PRESENTATION TO SELECT COMMITTEE
ON APPROPRIATIONS
16 OCTOBER 2012
PRESENTATION BY Cllr NG HLONGWANE
EXECUTIVE MAYOR: EMFULENI LOCAL
MUNICIPALITY
CONTENTS
1
MUNICIPAL OVERVIEW
2
MUNICIPAL CASH FLOW FINANCIAL STATUS
3
4
SOURCE OF REVENUE,COLLECTION AND
EXPENDITURE MANAGEMENT
GRANTS EXPENDITURE
5
MUNICIPAL BUDGETS
6
COMPLIANCE MATTERS
7
CURRENT ASSETS AND LIABILITIES
8
AUDIT OUTCOMES AND ACTION PLANS
9
CHALLENGES,WAY-FORWARD AND PRIORITIES
1
CONTEXT AND BACKGROUND
 Municipal Assets Value = R 9 billion
 Municipal Budget






2011/12 Financial Year = R 3.7 billion
2012/13 Financial Year = R 4.5 billion
Municipal Jurisdiction( area size) = 987.45 Square KM’
Water and Sanitation Coverage = 98%
Electricity Coverage = 97%
Portable Water Quality Compliance = 100%
Waste Water Discharge Compliance = 97%
Refuse Collection Coverage = 100%
2
Top 10 Challenges( institutional)
•
Unemployment Rate = 45%
• Water and Sanitation Infrastructure Backlog = R10 billion
•
Roads Infrastructure Backlog = R9 billion
•
Electricity Backlog = R2 billion
•
Payment Levels in Poor Areas = 3%
•
Outstanding Debt = R2 billion
•
Cash Flow – Unfavorable Status
3
Top 10 Challenges( institutional)
• Water Losses = R180 million Per Annum
•
Electricity Losses = R20 million Per Annum
•
Billing Functionality
4
Some Key Indicators
MUNICIPALITY
GEOGRAPHIC
AREA
MUNICIPAL
BUDGET
2011/12
POPULATION
% of
NATIONAL
GVA
Buffalo City
2 527 km²
R3.9 bn
880 000
2%
Mangaung
6 604 km²
R4.0 bn
850 000
2%
987 km²
R3.7 bn
652 819
1.78%
Emfuleni
5
Budget Year on Year
• Budget from 2003/04 to 2006/07 was not credible and reflected either a
surplus or deficit
• Growth in budget is noticed due to increase service delivery demands
6
Budget Year on Year
4,000,000,000
3,500,000,000
3,000,000,000
Exponential growth in
budget
2,500,000,000
2,000,000,000
Expenditure
1,500,000,000
Income
1,000,000,000
500,000,000
0203 0304 0405 0506 0607 0708 0809 0910 1011 1112
7
MUNICIPAL CASH FLOW STATUS
8
Cash Flow Status- Quarter ended September 2012
R
Bank opening Balance
Total Receipts
Receipts
Grants
Equitable Share
Other Grants receipted and spent
R
13,797,520
1,084,477,600
780,064,498
248,952,000
55,461,102
Less Expenditure
-1,207,746,079
Eskom
Rand Water
Personnel Costs
Other payables
571,991,951
163,911,425
182,020,692
289,822,012
Operating surplus/(Deficit) for the quarter
Overdraft Facility utilized
-109,470,959
109,470,959
• Council raised R 150 million overdraft facility as a bridging finance during 2012/13 financial year.
Included within the Expenditure, are accruals raised at year-end amounting to +/- R 300 million.
Bulk services account to + 60% of expenditure incurred.
9
Eskom Impact (R)
250,000,000
200,000,000
150,000,000
2011
100,000,000
2012
50,000,000
0
• Eskom bill has a significant effect on the municipality’s cash flow
•A R 150 million overdraft was raised as a bridging finance to address, among others, effect of
Eskom bill
10
Performance on Electricity
Billing, Receipts & Payment
Electricity
250,000,000
200,000,000
150,000,000
Electricity(Billing)
Electricity(Receipts)
Eskom(Payments)
100,000,000
50,000,000
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
11
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Performance on Water
Billing, Receipts & Payment
Water
80,000,000
70,000,000
60,000,000
50,000,000
Water(Billing)
40,000,000
Water(Receipts)
Rand Water(Payments)
30,000,000
20,000,000
10,000,000
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Financial Sustainability
• Managing cash flow, debtors’ collections, distribution losses on electricity
and water and overall financial sustainability of the municipality
ACTION PLAN
AUDITOR-GENERAL FINDINGS
PLANNED ACTION BY ELM
Distribution losses on water were 
incurred
due
to
aging
infrastructure, burst pipes etc.

Stage
INTERNAL AUDIT
COMMENT
Water
loss
reduction Implementation
programme launched. Annual
target of 2% water reduction
has been set.

Smart Metering procurement Procurement stage
in progress

13
Financial Sustainability (Cont…)
 Improving the debtors collection rate
 Cash flow concerns due to debtors write off
 Socio economic factors affecting payment rates
ACTION PLAN
AUDITOR-GENERAL FINDINGS
Managing cash flow, debtors’
collections
PLANNED ACTION BY ELM
DUE DATE
 Appointment of debt collection June 2012
agencies at an advanced stage.
 Restructuting of non performing
portion of the debtors book is at
an advanced stage.
 Establishment of a Revenue
Management Agency.
 Appointment of the following
Heads were done:
Debt Management
Customer Services
Operations
14
INTERNAL AUDIT
COMMENT



REVENUE,COLLECTIONS AND EXPENDITURE
MANAGEMENT
15
STATEMENT OF FIN.. PERFORMANCE
STATEMENT OF FINANCIAL PERFORMANCE (30 JUNE 2012)
Description
REVENUE
Assessment Rates
Electricity Services
Water Services
Sewer Services
Refuse Services
Rent of Facilities & Equipment
Interest Earned – Outstanding Debtors
Total Billing
Other Income
Total Revenue
EXPENDITURE
Personeel Cost
Remuneration - Councillors
Debt Impairment
Depreciation
Repairs And Maintenance
Interest Expense
Bulk Purchases Water
Bulk Purchases Elect
Contracted Services
General Expenses
Capital Expenditure
Total Expenditure
Surplus/(Deficit)
Annual Budget
(R)
Actual (R)
% Actual to Budget
YTD
364 497 441
1 491 729 462
553 766 019
220 818 683
98 916 159
9 442 544
23 309 052
2 762 479 360
1 012 197 109
3 774 676 469
351 966 028
1 390 378 935
492 337 050
197 320 365
96 346 276
11 439 141
21 234 644
2 561 022 439
998 871 858
3 559 894 297
97%
93%
89%
89%
97%
121%
91%
93%
99%
94%
699 503 866
30 960 598
293 420 256
129 684 958
129 527 911
10 246 139
370 000 000
1 156 161 403
88 917 389
866 253 949
364 369 940
3 774 676 469
-
722 713 867
25 133 151
314 129 108
732 772 994
120 158 199
19 106 887
411 834 554
1 162 496 093
83 289 231
455 385 820
103%
81%
107%
565%
93%
186%
111%
101%
94%
53%
4 047 019 904
(487 125 607)
107%
Cost
Drivers
• Included in the Budget is R 364 million for capital expenditure, for which, its spending pattern is not
reflected as the expense, as it has been capitalized, disclosed in the following slide. Also the depreciation
increased materially due to the Fixed Assets unbundling process (GRAP 17)
16
CAPITAL SPENDINGS (2011/12 FINANCIAL YEAR)
Funding
Budgeted ( R )
Expenditure ( R )
% Spent
MIG & Counter Funding Projects
156,248,360
144,227,937
92%
143,885,000
144,227,937
100.00%
64,236,580
37,720,844
59.00%
364,369,940
326,176,718
76.29%
MIG Projects (Allocation & Roll
Over)
Council Funded Projects
Capital Budget Spending
• The under-spending of council funded projects was contributed by the cash-flow
restrictions. Most of the projects were rolled over into 2012/13 financial years
17
Revenue (2011/12 Financial year)
Revenue (Levied v/s budgeted)
140%
120%
100%
80%
60%
40%
20%
0%
Assessment
Rates
Electricity
Services
Water Services Sewer Services Refuse Services Rent of Facilities Interest Earned –
& Equipment
Outstanding
Debtors
• The billed revenue on all services are on par with the budgeted billing for the current
financial year, except for rental of facilities at 121%.
18
Expenditure (2011/2012 Financial Year)
600%
500%
400%
300%
200%
100%
0%
• The realized expenditure is sitting at 12% above the realized revenue and 7% above the budget.
Due to the revaluation process of the Fixed Assets (GRAP 17), our assets were re-stated at the
net book value of R 13 billion. This led to an increase on Depreciation from anticipated R 130
million to R 733 million in 2011/12 financial year.
19
2011/12 Financial Year
GRANTS SPENDINGS
20
National Grants (2011/12 financial year)
Opening
Balance
Restructuring Grant
Equitable Share
Financial Management Grant
Regional Sewer Scheme Grant
National Electrification Grant
Electricity Demand Site Management
Grant
Municipal Systems Improvement Grant
DWAF Grant
DACE Grant
EPWP Grant
Sedibeng Regional Sewer Scheme Grant
Municipal Infrastructure Grant
Total
Receipts
18,249,475
Total
Expenditure Surrendered
0
%
Spent
Closing
Balance
0
18,249,475
0
0
0 539,842,000 539,842,000
0
100
0
750,000
8,750,000
8,750,000
750,000
100
0
-1,862,813
26,298,099
23,300,618
0
95
1,134,668
673,525
16,256,000
16,256,000
673,525
100
0
0
6,000,000
3,912,860
0
65
2,087,140
500,000
800,000
800,000
500,000
100
0
1,096,474
0
165,990
0
2
930,484
728,627
500,000
0
0
0
1,228,627
1,290,258
3,049,000
6,734,674
+100
-2,395,416
9,953,530
11,553,375
12,396,780
0
58
9,110,125
17,242,937 126,985,000 126,985,000
0
88
17,242,937
48,622,013 740,033,474 739,143,922
20,173,000
96
29,338,565
21
Provincial & District Grants (2011/12 Financial Year)
Opening
Balance
Library Grant
Total
Receipts
Total
Expenditure Surrendered
%
Spent
Closing
Balance
2,802,216
7,200,000
7,206,589
0
72
2,795,627
HIV Aids Grant
37,346
524,160
561,506
0
100
0
Health Grant
68,239
0
68,239
0
100
0
743,368
4,090
930
0
0
746,528
Ex- District Grant
2,704,127
0
0
0
0
2,704,127
Social Development Grant
5,102,498
9,000,000
14,102,498
0
100
0
Sports Grant
1,118,853
0
558,722
0
50
560,131
Debtors Book Project (ALOECAP)
0
2,300,000
2,080,048
0
90
219,952
Asset Management Project (GRAP 17)
0
1,800,000
1,800,000
0
100
0
Security services subsidy(evictions)
0
26,330,339
26,330,339
0
100
0
50,000
0
0
0
12,626,647
47,158,589
52,708,871
0
Bontle - ke - Botho Grant
MSIG Sedibeng
22
50,000
88
7,076,365
MUNICIPAL BUDGET
23
Budget preparation process
 Establishment of effective Budget Steering Committee
 Approval of the IDP and Budget Process Plan, highlighting:
o
o
o
Key Stakeholders
Key deadlines
Consultation processes
 Mid term budget and performance review-January 2012
 Adjustment budget 2011/12 February 2012
 Draft 2012/13 Multiyear Budget - March 2012
 Public participation process
 Final MTREF Budget adopted 28 May 2012
24
Subsequent Activities considered
 Experienced Water losses in 2010/11
 Inflation hikes, guidelines from budget circulars
 IDP priorities
 Input costs v/s Output costs (Tariffs)
 Achieved collection rates
 True Cost of Service Delivery
 Direct cost
 Indirect overhead cost
25
Tariff Modelling
 Policy Shifts
o Recognition of Indigents – Property value below R150 000
o Free Basic Water – Only to Indigents
o Equalisation of tariffs
 Restructuring of Water Tariffs – Encourage water saving
 Residential Sewerage tariffs dependent on water consumption
26
Tariff Modelling- 2012/13 Fin... Year
 Tariff structures approved by council together with Budget-May 2012
 Tariff Increases approved with the Budget were:






