Speaker, the Auditor-General's findings related to supply chain management, which showed weaknesses in procurement processes, human resource management issues, and the filling of vacancies, in particular in information technology, financial health, and competency levels in key positions, such as those of municipal managers and chief executive officers.
An adverse opinion is issued when the Auditor-General determines that the financial statements are materially misstated and, essentially, that the information contained in them is materially incorrect, unreliable, and inaccurate in relation to the task of assessing the financial position and results of operations.
A disclaimer, on the other hand, is issued when a limitation on scope is imposed by the municipality as a result of the auditor being unable to obtain sufficient and appropriate audit evidence to support key information in the financial statements. This renders the Auditor-General unable to express any opinions.
Disclaimers and adverse audit opinions therefore cannot be directly linked or ascribed to corruption and maladministration. In the event that the Auditor-General identifies cases of potential corruption and maladministration, these are brought to the attention of management for investigation, as they constitute criminal activity. However, the absence of information resulting from the lack of proper record-keeping in the case of disclaimers presents a risk of corruption, because the environment becomes conducive to corruption and maladministration that can occur and remain undetected.
The Minister is not considering instituting lifestyle audits in municipalities as a measure to fight corruption. Whether the Minister has the power to do so is debatable. Instead, the Minister is looking at finalising regulations which are now before Parliament, and which will require senior managers in municipalities to disclose their financial interests annually within 30 days of the commencement of the new financial year of a municipality, or their date of appointment and when they entered into an employment contract with the municipality.
The other measure that is in place, or proposed, to prevent corruption relates to the application of section 57A(3) of the Local Government: Municipal Systems Amendment Act, which provides that any member of staff found to have been dismissed for financial misconduct relating to corruption and fraud will not be re-employed in any municipality for a period of 10 years. I thank you.
Thank you, hon Deputy Speaker. Deputy Minister, what corrective measures did the Minister put in place to deal with corruption in municipalities?
Secondly, why must we wait for 20 years to implement lifestyle audits? What is their present status? Could the Deputy Minister also inform us whether there is a willingness to keep councils and their councillors respectively accountable for their actions? Thank you.
Deputy Speaker, with due respect, I do not think that is a follow-up question. It is just a restatement of the original question, which I believe I have answered at quite some length. The hon member's follow-up question is premised on the existence of corruption. We have explained what the process of an audit is. We have explained that a disclaimer and a qualification do not necessarily equate to corruption. However, we do take those matters very seriously, because those things - those systemic problems and failures which result in disclaimers - do provide an environment that is conducive to the taking place of corruption and other criminal activity. Therefore, it is necessary to support municipalities in their improving and strengthening their financial systems. That is why we are taking the question of audits so seriously.
The question of lifestyle audits I explained in my initial answer, saying that I do not think the Minister has the power to institute such things. However, the department has put in place a range of other measures, including the regulations that are currently before Parliament and that require senior managers to disclose their interests on an annual basis, and that also make provision for those who are found to be guilty of fraud and corruption to be banned from being employed in municipalities for a period of 10 years. Thank you. [Applause.]
Deputy Speaker, we have heard a bit of obfuscation today about lifestyle audits, but let us look at what the Ministry has done.
Two years ago the Ministry set up this wonderful beast that the Minister came to Parliament and told us was going to fight corruption. It was called the Anti-Corruption Inspectorate, and it was going to go out into municipalities around the country and root out the corrupt officials and prosecute them. Well, two years later we have seen nothing but an organisation that has sat on its hands whilst municipalities have been pillaged by municipal councillors and officials.
I want to say to you that if you had been on a game show today, you would have been sent home for the original answer that you gave, because it was the wrong answer. There is a causal link between poor audit outcomes and corruption and maladministration in municipalities. If you can stand here in Parliament today and deny that, then this country is in a lot more trouble than I originally thought.
So, I want to know what you are going to do about this Anti-Corruption Inspectorate, seeing that it has done nothing concrete for the last two years. What are you going to do about it? [Interjections.]
Deputy Speaker, let me just perhaps make a contribution of free advice to the hon Steenhuisen. One of the basic skills in advocacy is sometimes to understate one's case. Sometimes it takes one a whole lot further. The hon Steenhuisen has stated his case in very wide, and I think ultimately, quite empty terms.
