The importance of strong professional skills, governance and accountability in local government is stressed in the latest annual report from South Africa’s auditor-general, Tsakani Maluleke.
Maluleke’s most recent report to the South African parliament outlines the progress made in promoting a culture of accountability, integrity, transparency and performance in the public sector. In 2019, the auditor-general was granted enhanced powers through an amendment of the Public Audit Act, which it is hoped will help improve the financial health of South Africa’s municipalities; in the 2016/17 financial year, only 33 of the country’s 200 municipalities produced financial statements that complied with legislation.
A ‘culture of accountability’ will result in improved services to the public
Sustainable solutions
The auditor-general’s report for the 2021/22 financial year sets out a series of steps to introduce a ‘culture of accountability’ in local government finance and administration in the country, which will in turn result in improved services to the general public.
The report outlines the range of challenges still to be overcome, including poor audit outcomes and over-reliance on the audit process to identify and correct financial misstatements, and ineffective IT governance. It identifies three root causes of the problems across local government in South Africa: inadequate skills and capacity; governance failures; and a lack of accountability.
‘While it might seem like a daunting task to turn around local government, the leaders are in place and the tone is being set for significant improvements by systematically addressing the root causes of financial and service delivery failures through sustainable solutions,’ says the report.
Professionalisation drive
On the topic of building the right skills in local government, the report says that local government should wholeheartedly support the South African government’s plans for professionalisation of public services. A policy document on this topic, the national implementation framework for national, provincial and local government, was approved in 2022 and an implementation plan is expected to be drafted this year.
The framework is intended to work as the basis for building state capacity by ensuring that public services are staffed with qualified and competent people, with a strong sense of public service and ethics. The government has also introduced minimum competency requirements for municipal managers and officials.
‘Councils should appoint experienced, ethical and citizen-centric municipal managers’
Support from ACCA
ACCA is working with South Africa’s Local Government Sector Education and Training Authority (LGSETA) to professionalise local government finance in the municipalities through the Chartered Certified Accountant Candidacy project. The aim is to develop qualified professionals with strategic organisation leadership skills and enable public employees with relevant accounting skills to attain a professional qualification. As part of the project, ACCA members act as mentors to municipal employees studying for the ACCA Qualification and undertaking practical experience.
Filling vacant positions quickly with competent people should be a priority. The report recommends that councils should ‘take care to appoint experienced, ethical and citizen-centric municipal managers who meet the minimum competency requirements and will support councils ‘in setting a tone of integrity, transparency, accountability and high performance’.
It adds that ‘professionals want to work in a professional and ethical environment where their expertise can be fully applied with limited disruptions and interference’. They need, it continues, ‘good salaries, developmental opportunities and prospects for career progression’. In pursuing professionalisation, local government needs to be ‘a career of choice for professionals’.
Positive influence
In terms of improvements to governance, the report stresses the value and positive influence of public accounts committees. ‘There is tremendous potential premium for improved audit outcomes and accountability if these committees are functioning well and are supported by the council,’ it says. The report adds that internal audit units, working under the oversight of audit committees, also provide a valuable role and ‘should provide independent assurance to municipal managers on the implementation of controls and mitigation of risk’.
Internal audit units in just under half of the municipalities assessed were having some impact on financial and performance management and compliance with legislation, the auditor-general found. In those where there was no impact, this was mainly because management was not implementing the recommendations.
IT governance was also singled out by the report; municipalities, it notes, should pay specific attention to strengthening IT governance so that they can better manage their IT risks and align their IT activities to their overall business objectives.
‘A key role player in the accountability ecosystem is an active citizenry’
AGM looks to the future
Following ACCA South Africa’s AGM in June, Kadammanja Phiri FCCA, business development manager for ACCA Southern Africa, presented key findings from the State of the Accountancy Profession in Africa report, a collaboration between ACCA, the Pan African Federation of Accountants and PwC.
A panel discussion followed, focusing on ways of leveraging partnerships to build capacity so that accountants can support the country’s development. Participants acknowledged the progress made so far, and that bringing together accounting professional bodies to exchange ideas was an important step towards fostering collaboration and synergy within the profession.
It is clear that progress has already been made to bring about positive change in local government finance and administration, and the auditor-general hopes that this will be reflected in better audit outcomes in the future. The initiative is supported by national and provincial government leaders, who have made a number of commitments in response to the call to action.
The report concludes with a plea to South Africa’s citizens to make use of public participation processes, and to report any indicators of fraud, mismanagement or service delivery failures. ‘A key role player in the accountability ecosystem is an active citizenry,’ it says, ‘which is crucial to ensure that the needs of the public are heard and acted on and that municipal leaders are held accountable for any wrongdoing.
‘A culture of performance, accountability, transparency and integrity should be a shared vision for all involved in the public sector and we urge all role players in the accountability ecosystem to fulfil their designated roles and to play their part effectively, without fear or favour, to ensure accountability for government spending and improvement in the lives of all South Africans.’