Property Rates
Electricity
Water
Sewerage
Refuse
Sundry Tariffs
– 10%
– 13.3%
– 21.6% (13.5% + 8.1%)
– 19.37% (13.5% + 70% of 8.1%)
– 10%
– 10%
 Eskom Tariff increase
– 13.5%
 Rand Water Tariff increase – 13.5%
27
Tariff Modelling - WATER
 Business - Restructuring of tariffs proposed - Water
o
o
o
o
o
Inclining block tariff (DBT) for water
IBT in compliance with Circular 58 and s10 of the Water Services Act
Circular 58 – prescribes IBT
S10 (2)(d) of the Water Services Act – tariffs should promote or achieve
water conservation
Tariffs cheaper for initial usage but higher with increased consumption
28
Tariffs – Business (Continue)
 Restructuring of tariffs proposed - Sewerage

Equalisation of tariffs
 Due to Impact it – proposed to equalize in 2012/13 and
move towards Water consumption based in 2013/14
 Additional tariffs in respect of type of business to be
included in 2012/13 – Fat Traps, etc.
29
Tariffs – Business (Continue)
 Refuse
o
o
o
Rendered at a significant loss
Previously subsidised through other tariffs
Breakeven tariff calculated at 18% increase
 Electricity tariff
o
o
Nersa approved an average tariff increase of 13.3 %
Emfuleni pays 13.5% towards Eskom
30
Tariffs – Residential
 Restructuring of tariffs proposed - Water
o
o
o
o
o
Inclining block tariff (IBT) for water, electricity, sewerage
IBT in compliance with Circular 58 and s10 of the Water Services Act
Circular 58 – prescribes IBT
S10 (2)(d) of the Water Services Act – tariffs should promote or achieve
water conservation
Tariffs cheaper for initial usage but higher with increased consumption
31
Tariffs – Residential
 Restructuring of tariffs proposed - Sewerage
o
o
Waterborne Sewerage principle to be followed
Basic Plus Sewerage tariff (billing units) linked to 50% of Water
consumption
 Refuse
o
o
o
Rendered at a significant loss
Previously subsidized through other tariffs
Breakeven tariff calculated at 18% increase
 Electricity tariff
o
o
NERSA approved a average tariff increase of 13.3 %
Emfuleni pays 13.5% more towards Eskom
32
Tariff Structure - Residential
 Water Tariff Structure





Tariff increase per block (Incremental)
Maximum Water consumption block – Currently 30kl
Restructuring proposal (Tariff increments)
Additional Blocks – 30kl-45kl and 45kl +
Punitive tariff
 Sewerage – Consideration of water based tariff
 Basic + 50% of water consumption
33
Revenue & Collections – Budget 2012/13
ADJUSTMENT BUDGET
2011 / 2012 (R)
BUDGET 2012 / 2013 (R)
% OF BUDGET
1,298,781,712
1,489,734,764
33,0%
Grants
844,253,184
901,185,934
20,0%
Water Sales
553,766,019
695,224,834
15.4%
Assessment Rates
343,684,023
396,524,977
8,8%
Sewer
220,818,683
303,809,802
6.7%
Pre-paid Electricity
192,947,750
213,000,798
4,7%
Refuse Removal
98,916,159
125,222,157
2.8%
Other Income
169,859,395
315,865,423
7,0%
Tariff Charges Other
25,234,002
47,489,427
1.0%
Fines
26,415,543
32,399,049
0.7%
Total
3,774,676,469
4,520,457,165
100%
REVENUE BY SOURCE
Electricity Sales
34
Expenditure –Budget 2012/13
ITEM
Employee Costs
ADJUSTMENT BUDGET BUDGET 2012 / 2013
2011 / 2012 (R)
(R)
% OF BUDGET
699,503,868
693,341,946
15,3%
30,960,598
32,841,255
0,7%
129,684,958
351,444,059
7,8%
115,616,1403
1,360,317,000
30,1%
Bulk Purchase – Water
370,000,000
380,918,643
8,4%
Provision for Doubtful Debts
293,420,256
596,271,005
13,2%
Contribution to CAPEX
364,369,940
367,488,750
8,1%
Repairs and Maintenance
158,301,955
141,545,790
3,1%
Other
572,273,491
596,288,617
13,2%
TOTAL
3,774,676469
4,520,457,165
100%
Remuneration of Councilors
Depreciation and Asset
Impairment
Bulk Purchase – Electricity
35
Key Expenditure Budget components
 Bulk purchases
 Electricity

38.5 %
30.1 %
8.4 %
Water
 Personnel Costs
 Repairs and Maintenance
 Capital expenditure
3.10%
16 %
3.1 %
8.1 %
8.10%
Bulk Purchases
Personnel Costs
16%
38.50%
Repairs and Maintanance
Capital Expenditure
 Total 2012/13 MTREF Budget
R 4.5 billion
36
LEGISLATIVE COMPLIANCE
37
Compliance with Audit Processes & the
Law
Municipal Structures Act


Section 79 Establishment – (1) The Council has
appointed a functional Audit Committee and MPAC for
the effective and efficient performance of its
functionalities.
Audit Committee members appointed has requisite skills
as follows:





(Final)
Financial Accounting and Management
Internal and External Audit
Performance and Risk Management
Engineering
Legal and Governance
38
Compliance with Audit Processes & the
Law (Cont)
 Emfuleni Local Municipality is in the process to appoint an
IT Specialist to serve as a member to further capacitate the
Committee.
 Audit Committee and MPAC co-ordinate their efforts on
oversight as per MFMA Circular 32 and COGTA and
National Treasury Instructions.
(Final)
39
Compliance with Audit Processes & the
Law (Cont)
Municipal System Act

Section 45 –
The results of the performance measurements
are audited by Internal Audit in terms of section 41(1).


(Final)
Internal audit is auditing 100% not on a SAMPLE basis as other municipalities, the
reason for that is to reflect the total service delivery efforts of the municipality; it is the
ONLY municipality which does this in the country.
The AG audited the performance measurements annually as required (part of OPCA).
40
Compliance with Audit Processes & Law (Cont)
Municipal Systems Act

Section 46 – The municipality has prepared a performance report which was
subjected to IA and AG audits.
Municipal Systems Act – Regulations 14(1)(a)(c)(i)

The Municipality has developed and implemented mechanisms, systems and
processes for auditing the results of performance measurements as part of its
internal auditing process as already alluded to before.
(Final)
41
Compliance with Audit Processes & Law (Cont)
Municipal Systems Act – Regulations 14(1)(a)(c)(ii)

The Internal Audit Department of Emfuleni Local Municipality
submits quarterly reports to the Municipal Manager and
Performance Audit Committee
Municipal Systems Act – Regulations14(2) (a)

Emfuleni Local Municipality has appointed Performance Audit
Committee which meets quarterly, reports to Mayoral Committee
(Mayco) on issues of Performance, and in so doing keeps Mayco
informed in that respect
(Final)
42
Compliance with Audit Processes & Law (Cont)
 The Performance Audit Committee reports to the Council on
matters of Performance, three reports have already been submitted
to Council for this financial year.
(Final)
43
Compliance with Audit Processes & Law
(Cont)
Municipal Finance Management Act
121(i) Preparation and adoption of annual reports:
 The Annual Report for Emfuleni Local Municipality
was prepared and adopted by Council.
121(3)The Annual report
 Complied with Legislation required as per Section
121(3)(a) and (b).
122 Preparation of Financial statements:

Emfuleni Local Municipality has compiled the
annual financial statements on the basis as
required by this Section basis.
(Final)
44
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)
123
Disclosure on intergovernmental and other
allocations
124 Disclosure of Interest concerning
Councillors,
Directors and Officials
125 Other compulsory disclosures

(Final)
The Annual Financial Statements of Emfuleni Local Municipality
complied with these abovementioned Sections
45
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)
126 Submission and auditing of Annual Financial
Statements
 The Annual Financial Statements of the Municipality
was submitted within two months after the end of
Financial Year to the Auditor-General for auditing
purposes.
(Final)
46
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)

Section 62(1)(c)(ii) and 165(1)(a)


Section 165(1)(b)

(Final)
The municipality has established a functional internal audit department which have
prepared a risk based annual audit plan as approved by the Audit Committee.
The Internal Audit department has continuously advised the Accounting Officer and
reported to the Audit Committee on the implementation of the plan in relation to
internal controls, accounting procedures and practices, risk and risk management,
performance, loss and compliance with other legislation.
47
Compliance with Audit Processes & Law (Cont)
Municipal Finance Management Act (Cont)




(Final)
166 Audit Committee166(a)The committee was established as already alluded.
166(b) Audit Committee reviewed the AFS.
166(c) Audit Committee responded to the Council on issues raised by AG.
48
Reporting and other compliance
requirements
 Compliance with reporting requirement

