Honourable Speaker
Cabinet Ministers present
Distinguished members of this house
Ladies and gentlemen
Introduction
Thank you for this opportunity to interact with the honourable members of this house and to present a status report on one of the key projects that we have embarked upon as the Department of Cooperative Governance and Traditional Affairs: ‘Operation Clean Audit 2014’.
It is particularly significant for me, as this project is but just one leg of a programme to clean up governance and enhance service delivery at both local and provincial levels of government. The Clean Audit 2014 is part of the four legged Operation Clean Up which includes three other legs, which are Clean Cities, Towns, Debt Collection, Public Mobilisation and Revenue Enhancement, as well as infrastructure backlogs and economic development.
Operation Clean Audit 2014, for which I am standing here in front of you today to update you on, is an ambitious groundbreaking initiative. Colleagues let me confess upfront: I am very passionate about this project, as this is something that has eluded government for the past 15 years. I say it can be done and I am here to tell you how.
Honourable members
Today, I am here to outline the process of one of the most critical projects that provide government with an opportunity to turn the situation around at both provincial and local government. The latter is particularly crucial as it is at the coal face of service delivery. Local government is the face of government to all our communities, to the electorate. To note in particular is that not only am I presenting this statement to this esteemed house, but this is also a reporting mechanism to our people whom we all represent here. Citizens are indeed central to this debate as they have the responsibility to keep us accountable at all times.
Operation Clean Audit 2014 was launched on 16 July 2009. The launch was attended by both members of this house and Provincial Legislatures, premiers, MECs, heads of department, the private sector and a number of senior government officials. The launch signified the beginning of the end as far as disclaimers; adverse opinions and qualified audits are concerned for municipalities and provincial government departments.
The goal is that by 2011, no municipality or provincial government department will have a disclaimer or an adverse audit opinion, and by 2014 none should have those or a qualified audit. As a department, we commit ourselves to reviewing our work annually and to check if we are indeed succeeding on this project. To this end, we have already had the first provincial launch on 11 September 2009 in the North West province. On 23 September 2009 we are launching at Limpopo, and then Gauteng province will follow on 15 October 2009.
In implementing this project and achieving its objectives, the provinces are supported by provincial coordinating committees. These committees are pillars of operation Clean Audit at provincial level. Operation Clean Audit programme is guided by a clear vision, goal, purpose and some milestones.
Why operation Clean Audit 2014 programmes
Honourable speaker and members of the house allow me to briefly outline the programme as follows:
Madam speaker, and honourable members, when I joined the department, the then Department of Provincial and Local Development (DPLG) and through interaction with departmental officials, I made the following observations and conclusions:
The then DPLG, did not support provincial departments. As a result, the link and support between municipalities and provinces was weak and not sustainable. Thus, service delivery, governance and financial management were severely affected. Technically, when a system of governance and financial management is poor due to lack of support, without a doubt service delivery will be negatively affected.
More importantly, in some provincial departments and municipalities, there is lack of both administrative and political leadership. Let me explain this aspect of a lack of leadership. When any leader fails to make a decision, to me that is simply a sign of poor leadership. The public has been complaining about poor financial management, corruption, abuse of public resources but some leaders decided not to act. Yet, reports from Auditor-General continue to report about poor asset management, double payments by officials, stolen goods and assets, and yet again, some leaders chose not to do anything. Let me tell you, this time around, die poppe sal dans.
Our road map and what informs our strategy
Honourable speaker, operation Clean Audit programme 2014 is guided by:
Vision
We want to make sure that by 2014, all the 283 municipalities and nine provincial government departments in South Africa achieve clean audits on their annual financial statements and that they further maintain systems for sustaining quality financial statements and management information.
Programme goal
In achieving our vision, we are going to assist all the municipalities and provincial departments to achieve sustainable improvement in financial management and governance that will yield clean audit opinions by 2014. However, municipalities and provincial departments that have been consistently doing well must commit to helping others that have not managed to do so well. Doing well means that they should maintain receiving unqualified audit opinions with no matters of emphasis and other matters from the Auditor-General.
It does not make any sense if a district municipality receives a clean audit, yet municipalities under that same district are consistently receiving disclaimers. To me, that is not just lack of cooperation but also lack of leadership. Leadership is not about the position you hold but about guidance, mentorship, support and the ability to make decisions. One cannot be happy with being an island of excellence in a sea of impoverishment and failure.
