The 1996 Constitution of South Africa and the Public Audit Act of 2004 provide the legislative framework for the Office of the Auditor General of South Africa (OAGSA). The Independent Regulatory Board for Auditors further enriched the interpretation of the framework – for government auditing. Over the years of democratic rule in South Africa, audit performance by State organs was generally poor. Despite the efforts by the OAGSA to improve the performance, very little improvement was notable. Most disturbing was the observation that there was widespread, a prevalence of recurring findings, which indicated that the OAGSA’s recommendations and guidelines were not acted upon, or largely ignored. Firstly, the research study established that the system of capitalist democracy, which comes in different varieties throughout world democracies, indeed brought about a situation where the electorate was effectively removed from its rightful place of being the principal, and had its place taken up by political parties (which are in fact, agents) - which (parties) governed on its (the electorate’s) behalf. This system, taken together with the Principal Agency and the Rational Choice Theories – fully explained the prevalence of maladministration and malfeasance in government in South Africa. Secondly, the study established that the OAGSA has done everything imaginable in its attempts to improve audit performance in government institutions – using the carrot rather than the stick approach. The legislative framework cited above, revealed that the OAGSA has the power to audit and report, while Parliament has the power to enforce corrective action. The lesson of this revelation is: that there is not much that the OAGSA can achieve without a high level of cooperation between itself and Parliament – if audit performance is to be effectively, and appreciably improved in South Africa. A disappointing discovery however was indirectly delivered to the world, through the results of a research study conducted by one Wehner in 2002, on Public Accounts Committees (PACs) (alias Standing Committees on Public Accounts (SCOPAs)) in world democracies. The Wehner study clearly demonstrated that there was nothing contained in these committees’ founding documents or enabling legislation – which in no uncertain terms, directed the committees on what procedures and processes to follow to ensure that their resolutions were acted upon. In other words there was no enforcement mechanism discernible for their resolutions. Thirdly, there were developments in case law in South Africa, which augured well for Constitutional Institutions in general. They are contained in court judgements relating to the mandate of the Office of the Public Protector (OPP). The question at the core of these developments was: whether the decisions or remedial action emanating from the OPP, were binding and enforceable. Two judgements cited as cases in point, one a High Court judgment and another a Supreme Court of Appeal’s (SCA’s), feature in the research report. The SCA, in summary found that decisions of administrative bodies of State – stand in fact and in law, until such time that a court of law invalidates them. The SCA ruled through citing a High Court judgement passed way back in 2004 - that Constitutional Institutions, although not organs of State per se – were certainly included in this 2004 finding, if one considers the rationale of this initial finding, taken together with the purpose for which Constitutional Institutions were established in South Africa in the first place. In conclusion, although visible root causes of poor audit findings appear overall to be poor consequence management and questionable leadership quality in government, the system of capitalist democracy is ultimately to blame. The system certainly had unintended consequences.

Though it can be argued that the new democratic government has made tremendous strides in its first decades of democracy, continuing poverty and inequality tends to undermine the gains. Faced by this development dilemma, the government has adopted various development endeavours in an attempt to address issues of social and economic development. The topic of Local Economic Development has received considerable attention from both government and scholars in recent years. At the heart of the concept of LED are enshrined the goals of creating employment and promoting the economic growth and development of a locality or local area. It is in this context that the main objective of the study was to investigate the implementation of Local Economic Development as a cross-cutting dimension in the Integrated Development Plan of the Inkwanca Municipality of in the Eastern Cape Province. The construction of a bridge in the town of Sterkstroom was used as a case study to assess the ability of the municipality to plan and implement a LED project in a coordinated and integrated manner. The study used the combination of both methods of data collection, namely the qualitative and quantitative methods. The tool used to collect data was an interview schedule which consisted of open and closed ended questions. Findings by this study revealed that LED planning and implementation within the municipality does not receive the priority it so deserves and therefore it can not be regarded as the panacea for the development challenges confronted by the community in the municipality. Since LED has failed to create sustainable jobs and grow the local economy, questions can be raised about the efficiency of the municipality in its implementation of LED as a cross–cutting dimension. There appears to have been little cooperation with the LED Unit on the implementation of the Sokoyi Bridge construction project. Neither was there a concerted effort on the part of the municipality to use the project to build skills among the workers that they could use in future initiatives. The study revealed that the line function departments within the municipality could not plan their activities and programmes in a coordinated and integrated manner. Planning is characterised by ‘silo-functioning’. Furthermore, intergovernmental coordination amongst the various spheres of government has been and remains a challenge. Intergovernmental coordination and collaboration needed to be strengthened. The Integrated Development Plan of the municipality which is supposed to be a strategic coordination and integration tool has failed to achieve its objective and as such planning happens in an ad hoc and fragmented fashion. A plan-led system is needed to bring focus and allow long term public interest to guide the development of places. The National Development Plan state that “it will take time to create this capability, drawing on fuller understanding of the limitations of current arrangements and incorporating the lessons of good international practise.” (NDP, 2011: 263). Having a policy in place does not guarantee that there will be developmental or pro-poor outcomes. This study indicated that there are real capacity constraints in local government to plan in an integrated and coordinated manner. The Inkwanca Municipality did not use the developmental opportunities presented by the bridge construction project to its fullest extent. A lack of coordination limited the ability of the municipality to move beyond short-term job creation through a more integrated programme that could have had a broader positive impact on the residents of the Inkwanca municipality.

