred to the Committee in terms of these Rules.

• Robust and proactive oversight on the executive;• Ensure greater co-operation with other organs of the state such

as the SIU & National Treasury to strengthen financial management in the public sector;

• Maximize oversight by ensuring Ministerial Accountability under which certain Entities & Departments fall;

• Contribute to the developmental state by ensuring value for money in the utilization of public funds.

• Influence institutional, governance and financial reforms in Public Sector to ensure greater efficiency, e.g. Audit Committees.

• Improve financial management in the public sector by closely scrutinizing the relevance of the current financial administration systems.

Vision of SCOPA in ensuring accountability

Recommendations

• Municipal Public Accounts Committees have to be empowered and better capacitated to deal with the enormous task of promoting effective governance within municipalities; the current status of municipal governance as outlined in the Auditor General’s report is far from ideal, thus requiring a concerted effort from Municipal Public Accounts Committees to strengthen their arm of oversight.

• Without altering the legislative provisions of intergovernmental relations, there is a need for greater coherence amongst Public Accounts Committees in each sphere of government.

• Public Accounts Committees in all spheres of government should strengthen the co-ordination of their work, especially in areas such as the performance of local government

Recommendations continued.........

• Municipal Public Accounts Committees need to build on the solid legislative foundation laid by the PFMA, MFMA, and other governance codes such as the King Report of Corporate Governance;

• Municipal Public Accounts Committees need to broaden their oversight scope by building an in year-monitoring repertoire;

• The effectiveness of any Public Accounts Committee is solely embedded on its ability to operate above board by objectively attending to issues without fear or favour, and without the influence of party politics that normally come into play at various times;

• The capacity of the members of the committee, including that of its secretariat, is of vital importance, as it will ensure that members have all the necessary tools that will enable them to execute their tasks effectively

Thank You