Intervention strategies by Northern Cape Provincial Treasury to assist municipalities to produce clean audit outcome : the case of Francis Baard District

MBA, North-West University, Mafikeng Campus, 2015Sound management of public finances across national, provincial and local government means the transparent, economic, efficient and effective use of public resources. There is a great deal of progress that is needed before the achievement of an ideal situation, primarily owing to the lack of sufficient public financial management capability. The Municipal Finance Management Act of 2003 (Act No 56 of 2003) aims to modernise financial management practices in municipalities in order to maximise the capacity of municipalities to deliver services to all their residents. Poor financial management and lack of controls and accountability systems have a negative impact on service delivery. There are a number of good practices to guide municipalities primarily to keep a clear trail of supporting documentation that is easily available and provided timeously. The study seeks to evaluate intervention strategies employed by Northern Cape Provincial Treasury to assist municipalities to produce clean audit outcomes with specific reference to the local municipalities. (Sol Plaatje, Magareng, Dikgatlong and Phokwane) in the Francis Baard District. Generally, according to the literature review, financial management within local municipalities in the Francis Baard District Northern Cape is not properly managed and assisted by Provincial Treasury. A framework for managing financial performance in municipalities has been developed and work is currently being done to improve the strategic financial planning framework. This comes from the awareness that the audit outcome from the AGSA shows that intervention is needed in municipalities. National treasury is currently developing national guidelines to improve processes to ensure that when plans are developed, there is an explicit requirement to link compliance, accountability and reporting. Therefore, the municipalities' overall financial management is not well managed. Case study analysis was employed and an interview schedule was used to collect data, which was analysed to give a clear understanding to the level of intervention received by municipalities from the Northern Cape Provincial Treasury. The purposive sampling technique was used, based on the knowledge and research objectives that rely on expert judgement, to be representative of the population. The case study was analysed and the interview schedule both close-ended and open-ended questions were coded and similar responses grouped together to create more compact and meaningful groupings. It was found that lack of internal controls, no proper reporting, low capacity and skills, mismanagement and lack of governance principles are the key reasons for the ineffective state of financial systems in municipalities. It was further found that municipalities lack proper guidance and assistance to improve the audit findings from Auditor-General of South Africa. Consequently, improving local government financial management will require a range of processes and systems. According to the results obtained in this study, there must be an effective financial management strategy in the form of a hands-on approach, transferability of skills from Northern Cape Provincial Treasury, and practical information sessions to ensure that repetitive audit findings are reduced or minimised.Master