Thesis (MDF)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: Poor financial management and a lack of financial performance are some of the major challenges that affect local government in South Africa. This has raised concern with regard to the financial sustainability of local government in South Africa. Furthermore, the poor state of financials in local government has directly impacted the ability of local government to execute and deliver on its constitutional mandate to deliver basic public services and goods to local communities. The lack of service delivery by local government has since resulted in service delivery protests around the country which have often turned violent. The improvement of the financial function in local government is said to have the ability to improve the general functioning of local government and lead not only to the delivery of basic public services to communities but also facilitate development in those communities. Thus, the objective of this study was to analyse and determine the drivers of financial performance and financial sustainability of local government in South Africa. The data that was used for the study is from all 278 municipalities in South Africa for the year 2013/2014. The study used regression analysis (Chi-Squared) with financial distress (performance) as a dependent variable and the following as explanatory variables: Type of municipality, cash cover, cash balances, reliance on grants and transfers, overspending, underspending, debtor growth, debtors as a percentage of own revenue and capacity in the key positions of the municipality. The regression analysis was supported by a contingency table and decision tress. The results and findings of the study are consistent with literature and indicate that the type of municipality, the degree to which a municipality relies on government grants and transfers, the manner in which a municipality manages it debtors, cash, creditors, its spending (in comparison to its budgets) as well as the extent to which municipalities adhere to legislative compliance all affect financial performance in local government in South Africa.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in 25% fulfilment of the requirements for the degree of Master of Management (in the field of Public and Development Management) March 2017 / In recent years, increased attention being given to accountability on public finances in South African municipalities saw an increase in the number of municipalities establishing Municipal Public Accounts Committees (MPACs) to address deficiencies and gaps in the local government accountability mechanisms and oversight. The purpose of the study was to establish the alignment between the recently established MPACs and the generally accepted public accounts committees with respect to the institutional design, practices and performance assessment. A qualitative case study of the Nelson Mandela Bay Metropolitan Municipality (NMBM) MPAC was followed where documents were analysed and semi-structured in-depth interviews with purposively selected participants were conducted. This research study revealed some gaps in the alignment of the NMBM MPAC to the generally accepted public accounts committees. The most crucial gap that emerged pertained to the mandate and powers of the NMBM MPAC. Recommendations for enhancing the financial oversight of the NMBM MPAC were made. The study also suggests further research on a larger number of municipalities. / GR2018

A research report submitted to the Faculty of Management, University of the Witwatersrand, in 50 per cent fulfilment of the requirements for the degree of Master of Management (in the field of Public and Development Management) February 2017 / This study examines legislative oversight practice within the Limpopo Legislature (subnational government) in South Arica, over a specific historic period. Legislative oversight and executive accountability are constitutionally mandated responsibilities. This study is focused on the fourth term (2009-2014) of the government of Limpopo, when financial management and policy implementation challenges resulted in five departments being placed under national administration. Semi-structured interviews and document analysis was utilised to understand the practice of legislative oversight and explore the challenges embedded in securing executive accountability. Drawing on the literature, a conceptual framework was used to guide the process for establishing the areas for detailed exploration. These included the legal and institutional framework for oversight; the capacity availed and utilised for oversight; and the informal institutional incentives and challenges that influenced the performance of oversight. The study revealed that oversight by the legislature and accountability by the executive are intertwined mandates and there are numerous contingencies embedded in the relationships they embody. The manner in which mandates unfold and oversight is exercised is affected by the underlying political dynamics within the dominant party. These dynamics impact on the autonomy of the legislature, shape the power relations between the executive and the legislature and creates incentives for practices that impact on legislative oversight and executive accountability. Members of the legislature were junior in party structures and did not have political authority which influenced the extent to which members of the legislature held the executive answerable as well as the extent to which the executive would account. In addition, the capacity of the institution and budget were insufficient to perform adequate oversight effectively and timeously and enable the legislature to develop into an efficient and successful institution. Furthermore, the legislature relied on the executive for information which was not always credible or reliable. This combination of factors led to oversight at times not being effective. The lessons derived from this study can be used to improve oversight effectiveness at a subnational and national governance level. However, given the role that the party plays in the governance system, there is a need for further research on party functioning, party incentives and internal democracy within the party. Key words: legislative oversight, executive accountability, parliamentary system, proportional representation, electoral system, Limpopo / MT2017