MFMA compliance reporting timelines adherence
 Other Compliance issues



49
Establishment of Risk Management Framework and registers
Performance management System
Formulation of risk-based audit plans
CURRENT ASSETS AND
LIABILITIES
50
Current Assets
2011/12
(Unaudited)
ITEM
2010/11
Cash and cash equivalents
12,857,572
18,497,047
Trade and trade receivables from exchange
transactions
237,843,335
255,423,565
Trade and other receivables from non-exchange
transactions
139,166,698
44,585,250
Inventories
20,536,147
19,886,954
Investments
114,928,212
106,269,517
Value added tax receivable
71,033,304
21,649,624
TOTAL
596,365,268
466,311,957
51
Current Liabilities
ITEM
2011/12 (unaudited)
Trade and other payables from exchange
transactions
2010/11
701,169,997
526,816,744
Unspent conditional grants and receipts
21,567,411
61,248,661
Borrowings
5,268,984
6,858,622
Finance lease liability
23,161,407
62,193,495
TOTAL
751,167,799
657,117,522
• Included in the Trade payables is the Eskom billing for R175 million (2011/12) and R 136
million (2010/11), Rand Water bill for portable water amounted to R 23 million (2011/12)
•The municipality managed to settle the raised Overdraft facility amounting to R 90 million
during 2011/12
52
Outstanding debtors June 2012
84% debt
in
residenti
al
• Goverment Debt in the Region of R44 million
• Total Debt Stand at almost R2.7 billion (84% is Residential)
53
Outstanding Government Debt
NAME OF DEPT
GOV - EDUCATIONAL
GOV - EDUCATIONAL RATES
EDUCATIONAL (SECTION 21 SCHOOLS)
EDUCATIONAL (SECTION 21 SCHOOLS) RATES
HOSPITALS AND HEALTH
HOSPITALS AND HEALTH RATES
GOV - HOUSING
GOV - HOUSING RATES
POLICE
S.A POST OFFICE
S.A POST OFFICE RATES
PROVINCIAL HOUSING
PROVINCIAL HOUSING RATES
GOV - PUBLIC WORKS NATIONAL
GOV - PUBLIC WORKS NATIONAL RATES
GOV - PUBLIC WORKS PROVINCIAL
GOV - PUBLIC WORKS PROVINCIAL RATES
GOV - ROADS
GOV - ROADS RATES
GOV - TELKOM
GOV - TELKOM RATES
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
Grand total R
54
AMOUNT OUTSTANDING AS AT JUNE 2012
5,749,717.89
962,864.54
2,994,929.25
100,166.38
10,100,069.93
1,167,329.82
2,354,086.49
1,363,365.86
924.72
21,968.11
839.38
532,611.13
394,039.77
233,375.07
2,347,307.08
11,314,035.10
3,428,035.26
39,629.32
21,907.90
4,856.92
8,351.83
44,179,411.75
Risk Management
 ELM Fully functional Risk Management, Anti-Fraud & Anti-Corruption







Committee
Quaterly meetings are held and report is presented to Audit Comm and
Council
Risk Management represented at SMT level through the CRO being
appointed on 15/10/2011
Risk Management is aligned to Strategic Planning through the IDP,
whereby strategic & high level risks are identified
A Risk Management register has been developed ans approved by the
Audit Committee and Council
Whistle blowing policy is in place
A reviewed Risk Management Framework & Strategy has been approved
by AC and RMAAC & is ready for next Council meeting for approval
Risk matury has improved from 3 to 4.8 maturity level (NT assesment)
55
Top 10 Risks of ELM
Risk Ref
ELM Strategic
Objective
Risk Description
Root Cause
Consequences
Risk
Category
Risk
Priority
HIGH LEVEL ORGANISATIONAL RISKS
Viable and
sustainable
municipal
government
MM.HL.01
MM.HL.02
Viable and
sustainable
municipal
government
Inadequate Leadership
Sustainability (Lack of
Continuity at Senior
Management)
Senior Manager
contracts limited to
5 years; lack of
retention strategies;
Lack of continuity in
terms of
organisational
direction; Lack of
accountability;
Organisatinal
instability- new
management
recreating the wheel;
Diminishing Revenue
High Unemployment Inability to
Base (Poor Cash Flow) rates; Increasing
adequately sustain
Debtors Book;
operations; Inability
Ageing
to carry out service
Infrastructure; Lack delivery effectively
of Urban renewal;
and efficiently;
56
Strategic
Risk
High
Financial
Risk
High
Top 10 Risks of ELM (Cont…)
Risk Ref
ELM Strategic
Objective
Risk Description
Root Cause
Consequences
Risk
Category
Risk
Priority
HIGH LEVEL ORGANISATIONAL RISKS
Accountable and
clean municipal
government
Lack of Clear
Predetermined
Performance Criteria.
MM.HL.03
Key Performance
indicators not
SMART (Specific,
Measurable,
Achievable, Relevant
& Time-bound); Lack
of agreed upon predetermined
performance
outputs; Lack of
assessment criteria
for Performance
measurement in
Senior Management
Contracts;
Miss-alignment
between
Organisational
Performance and
Individual/Manageme
nt Performance;
Inability to
Strategic
adequately and
Risk
precisely determine
levels of performance;
Under accounting of
good performance;
Inability to correct
organisational
deficiencies;
MM.HL.04
Effective and
Mis-alignment of
Lack of clarification
efficient municipal business functions and of roles and
government
delegations of authority; responsibilities and
required level of
authority; Poorly
designed
organisational
structure
(disfunctional
reporting lines);
Failure to make timely
decisions; Loss of
opportunities;
Delayed service
delivery;
Strategic
Risk
57
High
High
Top 10 Risks of ELM (Cont…)
Risk Ref
ELM Strategic
Objective
Risk Description
Root Cause
Consequences
Risk
Category
Risk
Priority
Service
Delivery Risk
High
HIGH LEVEL ORGANISATIONAL RISKS
Quality rendered,
accessible,
sustainable and
reliable municipal
services
MM.HL.05
MM.HL.06
Ageing Municipal infrastructure
Poor collection
rates; Lack of
maintenance and
maitenance plans;
Inadequate Captial
Budgeting; Shortage
of skilled technical
staff; Inadequate
funding of Capital
budget on own
funds;
Effective and
Lack of documented
Management
efficient municipal procedures, controls and avoidance; Negative
government
processes
perceptions on
limitations placed
by controls;
Management need
to override controls
(easier if not in
place);
58
High electricity and
water distribution
losses; Loss of
revenue; Poor service
delivery; Costly
provision of basic
services (high
municipal tariffs);
Opportunity for fraud
and corruption;
mismanagement of
funds and missuse of
assets; Nonaccountability by
managers in enforcing
controls and rules;
Operational
Inability to
Risk
successfully hold
employees
accountable and to
institute disciplinary
actions where no
controls are placed
and well
communicated;
High
Top 10 Risks of ELM (Cont…)
Risk Ref
ELM Strategic
Objective
Risk Description
Root Cause
Consequences
Risk
Category
Risk
Priority
HIGH LEVEL ORGANISATIONAL RISKS
Effecti ve and
effi ci ent muni ci pal
government
Weak Procurement
Processes
MM.HL.07
Vi abl e and
sustai nabl e
muni ci pal
government
MM.HL.08
Loss of Key Personnel
Shortage of Staff;
Del ays i n processi ng
Cashfl ow
of orders; NonConstrati nts; Lack of compl i ance wi th SCM
adequate control s;
pol i cy and l egi sl ati on;
Lack of organi sati on- Del ayed/Poor Servi ce Procurement
Ri sk
wi de educati on and Del i very; Fraud &
trai ni ng on SCM
Corrupti on;
i ssues;
Procurement vi a
devi ati ons
Mi spl acement of
qual i fi ed and/or
experi enced
empl oyees
(Mi ssal i gnment of
Empl oyee Ski l l s wi th
assi gned job
functi on); Lack of
advancement
opportuni ti es/succe
ssi on pl anni ng; Lack
of performance
recogni ti on and
reward; Lack of onthe job/off-the job
trai ni ng and
conti nued
educati on;
59
Hi gh
Brai n drai n; Reduced
producti vi ty; Poor
servi ce del i very; Low
staff moral e;
Human
Resource
Ri sk
Hi gh
Top 10 Risks of ELM (Cont…)
Risk Ref
ELM Strategic
Objective
Risk Description
Root Cause
Consequences
Risk
Category
Risk
Priority
HIGH LEVEL ORGANISATIONAL RISKS
Effective and
Non-compliance with
efficient municipal rules and regulations
government
(contravention of Acts).
Poor planning and
scheduling;
MM.HL.09
MM.HL.10
Effective and
Poor Access Control and Lack of Security
efficient municipal Safeguarding of
Management
government
Municipal Assets
Systems; Inadequate
funding for security
controls; Lack of
application of
policies and
controls in place;
Lack of
accountability over
asset management
by Departmental
Managers; Lack of
documented
controls for staff
usage;
60
Penalties;
Imprisonment;
Withholding of funds; Compliance/
Financial
Legislative
loss/Irregular/Fruitles Risk
s/ Wasteful
expenditure,
High
Theft and vandalism
of municipal property;
Financial Loss;
Endangerment of
employees;
Security Risk
High
Risk Management (Cont…)
 A Risk-based Internal Audit Plan was developed determining high risk
areas of ELM based on the risk registers
 Operational risks are identified through the SDBIP’s & assessed
quarterly and reported to Audigt Commitee and Council
 Risk Champions has been appointed for each cluster to monitor and
report on each cluster risks
 IT Risks were identified and Action Plans are in place to remedy some
risks which include:





Overall IT Assessment (hardware and software)
Disaster Recovery Plan
Business Continuity Plan
IT Governance Framework & Control
IT Policies & Procedures
61
AUDIT MATTERS
62
Audit Report
 Audit Opinion:
2006/2007 – Disclaimer
2007/2008 – Disclaimer
2008/2009 – Qualification
2009/2010 – Qualification
2010/2011 – Qualification
 Basis of Qualification 2010/2011:

Property, plant and equipment
 Valuation of Property, Plant and Equipment (PPE)

Statement of changes in net assets
 2007/08 misstatements of service charges and employee costs that affects
the 2010/11 accumulated surplus/deficit
63
Audit Report (Cont…)
 Matters of Emphasis:
 Significant uncertainties - Civil matters
Restatement of corresponding figures - GRAP 17 implementation
 Material losses - Water 51% and Electricity 11%
 Material Impairments – Irrecoverable debt

 SCM Deviations:
20 deviations due to urgency.
 12 Irregularities reported of providers in service of the state.