The third sphere of government (Local Government) has been persistently clouded by unfavourable Annual Financial Statement (AFS) audit reports. This results in local government losing credibility and its stakeholders losing confidence in the institutions or municipalities. In-depth analysis of the root cause of this dilemma is an opportunity for the municipality to reorganise its house and redeem its dignity and credibility to its stakeholders through addressing the identified challenges. The importance of the study can be attributed to the need to investigate the root causes of unfavourable audit opinion and recommend possible remedies that can assist municipalities to improve their audit report outcomes which in turn will improve the confidence of its stakeholders. The primary objective of the study was to investigate variables that impact on the audit report outcomes on annual financial statements of the municipalities that are within Alfred Nzo District (AND) Jurisdiction, including Alfred Nzo District Municipality (ANDM). This was achieved through investigating the root causes of the audit report outcomes with specific focus on the relationship that exists between the management role and audit outcomes of the Alfred Nzo District Municipalities. This was measured by the municipality’s leadership, governance, internal controls and human capital management. Convenient sampling was used wherein 150 questionnaires (30 per municipality) were sent out to the selected employees in all the municipalities in the Alfred Nzo District. Out of the questionnaires that were sent out, 103 responses were received. These were analysed to draw findings, conclusion and recommendations. The empirical results of the study revealed that there is strong evidence that leadership, governance and human capital management have a positive influence on the municipality’s AFS audit report outcomes. It also revealed that there is overwhelming evidence that internal controls have a positive influence on the municipality’s AFS audit report outcomes. The study recommends how leadership, governance, internal controls and human capital management must be improved. It also provides future research recommendations to improve this study.

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.

Since Ricardo's nineteenth-century suggestion that the mean's of financing government spending is irrelevant, theoretical debate concerning the burden of government debt has been vigorous / Thesis (M.Econ.)-University of KwaZulu-Natal, Pietermaritzburg, 2006.

Thesis (MBA.)-- University of Limpopo, 2007 / The Department of Health and Social Development in Limpopo endeavors to efficiently and effectively manage revenue collection. The study analyzed the revenue collection for the Capricorn district hospitals from 2001 to 2006 by identifying problems and possible solutions related to revenue collection. A quantitative analysis of data has been obtained from in- depth structured interviews and revenue records. An analytic retrospective study design was used. All revenue records from 2001/2002 to 2006/2007, financial managers, revenue clerks, and clients /patients who came to request credit from each hospital constituted the population of the study. The findings were that in 2001/2002 none of the hospitals were able to attain the revenue targets. In 2005/2006 revenue targets were increased by almost double the amount however all hospitals were able to attain the revenue targets as prescribed. It implies that the hospitals were able to collect more revenue than in the previous financial year. It has been noted that the appointment of CEOs has brought a tremendous change in revenue collection. It has been identified that revenue is the life blood for a country or institution. The institutions need commitment of all stakeholders to collect revenue.