So, to all the mayors, municipal managers, provincial heads of departments, by 2014, you must be able to tell your provincial legislatures and councils that you are indeed clean. We are not prepared to compromise on our vision, come rain or sunshine. As we implement the operation Clean Audit 2014 programme, we are guided, at least, by a set of milestones, and these milestones inform our strategy. We boldly say that:
* between 2010 and 2011, no municipality and provincial departments will receive adverse and disclaimer audit opinions
* at least 60 percent of provincial departments and the 283 municipalities must achieve unqualified audit opinion by 2012
* by 2013, there must be an increase to 75 percent both in municipalities and provincial departments that achieve unqualified audits
* by 2014, we must have 100 percent of clean audits, both at provincial departments and all municipalities.
As part of our strategy, we then decided to analyse the Auditor-General’s reports based on 2006/07 and 2007/08 financial years. To us, it is not just statistics but a way of understanding key problems that led to the situation we are faced with today. These institutional problems range from governance, leadership and financial management. Honourable members, these indeed affect service delivery.
Municipal analysis and entities: Auditor-General (AG) 2006/07 and 2007/08 financial years
We then noticed a culture of consistent disclaimers, adverse and qualified audit opinions in a number of municipalities and their entities. What was also very strange was the fact that municipalities continued to regress. This could be attributed to lack of leadership, lack of systems and mechanisms to implement and sustain the recommendations of the AG. The following is a picture and statistics regarding state of municipalities in the given financial years:
* disclaimers decreased from 105 (36 percent) in 2006/07 to 90 (31 percent) in 2007/08
* adverse audit opinions decreased from 21 (seven percent) in 2006/07 to 10 (three percent) in 2007/08
* qualified audit opinions regressed from 82 (29 percent) in 2006/07 to 63 (22 percent) in 2007/08
* financial unqualified audit opinions (with other matters) increased from 79 (27 percent) to 122 (42 percent) in 2007/08
* financial unqualified audit opinions (with NO matters) increased from three (one percent) to six (two percent) in 2007/08
Analysis of provincial departments and their entities: 2006/07 and 2007/08
On the other hand, the provincial departments and their entities are showing steady improvement with few negative cases. The critical question to ask is, if there is steady improvement at provincial level, why most municipalities are struggling to manage public finances. Why, are they struggling to develop effective and efficient systems to support municipalities? Provincial government has a constitutional responsibility to support municipalities. The picture in the provinces is as follows:
* disclaimers decreased from four (three percent) in 2006/07 to three (three percent) in 2007/08
* adverse audit opinions decreased from three (two percent) in 2006/07 to two (one percent) in 2007/08
* qualified audits decreased from 56 (47 percent) in 2006/07 to 38 (32 percent) in 2007/08
* financially unqualified audits (with matters) increased from 50 (42 percent) in 2006/07 to 69 (58 percent) in 2007/08
* financially unqualified audits (with No matters) increased from six (six percent) in 2006/07 to seven (six percent) in 2007/08.
The above picture of audit outcomes in both municipalities and provinces tells us that our municipalities, in particular, need more urgent attention. The focus should be on financial management, making sure that we have functioning audit committees and internal audit units and effective leadership that will take us to the next level.
Way forward
Honourable members, it not all doom and gloom. There are municipalities and provincial departments that are doing very well. We have a number of municipalities which have maintained financially unqualified audit opinions over the past few years. Clean audits must translate to good and quality service delivery.
During our national launch on 16 July 2009, we very loudly and unambiguously hailed ministerial ambassadors (municipalities and provincial departments which have consistently received financially unqualified audit opinions) for a job well done. They turned the situation around, and have successfully maintained that status.
On 28 September 2009, we shall be addressing the 10th Annual Conference of the Association of Public Accounts Committees (APAC). The department has chosen APAC as one of the key strategic partners in realising the objectives of Operation Clean Up, in particular Operation Clean Audit 2014 programme.
Further more, on 7 October 2009; we will be presenting our strategy to the Cooperative Governance and Traditional Affairs Portfolio committee, the Finance Portfolio committee and Standing Committee on Public Accounts. Come 2014, together we shall win this battle and the public will be recipients of such victory.
I thank you for the opportunity!
Issued by: Department of Cooperative Governance and Traditional Affairs
22 September 2009
Source: Department of Cooperative Governance and Traditional Affairs (http://www.dplg.gov.za/)
