MMF – NKANGALA DISTRICT
21/06/2013
PREPARATION 2012/13
PRESENTED BY: WISEMAN KHUMALO
(AIMFO)
CHIEF FINANCIAL OFFICER
EHLANZENI DISTRICT MUNICIPALITY
CONTENTS
 BACKGROUND
 COST OF COMPLIANCE
 PREPARATION MATERIAL
 PREPRATION FOR 2012/13 AUDIT
 AUDIT APPROACH
 AUDIT CHALLENGES
 RECOMMENDATIONS
BACKGROUND
 SUBMISSION – TWO MONTHS AFTER END OF
FINANCIAL YEAR AS PER MFMA – 31 AUGUST
2013
 ANNUAL PERFORMANCE REPORT TO BE
SUBMITTED AS WELL – 31 AUGUST 2013
 ASSUMPTION – THAT ISSUES RAISED IN THE
MANAGEMENT LETTER HAVE BEEN CLEARED
BY NOW.
 ACTION PLAN WAS SUBMITTED TO COUNCIL
AND MONITORING HAS BEEN DONE
COST OF COMPLIANCE
 MAINLY GRAP COMPLIANCE
- GRAP 25 ( ACTUARIAL VALUATION TO COMPLY)
- GRAP 17, 16 – FULLY GRAP COMPLIANT ASSET
REGISTER (USE OF ENGINEERS, GIS
SPECIALISTS)
- GRAP 101 (AGRICULTURE) FORESTRY
INCLUDING BIOLOGICAL ASSETS (ANIMALS) ACTIVITIES – VALUATION OF PLANTATIONS
- GRAP 103 HERITAGE ASSETS – VALUATION
- VERY EXPENSIVE TO COMPLY
PREPARATION MATERIAL
 MFMA REPORTING REQUIREMENTS INCLUDING DELEGATIONS
 GRAP – CFO AND INTERNAL AUDIT ( IDENTIFICATION,
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RECOGNITION, MEASUREMENT, PRESENTATION AND
DISCLOSURE)
DIRECTIVES FROM ASB, TREASURY
GUIDE AND CIRCULARS FROM PT & NT
SUPPLY CHAIN REGULATIONS AND POLICY – ALL TRANSACTION
TO HAVE FOLLOWED THE SCM POLICY AND OTHER RELATED
POLICIES
MUNICIPAL PLANNING AND PERFORMANCE MANAGEMENT
REGULATION OF 2001 – AG USES IT
MANAGEMENT AVAILABLE & CONSULTANTS
PREPARATION 2012/13
 ESTABLISH A PROJECT STEERING COMMITTEE
(PREFERABLE MM TO CHAIR)
 ESTABLISH FINANCE AFS PREPARATION TEAM
(TO BE CHAIRED BY CFO)
 PREVIOUS ISSUES RAISED IN THE
MANAGEMENT LETTER CLEARED – INTERNAL
AUDIT TO GIVE ASSURANCE THAT MATTERS
PREVIOUSLY RAISED HAVE BEEN CLEARED
 INTERNAL AUDIT REPORTS – IA TO MAKE SURE
THAT THE ISSUES RAISED HAVE BEEN
CLEARED BY MANAGEMENT
PREPARATION 2012/13
 PRIOR TO DRAFTING AFS – MAKE SURE THAT CORRECTIONS
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HAVE BEEN MADE WITH PROPER SUPPORTING DOCUMENTS E,G
SUPPORTING VOUCHERS TO JOURNALS
ACCOUNTING POLICIES – REVIEWED AND UPDATED (NEW
STANDARDS)
CORRECTIONS TO BE IN LINE WITH GRAP, ESPECIALLY GRAP 3
WHERE CORRECTION OF PRIOR PERIOD ERRORS, CHANGES IN
ESTIMATES ETC – AGREE WITH THE AG IF POSSIBLE
UNAUTHORISED, IRREGULAR AND FRUITELESS – DISCLOSE IN
THE AFS, REPORTED TO CONDONE TO HAVE BEEN SUBMITTED
TO COUNCIL ON DEVIATIONS (SCM)
RELATIONSHIP WITH THE AUDITOR GENERAL – AVOID
TENSIONS IN ALL POSSIBLE WAYS
PREPARATION 2012/13
 SELF AUDIT BY ALL DEPARTMENTS – COMPLIANCE
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MATTERS
MPPM- SMART OBJECTIVES, QUARTERLY REPORTS,
PoE – ACCURATE, RELIABLE AND COMPLETE –
OBJECTIVES LINKED TO ORGANISATION OBJECTIVES
CONTAINED ON THE IDP, SDBIP IN LINE WITH
BUDGET AND IDP (LINKAGE)
CONTRACT REGISTER, FAR, INVESTMENT, LOANS ETC
RECONCILED
DETAILED AUDIT WORKING PAPER FILE
DRAFT AFS, APR AND SUBMIT TO IA &AUDIT
COMMITTEE PRIOR TO SUBMISSION
2012/13 APPROACH TO AUDIT
9
EXCEPTION RAISED
– EARLY
RESOLUTION
RECOMMENDED
CLEARED WITH
AUDITORS
NOT CLEARED
COMMUNICAT
ION OF
FINDINGS
(FORMAL)
MANAGER
INFORMED
DEPUTIES/
ASSISTANTS
CLEARE THE
QUERY
SUBMISSION
TO MM
SUBMISSION BY
MM TO A-G
DISCUSSED – AUDIT
STEERING COMMITTEE
MEETING
CORRECTIO
N MADE /
AFS
ADJUSTED
ETC
AUDIT CHALLENGES
 Compliance with GRAP standards and interpretations including new GRAP
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standards
Management estimates – AG vs. Auditors – landfill site provisions
Audit risks vs. Business risks
Material adjustments to AFS
Prior year adjustments
Internal control deficiencies – identified by A-G
Non reliance on Internal Audit work done by A-G
Negative publicity – objectivity of AG???
Record keeping
Availability of key personnel – AG and Management
Rotation of A-G Auditors (Annually new team)
Audit (Add value) vs. Investigation
Extrapolation
30 days – weekends and public holidays counted
State employees in the service of the state
RECOMMENDATIONS
 COMMON GOAL ALL STAFF MEMBERS INCLUDING
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MANAGEMENT– UNQUALIFIED (NO EMPHASIS)
FUNCTIONAL STREERING COMMITTEES (MM & CFO TO
ATTEND)
EARLY RESOLUTION OF AUDIT QUERIES
MANAGEMENT AND CONSULTANTS TO BE AVAILABLE
DURING AUDIT
RELATIONSHIP WITH THE AUDITORS – AVOID TENSIONS
FUNDS FOR COST OF COMPLIANCE – NT, PT, COGTA
AUDIT CHALLENGES RAISED WITH PT TO DISCUSS WITH
AG – MMF TO FOLLOW UP – AS THERE IS NO PROGRESS /
FEEDBACK TO DATE
THANKS