REPOSITION AND MAXIMISING THE ASSURANCE ROLE

1. REPOSITION AND MAXIMISING THE ASSURANCE ROLE Vice President :Sidwell Mofokeng GIMFO, CRP GARP(Intl), MIODSA, ACP(SA)

2. WE START, 9th AUDIT AND RISK INDABA 2018

3. LEGISLATIVE REQUIREMENTS AND FRAMEWORK Municipal Systems Act , 2000 (Act No. 32 of 2000) (MSA) Local Government: Municipal Planning and Performance management regulation (GNR 796 of 24 August , 2001) Municipal Structures Act, 1998 (Act 117 of 1998) Municipal Finance management Act, 2003 (Act no 58 of 2003) National Treasury Framework for managing programme information (Issued by the National Treasury in May 2007 This represents the performance management and reporting framework against which the performance information should be managed and reported. The principles and requirements set out in the framework are used as a basis for the audit.

4. PERFORMANCE,BUDGETING AND REPORTING

5. KEY PERFOMANCE ACCOUNTABILITY DOCUMENTS • Consistent structures to facilitate understanding and accountability • Enable linkage between plans and actual performance

6. KEY PERFORMANCE INFORMATION CONCEPT

7. KEY PERFOMANCE INDICATOR • A key performance indicator(KPI) sets a performance measurement for an organisation, a business unit, or an employee which are periodically assess, monitored and evaluated; • KPI’s are commonly defined in a way its understandable, meaningful and measurable.

8. GOOD PERFORMANCE INDICATORSCRITERIA per NT FMPPI and ELM approved PMS Framework which the AG and Internal Audit uses for Audit Criteria Reliable Must be accurate enough for its intended use and respond to changes Well defined Clear, unambiguous definition so that data will be collected consistently and will be easy to understand and use Verifiable Possible to validate the processes and systems and records Cost-effective Usefulness of the indicator must justify the cost of collecting the data Appropriate Avoid unintended consequences and encourage mandated service delivery improved service levels Relevant Must relate logically and directly to an aspect of the institution's mandate

9. GOOD PERFORMANCE INDICATORS - MSA • Performance indicators selected should measure the inputs, activities, outputs, outcomes and impact. • Thus the development of indicators needs to be informed by 5 elements above. • Performance indicator selected should also measure the economy, efficiency, effectiveness and equity from data collected. • Economyrefers to resource used- salaries, the cost of acquiring inputs at the lowest cost and at the right time. The method of producing outputs is economical – by comparison with similar products available in market • Efficiency, how productive inputs are translated into outputs (turn around time of the process). Refers to optimal level of processing • Effectiveness, relates to outputs and outcomes, how outputs result in achievement of desired outcomes. This can be measured over a period of time • Equality , relates to whether services are being provided impartially, fairly and equitably to the intended beneficiaries. It measure the extent to which the institution has achieved and been able to maintain equitable supply of comparable outputs across the demographic groups.

10. TYPICAL DIRECT INDICATORS per NT FMPPI i) Cost or Price indicator are both important in determining the economy and efficiency of service delivery. ii) Distribution indicators relate to the allocation of resources to deliver services and are critical to assessing equity across geographical areas, urban-rural divides or demographic categories. Such information could be presented using geographic information systems.

11. iii) Quantity indicators relate to the number of inputs, activities or outputs. Quantity indicators should betime-bound; e.g. the number of inputs available at a specific point in time, or the number of outputs produced over a specific time period. iv) Quality indicators reflect the quality of that which is being measured against predetermined standards. Such standards should reflect the norms and/ or sector practices while ensuring economy, efficiency and effectiveness. Standards could include legislated standards and/or industry codes.

12. v) Dates and time frame indicators reflect timeliness of service delivery. They include service frequency measures, lead/time period, response time, turnaround times, time frames for service delivery and timeliness of service delivery.

13. vi) Adequacy indicators reflect the quantity of input or output relative to the need or demand – “is enough being done to address the problem.” • Accessibility indicators reflect the extent to which the intended beneficiaries are able to access services or outputs. Such indicators could include distances to service points, travelling time, waiting time, affordability, language, accommodation of the physically challenged(quality provided vs recipient).

