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MMF – NKANGALA DISTRICT 2 1 /06/2013

MMF – NKANGALA DISTRICT 2 1 /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

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MMF – NKANGALA DISTRICT 2 1 /06/2013

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  1. MMF – NKANGALA DISTRICT21/06/2013 PREPARATION 2012/13 PRESENTED BY: WISEMAN KHUMALO (AIMFO) CHIEF FINANCIAL OFFICER EHLANZENI DISTRICT MUNICIPALITY

  2. CONTENTS • BACKGROUND • COST OF COMPLIANCE • PREPARATION MATERIAL • PREPRATION FOR 2012/13 AUDIT • AUDIT APPROACH • AUDIT CHALLENGES • RECOMMENDATIONS

  3. 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

  4. 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

  5. PREPARATION MATERIAL • MFMA REPORTING REQUIREMENTS INCLUDING DELEGATIONS • GRAP – CFO AND INTERNAL AUDIT ( IDENTIFICATION, 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

  6. 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

  7. PREPARATION 2012/13 • PRIOR TO DRAFTING AFS – MAKE SURE THAT CORRECTIONS 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

  8. PREPARATION 2012/13 • SELF AUDIT BY ALL DEPARTMENTS – COMPLIANCE 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

  9. 2012/13 APPROACH TO AUDIT EXCEPTION RAISED – EARLY RESOLUTION RECOMMENDED CLEARED WITH AUDITORS NOT CLEARED DEPUTIES/ ASSISTANTS CLEARE THE QUERY COMMUNICATION OF FINDINGS (FORMAL) MANAGER INFORMED SUBMISSION TO MM SUBMISSION BY MM TO A-G CORRECTION MADE / AFS ADJUSTED ETC DISCUSSED – AUDIT STEERING COMMITTEE MEETING

  10. AUDIT CHALLENGES • Compliance with GRAP standards and interpretations including new GRAP 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

  11. RECOMMENDATIONS • COMMON GOAL ALL STAFF MEMBERS INCLUDING 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

  12. THANKS

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