The Office of the Auditor -General’s role is by no means minor, for it plays a major role in curbing corruption and acts as a ‘’watchdog’’ of the nation over public funds. Amidst high mismanagement and misuse of public resources, as well as corruption, especially in developing countries, the major question one asks is how effective the Auditor -General can be in ensuring good governance within state departments so as to improve service delivery. The gaps between approved budgets and the realisation of policy and development goals stand among key governance challenges in many developing countries. Supreme Audit Institutions (SAIs) play an important role in holding governments to account. However, many SAIs including AGSA face serious challenges when trying to evaluate the expenditures and performance of government agencies. Therefore this study suggests that more resources should be invested in the office of the AG so as to allow it to carry out its duties without impediments. Good governance and public finance accountability is becoming increasingly important in the public sector. One means of effecting good governance and accountability is through auditing. For this reason the Office of the Auditor-General through the Constitution of the Republic of South Africa 1996 (Act 108 of 1996 section 216 (1)) was established to facilitate and encourage good governance and effective accountability through auditing.

The objective of the study was to investigate challenges affecting the effective implementation of the Public Finance Management Act, 1999 (Act No. 1 of 1999 as amended by Act No. 29 of 1999) in the Eastern Cape Province with specific reference to the Provincial Department of Public Works. The research study has been conducted in such a manner that the reason to send a team of experts by the DPSA on approval by the President to come to the Eastern Cape and assist the ailing administrations of four departments is determined. The four departments that had a problem were: 1. Department of Roads and Public Works 2. Department of Health 3. Department of Education and 4. Department of Social Development The roads function of the Department of Roads and Public Works was later transferred to the Department of Transport and the Department of Roads and Public Works changed the name to Department of Public Works in September 2004. The team that was sent to the Eastern Cape together with the Director-General of the Province and the Superintendent-General of the Provincial Treasury formed up the IMT. The objective was to introduce turnaround strategies that would enable the four departments to effectively and efficiently implement the PFMA to the best interest of the South African Government. The PFMA is part of the broader strategy on improving public financial management in the public sector in the Republic of South Africa. It prescribes measures to ensure responsibility, accountability and transparency in national and provincial departments. Qualified Auditor-General’s reports for the previous financial years compelled the President in 2002 to establish Interim Management Team (IMT) in the Eastern Cape, comprising of experts from national government, to assist the ailing administration in four provincial departments, including the Department of Roads and Public Works. Questionnaires to employees, Auditor-General, Provincial Director-General, Superintendent-General of Provincial Treasury and as well as to the Accounting Officer of the Department of Public Works, were designed and issued out for completion. Interviews were also conducted to some of the employees. The assumption is that the majority of employees do not understand policies and procedures of the department and they displayed this by remaining neutral in questions asked and disagreed with some of the statements. During the interview process, the majority emphasised their protest against over usage of consultants by the department. Preference given to candidates from outside the department when senior posts are advertised instead of looking for excellently performing candidates from the internal ranks of serving employees, has been outlined as one of the elements contributing to low moral and low productivity in the workplace. Over usage of consultants and a big number of employees who disagreed with statements and remained neutral signify incapacity of the management to perfectly implement the PFMA for sound public financial management in the department. It has been established that regular risk assessments are not conducted, poor organisational structure with many posts that are not filled, no Anti-Corruption Unit to implement Public Service Anti-Corruption Strategy and, no clear managerial lines of accountability due to poor planning, ineffective internal controls and procedures, all render the department incapable of becoming one of the best provincial departments that get unqualified audit report from the Auditor-General. The findings provide clear indication that drastic transformation of the department into an institution that can perfectly implement the PFMA is necessary. The implication is that mismanagement of financial resources and fraud and corruption defeat service delivery objectives. Strategic objectives of the department are not achieved. The Eastern Cape Provincial Departments are obliged to align their strategic plans to the Provincial Growth and Development Plan (2004 – 2014). Therefore the implication is that, poor performance by the Department of Public Works impacts negatively to this provincial objective. Lack of effective control systems has negative implications on the administration of the department and renders it vulnerable to fraud and corruption.

