Audit committee effectiveness in an Eastern Cape provincial department

The discussion on the extent to which audit committees perform the oversight function of financial governance is important. This is particularly so in the Eastern Cape where the implementation of the Public Finance Management Act (PFMA) of 1999 has not significantly improved financial management. The deteriorating financial management environment of provincial departments impacts negatively on service delivery and is therefore a matter of great concern to the political administrators at both national and provincial levels. The objective of this study is to determine how effective audit committees are in Eastern Cape provincial departments and how this translates into good financial governance and, ultimately, improved service delivery. To achieve this objective, a literature review of the link between audit committee effectiveness, accountability and corporate governance in the public sector was conducted. It was found that audit committees in the public sector have similar responsibilities to that of the private sector and lack of accountability in the public sector impacts negatively on service delivery. A second literature review was conducted to highlight the current state of public financial management in South Africa and how this has had an impact on financial management in Eastern Cape provincial departments. A qualitative research methodology was applied because the researcher is of the opinion that the research question asked is more interpretive than predictive. An interview survey was conducted in which senior management officials were selected from provincial departments and interviewed using semi-structured questions. The research study concluded, that provincial departments in the Eastern Cape have all established audit committees in line with the Public Finance Management Act (PFMA) National Treasury regulations. These committees are however ineffective. Ineffectiveness is as a result of, among other factors, lack of stability in accounting officer and chief financial officer positions. Secondly, senior management have not been made to account for the persistent negative audit outcomes in their departments. The research recommends that the political leadership of the province should ensure stability in leadership, particularly in the position of accounting officer and the chief financial officer