64
Status of Audit Action Plan for 2010/2011

Appointment of same service provider to finalize GRAP 17 implementation.

Establishment of OPCA steering Committee (Senior Management Team)

Action Plan-Addressing Audit findings 2010/2011

Quarterly Internal Control assessments(dash board reports) –AG

OPCA progress report presented quarterly to Audit Committee (CAE), MAYCO
and Council (by Chairperson of Audit Comm)
65
SUMMARY OF FINDING!!
Cluster
Total
Findings
Not
needed to
Applicable be address
Number
during this
of
financial
findings
N/A
year
Resolved
Partially
Resolved
Not Resolved

%

%
L
%
Internal Audit
2
0
2
2
100%
0
0%
0
0%
Basic Services
1
0
1
1
100%
0
0%
0
0%
Corporate Services
2
0
2
0
0%
2
100%
0
0%
Economic Development and
Planning
Public Safety and Community
Development
2
0
2
0
0%
2
100%
0
0%
2
0
2
1
50%
1
50%
0
0%
Municipal Manager
26
6
20
11
55%
8
40%
1
5%
Infrastructure Planning and
Assets Management.
Finance
15
14
1
0
0%
1
100%
0
0%
67
34
33
25
76%
8
24%
0
0%
Cross Cutting findings
1
1
0
0
0%
0
0%
0
0%
118
55
63
11
17%
22
35%
1
2%
66
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
Action Plan Taken
Not
Partially
Not
Applicab
Resolve
Resolve Resolve
le for
d
d
d
Reviewin
Employee in
g
charge
  L
1. Infrastructure assets- No
supporting documents for
cost recorded on the
financial
statements
Financial
Services/Infrastr
ucture Planning
and Asset
Management
2. Information not submitted
Financial
Services/Infrastr
ucture Planning
and Asset
Management
3. Assets incorrectly valued
Financial
Services/Infrastr
ucture Planning
and Asset
Management
4. Newly identified assets
Financial
Services/Infrastr
Consultants (PWC) have
being appointed to assist in
all issues related to the
Emfuleni Assets and
afterward Auditor-General will
retest the Assets Register
Methodology.
Consultants (PWC) have
being appointed to assist in
all issues related to the
Emfuleni Assets and
afterward Auditor-General will
retest the Assets Register
Methodology.
Consultants (PWC) have
being appointed to assist in
all issues related to the
Emfuleni Assets and
afterward Auditor-General will
retest the Assets Register
Methodology.
Consultants (PWC) have
being appointed to assist in
all issues related to the
Bernard
Langa
Bernard
Langa
Bernard
Langa
67
Bernard
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Remarks
N/A
N/A
N/A
N/A
The audit finding will be
reviewed by AuditorGeneral after PWC
(Consultants) complete the
rectification of asset
Register.
The audit finding will be
reviewed by AuditorGeneral after PWC
(Consultants) complete the
rectification of asset
Register.
The audit finding will be
reviewed by AuditorGeneral after PWC
(Consultants) complete the
rectification of asset
Register.
The audit finding will be
reviewed by Auditor-
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
5. Assets recorded at incorrect
amount
6. Understatement of depreciation
7. Assessment of Impairment for
assets
8. Assets not considered for write
off
9. Assets not bar-coded on the
asset register
10. Valuation of newly identified
assets- differences on supporting
documents
11. Valuation methods for assets
Cluster
Action Plan Taken
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues
Services/Infrastructu
related to the Emfuleni Assets and
re Planning and
afterward Auditor-General will retest
Asset Management
the Assets Register Methodology.
Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing


L
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
Employee in
charge
68
Resolved
N/A
Remark
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings€
12. Asset Register not GRAP
Compliant
13. Assessment of residual values
14. Impairment of transport assets
15. Valuation of newly identified
assets
16. Intangible assets- Classification
17. Overstatement of landfill site
18. Post balance sheet-events after
reporting date
Cluster
Action Plan Taken
Consultants (PWC) have being
Financial
appointed to assist in all issues related
Services/Infrastructur
to the Emfuleni Assets and afterward
e Planning and Asset
Auditor-General will retest the Assets
Management
Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues related
Services/Infrastructur
to the Emfuleni Assets and afterward
e Planning and Asset
Auditor-General will retest the Assets
Management
Register Methodology.
Consultants (PWC) have being
appointed to assist in all issues related
Financial Services to the Emfuleni Assets and afterward
Auditor-General will retest the Assets
Register Methodology.
Consultants (PWC) have being
Financial
appointed to assist in all issues related
Services/Infrastructur
to the Emfuleni Assets and afterward
e Planning and Asset
Auditor-General will retest the Assets
Management
Register Methodology.
Consultants (PWC) have being
appointed to assist in all issues related
Financial Services to the Emfuleni Assets and afterward
Auditor-General will retest the Assets
Register Methodology.
Consultants (PWC) have being
appointed to assist in all issues related
Financial Services to the Emfuleni Assets and afterward
Auditor-General will retest the Assets
Register Methodology.
The matter was resolved during the
audit as the statements were updated
with the recommendations of the AG.
Financial Services
A repetitive review of the AFS will be
undertaken before the submission to
AG.
Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing


L
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Tsietsi Rafube

Nil
Nil
Nil
Employee in
charge
69
Resolved
Remarks
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding will be reviewed
by Auditor-General after PWC
(Consultants) complete the
rectification of asset Register.
The audit finding was resolved
during the AG audit process.
Portfolio of evidence was provided
and verified.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
Action Plan Taken
Employee in
charge
Partially
Resolved
Resolved
Not
Resolved
  L
19. The specifications were not
approved by the accounting
officer prior to publication of the
invitation of bids.
20. Registered address of the
contractors is different to the
one disclosed in the bid
documentation
21. Register of bids is not
published on the municipality
website
Supply Chain Management
functions have been
decentralized and different
clusters have delegated powers
in terms of section 8 of SCM
policy were by the Bid
Specification Committee get
Financial Services
Thabo Thwala
appointed by the Accounting
Officer and Bid Specification
Committee is delegated to draft
the specification and other
requirements including approving
and determining advertising
methods.
Bid Document (MBD 4 & MBD 8)
requires the bidder to indicate the
address where the business is
operating and also declarations.
Financial Services
Thabo Thwala
The bidder is required to include
Municipal Account or lease
agreement to indicate were the
business is operating.
Financial Services
The awarded bids will be
published on the website
Thabo Thwala
70
Not
Applicabl
e for
Reviewing
Remarks
N/A

Nil
Nil
Nil
The audit finding was
resolved. An approved letter of
delegation authority by the
Accounting Officer was
provided for as Portfolio of
evidence was verified.

Nil
Nil
Nil
Resolved
Nil
The audit finding was
resolved. Printout from
Website was provided as
Portfolio of Evidence and
Verified.

Nit
Nil
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
Action Plan Taken
Employee in
charge
Resolve
d
Not
Partially
Applicabl
Not
Resolve
e for
Resolved
d
Reviewin
g
  L
22. Non compliance with
Section 32(2) of the MFMA
Municipal
Manager
Irregular or fruitless and
wasteful expenditure Register
will be developed and
monitored by delegated
personnel (CFO) and
feedback will be provided on a
quarterly basis.
Nil

Nil
Nil
Nil
Nil
N/A
Nil
ALL DMM
23. Suppliers not on the
database
Financial
Services
24. Operating expenditure Transactions recorded in
SCM department encourage
suppliers to register on the
data base and also our
website have database forms
were suppliers can print and
submit to our offices during
working hours
Year End procedures(SOP)
Thabo
Thwala
71
Remark
N/A
Irregular or Fruitless and
Wasteful expenditure
Register was developed
and submitted to the
relevant management,
monthly monitoring and
evaluation process will be
implemented with effect
from
1st July 2012.
Furthermore it is
recommended that MFMA
32(2) must observe at all
times in respect of
unauthorized, irregular or
fruitless and wasteful
expenditure.
Management did not
agreed with the AG audit
finding.
Creditors list will be ready
on the 25 July 2012.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
25.
Understatement
and
Overstatement of Creditors Listings
26. Expenditure-Information
submitted for audit
not
27. Predetermined objectives No
evidence that IDP and budget are
aligned
28. IDP does not include core
components
Action Plan Taken
SCM is supposed to complete GRN
first to enable the fin system to
accrue automatically. Year-end
procedures to be followed up by
Financial Services
SCM.
Inter-departmental
communication channels with be
enhanced and regular strategic
meetings with SCM will be held going
forward
Documents were misfiled. An
investigation of root causes is
Financial Services
undertaken and proper record
keeping is in place to prevent
recurrence of such events.
Budget Sheets SA4, SA5 and SA6
which reconcile the budgeted
amounts to the strategic objectives in
Municipal
the IDP will be completed and
Manager/Performan submitted with the final budget for
ce
Management approval.
System
Communicate coding convention with
Budget Office and IPAM
Budget Office to include IDP codes
into Budget
MSA determines 9 core components
for the IDP. Two were not included disaster management plan, and
financial plan (7/9=78%)
Municipal
Manager/Performan Develop disaster management plan
ce
Management
System
Submit disaster management plan
Develop financial plan
Submit financial plan
Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing


L
N/A
Derrick
Maaroganye
Nil
Nil
Nil
N/A
Derrick
Maaroganye

Employee
charge
in
Resolved
Nil
Nil
Nil

Nil
Creditors list will be ready on the
25 July 2012. Therefore finding
will be subjected to AG
processes.
The finding was resolved,
Documents selected from the
Register was duly filed and were
verified.
Nil
Partially resolved, the core
strategic objectives are reflected
in the IDP2011/12 and Budget
(SA4, SA5 and SA6) as aligned
and verification was done. Further
verification will be subjected to AG
processes.
Nil
The audit finding partially
resolved, Disaster Management
Plan was provided as portfolio of
evidence however the financial
plan is still in a draft.
Budget Manager
Nil
Remarks
IDP Manager
Budget Manager
Manager Public
Nil
Safety
Manager Public
Safety
Manager Budget
Manager Budget
72

Nil
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
29. KPI's and targets not set for
all the core strategies
Cluster
Municipal
Manager/Performa
nce Management
System
30. IDP does not include
Municipal
general KPI's as per regulation Manager/Performa
requirements
nce Management
System
31. KPI's and targets are not
Municipal
well-defined and verifiable
Manager/Performa
nce Management
System
32. IDP not aligned to the
Municipal
SDBIP
Manager/Performa
nce Management
System
22A. IDP not aligned to the
Municipal
annual performance report
Manager/Performa
nce Management
System
33. Lack of performance
Municipal
management system for
Manager/Performa
predetermined objectives as per nce Management
the IDP
System
34. Targets in the performance
Municipal
contracts are not based on KPI's Manager/Performa
in the IDP.
nce Management
System
Action Plan Taken
Employee in
charge
Resolved
Partially
Resolved
Not
Not
Applicable
Resolved
for
Reviewing
The 2011/12 IDP and OSDBIP, as Performance
amended, addressed and
Specialist and
resolved this finding
IDP Manager
  L