Supply Chain Management is an aspect of the procurement process which focuses on addressing the needs of both the service provider and the end user. It has a constitutional status which enables it to contribute towards addressing past discriminatory practices. It assists in correcting the imbalances of the past in the procurement of goods and services for government. Section 217(1) of the Constitution of the Republic of South Africa (Act 108 of 1996) specifies that procurement must be fair, equitable, transparent, competitive and cost effective. Accountability is the most critical element in improving financial management in the public sector. The objective of the study was to highlight the need for accountability in Public Finance Management. Additionally, it was intended to assess the respective roles of the various processes involved in the acquisition of goods and services with the goal of enhancing accountability in the Eastern Cape Department of Safety and Liaison in Bhisho. The study was conducted at the Head Office of the Supply Chain Management Section and the district offices with officials who are responsible for the procurement of goods and services. In order to achieve the objectives of the research, a survey was conducted using the qualitative method to ensure greater understanding and reliability. Convenience sampling was applied as it allowed the researcher to select the sample that was convenient. Moreover, it made it easier to reach the available participants. Data was gathered by means of face-to-face interviews for the Head Office respondents and telephonic interviews for the respondents of the district offices. The study concluded with recommendations emanating from the research findings that are meant to assist in improving accountability in Supply Chain Management within the Eastern Cape Department of Safety and Liaison.

Thesis (D. Tech.) - Central University of Technology, Free State, 2005 / The primary objective of this research has been to undertake a critical investigation of the application of the budget process and the achievement of budget objectives in the Free State Provincial Government. The emphasis has been specifically on the planning and control functions of management. The justification for the research is the continuous demand for unlimited public services and the limited availability of the state‟s financial resources. The undertaking proceeded from the hypothetical viewpoint that a budget is designed to assure that public resources are spent according to the preferences of the taxpayer and the legislature. A budget promotes consistency in the process of resource allocation, and its implementation should be enforced by constant evaluation and monitoring. The research includes the following aspects: - The problems encountered by the Free State Provincial Government in its endeavors to optimize the effectiveness and efficiency of the implementation of the budget. - The fundamental principles of budget management in general, and in particular various types of budget and budget management techniques. - The evaluation of budgets as a basis for reporting on performance and the importance of such performance reports. The research methodology followed relies both on a survey of relevant literature and on empirical data. The former consists of a discussion regarding the extent to which the present budget system promotes effective and efficient budget control management and the achievement of budget objectives. As part of the empirical research an “ex post facto” analysis was undertaken of external audit reports and appropriation accounts over a period of fourteen years. In addition the fishbone or root-cause analysis approach was followed to identify core symptoms. The theoretical and empirical research yielded the following results: - The partial disturbance of the input/output relationship means that performance cannot be measured against profit as in the private sector. To compensate for this deficiency management should focus on financial statements and on audit and performance reports to measure performance. - Management needs to have an unimpeded access to budget information on the financial management system right from the beginning of each new financial year. - Estimates of expenditure (projections) should be captured on a monthly basis in the financial management system. With the implementation of the Medium Term Expenditure Framework, budget projections must be regarded as compulsory. - Press reports and reports of the Auditor-General indicated that shortcomings relating to audit committees still exist both on national and provincial levels. This deficiency has a negative effect on the effectiveness of the internal audit function. - An annual percentage deviation in various departments between voted amounts and expenditure was substantial. In some instances the deviation - Losses should be monitored constantly, and management should be aware of the impact of losses and claims on financial resources. Their prevention should be part of each department‟s financial strategy. - Budget manipulation reduces the budget‟s effectiveness and efficiency as a means of performance measurement. The first possible solution to solve the problems associated with the budget is privatization of the service or function. The second possibility is the implementation of a quality control program. Its objective would be to reverse poor performance. To be successful, the quality control program should rely on clear accountabilities, effective partnerships and devoted leadership. A third recommendation might be the implementation of a quality assurance and quality control division for each department. The first component would gather all the necessary documentation to assure quality while the second would monitor effective application. The first requirement in measuring performance will be the motivation of all staff to be committed to the improvement of service delivery. The second challenge will be to train them accordingly. The third challenge will be the development of a performance report procedure for each department. A further recommendation is the analysis and reduction of underspending. Finally, accounting officers must implement effective and transparent processes of financial and risk management. Broadly viewed, the integration of budget and strategic planning initiatives of the National Treasury are a slow process that cannot be implemented overnight. National departments and provinces are, however, requested by National Treasury to improve on the outputs and the development of robust output performance measures and service delivery indicators. This viewpoint supports the proposed budget-management model aimed at effective objective achievement or sustainable development of the Free State. In future the budget management process could be based on this model to improve service delivery.