With respect to the effectiveness of governance structure, namely: internal audit and audit committees, the AG reported that seven of the eleven municipalities did not have an audit committee in operation throughout the year and six of the eleven municipalities did not have an internal audit function throughout the year. Six audit committees did not operate in terms of written terms of reference and eleven audit committees did not substantially fulfill their responsibilities as provided in section 166 of the MFMA. Six internal audit units did not operate in accordance with an approved internal audit plan and ten internal audit units did not substantially fulfill their responsibilities as per section 166 of the MFMA. The AG stated that the effectiveness of internal audit was negatively affected by capacity constraints and inadequate scope of work. Moreover, the AG proposed that risk assessments should be conducted and fraud prevention plans or plans mitigating risks should be designed, implemented and monitored on an ongoing basis. The AG advised that internal audit should include responsibilities to assist with providing assurance in the financial statement and other reporting processes to those charged with governance.