The 2011/12 IDP, as amended,
addressed and resolved this
finding
Performance
Specialist and
IDP Manager
Remarks
N/A
The audit finding was resolved.
Copy of Council Resolution
was provided as Portfolio of
evidence and was verified
The audit finding was resolved.
Copy of Council Resolution
was provided as Portfolio of
evidence and was verified.
The audit finding was resolved.
Copy of Council Resolution
was provided as Portfolio of
evidence and was verified.
The audit finding was resolved.
Copy of Council Resolution
was provided as Portfolio of
evidence and was verified.
Nil
Nil
Nil

Nil
Nil
Nil
The 2011/12 IDP and OSDBIP, as Performance
amended, addressed and
Specialist and
resolved this finding
IDP Manager

Nil
Nil
Nil
The 2011/12 IDP and OSDBIP, as Performance
amended, addressed and
Specialist and
resolved this finding
IDP Manager

Nil
Nil
Nil
The 2011/12 IDP and OSDBIP, as Performance
amended, partially addressed and Specialist and
resolved this finding
IDP Manager
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
Drafting the 2011/12 performance
Specialist PM
report
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
The creation and commissioning
of the M & E solution for the
2011/12 OSDBIP addressed and
resolved this matter
73

Nil
Nil
Nil
The finding was resolved.
Performance of section 56
employees is aligned with
SDBIP and was verified.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Test Audit Findings
Cluster
Action Plan Taken
Annual performance report must
reflect comparative performance
information of previous reporting
period
Municipal
35. Annual performance report is
Determine existence of
Manager/Performa
not prepared in terms of Municipal
comparative performance data
nce Management
Systems Act S46
from 2010/11 reporting period
System
Determine performance data gap
analysis
Report on performance data gap
analysis
36. Annual performance report
Municipal
Annual performance report is
not supported by evidence
Manager/Performa
based on Q4 OSDBIP
nce Management
assessment with PoE
System
Deficiency: not properly
Municipal
advertised and SDM not properly
37. The prescribed process to
Manager/Performa consulted
amend the IDP was not followed. nce Management 2011/12 IDP amendment was
System
properly advertised and SDM
formally consulted
38. Lack of community
Municipal
KPIs and targets of Basic
involvement in the setting of
Manager/Performa Services and IPAM and EDP to
KPI's, targets and the
nce Management be communicated during public
performance management
System
participation process
process
39. Cash and cash equivalentsA letter stipulating banking details
None compliance with the Act
of the Municipality will be
Financial Services
compiled and submitted to AG
and Dept of Finance.
Employee in
charge
Specialist PM
Resolved
Partially
Resolved
Not
Resolved
  L
Not
Applicabl
e for
Reviewing
Remark
N/A
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
Specialist PM
Specialist PM
Specialist PM
IDP Manager
IDP Manager
Specialist PM
Tsietsi Rafube
74
The audit finding was resolved.
Advert and Letter to Sedibeng
was provided as portfolio of
evidence and verification was
done.

Nil
Nil
Nil
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
Nil
Resolved, Letter stipulating
banking details of the
municipality was provided as
portfolio of evidence

Nil
Nil
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
40. Debt management not
effective
Cluster
Financial
Services
41. Differences between
grant amount on the
financial statements and the
amount on the trial balance
Action Plan Taken
C. Review Credit Control and Debt
Collection Policy and By-laws
D. Indigent process
1. Write off of arrears prior to 2011/2012
financial year
2. Write off of arrears in abeyance on a
monthly basis
7. Finalization of Legal agreements
8. Report to Council for approval of
process
Not
Applicabl
Partially
Not
Resolved
e for
Employee in
Resolved Resolved
Reviewin
charge
g
Debt Manager
Financial
Services
Grants Management Committee to be
established to ensure among others the
Dobe Mokgethi
correctness of grant amounts on a monthly
basis.
Financial
Services
The clearance certificate costs are paid
directly into applicable vote number.
These payments are done when a bank
guarantee is received for the capital
amount payable for clearance certificate.
The current receipting system does not
generate the property description on the
direct payment.
42. Information not provided
for Clearance Certificates
Sam
Mokoena/Laura
Schmidt
75


L
N/A
Nil
Nil
Nil
N/A
Nil

Nil
Nil

Nil
Nil
Nil
Remark
Management did not agreed
with the AG audit finding.
The audit finding is partially
resolved. Grants
Reconciliation from July 2011
to May 2012 was provided as
portfolio of evidence.
Review of completeness and
accuracy of Trial balance
will be performed by CFO to
ensure that the AFS agreed
to the trial balance.
Finding was resolved.
Clearance Certificate Register
was established.
A sample was selected and
the requested portfolio of
evidence was provided to
support the Clearance
Certificate Register.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
Action Plan Taken
Employee in
charge
Not
Partially
Not
Applicable
Resolved
Resolved Resolved
for
Reviewing

43. Incorrect and
incomplete calculation of
VAT
44. Incomplete disclosure of
fruitless and wasteful
expenditure
45. Non compliance with
Section 65(2)(e)
46. Information not provided
for audit - Grant
Expenditure
47. Some municipal
councilors did not declare
their interest
48. Differences in amount
disclosed in the financial
statement and invoices
Financial
Services
1. Calculate the VAT apportionment rate at
the end of June 2012 and affect the
recalculated rate from the 1st of July 2012.
Tsietsi Rafube
2. To run a report on all transactions zero
rated, i. o.t find transactions which VAT
was mistakenly not calculated.
Financial
Services
Post dated payments control for third
parties payments is in place on Business
Integration system (ABSA) on the 7th of
each month.
Financial
Services
Financial
Services
Municipal
Manager
Financial
Services
It is an on-going issue institutional
challenge. First-in-first out paid principle
will be enhanced on tax invoice receipt.
Documents were misfiled. Investigations of
root causes are undertaken and proper
record keeping is in place to prevent
recurrence of such events.
Register of Declaration of interest was
developed and were issued on every
Council meeting
The matter was resolved during the audit
as the statements were updated with the
recommendations of the AG. A repetitive
review of the AFS will be undertaken
before the submission to AG.
Nil

Nil
L
Nil
Remarks
N/A
N/A
Management has appointed
Service Provider to address
the matter raised by Auditor
General.
Fruitless and wasteful register
was developed the monthly
monitoring and evaluation will
be effected from 1st July
2012/13.This finding will form
part of AG processes.
The audit findings may not be
resolved due to the financial
constrains
Derrick
Maaroganye
Nil
Nil
Nil
N/A
Derrick
Maaroganye
Nil
Nil
Nil
N/A
Derrick
Maaroganye

Nil
Nil
Nil
The finding was resolved
selected sample was
performed.
Nil

Nil
Nil
Not all Councillorship and
Personnel declare their
interest.

Nil
Nil
Nil
Manager:
Speaker
Tsietsi Rafube
76
The audit finding was resolved
during the audit. Audit finding
will form part of AG processes
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Findings
Cluster
Action Plan Taken
Not
Applicabl
Partially
Not
Resolved
e for
Resolved Resolved
Reviewin
Employee in
g
charge
  L
49. Incomplete disclosure of
Environmental Rehabilitation
provisions
Financial
Services
The matter was resolved
during the audit as the
statements were updated with
Tsietsi
the recommendations of the
Rafube
AG. A repetitive review of the
AFS will be undertaken before
the submission to AG.
Financial
Services
Reconciliation of salaries
suspense control account on
monthly basis including review Derrick
and supervision i.o.t prevents Maaroganye
the re- occurrence of
variances.
50. Difference between
Venus and Pay Day
Total
Percentage
Number of audit findings
remaining for retesting.
Percentage
51
0
0%
77

Nil
Nil
Remarks
N/A
Nil
Nil

Nil
Nil
16
73%
6
27%
0
0%
29
The audit finding was
resolved during the audit.
Audit finding will form part of
AG processes
The funding is partially
resolved, Currently service
provider has been
appointed to address the
reconciliation between
Venus and Payday System
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding
51. Bank account balances not
properly disclosed
52. Control environment:
Shortcomings with regards to
audit committee
53. Risk assessment:
Implementations of internal audit
findings
54. Control environment:
Performance of deputy municipal
managers not monitored
Action Plan Taken
The matter was resolved during the audit
as the statements were updated with the
recommendations of the AG. A repetitive
review of the AFS will be undertaken before
the submission to AG.
Financial Services
Employee in
charge
Tsietsi Rafube
Finding was resolved, Clause was included
in the Reviewed Audit Committee Charter.
Internal Audit
JS Masite
The finding was resolved.
Internal Audit
Js Masite
Monitoring and evaluation of performance
is done on a quarterly basis. 1st Q informal
, half yearly
55. Control environment:
Weakness pertaining to
preventative measures on
environmental
factors affecting the municipality
Cluster/Department
The Environmental By-Laws are at the 3rd
Draft and the ELM is assisted by Sedibeng
and DEA. The target date for submission to
ELM Legal Department is 31 August 2012.
The report regarding the Environmental
Plan of Action will be resubmitted to the
Sec. 80 Committee and thereafter to Mayor
and Council. Should be approved by 30
June 2012. Implementation will follow
approval subject to funding. All the other
matters raised in the Management Letter
are subject to funding. The indications are
that nothing will be approved for the
Municipal
Manager/Performance
Management System
Public Safety
Henre de Hart
Nnete Makhubo
and Benny
Mhlanga
78
Resolved




Nil
Nil
Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing

L
N/A
Nil
Nil
Nil
The audit finding was
resolved during the audit.
Audit finding will form part of
AG processes
The audit finding was
resolved; the relevant
clause was included in the
charter.
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil

