Political target set to achieve Cape Town clean audit

Political target set to achieve Cape Town clean audit

It has been a long, hard road for the City of Cape Town to achieve a clean audit in FY2012-13, says deputy executive mayor alderman Ian Neilson.

Cape Town was the only metropolitan municipality out of eight to achieve a clean audit after it addressed several issues identified in earlier years, the auditor-general Kimi Makwetu (AG) announced recently.

It reported no unauthorised and fruitless, and wasteful expenditure and its R1.5m irregular expenditure is by far the lowest among the metros. Neilson says Cape Town consistently achieved unqualified audits over the last decade with findings, and only once a few years ago returned a clean audit report.

“In the previous year the financials were fine, but the legislative compliance tripped us,” he says. A political target was then set to achieve a clean audit. “That focuses the mind a lot."

Mayor Patricia de Lille, Neilson and the municipal manager and chief financial officer personally led the effort. In order to get the political buy-in, politicians have to understand that there is real value in a clean audit report says Neilson.

While the AG only announced the consolidated audit outcomes for municipalities last week, the audit outcomes of specific municipalities have been known for a few months. During this period Cape Town has already seen some benefits, says Neilson.

“If your financials are in order, it means you can manage service delivery better, because you can rely on the numbers. A clean audit on predetermined objectives means that you report correctly and one can rely on it. If you say you are going to build a 1 000 houses, you will build a 1 000 houses.”

He says compliance with legislation means you run the organisation efficiently. “Banks lower their finance charges because of the lower perceived risk and bidders who want to do business with the city know that they can submit lower bids, because they will be paid on time,” he says.

“It also drives value within the organisation. Everybody knows that they have to adhere to a certain level of behaviour and nobody wants to be the one that cost the city its clean audit.”

Neilson says in the previous year the award of tenders to people working for organs of state stood between the city and a clean audit. The leaders had to consider which systems to implement to independently assess bidders, rather than rely on their declarations. Details of shareholders were for instance run against the payroll data of the provincial government.

“It was also important to understand the AG’s interpretations in this regard.” The city had a legal opinion that shareholding by government employees would only be problematic once it reaches the 50% level, only to find that the AG used a standard of 10%. “Now we actually insist on 0% shareholding by government employees.”

In its road to a clean audit the City of Cape Town embraced efforts by government to ensure that key municipal staff comply with prescribed minimum qualifications. It set up a training program with the University of Stellenbosch and senior staff, including the municipal manager, chief financial officer, executive directors and senior financial staff enrolled in the applicable courses.

“We now have 156 qualified people and by the end of the year another 65 will qualify. I believe it is more than at any other metro,” Neilson says. “Even the very senior people say they have learnt a lot. Now they know what is needed and how to do it.”

“What is needed is to look for solutions and when you find it, to see that they are implemented,” Neilson says.

[Source: moneyweb]

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