IIASA Note the decline in the state of governance in municipal entities across South Africa

The IIASA said it notes with concern that the AGSA’s report on the MFMA 2021/22 local government audit outcomes details further breakdowns in governance, risk and control.

The Institute of Internal Auditors South Africa notes, with concern, the decline in the state of governance in municipal entities across South Africa evidenced by the Auditor- General’s MFMA Report. An enabling and functioning local government is the bedrock upon which a democratic South Africa is built. It affords people their dignity and guarantees citizens’ hard-fought rights as enshrined in the Constitution.

The breakdown of governance in municipalities, particularly in financial and performance management controls, derails development and undermines civic cohesion. The MFMA report demonstrates that where a lack of institutionalized controls and ineffective oversight exist it is impossible to implement consequence management. As custodians of governance within municipalities, it is disheartening to note that internal audit units and audit committees have had limited impact because their recommendations are not implemented.

The IIASA said it notes, with disappointment, that the overall rating of internal audit activities that were classified as good (Annexure 4 to the MFMA), declined from 87 to 84 internal audit activities compared to the previous MFMA report. The same trend is witnessed in the overall rating of audit committees, where the number of audit committees rated as good declined from 106 to 96. Municipal managers, along with senior management, are responsible for creating an environment where internal audit units and audit committees can be effective.

Municipal managers are urged to work with internal audit units and audit committees to identify and mitigate risks, strengthen the accountability ecosystem, elevate the roles of internal audit units and audit committees, and ensure that municipal legislatures receive reports that address the real issues at hand. By supporting the work of internal audit units and audit committees, municipal managers can help to ensure that their municipalities are run efficiently and effectively and that public funds are used in responsible and appropriate manner.