Nil
Remark
Nil
The audit finding was
resolved.
Half yearly assessment was
conducted; however there is
one senior manager
performance assessment
conducted still outstanding
however, management has
put process is in place to
finalize the performance
assessments of all senior
managers.
The audit finding is partially
resolved. Draft Air Quality
Management By law,
Climate Change Tools and
draft Environment education
and awareness strategy and
action plan were provided
as portfolio of evidence.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding
56. Control environment:
Remuneration policy
outdated
Action Plan Taken
Cluster/Departme
nt
Employee
in charge
Review the salary scales for 20072008
and replace them with current salary
percentage
Corporate Services
Mr. Vincent
Phalange
The Manager: Communications will be
engaged in writing and the monthly
budget statements will be placed on
the website from February 2012.
Financial Services
Doe
Mokgethi
58. Monthly budget
statements do not include
variances and projections for
the remainder of the year
1. Monthly statements to be completed
on the new template (C-Schedule). 2.
Comments on material variances to
solicited and recorded in the template.
Financial Services
59. Non compliance with
section MFMA 62(1) (d).
Irregular or fruitless and wasteful
expenditure Register was
developed and monitored by
delegated personnel (CFO) and
feedback is provided on the
quarterly bases.
57. Monthly budget
statements not placed on the
municipality's website
Resolved

Partially
Resolved
Not
Resolved
 L
Not
Applicable
for
Reviewing
N/A
Nil

Nil
Nil

Nil
Nil
Nil
Senior
Manageme
nt Team
Nil

Nil
Nil
Senior
Financial Services Manageme
nt Team
Nil

Nil
Nil
79
Remarks
The audit finding is partially
resolved. Management will
have an addendum to the
policy to address the AG
finding
The audit finding was
resolved. Print out from
Emfuleni Local Municipality
website was provided as
Portfolio of evidence
verification was conducted.
The finding is partially
Resolved.
Template of C schedule was
introduced with effect from
January 2012, explanation of
variance and corrective
action was given, starting
from May 2012.
Furthermore management
to ensure that the
explanation for material
variance and corrective
actions are submitted to
Budget so as to comply
with Section 71 of MFMA.
The Irregular or Fruitless and
Wasteful expenditure
Register was develop
effective date for monthly
monitoring and evaluation will
is 1st July 2012.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding
Action Plan Taken
Cluster/Department
Employee in
charge
Resolved

60. Fixed assets: No evidence obtained A Consultants (PWC) has being appointed
of periodic review of asset register
to assist in all issues related to the
Emfuleni Assets and afterward AuditorGeneral will retest the Assets Register
Methodology.
61. Unidentified library books during
physical verification of library books
A Consultants (PWC) has being appointed
to assist in all issues related to the
Emfuleni Assets and afterward AuditorGeneral will retest the Assets Register
Methodology.
Financial Services
Financial Services
Bernard Langa
Bernard Langa
62. Expenditure: Contracts not
available for inspection
The invoice will be submitted to Internal
Audit
63. Amount on the invoice does not
agree to the amount as per General
Ledger
64. The final award of above R5 million
may only be sub delegated only to the
Chief Financial Officer
Basic Services
Invoices are adjusted by user depts. for
CREDITOR'S section to effect payment. A
letter from supplier confirming the changes
on the invoice will have to be attached
before processing pmt.
Financial Services
Supply Chain Management functions have
been decentralized and different clusters
have delegated powers in terms of SCM
policy. Adherence to SCM Policy will be
encouraged. In terms of section 8 (7.3),
The Accounting Officer or delegate may
review and reconstitute the members of the
Bid Adjudication Committee periodically.
Financial Services
Nil
Nil
Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing

L
N/A
Nil
Nil
Nil
Nil
N/A
The audit finding will be
reviewed by Auditor-General
after PWC (Consultants)
complete the rectification of
asset Register.
N/A
The audit finding will be
reviewed by Auditor-General
after PWC (Consultants)
complete the rectification of
asset Register.

Nil
Nil
Nil
Derrick
Maaroganye
Nil
Nil
Nil
N/A
Thabo Thwala
Nil
Manager
80
Nil
Nil
Remarks
N/A
The audit finding was
resolved. The invoice was
submitted to internal audit
for verification which was
conducted.
Audit finding will form part of
AG processes
Will be subjected to AG
process.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Resolved
Audit Finding
Action Plan Taken
Cluster/Department
Employee in charge

Partially
Resolved
Not
Resolved
Not
Applicable
for
Reviewing

L
N/A
65. Non Compliance with
Division of Revenue Act
regarding the reporting of
unspent
conditional grants
Grants Management Committee to be
established to ensure among others the
correctness of grant amounts on a monthly
basis. This will enable the correct reporting
of grants at the end of the financial year.
66. Trade Payables:
Overstatement of Midvale Local
Municipality liability
67. Non-disclosure of Operating
Leases
68. Budget is not based on the
development priorities and
targets
Creditor's sec didn't have all the invoices
as Midvale at the time of request. The
matter was resolved with the inter-council
indebtedness account reconciling. The
department will vet recons prior
submission of info for AFS preparation.
Ensure full compliance with GRAP 13. The
excise can only be performed during the
compilation of 2011/12 AFS
Tables SA4 to SA6 in the annual budget
reconcile the strategic objectives in the
IDP to the Budget. The tables indicate the
funding for all strategic objectives as per
the IDP. The Schedule will be completed
again in the 2012 / 13 financial year and
will be verified for correctness.
Financial Services
Dobe Mokgethi
Financial Services
Derrick Maaroganye
Financial Services
Tsietsi Rafube
Financial Services
Dobe Mokgethi
81
Remarks
1. Reconciliation of Grants
were performed up to May
2012
2.
Reconciliations up to June
2012 will be performed and
submitted to the grants
committee once the financial
system is running. (Year
end processes are in
progress)
3. An application for all
unspent grants to be rolled
over into the
2012 /
2013 financial year will then
be made to the National
treasure
Audit finding will be form
part of AG processes.
The audit finding was
resolved. The copy of the
invoices and payments were
provided as portfolio of
evidence and were verified.
Nil
Nil
Nil
N/A

Nil
Nil
Nil
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes
Nil
The finding was resolved,
SA4 to SA6 which reflect
how strategic objectives are
funded by the budget was
completed and that was
approved by Council.
Portfolio of evidence was
provided

Nil
Nil
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Audit Finding
Action Plan Taken
69. Monthly budget statements not S 71 reports have been submitted on
submitted in terms of S71 of
a monthly basis. Starting January
MFMA
2012 both the old formats as well as
the format prescribed by the Municipal
Budget and Reporting Regulations will
be submitted to the National Treasury.
Strict measures will be implemented to
ensure that these reports will continue
being submitted on a monthly basis.
70. Unauthorized expenditure
Transfer of amounts to relevant
votes on a monthly basis to ensure
that votes and sub-votes are not
overspent.
71. Incorrect allocation of the
provision amounts
72. Deposit register not reconciled
to the General Ledger
The matter was resolved during the
audit as the statements were updated
with the recommendations of the AG.
A repetitive review of the as will be
undertaken before the submission to
AG.
The deposit register is updated daily
as new leases or vacations are
received and Reconciliation was
perform on the monthly basic
Cluster/Departme
nt
Employee in
charge
Resolved
Partially
Resolved
Not
Resolved
  L
Not
Applicabl
e for
Reviewing
N/A
Financial Services
Dobe Mokgethi

Nil
Nil
Nil
Financial Services
Dobe Mokgethi
Nil
Nil
Nil
N/A
The audit finding was
resolved. Copies of S71
report were provided as
Portfolio of evidence
(Letter from Provincial
Treasury that outline the
information that was
supported).
Audit finding will form
part of AG Processes.
Financial Services
Tsietsi Rafube

Nil
Nil
Nil
The audit finding was
resolved during the audit
and verification will be
performed after tabling of
Annual Report.
Financial Services
Sam
Mokoena/Gawi
e

Nil
Nil
Nil
The finding was resolved
and verification was
conducted.
73. Vacant land charged refuse
It is the basis of the valuation and the
technical indication as (VL) that gives
the status of the property as improved.
Remark
Financial Services
Sam
Mokoena/Shak
es
82
Nil
Nil
Nil
N/A
The finding still not
resolved, Management
should review Rates
Policy so as to address
the tariff of Vacant land
charged refuse.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Resolved
Audit Finding
Action Plan Taken
Cluster/Departme
nt
Employee in
charge
Partially
Resolved
Not
Resolved
  L
74. Duplication in valuation roll
75. Meters in the upload file not
linked to any meter number in the
transaction file
76. Difference in readings as per
upload file and the transaction file.
77. Disclosure for Property, Plant
and Equipment
Properties within the jurisdiction
which are registered appear on the
valuation roll. In community of
property, both names will appear
and only one account will be
generated on the billing system.
Not
Applicabl
e for
Reviewing
Remark
N/A
Financial Services
Sam
Mokoena/Laura
Nil
Nil
Nil
N/A
Audit finding will form part
of AG processes.
Errors corrected when picked up on
the deviation report
Financial Services
Sam
Mokoena/Nerina
Nil
Nil
Nil
N/A
Audit finding will form part
of AG processes.
Deviation report and test readings
done monthly.
Financial Services
Sam
Mokoena/Nerina
Nil
Nil
Nil
N/A
Audit finding will form part
of AG processes.
The matter will be resolve during the
preparation of Financial statement for
2011/12
Financial Services
Nil
Nil
Nil
N/A
Audit finding will form part
of AG processes.
Nil
Nil
Progresses of the assets
verification were
conducted. Currently
PWC has been appointed
to assist Emfuleni with
Property Plant and
Equipment.
0
12
Tsietsi Rafube
78. Asset count not submitted to
the CFO
Financial Services
Assets verification will be conducted
and report will be prepared.
Total
Percentage
Number of audit findings
remaining for retesting.
Percentage
Nil

10
63%
6
37%
Bernard Langa
28
83
0
0%
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
79. Control environment:
Information requested but
not submitted for audit
80
80. Quarterly reports were
not submitted to the
mayor
81
81. Monthly reports were
not submitted to the
accounting officer
82
Action Plan
Taken
Current Management Comment
Employee in
charge
1. The Budget Office has a Budget
Policy which is used as a guideline in
the compilation of budgets.
2. The MFMA, MFMA Circulars and the
Budget Regulations are guidelines to
the Budgeting Process as well.
3. The IDP and Budget Process Plan
Financial Services detailing timeframes and deadlines for Dobe Mokgethi
events within the budget cycle was
also approved by Council in August
2012.
4.
The Budget Policy, MFMA Circulars 58
and 59, The Budget Regulations and
the IDP/Budget Process Plan are
attached as evidence.
In terms of standing orders of Emfuleni
Local Municipality The quarterly SCM
reports serves at SMT, Section 80,
MAYCO, and Council.
All this committees have different dates
Financial Services
Thabo Thwala
which overlap beyond the 10 of every
quarter. The Executive Mayor is the
member of MAYCO and Council and
the quarterly report serve in those
committees.
In terms of standing orders of Emfuleni
Local Municipality The SCM reports
serves at SMT, Section 80, MAYCO,
Financial Services and Council. The Accounting Officer is Thabo Thwala
the member of SMT, MAYCO and
Council and the reports serve in those
committees.
84
Partially
Resolved
Resolved
Not
Resolved
Not
Applicable
for
Reviewing
 
