| Summary: | In 2009 Operation Clean Audit was launched with the objective that all municipalities
must achieve a clean audit by the 2014 financial year. A clean audit is an audit opinion
when the financial statements are unqualified; no adverse findings were identified on
compliance with laws and regulations as well as on predetermined objectives. The
overall aim of the programme is to clean up the governance of municipalities and to
enhance service delivery.
In both the public and the private sector internal control is crucial. It is seen as one of
the key elements of good governance, it provides assurance of the rendering of reliable
financial statements, of compliance with legislation and it also indicates how the
organisation performs against its objectives. Budgetary control in local government can
be used as an effective internal control method by legally limiting the authorised
expenditure and to monitor the actual service delivery against the budgeted targets. If
variances are identified in the budget or with regard to service delivery objectives,
remedial action can be taken. If municipalities do not provide services to communities
in a sustainable manner, it contravenes its constitutional mandate as stipulated in
section 152(1)(b) of the Constitution of South Africa.
The qualitative research method, in the format of a case study of the Tlokwe City
Council, a local municipality in the North West Province, was chosen for this research.
In the 2010 financial year, the Auditor General reflected that the Tlokwe City Council
experienced deficiencies in the key fundamentals of internal control: leadership,
financial and performance management, and governance which could directly be linked
to the basis of the qualification of the financial statements, findings on predetermined
objectives and compliance with legislation. The material underspending of the capital
budget was also found to be affecting service delivery negatively.
The purpose of this study is to benchmark the internal budgetary control systems of
municipalities in South Africa, which have already achieved clean audit reports for consecutive years, to improve the internal budgetary control system of the Tlokwe City
Council. This research was formulated in such a way that — through the findings
obtained in the literature study with regard to the legislative framework regulating the
budget formulation, internal and budgetary control of the local government sphere in
South Africa, analysis of the internal budgetary control deficiencies at the Tlokwe City
Council and the benchmarking exercise with the Swartland and Steve Tshwete local
municipalities — a strategy can be developed to provide for effective budgeting and to
improve the internal control system of the Tlokwe City Council.
Potential benefits that can arise from the implementation of the recommended strategy
to improve the internal budgetary control system of the Tlokwe City Council are the
attainment of a clean audit opinion by the Auditor General and subsequently the
enhancement of service delivery to the community. === MCom (Management Accountancy), North-West University, Potchefstroom Campus, 2014
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