OPERATION CLEAN AUDIT
(OCA) 2014
PRESENTER: MS LERATO THWANE
DATE: 25 November 2010
Operation Clean Audit
By 2014, all 283 municipalities and 9 provinces’ departments
in South Africa will have achieved clean audits on their
Annual Financial Statements and maintaining systems for
sustaining quality financial statements and management
information.
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OVERVIEW
 Background on Operation Clean Audit (OPCA)
 OPCA 2014 targets and progress to date
 Effect of asset management on OPCA targets
 Asset management challenges experienced by municipalities
 OPCA support initiatives
 Key issues for Accounting officer’s attention
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Background Operation Clean Audit
Operation Clean Audit forms key part of Outcome 9 of
Government’s priorities:
RESPONSIVE, ACCOUNTABLE, EFFECTIVE &
EFFICIENT LOCAL GOVERNMENT SYSTEM
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The approach of Outcome 9
Delivery Focus
•
•
•
•
Outcomes Based Approach
Hands on Political Leadership
Focus on underlying root causes
Stronger Intergovernmental management
& coordination
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Operation Clean Audit Targets for
Municipalities & entities
Financial Year
% Disclaimers + Adverse
opinions
% Qualified opinions
% Unqualified Opinions
2007-08 (Actual)
38%
21%
39%
2008-09 (Actual)
31%
17%
51%
2014 Targets
Zero by 2011
60% by 2012;
75% by 2013
100% by 2014
2010 Expectation
Minimum 15%
60%+
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Effect of Asset Management on
OPCA Targets
 Of the total number of municipalities that were qualified in 2008-09,
110 (81%) municipalities were qualified in the area of property, plant
and equipment [2007-08: 164 (89%)]
 Qualifications are the result of inadequate information furnished for
audit purposes in order to verify the existence, completeness and
valuation of property, plant and equipment.
 Action plans to address prior year audit findings were not adequately
implemented by the finance units or monitored by the leadership,
which resulted in the incorrect application of GRAP 17 in respect of
Property, plant and equipment.
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The main challenges summarised
 Deficiencies in the control environment and control
activities.
 Asset systems are not always adequate.
 The complexity of measuring assets requires a high degree
of expertise.
 Inadequate supervision by accounting officers and
management throughout the year.
 Inadequate monitoring of action plans to address audit
findings by leadership
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Asset management issues
during the current 2010 audit
 Capitalisation & reporting on library books
 Infrastructure verification & Componentisation
 Intangible assets identification
 Water reticulation assets where Locals have signed SLA’s
with District municipalities
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OPCA’s 3 main areas of focus
Adequate leadership
involvement and
oversight
Effective Governance
arrangements
• Setting the tone at
the top
• Ensure proper risk
management
• Capacitate
Councilors to
strengthen Oversight
• Adequate internal
controls
• Internal audit and
Audit Committees
Conducive Financial
management
environment
• Appropriate
resources &
appropriately
qualified personnel
• Adequate financial
management systems
• Adequate systems for
dealing with audit
queries
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OPCA initiatives to support leadership
involvement and effective oversight...
 Municipal Public Accounts Committee’s (MPAC’S)
o
o
o
o
Support to Municipalities in establishment
Publish the MPAC framework
Launch MPAC’s nationally
Partnership with APAC on training & functionality
 Training of Councilors (SALGA partnership)
o Councilor induction training
o Ongoing Councilor training
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OPCA initiatives to support leadership
involvement and effective oversight
 Leadership feedback system on OPCA
o OPCA programme of action approved
o Approval of OPCA plans by Provincial EXCO’s (Cabinets)
o Quarterly progress reports on OPCA to Provincial EXCO,
Premier Coordinating Forum
o Consolidated quarterly progress reports to MINMEC
 Training of Councilors (SALGA partnership)
o Councilor induction training
o Ongoing Councilor training
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OPCA initiatives to support effective
governance arrangements
 Internal Audits:
o Provincial Treasuries’ internal audit units and audit committee upskilling by the Institute of Internal Auditors
o SAICA partnership project expanded to include support to the
functionality of internal audit units
o PCC’s to monitor and report quarterly on functionality
 Audit Committees:
o Partnership with the Institute of Directors (IoDSA) for training of
committee members & continuous guidance through
membership.
o PCC’s to monitor and report quarterly on functionality
o Governance monitoring tool to be provided by IoDSA
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Initiatives to support systems to address
previous audit findings
Provincial coordinating committees
This is a forum with representation by all key role-players i.e. SALGA, Auditor
General (advisory), National Treasury, Provincial Treasury, Provincial
COGTA, Office of the Premier, SALGA and DBSA.
Purpose:
 A coordinated approach to financial management support programs whilst
maximizing resources and eliminating duplication,
 A single strategy for the province translated into provincial action plans,
 Direct the focus towards achievement of OPCA objectives,
 Visibility & Support to the municipalities,
 Accountability and constant reporting on progress
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Initiatives to support conducive financial
management arrangements
 Financial IT system standardisation in Local Government
o 2011 project to define the ideal system for local government &
o Investigate the standardisation of systems
 Skills development projects
o Current AAT training for lower level financial managers
o ACCA partnership on skills development
o Long term strategy for training Chartered Accountants for Local
Government (SAICA partnership)
o Ongoing training by all stakeholders (Provinces, National
Treasury, etc)
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Key issues requiring the Accounting Officers’
and CFOs’ attention:
1. Leadership issues
 Tone at the top towards financial management and accounting issues
 Guidance, monitoring and supervision
 Commitment to implement corrective actions
 Maintaining required level of staffing numbers and skills
2. Financial management issues
 Preparation of complete set of financial statements on a monthly basis
 Basic internal controls implemented including reconciliations
 Commitment to corrective measures on AG quarterly key controls report
 Document management and safeguarding of documents
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Key issues requiring the Accounting Officers
and CFO’s attention:
3. Governance issues
 Ensure that Internal Audit assists leadership in providing independent
assurance on the implementation of the action plans on audit issues
 Ensure that Audit Committees fulfil the responsibility for reviewing the
financial statements submitted for audit
 Support the establishment and functionality of MPAC’s
4. Support issues
 PCC’s are there to co-ordinate municipal support, ensure that your
support requirements are met.
 Ensure honest & accurate reporting to facilitate adequate support
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THANK YOU
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