L
N/A
N/A
Nil
Nil
Nil


Nil
Nil
Nil
Remark
Nil
1. Copy of Budget Policy and
Council Resolution was
provided as portfolio of
evidence.
Nil
Partially Resolved. Quarterly
reports were submitted to the
Mayor, however the reports
are not submitted within ten
working days framework
stated in the Supply Chain
Management regulations 7 (3)
Nil
Partially Resolved. Monthly
reports were submitted to the
Accounting Officer, however
the reports are not submitted
within five working days
framework stated in the
Supply Chain Management
regulations 5 (3)
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
Action Plan
Taken
Current Management Comment
Employee in
charge
Partially
Resolved
Resolved
Not
Resolved
Not
Applicable
for
Reviewing
 
L
N/A
82. Variance between the
creditors listing and the
financial statements
83
84
85
86
87
88
89
Ensure that cut-off procedures are
observed and adhered to by issuing out
a Memo informing all departments
Financial Services about the yearend cut-off dates. The
Tsietsi Rafube
system must be temporarily closed
after the cut-off date to prevent further
processing
83. Community not invited
Matter was resolved, Currently ELM
to make representations in
invited the community for participation
connection with the
Municipal Manager through media (news paper, Local
Henry De hart
2009/2010 annual report
Radio, Emfuleni external News letter,
etc)
84. Completeness of
Ensure full compliance with GRAP 13.
finance lease disclosure
Financial Services The excise can only be performed
Tsietsi Rafube
during the compilation of 2011/12 AFS
85. Differences in amount
disclosed as restructuring
Grant Withheld and
The matter was addressed during the
Financial Services
Tsietsi Rafube
amount as per
audit.
Correspondence with
National Treasury
86. Differences in Grants
opening balances
Financial Services This was resolved during the audit.
Tsietsi Rafube
87. Reconciliation
between valuation roll and
update on thereof on
Venus not made
available
88. Differences in grants
reconciliation and grants
receipts disclosed in the
financials
Financial Services The matter will be resolve during the
preparation of Financial statement for
2011/12
The matter was resolved during the
Financial Services preparation of financial Statement for
2010/2011
Remark
Nil
Nil
Nil
N/A
Creditors list will be ready on
the
25 July 2012.
Therefore finding will be
verified after the completion of
creditor's list therefore it will
be subjected to AG
processes.
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes.
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes.

Nil
Nil
Nil
The audit finding was
resolved during the audit. This
will form part of AG audit
processes.
The audit finding was
resolved during the audit. This
will form part of AG audit
processes.

Nil
Nil
Nil
Tsietsi Rafube
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes.
Tsietsi Rafube
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes.
85
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
Action Plan Taken
Employee in
charge
Current Management Comment
Resolved
Partially
Resolved
 
90
89. Leave policy in draft
91
90. Rentals agreement not
signed by both the lessor
and lessee
91. Approval for
92
cancellation of fines
Corporate Services
EDP
Public Safety
Policy has been work shopped by
Speaker.
Properties: Agreements with
outstanding rental amounts be
investigated by Debt Collection.
There was SOP in place when the
incidents occurred.
The SOP will be amended to address
the specific error that occurred and will
be distributed to all personnel.
There matter will be discussed with
traffic division to inform their personnel
about the correct procedure on how to
cancel a document
92. Rental agreements not
received
93
94
Properties: Finance to be informed of
agreements not valid anymore.
Housing:
Quarterly stock take will continues be
done to detect discrepancy with the
Financial Services
stock and to improve controls around
stock
EDP
93. Insufficient controls
around stock
Not
Resolved
Not
Applicable
for
Reviewing
L
N/A
Nil
Nil
Mr. Vincent
Phahlane
Nil

Nil
Properties: A.
Streak
Housing: F
Human
Nil

Nil
Wynand
Pretorious

Nil
Nil
Remark
The finding is partially
resolved. Policy has been
work shopped by Speaker.
The audit finding is partially
resolved. Current status was
provided as portfolio of
evidence.
Nil
The finding was resolved,
Copy of Standard Operation
Procedures was provided as
portfolio of evidence.
Properties: A.
Streak
Housing: F
Human
Nil

Nil
Nil
The audit finding is partially
resolved. Current status was
provided as portfolio of
evidence.
Thabo Thwala

Nil
Nil
Nil
The audit finding was
resolved, Quarterly stock
takings were conducted.
86
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
95
Audit Finding
94. No formal
appointments of members
serving on bid
specification, evaluation
and
adjudication committee
95. Extensions of
contracts
96
96. Performance of
contractors not monitored
on a monthly basis
97
97. Bid awarded other
than the one
recommended by bid
evaluation
98
99
98. Balances disclosed on
the financial statement
with no supporting
evidence (Debt
Management & Sports
and Recreation)
Action Plan
Taken
Current Management Comment
Appointments of members serving on
Financial Services
bid committees are done
Clusters or Department will be
encouraged to do proper costs
projections when doing planning of the
Financial Services
projects. This will help to ensure that
extensions of contracts are not
encouraged.
Performance
Department usually hold Project
Management
Steering Committee once a month
System/
whereby all Consultants and
Infrastructure
Contractors report on progress reports
Planning and
and verified all action taken during
Asset
weekly projects meetings
Management
Should the Bid be awarded to other
than one recommended by Bid
Evaluation Committee, section 114 (1)
& (2) of MFMA No. 56 of 2003 should
be complied with. For this finding the
All DMM's
National Treasury, Provincial Treasury
and Auditor General were not informed
and section 114 (2) of MFMA No. 56 of
2003 was applied to rectify an
irregularity.
The matter will be resolve during the
Financial Services preparation of Financial statement for
2011/12
Employee in
charge
Partially
Resolved
Resolved
Not
Resolved
Not
Applicable
for
Reviewing
 
L
N/A
Remark
The audit finding was
resolved. Copy of formal
appointment letter was
provided as portfolio of
evidence.
Thabo Thwala

Nil
Nil
Nil
Thabo Thwala
Nil
Nil
Nil
N/A
Internal Audit still verifying the
audit finding raised.
Nil
Audit finding is partially
resolved, not all performance
of the contractors was
monitored on a monthly basis.
Khulekani
Nxumalo
Nil

Nil
Thabo Thwala
Nil
Nil
Nil
N/A
Internal Audit could not
provided assurance as the
tender file could not be
provided by SCM. The file is
still with Ratanang
Tsietsi Rafube
Nil
Nil
Nil
N/A
Audit finding will form part of
AG processes.
87
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
Action Plan
Taken
Current Management Comment
Employee in charge
Partially
Resolved
Resolved
Not
Resolved
  L
Not
Applicable
for
Reviewing
N/A
99. Assets not bar-coded
on the asset register
100
101
100. Completeness of
asset register-other
assets
101. Non compliance with
section 62(1)(d).
102
103
104
105
Financial Services Assets Register will be updated by
Management after Auditor General
express the opinion
Consultants (PWC) has being
appointed to assist in all issues
Financial Services related to the Emfuleni Assets and
afterward Auditor-General will retest
the Assets Register Methodology.
Develop a policy on unauthorised,
irregular, fruitless and wasteful
expenditure. Design a register to
Financial Services
populate these expenditure and
distribute it to different clusters for
identification.
102. Non compliance with
Put strategy to improve cash flow
Section 65(2)(e)
Financial Services through revenue enhancement and
cost cutting measures.
103. Finance lease The matter was resolved during the
Appendix A not agreeing
audit as the statements were updated
to the Trial Balance
with the recommendations of the AG.
Financial Services
A repetitive review of the AFS will be
undertaken before the submission to
AG.
104. Minimum bank
Still not in agreement with the AG.
accounts not kept
Write a correspondence to AG to
Financial Services
validate the finding and give
appropriate recommendation
Bernard Langa
Nil
Nil
Nil
N/A
Bernard Langa
Nil
Nil
Nil
N/A
Tsietsi Rafube
Nil

Nil
Nil
Derrick Maaroganye
Nil
Nil
Nil
N/A
Tsietsi Rafube
Tsietsi Rafube
88

Nil
Nil
Nil
Nil
Nil
Remark
The audit finding will be
reviewed by Auditor-General
after PWC (Consultants)
complete the rectification of
asset Register.
The audit finding will be
reviewed by Auditor-General
after PWC (Consultants)
complete the rectification of
asset Register.
Irregular or Fruitless and
Wasteful expenditure
Register was developed and
submitted to the relevant
management however
monitoring and
evaluation????.
The audit findings may not
be resolved due to the
Financial constrains
Nil
The audit finding was
resolved during the audit.
This will form part of AG audit
processes.
N/A
Management did not agree
with the audit finding raised.
Therefore the finding is not
applicable for verification.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
Action Plan Taken
Resolved
Employee in
charge
Current Management Comment
Resolved
Number
106
105. Late Submission of
the details of new bank
account
106
Audit Finding
105. Late Submission of
the details of new bank
Financial
Services
account
Action Plan
Taken
Employee in
charge
Current Management Comment
Obtain a list of all banking details each
Obtain a list of all banking details each
monthServices
and report
accounts
to AG
Tsietsi
Rafube
Financial
Tsietsi Rafube
monthnew
and report
new accounts
to AG
Provincial Treasury.
and Provincialand
Treasury.
Partially
Resolved

Not
Resolved
Not
Resolved
Not
Applicable
for
Reviewing
L
N/A
 
 

Partially
Resolved
Nil
Nil Nil
Nil
Nil
L
Not
Applicable
for
Reviewing
N/A
Remark
Nil
Resolved, letter was
Nilsubmitted Provincial Treasury
Nil
and Auditor-General. (P.O.E
Email sent)
N/A
Audit finding will form part of
AG processes.
106. Incorrect tariffs used
106. Incorrect tariffs used
107
107
108
109
Mokoena/Laura
Sam
Mokoena/Laura
Financial Services
107. Supporting
108
documentation not
provided for audit
purposes (Expenditure 109
Management)
108. Mid-year budget and
performance assessment
report not placed on the110
municipality's website
109. Security
Management
110
Sam
Financial Services
107. Supporting
documentation not
provided for audit
purposes (Expenditure
Management)
Financial
108. Mid-yearServices
budget and
performance assessment
report not placed on the
municipality's website
109. Security
Management
Municipal Manager
Proper record keeping procedures are
currently implemented and in place to
and procedures
safeguard information
record maintain
keeping
arefor
easy access.
Derrick
Financial Services
Maaroganye
Proper
currently implemented and in place to
Derrick
maintain
for Maaroganye
Municipal and safeguard
Midyear budgetinformation
and Midterm SDBIP
Paseka Rakosa
Manager
easy
access. was placed in the Emfuleni Municipality
website.
The Issue was raised with BCX who are
the vendor of the Venus system. Their
response to this issue was forwarded to
the AGSA. The IT section cannot do
Municipalbudget and Midterm SDBIP
Midyear
any alterations to the system as they
Manager
rights. BCXMunicipality
felt that this could
was placed in have
the no
Emfuleni
not be done for reasons. Attached find
website.
the documents from BCX Marked as
BCX109
Nil


Paseka
CIO Rakosa Nil
The Issue was raised with BCX who are
the vendor of the Venus system. Their
response to this issue was forwarded to
the AGSA. The IT section cannot do any
Municipal Manager alterations to the system as they have
no rights. BCX felt that this could not be
done for reasons. Attached find the
documents from BCX Marked as
BCX109
CIO
89
Nil
Nil

Nil


Nil
Nil
Nil
Nil
Nil
Nil
N/A
Nil
Nil Nil
Nil
resolved. Printout of website
was provided as portfolio of
evidence.
security Management
NilDraft
policy was developedNil
still
awaiting for council approval.

