How Performance Audit enhances service delivery in local government Institute for Performance Management empowering tomorrow’s leaders Alan Dawson
Performance Management is not... • Employee/bonuses • HR’s job • Just measurement • No one-year wonder
Performance management is... • Holistic • Change management • Integrated • Management tool • Good governance
Performance Management Defined • Performance Management is a strategic approach to management, which equips leaders, managers, workers and stakeholders at different levels with a set of tools and techniques to regularly plan, continuously monitor, periodically measure and review performance of Council in terms of indicators, to determine its efficiency, effectiveness and impact; thereby ensuring improved delivery and value for money to the community and citizens and accountability.
Value for Money Performance auditing, or value for money (VFM) auditing
Challenges • Lack of international audit standards • Need for formalisation of predetermined objectives audit standard in SA • www.irba.co.za
SA leads "The Public Finance Management Act shows an awesome display of commitment to accountability and the application of sound management principles. It takes the responsibilities of public financial managers to new horizons and introduces what I refer to as statutory performance management (SPM). This commitment places South Africa amongst the world leaders with regard to public finance management ...." Gloeck 2000:5
Phased-in • First year 2005/06 • Second year 2006/07 • Third year 2007/08 • Fourth year 2008/09 • Fifth year 2009/10 • Metros 2009/10 audit review • Other muni’s 2011/12
PM audit defined A performance audit is an independent evaluation of the measures implemented by management to ensure the efficient, effective and economic use of resources.
Auditing: PAA Sections 20(2)(c) and 28(1)(c) of the Public Audit Act: An audit report must reflect an opinion or conclusion relating to the performance of the auditee against predetermined objectives Applicable to all spheres of government, including: • national, provincial and local government • public entities • those the AG opts to perform and opts not to perform • institutions funded with public monies • institutions that receive money for public purposes
Auditing: MSA Municipal Systems Act, Act No. 32 of 2000 Section 45: The results of performance measurements in terms of section 41 (1) (c) must be audited – • (a) as part of the municipality’s internal auditing processes; and • (b) annually by the Auditor-General.
Planning, Budgeting, Managing and Reporting • Municipal Finance Management Act (MFMA) • Municipal Systems Act (MSA) • LG: Municipal planning and performance management regulations, 2001 – GNR.796 of 24 August 2001 • LG: Municipal performance regulations for municipal managers and managers directly accountable to municipal managers, 2006 – effective 1 August 2006 – GNR.805 of 1 August 2006 National Treasury guidance: • MFMA circulars • Framework for managing programme performance information
Strategic Planning &Budgeting Chapter 5 – Integrated development planning Chapter 6 – Performance management MFMA Chapter 7 – Budget process and related matters Chapter 10 – Municipal entities (sec 87,88)
Implementation & Managing S 41: A municipality must in terms of its performance management system and in accordance with any regulations and guidelines that may be prescribed- • set appropriate key performance indicators as a yardstick for measuring performance, including outcomes and impact, with regard to the municipality’s development priorities and objectives set out in its integrated development plan; • set measurable performance targets with regard to each of those development priorities and objectives; • with regard to each of those development priorities and objectives and against the key performance indicators and targets • monitor performance; and • measure and review performance at least once per year
Reporting The annual report of a municipality must include the annual performance report of the municipality prepared by the municipality ito section 46 of the Local Government Municipal Systems Act. MFMA – section 121(4)(d) The annual report of a municipal entity must include an assessment by the entity’s accounting officer of the entity’s performance against any measurable performance objectives set ito the service delivery agreement or other agreement between the entity and its parent municipality.
National Treasury Guidelines Relevant MFMA circulars: • No. 11: Annual report guidance • No. 13: Service delivery and budget implementation plan • No. 32: The oversight report • No. 42: Funding a municipal budget • No. 51: Municipal Budget Circular for the 2010/11 MTREF Available on Treasury website www.treasury.gov.za/legislation/mfma/circulars
Accountability Cycle (National Treasury)
Benefits of PM Auditing • Social Contract • Efficiency • Improving organisational performance • Good Governance • Strategy and Policy
Critical Questions • have policy goals and objectives been set? • are they clearly defined and approved at the appropriate level by the appropriate authority? • are supporting policies and procedures aligned with higher level policy?, and • are policy assumptions based on appropriate motivations and relevant and reliable information?
More critical questions Is there: • Alignment between IDP, Budget and PM (organisational and individual) • Alignment between above and SDBIP’s • Alignment between IDP and APR • SDBIP to quarterly reports • Annual Performance Reporting • Objective Performance Reporting (organisational and individual)
New Auditing Competencies • Statisticians/Data Analysts • Economists • Social Scientists • Researchers • Town Planner • PM HR Specialist