Yes, we understand that poor financial systems create an environment that is conducive to corruption. That is a very different thing to saying that there is a causal link, in the sense that every time there is a qualification or a disclaimer that equates to corruption or some form of criminal activity. That, in fact, is a very dangerous way to put the question, because it is a fundamental misstatement of what auditing is all about.
Why is it dangerous? It is dangerous because, on the one hand, a municipality can have an unqualified audit, and yet there can be the most terrible corruption and criminal activity going on. It is exactly because an audit is not meant - unless it is a forensic audit - to find criminal activity. So, if you say that because an audit is unqualified we can relax, that is a very dangerous thing.
Conversely, there could be a whole host of reasons why a municipality or any other institution gets a qualification or a disclaimer. It might have nothing to do with criminal activity. Then to cast aspersions on officials who might be honest and well meaning but simply do not have the capacity, do not have the resources to do their work, I think does a grave disservice to a very serious issue.
On the question of the Anti-Corruption Inspectorate, I think we have addressed that matter in another question. We have explained that in terms of the Constitution and the law that unit cannot have investigating powers in the way that the police do. For that reason, the department is engaged with the Hawks and the Special Investigating Unit, and has entered into agreements with those institutions in terms of which this anticorruption body will co-operate with that. I can provide the hon member with more a detailed response at a later stage as to the successes achieved. [Time expired.] [Applause.]
Thank you, Deputy Speaker. Minister, your department definitely has a constitutional obligation to improve service delivery to citizens and to introduce different measures to arrest the corruption in municipalities. Given the damning findings by the Auditor-General about two thirds of all municipalities in the country, how does your department intend to monitor and implement the recommendations by the Auditor-General? Are you, having said that as a Ministry you do not have the power to do lifestyle audits, prepared to call on Sars to do those lifestyle audits? Thank you.
Deputy Speaker, as I have explained, the Auditor-General's findings were acted upon immediately. We were present when the Auditor-General announced the current audit findings. We tabled the Auditor-General's report in the very first Minmec meeting that took place after they were tabled. The Department of Co-operative Governance and Traditional Affairs, nationally, together with all of the MECs, held very extensive discussions on how we were going to take forward those recommendations.
By the time that the following Minmec meeting took place six weeks ago, the MECs for local government in most of the provinces had convened meetings of all of their municipalities to address this issue with them. In a number of those municipalities, action has already been taken against municipal managers who have presided over consistent disclaimers. I think a number of them have been dismissed, so action is being taken.
In addition to that, the Department of Co-operative Governance and Traditional Affairs, working together with National Treasury, has put in place a number of programmes to support municipalities in improving their capacity to work towards unqualified audits. So, it is something that we take extremely seriously and which we are working together with our provincial counterparts to address. Thank you very much.
Deputy Speaker, sorry, on the question of lifestyle audits, I think it is quite well known that Sars is already embarking on that process. I do not think there is a necessity for an additional call. I think they are doing quite well at the moment.
Deputy Speaker, I would like to thank the hon Deputy Minister for his response. Could the Deputy Minister share with the House what programme the department has to assist those municipalities that get disclaimers and adverse audit reports, since it is clear that the problem has to do with the lack of capacity?
Deputy Speaker, as I indicated, the department does already have a programme called Operation Clean Audit. We have reported to the portfolio committee on the progress with that programme. We have also shared with the portfolio committee what the challenges have been with the implementation of the programme.
In addition to Operation Clean Audit, as I said, we are working very closely with National Treasury and with the MECs in the different provinces in supporting municipalities, for example through the secondment of teams of experts to assist those municipalities to engage in training and capacity-building. We have also facilitated municipalities' entering into partnerships with the private sector to assist them in this regard, so there are a number of steps that are being taken. Thank you.
Budget expenditure versus performance indicators achieved under programme for persons with disabilities
328. Mrs D M Ramodibe (ANC) asked the Minister of Women, Children and People with Disabilities:
What are the reasons for the expenditure of 85% of the budget on the programme for persons with disabilities, whereas only 5 performance indicators were achieved out of the 15 that were targeted?