Module 4: Governance Structures and their responsibilities under the

MFMA

1

1. Introduction

The local government system is faced with enormous challenges in its pursuit to live up to its increasingly complex and widening role in service delivery

Municipalities are increasingly challenged by ineffective municipal governance structures.

Poor financial management is one of the major concerns Lack of ethical leadership is increasing polluting the local

government environment Lack of consequences for non adherence or lack of

accountability

2

3

2. Accountability and Oversight

What is accountability?‘accountability is an obligation to answer to someone with authority for the execution of one’s assigned responsibilities’

What is oversight?‘oversight is the means by which accountable persons are called to account’

Elements of oversightA principal and An Agent

4

3. MFMA and Accountability

Object of Act2. The object of this Act is to secure sound and sustainable management of the fiscal and financial affairs of municipalities and municipal entities by establishing norms and standards and other requirements for—(a) ensuring transparency, accountability and appropriate lines of responsibility in the fiscal and financial affairs of municipalities and municipal entities;

Level of accountability substantiated & best illustrated in section 79(3)(e) of MFMA.

4. MFMA and protecting the public purse

• Protecting the public purse requires the right– Policies– Processes– People – Practices

• MFMA regulates the first three of these aspects– The greatest challenge in local government is implementation

translating policy into practice through the processes implemented by people

5

5. Importance of Oversight

To detect and prevent abuse, arbitrary behavior or illegal and unconstitutional conduct on the part of the government and public agencies.

To hold the government to account in respect of how the tax payers money is used.

To ensure that policies announced by government and authorised by Parliament are actually delivered.

To improve the transparency of government operations and enhance public trust in the government, which is itself a condition of effective policy delivery.

6

6. Oversight process

Is about enforcing the implementation of agreed policy It is exercised through out the year Legislative Frameworks also allows the Provincial Executive

to dissolve council if it fails to fulfill its oversight role In simple terms, it is about

– Identify problems– Provide remedies (timeously reacting to situations to mitigate risks

and taking the necessary corrective actions to address non-performance)

– create an environment that is conducive to good financial management and service delivery

– strengthen the accountability and responsibility of management

7

7. Principals and agents – role-players in protecting the public purseWithin the municipality:• Citizens

– voters, ratepayers, community groups, political parties

• Customers– households, businesses, institutions

• Councilors• Municipal council

– Committees of council– MPAC

• Auditor-General• Mayor

– Mayor’s executive committee• Municipal manager –

accounting officer– Chief financial officer– S57 managers– Other municipal officials

8

External to municipalities• Provincial executive

– Dept of local government– Provincial treasury

• National executive– Dept of Co-operative Governance– National Treasury– Water, transport, housing– NERSA

• Provincial legislatures• Parliament

• SALGA

8. Role players legislative mandates

All responsibilities are spelt out in legislation• Mayors – ss.52-59 of the MFMA• Accounting Officers – ss.60-76 of the MFMA• Other officials – ss.77-79 of the MFMA• CFO, Budget and Treasury Office – ss.80-83 of the MFMA • Oversight – MFMA section 129• Councils – Constitution and LG legislation• Councilors – Code of Conduct in the Structures Act

9

9. Financial Governance

Promote transparency, accountability and oversight Effective management of Revenue, Expenditure, Asset mgt. and

Liabilities Proper budgeting and planning Ensuring a procurement process that is:

• Fair;• Equitable;• Transparent;• Competitive; and • Cost effective.

Meeting the service delivery imperatives

10

10. Financial Governance Framework in LG

11

12

11. Accountability Framework in LG

12. Accountability relationships

13

Council

Auditor-General Executive

Independent, objective information

Transparency

Audit

Aud

it Re

port

ing

Con

stitu

tiona

lly e

mpo

wer

sConferred Responsibility

Accountability reporting

Political

Operational

Policy Direction and Oversight

13

13. The accountability cycle

14

• Organisational structure aligned to services

• Sound municipal policies, processes and procedures

• Performance information

IDP

Budget

SDBIP

In-year reporting

A n n u a l

f in a n c ia l

s ta te m e n ts

Annual financial

statements

Annual report

Five-year strategy

Three-year budget

Annual implementation plan

Implementation monitoring

Accountability reporting

Oversight report

Oversight report

Thank You

15