In South Africa, local municipalities own various physical assets that require continuous maintenance and repairs. Often these costs are funded by taxpayers who should have the reassurance that municipal funds are being suitably allocated for all to benefit.

To prepare adequately for financial year-end, and in compliance with current legislation, municipalities’ accounts and financial statements need to reflect results that are clean and free of any prejudice or hidden agendas. Unfortunately, this is not always the case.

Achieving a clean audit does not only mean legislative compliance, but rather that municipalities can avoid fiscal penalties while demonstrating municipal transparency for taxpayers to see where and how their money is being spent.

“As an organisation, we are committed to helping municipalities improve audit outcomes with a clean audit opinion as key objective. Our goal is to assist municipalities to be fully compliant and transparent in the way in which funds are allocated and spent,” says Munsoft chief operating officer: advisory Stephan du Toit.

As the homegrown leader in the development, deployment and maintenance of municipal financial management software, Munsoft is able to identify gaps in municipal operations and customise solutions that are suited for each municipality.

“By digitising the management and monitoring of municipal assets, Munsoft ensures that municipalities run more efficiently and accurately. It also helps minimise certain service delivery issues, decreases non-payment and limits non-compliance,” explains du Toit.

After obtaining the relevant documentation from each client such as annual financial statements, previous audit reports, previous management reports and news articles, Munsoft is then able to understand the client better and develop a project plan that outlines specific goals and timelines.

Crucial feedback

“Once we’ve performed a risk assessment, we’re able to document any associated risks and constantly evaluate for any potential risks that could arise. This way, we’re able to offer tailored advisory services and give recommendations for each municipality’s needs.”

By constantly engaging with various service providers, third parties, municipal officials and relevant stakeholders such as national treasury, the auditor-general and the department of cooperative governance & traditional affairs (Cogta), Munsoft is able to monitor the progress of each project and provide crucial feedback on the status of the municipality.

Identifying the gaps

Munsoft’s financial systems are designed to incorporate solutions that offer an accessible and convenient service to accurately manage and monitor gaps within municipalities. The system can identify assets in need of restoration or maintenance, as well as send real-time data and reports to the relevant stakeholders.

“By managing assets efficiently, municipalities can provide service delivery efficiently, ensure transparency, achieve clean audits and instil confidence in taxpayers,” says du Toit.

Over the years, Munsoft has identified several common threads that prevent municipalities from achieving improved audit outcomes, namely poor revenue, debt and asset management; delays in the recording and capturing of transactions; and a lack of coordination between different departments within the municipalities.

Du Toit clarifies that while not all municipalities can be painted with the same brush, what the organisation implements across the board is that municipalities need to start working towards financial year-end earlier in the year and not leave things to the last minute. Working on internal controls and adopting a consistent work method are just some of the tactics that will assist in obtaining clean audits.

The evidence of good governance is manifest in good audit outcomes and this is often seen through annual financial statements

“By filling in important positions timeously, providing regular training of municipal officials, performing risk assessments at all levels, and implementing proper record-keeping, municipalities will be well on their way to obtaining clean audits.”

Clean audits versus good governance

Good governance facilitates the delivery of essential services for citizens and focuses on public administration, factoring in transparency, accountability and efficiency. The importance of good governance is given emphasis by the proximity of local government to the people, the epicentre of service delivery.

Citizens should assess local government based on its ability to deliver central functions such as the provision of water, electricity and sanitation, as these are tangible indicators of service delivery.

The evidence of good governance is manifest in good audit outcomes and this is often seen through annual financial statements that are free from material misstatements, an annual performance report that has no material findings, and compliance with key legislation with no material findings.

“A good point of departure is to compile a long-term financial plan (LTFP) that is linked to the integrated development plan of the municipality, followed by a budget that is in line with the LTFP and which should be reviewed against the actual figures spent on a monthly basis,” says du Toit.

“Improving revenue collection as well as debt and cash management, and ensuring that billing is complete and accurate tariff codes are used, are just some of the key factors municipalities need to consider when working towards obtaining a positive audit outcome.

Setting up a strong control environment, conducting regular performance of detailed reconciliations, constantly reviewing transactions captured, and performing reconciliations timeously will all ensure that municipalities achieve positive audit outcomes. It will also assist in the reduction of unauthorised, irregular, fruitless and wasteful expenditure.

About Munsoft
Munsoft’s mission is to partner with municipalities to make them the best run in the world by being the leading municipal software, infrastructure and services company. Munsoft provides software and services that matter. We want to change South Africa, Africa and The World. For more, visit www.munsoft.co.za.