Resolved, letter was submitted
Provincial Treasury and
Auditor-General. (P.O.E Email
sent)
Audit finding will form part of
AG processes.
The finding resolved as per
our selected sample.
NilThe audit finding wasNil
Nil
Remark
Nil
Nil
The finding resolved as per
our selected sample.
The audit finding was
resolved. Printout of website
was provided as portfolio of
evidence.
Draft security Management
policy was developed still
awaiting for council approval.
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
110. User Access Control
111
112
111. User Access Control
113
112. Program Change
Management
114
113. Information
Technology Service
Continuity
Action Plan Taken
Current Management Comment
Employee in
charge
This will form part of the IT assessment
and review and IT strategy
development.
Municipal
Current status: Unix, Access control
Manager/Informatio
procedures are documented for Payday
n Technology
and Venus. The IT usage approved
policy control is available and have
been in use since the year 2009.
The changes to these items were
discussed with BCX who is the vendor
of this system. As BCX does all
changes and database administration
Municipal
on the system this would have been
Manager/Informatio
done via an upgrade to Solaris 5.9
n Technology
operating system. This could not be
done for reasons as set out in the letter
(Marked as BCX 111) in the attached
file.
The requested Procedures have been
Municipal
developed and implemented by IT.
Manager/Informatio
Proof is marked Change
n Technology
Management112 in attached file
CIO
CIO
The Disaster recovery plan for PAYDAY
Municipal
was developed, implemented and
Manager/Informatio tested by IT. Finalised The test results
n Technology
and proof is marked PAYDAY DRP113
in the attached file.
90
Resolved
Partially
Resolved
 

Nil
Nil
Nil
Not
Resolved
Not
Applicable
for
Reviewing
L
N/A
Nil
L
Remark
Nil
The finding was resolved,
Adding and Modifying is the
same procedure. Removal of
users are done when
personnel resigns/ retire or
deceased upon request form
pay office informing IT.
Nil
IT to discuss the finding with
Business Connexion as they
are the once having database
administration rights.
CIO

Nil
Nil
Nil
CIO
Nil

Nil
Nil
Change management
procedure have been
developed and approved by IT
Management.
DRP plan was in place for
Venus and Payday system
and were tested, however
BCP was still not developed,
Management committed to
develop an ogranogram BCP
by Service provider
(Umnombo)
ACTION PLANS FOR 2010/11 AUDITOR GENERAL REPORT
Number
Audit Finding
Action Plan Taken
Current Management
Comment
Employee
in charge
The IT Steering
Committee have not been
fully functioning. Only one
meeting was held during
the current financial year
as at May 2012.
Municipal
Manager/Information
Technology
115
114. Information
Technology Governance
The IT Department is still
not being fully capacitated.
The intenda system has
been shut down and no
longer in use.
Asset Management
Department
91
Not Applicable for
Reviewing
 L
N/A

Nil
Nil
Nil
Nil
Nil
Nil
N/A

Nil
Nil
Nil
CIO
Payday user Account
Management
Consultants (PWC) have
being appointed to assist
in all issues related to the
Emfuleni Assets and
afterward Auditor-General
will retest the Assets
Register Methodology.
Total
Percentage
Number of audit findings
remaining for retesting.
Percentage
Partial
Not
Resol
ly
Resolv
ved Resol
ed
ved
Bernard
Langa
39
0
0%
Nil
Nil
Nil
N/A
14
56%
10
40%
1
4%
14
Remark
Resolved, meetings
held
on
30
September 2011, 9
December 2011, 25
May.2012
CIO has been
appointed and
currently Emfuleni
Local Municipality
and Sedibeng
District still busy
negotiating to move
IT department to
Emfuleni.
Resolved – account
management is now
done by IT
Assets Register of
IT department will
form part of AG
process
Road Map to an Unqualified Audit
Strengthening Project
Management
PMS & Capacity Governance
- Aug 2012
- Sumission of
Financial
Annual report
Sustainability &
- On time
Revenue
SCM capacity Completeness
submission of
and
AFS
- Aug 2012
Regulatory
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
- Aug 2012
92
Road Map to an Unqualified Audit
Financial
Sustainability &
SCM capacity Revenue
and
Completeness
Regulatory
- Aug 2012
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
Strengthening
PMS & Capacity Governance
- June 2012
- Sumission of
Annual report
- On time
submission of
AFS
- Aug 2012
Interventions:
• Engagement with AG on compilation of AR during 2011/12 – Completed
•Revised asset valuation method - Completed
•Submission of Assets register to AG - 30 Aug
• Computerized Assets Inf Syst (IQMS) – In progress
93
Project
Management
Road Map to an Unqualified Audit
Strengthening
PMS & Capacity Governance
- June 2012
- Sumission of
Financial
Annual report
Sustainability &
SCM capacity Revenue
- On time
and
submission of
Completeness
Regulatory
AFS
Aug
2012
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
- Aug 2012
Interventions:
• Decentralisation of SCM – Aug Deadline
• Capacitation – Skills – In progress
• Creation of Contract Mngt – In progress
• Review of SCM policy – In progress
• Data base clean up – Partially completed
• Price benchmark implementation (value for
money ) - Completed
Project
Management
Road Map to an Unqualified Audit
Strengthening
PMS & Capacity Governance
- June 2012
- Sumission of
Financial
Annual report
Sustainability &
- On time
SCM capacity Revenue
submission of
and
Completeness
AFS
Regulatory
Aug2012
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
Project
Management
Interventions:
• Meter Audit, verification and data clean-up – In progress
• Accounts reconciliation – On going
• Segment customers – In progress
• Appointment of debt collecting agencies - Completed
• Restructure the debtors book – Process to be reviewed
• Creation of Revenue Agency – in progress (50%)
• Review Tariffs and funding model – In progress
• DSM interventions (water & elec loss reduction) – in progress
• Appointment of key personell in revenue - Complete
- Aug 2012
95
Road Map to an Unqualified Audit
Project
Management
Financial
Sustainability
SCM capacity & Revenue
and
Completeness
Regulatory
Compliance - Aug 2012
GRAP 17
Compliant
Assets
Register
- Aug 2012
Strengthening
PMS &
Governance
Capacity
- June 2012
- Sumission of
Interventions:
Annual report
• Allignment of KPI’s with
IDP
- On time
• Review of KPI’s
submission of
• Review of IDP & SDBIP
AFS – Aug
• Submission of
2012
Performance Information
for Audit by Aug 2012
- Aug 2012
100% complete
96
Road Map to an Unqualified Audit
Financial
Sustainability &
SCM capacity Revenue
and
Completeness
Regulatory
- Aug 2012
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
PMS & Capacity
- June 2012
- Sumission of
Annual report
- On time
submission of
AFS
Strengthening
Governance
Project
Management
Interventions:
• Functionality of Sect 80 /79
Committees and Other
Committees esp MPAC
- Aug2012
100% complete
97
Road Map to an Unqualified Audit
Project
Management
Financial
Sustainability &
SCM capacity Revenue
and
Completeness
Regulatory
- Aug 2012
Compliance
GRAP 17
Compliant
Assets
Register
- Aug 2012
- Aug 2012
Strengthening
PMS & Capacity Governance
- June 2012
- Sumission of
Annual report
Interventions:
- On time
• Establishment of IPAM
submission of
• Development project mngt
AFS
framework/system
• Implementation of contract
mgt
• Implementation of ePmLive
70% complete
98
CHALLENGES,WAY-FORWARD AND
PRIORITIES
99
CHALLENGES
 Billing and non payment of services – R2.6 billion Debtor’s Book
 High Water and Electricity Losses, theft and non payment


Water (66% ) = R241 million
Electricity (11%) = R60 million
 Skills shortage and high vacancy rate
 In adequate Funding – High indigence
 Infrastructure Back log – R20 billion
 Non payment for Services in former black townships – No Metering
 Unfunded Mandates – Provincial Functions (Health, Libraries & Facilities)
 Arrear Government Accounts – R44 million
 Insufficient Cash Flow – Overdraft facility of R150 million raised as at 01 July 2012
 Data Integrity
 Customer Services Ethos Amongst Staff
100
WAY FORWARD & KEY PRIORITIES
 Ring-fence the revenue function
 Establish a customer call and walk in center
 Meter verification and data clean up (Meter audit)



Installation of meter at un-metered areas
Ensuring accuracy of meter readings at the right time.
Addressing internal control deficiencies
 Improvement of Revenue Collection



Impose Stringent Credit Control Measures
Appoint collecting Agencies for all debt
Restructuring of Debtors’ book
 Address all AG Findings Intend
Obtain an Unqualified Audit 2011/2012
101
WAY FORWARD & OTHER PRIORITIES
 Upgrade and Maintain infrastructure through MIG – R143 885 000 Allocation for
Basic Service Delivery Programs
 Enforce all Municipal By-Law by creating a super by-law enforcement unit
 Review Organizational Structure (People, Processes & Systems)
 Implement Demand Side Management Partnerships to Reduce Water and
Electricity Losses



Water
Electricity
Waste
= Reduce by 25%
= Reduce by 5%
= Reduce waste to landfill sites by 5 to 10%
102
THANK YOU AND SINCERE
APOLOGIES!!
FROM EXECUTIVE MAYOR
103