14. KEY PERFORMANCE TARGET A performance target should be specific, measurable, achievable, realistic and time- targeted. (SMART)

15. SETTING OF PERFORMANCE TARGETS MSA Regulation 12 (2) A performance target set in terms of sub-regulation (1) must- (a) be practical and realistic; (b) measure the efficiency, effectiveness, quality and impact of the performance of the municipality, administrative component, structure, body or person for whom a target has been set; (c) be commensurate with available resources; (d) be commensurate with the municipality’s capacity; and (e) be consistent with the municipality’s development priorities and objectives set out in its integrated development plan.

16. SMART PERFOMANCE TARGETS per the FMPPI and Council approved PMS framework S Nature and required level of performance can be clearly identified PECIFIC M Required performance can be measured EASURABLE A Realistic given existing capacity and environment CHIEVABLE R Required performance is linked to achievement of goal ELEVANT Time period/deadline for delivery is specified T IME BOUND

17. PERFORMANCE TARGETS • Performance targets sets the level of execution the institution and its employees will strive to achieve • The development of suitable targets should be informed by current baseline ( current level of performance the institution aims to improve where applicable) or re-establish to suit new developments. • The desired level of performance can be expressed in terms of targets or standard. • Target is a specific level of performance if: • Targets for input, activities and outputs can be measured quarterly or yearly • Targets for outcomes are normally cover more than one period as they follow delivery of outputs • Standard is the minimum acceptable level based on predefined benchmarks <legislated or industry>

18. When SMART targets/goals are set the following key principle must be considered-The six “W”questions: Who:       Who is involved? What:     What do I want to accomplish? Where:      Identify a location. When:      Establish a time frame. Which:     Identify requirements and constraints. Why:      Specific reasons, purpose or benefits of accomplishing the goal.

19. PERFORMANCE INFORMATION AUDIT PROCESS OR AUDITING OF PREDETERMINED OBJECTIVES

20. What is an audit of predetermined objectives or performance information? Quarterly and Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the quarterly MSA, Section 14(1) and annual performance report. Section 46 report • It is an integral part of the annual regularity audit process,confirming – • compliance with related laws and regulations • usefulness of performance information • reliability of performance reporting

21. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Council Approved Performance Framework Council -Approval and oversight • Adopts and review the PMS framework; • Adopts Priorities and objectives of the IDP; • Adopts municipality’s corporate strategy that includes KPI and targets adopts the SDBIPs; • Approves changes to priorities, KPI’s and targets; • Reports Municipal performance to the community twice a year; • Approves the implementation of strategic risk register with the IDP strategic objectives as well as the operational risk register to the SDBIP objectives.

22. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Council Approved Performance Framework Executive and Mayco - Oversight • Oversees the development performance management system; • Assigns the responsibility of development to the Municipal Manager; • Submits the adopts priorities and objectives of the IDP; • Approves SDBIP; • Quarterly evaluates the performance of the Municipality; • Monitor implementation of internal and external in performance and the PM system; • Monitor and evaluate implementation and alignment of strategic risk register with the IDP strategic objectives and SDBIP to the operational risk register.

23. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework Performance Audit and Audit Committee - Review • Quarterly and annual basis organizational performance review per legislation; • Report to the Mayoral Committee quarterly. • Assess whether targets are being achieved, the reasons for targets not being achieved where applicable and corrective action that may be recommended.

24. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework MPAC- Review • Consider and evaluate the content of the annual report and to make recommendations to Council when adopting an oversight report on the annual report. • Examine the financial statements and audit reports of the municipality; • Evaluate the extent to which the Audit Committee’s, Internal Audit andAuditor General’s recommendations have been implemented • Quarterly and annual basis organizational performance review per legislation;

25. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Council Approved Performance Framework Ward Committee and Public- Participatory • Advises the Mayor on priorities and objectives of the IDP; • Participates in the drafting and implementation of the IDP; • Oversees the development performance management system; • Discuss the development, implementation and review of the municipality PMS; • Participates in the formulation of proposals for performance improvements; • Participate in the annual review of performance

26. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework Accounting Officer - Planning, Monitoring, Implementation, Evaluation and Reporting • Manages the development of performance mgt function/framework • Ensures that the top/high score card/SDBIP linked to the IDP, budget and strategic risk register • Ensures that all role players implement the provision of the PMS framework • Receives the quarterly and annual audited performance reports from internal audit for implementation thereof; • Submits timely all necessary reports on performance to mayoral committee and council.

27. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework Senior Mgt - Planning, Monitoring, Implementation, Evaluation and Reporting • Set KPIs and targets(SMART); • Ensures that plans met set targets; • Ensures that performance objectives in the performance plans and agreements are achieved(R 805) • Ensures that the top/high score card/SDBIP linked to the IDP, budget and strategic risk register. • Ensures that all role players ie all staff members implement the provision of the PMS framework • Retains evidence of all items reported on performance. • Receives the quarterly and annual audited performance reports from internal audit for implementation thereof;

28. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework Performance Mgt - Facilitate, Co-ordinate and Report • Implement PMS Framework, Policy and Manual as approved by Council; • Administer the PMS in an economical, effective, efficient and accountable manner; • Ensure that PMS links to IDP, Budget, Risk Registers; • Ensure that KPI are complied with the NT FMPPI criteria as well as SMART targets ; • Develop and implement mechanisms, systems and process for monitoring, measurement and review performance; • Prepare quarterly and annual on organisation performance; • Ensure that early warning system in place to detect indicators of under-performance; • Ensure corrective measures for under-performance have been identified;

29. ROLE OF DIFFERENT ROLE PLAYERS PER ELM Performance Framework Internal Audit- Compliance and Assurance Review  > Assess the functionality of the PMS; • Review that the system complies to MSA; • Determine whether the performance measurements are reliable in measuring performance; • Quarterly and annually audit the results of performance measurement per PMS and MSA; • Submit quarterly reports on the audits to the Municipal Manager, Performance Audit Committee, Mayco and Council.

30. Audit criteria Main criteria Sub-criteria Compliance with legislative requirements Applicable to performance management and reporting Presentation Measurability Usefulness Relevance Consistency Validity, SMART Criteria Reliability Accuracy Completeness

32. CHALLENGES AND RISKS • PMS not embedded completely in all organisational functions and processes- Non-alignment of Budget and Service Delivery Implementation Plans( key planning, Budget and operational activities) > Financial constraints are placing a burden on meeting performance targets > Lack of Commitment in implementing Performance ( PMS seen as a function of the department, as apposed to management function) • Regular manager meetings not held to ensure new work performed is included quarterly target of work • Performance indicators do not always measure the things it should. • Late submission of Portfolio of Evidence • Lack of adherence to timeframe or deadlines as per the approved process plan

33. CHALLENGES AND RISKS • Lack of Integrated System to obtain correct sources of information ( Gaps • in the electronic Monitoring System – QPR system configuration); • Performance management is not implemented at all levels of the municipality but is only directed at Section 57 managers • Consequence Management There is a general failure to improve on issues that led to non-performance • Submitted quarterly reports are simply filed and not scrutinized to ensure that they serve as early indicators of non-performance and that the performance is in line with the set targets. • The Municipality lacks baseline information on the status quo; “they do not consider critically from which basis we are moving and how to set performance targets to monitor progress”.

34. SOLUTIONS AND WAY FORWARD • In the process of the development and approval of the IDP of a municipality, a “top-layer” SMT/Cluster and “technical "departmental Managers Service Delivery and Budget Implementation Plan (SDBIP) should also be developed based on the strategic direction provided by the IDP; • Proper alignment IDP, SDBIP and Budget; • KPI per the criteria and Targets SMART; • Consider alignment in accordance Treasury Framework Good Indicator the indicators and targets in the SDBIP should be similar to those included in the IDP of the Municipality; • Quarterly and Annual Performance Reports reflect the performance of the municipality and measured on the approved Key Performance Indicators (KPIs) and performance targets, as contained in the IDP and the SDBIP

35. SOLUTIONS AND WAY FORWARD • The achievements, reasons for the deviation of progress, and planned remedial action are reported by the respective Clusters per MSA; • Timely reporting and submission of complete information per approved process plans; • Data is supported by the relevant evidence that the clusters capture and maintain as per SMART principles; • PMS should be cascaded to all officials in the municipality per Schedule 2 of MSA– in spite of resistance by labor unions. All officials should have clear job descriptions and job specifications to facilitate the setting of performance targets and performance agreements between supervisors and themselves.