PREPARATION 2012/13

PRESENTED BY: WISEMAN KHUMALO (AIMFO)CHIEF FINANCIAL OFFICER

EHLANZENI DISTRICT MUNICIPALITY

MMF – NKANGALA DISTRICT

21/06/2013

CONTENTS

BACKGROUNDCOST OF COMPLIANCEPREPARATION MATERIALPREPRATION FOR 2012/13 AUDITAUDIT APPROACHAUDIT CHALLENGESRECOMMENDATIONS

BACKGROUND

SUBMISSION – TWO MONTHS AFTER END OF FINANCIAL YEAR AS PER MFMA – 31 AUGUST 2013

ANNUAL PERFORMANCE REPORT TO BE SUBMITTED AS WELL – 31 AUGUST 2013

ASSUMPTION – THAT ISSUES RAISED IN THE MANAGEMENT LETTER HAVE BEEN CLEARED BY NOW.

ACTION PLAN WAS SUBMITTED TO COUNCIL AND MONITORING HAS BEEN DONE

COST OF COMPLIANCE

MAINLY GRAP COMPLIANCE- GRAP 25 ( ACTUARIAL VALUATION TO COMPLY)- GRAP 17, 16 – FULLY GRAP COMPLIANT ASSET REGISTER (USE OF ENGINEERS, GIS SPECIALISTS)- GRAP 101 (AGRICULTURE) FORESTRY INCLUDING BIOLOGICAL ASSETS (ANIMALS) - ACTIVITIES – VALUATION OF PLANTATIONS- GRAP 103 HERITAGE ASSETS – VALUATION- VERY EXPENSIVE TO COMPLY

PREPARATION MATERIAL

MFMA REPORTING REQUIREMENTS INCLUDING DELEGATIONS

GRAP – CFO AND INTERNAL AUDIT ( IDENTIFICATION, RECOGNITION, MEASUREMENT, PRESENTATION AND DISCLOSURE)

DIRECTIVES FROM ASB, TREASURY GUIDE AND CIRCULARS FROM PT & NT SUPPLY CHAIN REGULATIONS AND POLICY – ALL

TRANSACTION TO HAVE FOLLOWED THE SCM POLICY AND OTHER RELATED POLICIES

MUNICIPAL PLANNING AND PERFORMANCE MANAGEMENT REGULATION OF 2001 – AG USES IT

MANAGEMENT AVAILABLE & CONSULTANTS

PREPARATION 2012/13

ESTABLISH A PROJECT STEERING COMMITTEE (PREFERABLE MM TO CHAIR)

ESTABLISH FINANCE AFS PREPARATION TEAM (TO BE CHAIRED BY CFO)

PREVIOUS ISSUES RAISED IN THE MANAGEMENT LETTER CLEARED – INTERNAL AUDIT TO GIVE ASSURANCE THAT MATTERS PREVIOUSLY RAISED HAVE BEEN CLEARED

INTERNAL AUDIT REPORTS – IA TO MAKE SURE THAT THE ISSUES RAISED HAVE BEEN CLEARED BY MANAGEMENT

PREPARATION 2012/13

PRIOR TO DRAFTING AFS – MAKE SURE THAT CORRECTIONS HAVE BEEN MADE WITH PROPER SUPPORTING DOCUMENTS E,G SUPPORTING VOUCHERS TO JOURNALS

ACCOUNTING POLICIES – REVIEWED AND UPDATED (NEW STANDARDS)

CORRECTIONS TO BE IN LINE WITH GRAP, ESPECIALLY GRAP 3 WHERE CORRECTION OF PRIOR PERIOD ERRORS, CHANGES IN ESTIMATES ETC – AGREE WITH THE AG IF POSSIBLE

UNAUTHORISED, IRREGULAR AND FRUITELESS – DISCLOSE IN THE AFS, REPORTED TO CONDONE TO HAVE BEEN SUBMITTED TO COUNCIL ON DEVIATIONS (SCM)

RELATIONSHIP WITH THE AUDITOR GENERAL – AVOID TENSIONS IN ALL POSSIBLE WAYS

PREPARATION 2012/13

SELF AUDIT BY ALL DEPARTMENTS – COMPLIANCE MATTERS

MPPM- SMART OBJECTIVES, QUARTERLY REPORTS, PoE – ACCURATE, RELIABLE AND COMPLETE – OBJECTIVES LINKED TO ORGANISATION OBJECTIVES CONTAINED ON THE IDP, SDBIP IN LINE WITH BUDGET AND IDP (LINKAGE)

CONTRACT REGISTER, FAR, INVESTMENT, LOANS ETC RECONCILED

DETAILED AUDIT WORKING PAPER FILEDRAFT AFS, APR AND SUBMIT TO IA &AUDIT

COMMITTEE PRIOR TO SUBMISSION

2012/13 APPROACH TO AUDIT

9

EXCEPTION RAISED – EARLY

RESOLUTION RECOMMENDED

CLEARED WITH AUDITORS NOT CLEARED

COMMUNICATION OF

FINDINGS (FORMAL)

MANAGER INFORMED

SUBMISSION TO MM

SUBMISSION BY MM TO A-G

DISCUSSED – AUDIT STEERING COMMITTEE

MEETING

DEPUTIES/ ASSISTANTS CLEARE THE

QUERY

CORRECTION MADE /

AFS ADJUSTED

ETC

AUDIT CHALLENGES

Compliance with GRAP standards and interpretations including new GRAP standards

Management estimates – AG vs. Auditors – landfill site provisions Audit risks vs. Business risks Material adjustments to AFS Prior year adjustments Internal control deficiencies – identified by A-G Non reliance on Internal Audit work done by A-G Negative publicity – objectivity of AG??? Record keeping Availability of key personnel – AG and Management Rotation of A-G Auditors (Annually new team) Audit (Add value) vs. Investigation Extrapolation 30 days – weekends and public holidays counted State employees in the service of the state

RECOMMENDATIONS

COMMON GOAL ALL STAFF MEMBERS INCLUDING MANAGEMENT– UNQUALIFIED (NO EMPHASIS)

FUNCTIONAL STREERING COMMITTEES (MM & CFO TO ATTEND)

EARLY RESOLUTION OF AUDIT QUERIESMANAGEMENT AND CONSULTANTS TO BE

AVAILABLE DURING AUDITRELATIONSHIP WITH THE AUDITORS – AVOID

TENSIONSFUNDS FOR COST OF COMPLIANCE – NT, PT, COGTAAUDIT CHALLENGES RAISED WITH PT TO DISCUSS

WITH AG – MMF TO FOLLOW UP – AS THERE IS NO PROGRESS / FEEDBACK TO DATE

THANKS