The purpose of this study was to investigate the relationship between the concept of clean audit reports in relation to service delivery. The study was conducted in the Amathole District Municipality in the Eastern Cape Province and centred on the audit outcome of the municipality for the 2013/2014 financial year. A qualitative research design was adopted in order to conduct the study and the data was collected through the conducting of semi-structured interviews. The research sample comprised officers who were employed by the Amathole District Municipality and one manager from the office of the Auditor-General. The key findings of the study revealed that, at present, the concept of a clean audit outcome is used by municipal officers to imply that the performance of an organisation is to be assessed mainly on the basis of evidence which is provided by financial indicators, to the exclusion of non-financial benchmarks. This assumption tends to encourage municipal officers to strive towards impressing auditors, rather than serving their communities through the providing of adequate service delivery. In addition, the auditing of municipalities does not assess their performance in relation to service delivery and the ways in which communities at the local level are affected by it. At present it appears to be beyond the remit of auditors to investigate the validity of the protests which erupt in communities in response to poor service delivery or whether the members of communities and other affected stakeholders are satisfied or dissatisfied with the manner in which services are rendered by their municipalities. Consequently, those who are tasked with the making of decisions in municipalities act upon the recommendations which are made in their audit outcomes and formulate plans in relation to service delivery or projects which do not necessarily accord with the needs of the communities which they are intended to serve. Consequently, on the basis of the findings of this study, it is proposed that assessments of the performance of organisations should incorporate non-financial indicators into the auditing process. Adopting this approach would minimise incidences of municipalities receiving clean audit outcomes while the members of the communities which they serve take to the streets to express their anger and frustration as a result of poor service delivery.

In an attempt to address the challenges of audit queries in a sustainable way and improve service delivery. Municipality should deal with causes of disclaimer and adverse opinion which are reflected on their audit report. This study focuses on the role of the Municipal Public Accounts Committee in the financial management of the Intsika Yethu Local Municipality. Challenges facing the Municipal Public Accounts Committee include lack of capacity, lack of co-operation from municipal departments and lack of knowledge and skill in municipal management. This study investigated the role of the Municipal Public Accounts Committee in the financial management of the Intsika Yethu Local Municipality. Particular attention was paid to the various roles played by the Municipal Public Accounts Committee making a contribution towards improving municipal financial management.

Public Administration and Management / M. Admin. (Public Administration)

Faculty of Commerce, Law and Management school of governance. Research report for the partial fulfillment of the masters of management in public policy degree 31 March 2016 / Fiscal decentralization is defined as the degree of autonomy and responsibility given to subnational governments. Fiscal decentralization looks at the assignment of functions to different levels of government and the appropriate fiscal instruments for carrying out these functions. Fiscal decentralization implies a level of autonomy given to sub-national governments. Through decentralized budgeting, local governments are tasked with the responsibility of ensuring that service delivery to communities is effective and efficient. Unfortunately the subnational spheres of government are more dependent on the national allocations as a result of a more centralized revenue collection system. The national budget is then shared vertically across the three spheres of government using the equitable share formula. The Local Government Equitable Share (LGES) is mainly allocated for the provision of basic services to local communities. The equitable share is also complemented with various conditional grants aimed at the reduction of infrastructure backlogs and other national priorities like water and electricity. However, the outcomes have been uneven across municipalities with some seen as excellent and others as dysfunctional. The South African Twenty Year Review Report indicates that challenges with the quality and functionality of municipal services in municipalities have led to backlogs and unevenness in the quality of service delivery which has contributed to deep-seated dissatisfaction in some communities, as evidenced by the steep rise in service delivery protests. This is an indication of how municipalities are not able to match the revenue they receive from the National Treasury and from collections made through rates and taxes with the amount of services expected from them. In a decentralized model of governance where national and provincial government are able to assign and delegate their responsibilities to local government, funding must then follow these functions. In doing do this will ensure that the responsibilities municipalities are tasked with are backed up by the sufficient budgets and other necessary resources from national or provincial governments. Unfortunately this is not the case in South Africa as seen in the multiplicity of ‘unfunded and underfunded mandates.” This clearly shows that the local government sphere has not been receiving sufficient revenue from the Fiscus to deal with the growing demand for services propagated by increased populations. This is a direct result of the failures of the fiscal framework that governs the allocation of funds to local government resulting in the smaller and rural municipalities being unable to deliver services to their communities. The Local Government Equitable Share formula also does not ensure equity among the citizens, hence most rural communities are still without basic services, including lack of sanitation and refuse collection in all the villages of the country. Even if the LGES was sufficient to ensure that basic services are catered for other functions of local government would not be covered and therefore compromising the principle of horizontal equity among the citizens of South Africa who are entitled to equal benefits, privileges and rights within the boundaries of the republic. / MT 2018

Thesis (M.M. (Finance & Investment)--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2016 / The issue of service delivery in South Africa has been one of the main priorities for the post-apartheid government since 1994. Local government, through municipalities, has been tasked with the provision of services to citizens. In order to achieve this, the municipalities need to invest in massive infrastructure, both to address the infrastructure backlog inherited from under-investment in previously black communities as well as infrastructure to support economic growth and development across the full breath of the Republic. Based on the revenues available from own sources and intergovernmental transfers, municipalities are unable to meet their constitutional mandate and this creates an area of participation for the private sector. Access to capital markets becomes an important source of funding that municipalities, in addition to borrowing from financial institutions such as banks, should aggressively pursue. This is an area that the metropolitan municipalities in particular, should prioritise as they are in a better position to exploit, than the smaller and less-resources local municipalities. Government can then focus on finding innovative ways of reining in the local municipalities, in as far as accessing capital markets. / DM2016

