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Annexure A

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					      Annexure A



      REPORT OF THE AUDITOR-GENERAL TO THE COUNCIL ON THE RESULTS OF THE PERFORMANCE
      MEASUREMENT OF THE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY FOR THE YEAR
      ENDED 30 JUNE 2003
                                   ●●●




      1. AUDIT ASSIGNMENT
         The results of the performance measurement in the annual report for the year ended 30 June 2003 as set out on pages 40 to 45
         is the responsibility of the accounting officer.

        My responsibility is to provide an assessment of the controls implemented by the accounting officer to develop and manage the
        municipality’s performance management system as required by section 45(b) of the Municipal Systems Act, 2000 (Act 32 of 2000).

        My role is not to assess or comment on the municipality’s actual performance, but rather to evaluate the processes followed during
        the implementation of the performance management system.

      2. NATURE AND SCOPE
         I have performed the procedures agreed upon and described below on the performance management system of the City of
         Johannesburg Metropolitan Municipality. Our engagement was undertaken in accordance with the statement of South African
         Auditing Standards applicable to agreed-upon procedures engagements.

        The responsibility of determining the adequacy of the procedures performed is that of the City of Johannesburg Metropolitan
        Municipality. My procedures were performed solely, to evaluate the controls implemented by the accounting officer regarding the
        municipality’s performance management system against the criteria included in Chapter 6 of the Municipal Systems Act, 2000, the
        Local Government: Municipal Planning and Performance Management Regulations, 2001 (No. R. 796) and best practices so as to
        report on the applicable compliance with legislation and to assist in identifying possible areas for improvement.

        The procedures performed during our factual finding were based on the feedback received from the completion of the high-level
        interview checklist by the accounting officer and included a review of the following aspects:
        ● Development of an integrated development plan                                    ● Actual service delivery process

        ● Development and implementation of a                                              ● Internal monitoring

          performance management system                                                    ● Internal control

        ● Development and implementation of key performance indicators                     ● Performance measurement and reporting

        ● Setting targets for key performance indicators                                   ● Revision of strategies and objectives




      3. FINDINGS
         The following matters were identified:

        3.1 Development of an integrated development plan
            A formalised process was adopted for the development of the integrated development plan (IDP). However, the communities
            inputs in respect of the process plan were not considered in adopting the documented process for drafting the IDP as required
            by section 28(2) of the Municipal Systems Act, 2000 (Act No 32 of 2000) (hereinafter “the Act”).

              The adoption, implementation and disclosure of the 2002/03 IDP was in accordance with legal requirements. Amendments
              to the IDP were received only 6 months after submission to the MEC of the province and hence the recommendations were
              included in the amended 2003/04 IDP. The 2002/03 IDP included most of the essential characteristics required, except for the
              institutional framework, which was only included in the amended 2003/04 IDP.

        3.2 Development and implementation of a performance management system
            The municipality has an approved and adopted development framework and process for its performance management
            system. However, consultation with the community during the development of the framework and the process did not take
            place as required in terms of section 42 of the Act. Regular meetings to monitor the implementation and review of the
            performance management system were also not conducted with the community. Both the framework for and the actual
            performance management system policy comply with the essential output criteria included in the legislation and guidelines.
            A shortcoming identified in the initial performance management system was that it focused more attention on individual
            performance within the core municipality and not so much on service providers as required by legislation.

        3.3 Development and implementation of key performance indicators
            The 2002/03 IDP includes key performance indicators and these are used as the basis for the development of operational and
            individual key performance indicators. The key performance indicators in the IDP were based on the priorities and objectives
            that were identified. The performance management system, however, did not prescribe a process for setting key performance
            indicators required in terms of section 41(1)(a) of the Act. The key performance indicators in the IDP were not classified as
            input-, output- and outcome indicators as required in the regulations, which should be used as a guideline to ensure that all
            types of indicators have indeed been considered for each developmental priority and objective identified in the IDP.

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  3.4 Setting targets for key performance indicators
      Targets were set for each of the key performance indicators. However, the performance management systems did not
      prescribe a process for setting performance targets as required by section 41(1)(b) of the Act.

  3.5 Actual service delivery process
      The municipality used a manual system to track individual performance of staff and service providers. The performance
      tracking process was an evolving process and staff performance was only tracked up to level four, which will be rolled-out to
      other levels by management in the near future. Tracking of performance of service providers was also an evolving process and
      was at the time of the audit in November 2003, being rolled-out to the utility companies, agencies and corporatised functions.

  3.6 Internal monitoring
      Internal performance monitoring of staff was conducted during December and June, while staff coaching was carried out on
      a quarterly basis. The utility companies, agencies and corporatised functions report their performance and results to the
      shareholder committee on a quarterly basis. Regulation 13 requires that performance reporting to the municipal council should
      be carried out at least twice a year. In relation to the core administration function this, however, was only carried out annually.

  3.7 Internal control
      The municipality has an in-house internal audit function. However, the performance management system of the municipality
      was not identified as a high-risk area in terms of the risk assessment process of the internal audit function. In terms of section
      42 read together with regulation 14 the auditing by the internal auditors “must include assessments of the following:

         (i) The functionality of the municipality’s performance management system;
        (ii) whether the municipality’s performance management system complies with the Act; and
       (iii) the extent to which the municipality’s performance measurements are reliable in measuring performance of municipalities…”

       The municipality utilised the regularity audit committee to review the performance management of the municipality, however,
       based on the minutes of the audit committee the legislative requirements were not met by this audit committee. The terms of
       reference were also not amended to include the requirements of regulation 14 pertaining to performance audit committees.

  3.8 Performance measurement and reporting
      Performance of the municipality, its staff and its various utility companies, agencies and corporatised functions were reported
      on in the annual report of the municipality. The annual report did not specifically report on the results of general (national)
      key performance indicators as required by regulation 10.


  3.9 Revision of strategies and objectives
      Strategies and objectives were amended and an amended IDP was prepared for 2003/04 taking into consideration various
      external factors, including national and provincial strategies, as well as the latest legislative requirements.

4. CONCLUSION

  Based on the premise that the above procedures do not constitute either an audit or a review carried out in accordance with
  Statements of South African Auditing Standards, I do not express any assurance on the results of performance measurement as at
  30 June 2003.

  An audit of the financial statements in accordance with Statements of South African Auditing Standards was concluded and a report
  to this effect was included in the annual report.

  This report is solely for the purpose as indicated in section 2 of this report as well as for your information, and is not to be used for
  any other purpose. Furthermore, this report relates only to the specific phases of the performance management system as specified
  above, and does not extend to any financial statements of the City of Johannesburg Metropolitan Municipality, taken as a whole.

5. APPRECIATION
   The assistance rendered by the staff of the City of Johannesburg Metropolitan Municipality during the audit of the results of
   performance measurement is sincerely appreciated.




S A FAKIE
AUDITOR-GENERAL

Johannesburg 2003

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