Because the nature of municipalities differs from that of commercial institutions, norms and standards for the determination of creditworthiness are also different. Although various documented models and studies addressing credit rating related issues in the commercial sector are available, no objective model for determining the creditworthiness of municipalities has been published in South Africa. This model has been developed specifically for the determination of the creditworthiness of municipalities and is based on objective standards. All the indicators applied in the model are calculated objectively. The net product of the model is therefore a numerical figure indicating creditworthiness at a specific time. The model shows the numerical composition of the figure, and specific indicators or norms of interest can be studied in greater detail. The model has the following unique features: • It calculates a numerical value, representing the creditworthiness of a municipality. • The determination of the creditworthiness figure is objective. • Trends are calculated and form part of the calculation of the creditworthiness figure. • The model is parameter-driven - by merely changing the values in the parameter file, all the calculations are changed accordingly. • The creditworthiness figure from the model does not claim to be an absolutely accurate representation of the creditworthiness of a municipality, but claims to be accurate enough (80/20 principle) to form a basis for reliable and effective management decisions. This model is the first in South Africa. to offer a means of determining the creditworthiness of municipalities objectively. It is a simple model which is based on the elements representing creditworthiness. / Accounting / D. Comm. (Accounting)

Thesis (MBA)--Stellenbosch University, 2012. / Section 216 (1)(a) of the South African constitution of 1996, as amended, requires financial reporting of municipalities and municipal entities to be aligned with the GRAP (all three spheres of government are required to comply). The Municipal Finance Management Act No. 56 of 2003 (MFMA) also requires this principle. The main objective of this principle is to ensure the transparency and consistency of financial reporting in the public sector. The objective of the public Finance Management Act, Act 1 of 1999 (PFMA), as amended, is to improve the components of financial management and financial administration in government reforms since 1994, giving recognition to the need to improve the value for money that the public sector provides to the citizens of South Africa. Government is increasing its interest in measuring and reporting on programme performance. The ability to obtain maximum benefit from increasingly limited resources can be enhanced by an understanding of the results of the programmes for which budget resources have been expended. The objective of government is to provide services, in contrast to the objective of private sector organisations, which is to earn profits and enhance return on investment, both of which are monetary objectives. The report on programme performance measures is not only an appropriate reporting statement, but is likely to be the most important statement for those persons interested in how the government entity is using the resources. (The Southern African Institute of Government Auditors, 2010) The introduction of such reports is considered to be an urgent priority for accountability purposes. The “appropriation accounts” that were previously prepared on a cash basis of accounting focused on inputs side only. It did not measure the resources consumed during the period under review, thus the actual cost of programmes is not measured, controlled or reported. In the absence of accurate cost information, performance measures of efficiency and cost-effectiveness cannot be readily determined other than by performing expensive ad-hoc studies. In contrast, the accrual accounting basis of accounting more readily provides the true cost of resources consumed. The introduction of GRAP on an accrual basis of accounting is therefore an urgent priority (The Southern African Institute of Government Auditors, 2010). In 2002, the Accounting Standards Board (ASB) was established. The main objective of the ASB was to develop the standards of GRAP. The GRAP standards are in line with International Public Sector Accounting Standards (IPSAS), which are in turn in line with International Financial Reporting Standards (IFRS). The transformation from the IMFO and GAMAP accounting frameworks to GRAP is a very challenging task. This research report is an exploratory study to highlight challenges faced by municipalities when implementing GRAP standards. The main challenges faced in the implementation of the GRAP standards include the following: • The identification, classification, and measurement of property, plant and equipment in line with GRAP 17 requirements; • Complex standards that require accounting technical expertise which include the following: o IFRS 9: financial instruments; o GRAP 9: revenue from exchange transactions; o GRAP 17: property, plant and equipment; • Existing staff lacking necessary knowledge and skills to implement GRAP standards; • Amending accounting policies and procedures to be in line with GRAP standards and where amended, difficulty in accounting for changes in accounting policies; and • The actual preparation of financial statements. Despite these challenges, the benefits of GRAP standards, which are on accrual accounting basis, include those listed below. • An assessment can be made of the stewardship or accountability of management. • The true cost of goods and services rendered can be determined. • An assessment can be made of the levels of borrowings and other liabilities, as well as an extent of the guarantees provided by the government. The author seeks to determine the challenges faced by municipalities when implementing GRAP standards. Once these challenges have been determined, recommendations on how to overcome the challenges will be made.