The AGSAâ€™s report on local government 2012- 2013: Implications for records management
The Archival Platform is concerned that the records of national, provincial and local government, and statutory bodies, are in a state of disarray. While there are pockets of excellence, national and provincial archives are generally inadequately resourced and capacitated, making it impossible for even the most conscientious officials to ensure compliance with archives and records management legislation. We argue that this situation has arisen for a number of reasons and has been exacerbated by a failure in leadership and political will and an insufficient understanding of the critical role and significance of archives and records in promoting and supporting open and accountable governance.
Our concerns appear to be shared by the Auditor General of South Africa (AGSA).
Local government audit outcomes 2012-2013
On 30 July 2014 the AGSA, Kimi Makwetu, issued a media release summarising local government audit outcomes for the 2012-2013 financial year.
Improvements and regressions
319 municipalities and municipal entities, with a combined total expenditure of R268 billion were audited. 63 improvements and 25 regressions were noted in different categories of audit outcomes.
30 (9%) achieved clean audits, indicating that they have demonstrated impeccable levels of discipline and oversight in their financial management and operational activities.
â€œAt these auditees, the breakdown of controls is easily detected and corrected timeously. Such environments are characterised by readily available documentation. Most importantly, they have accountable managers and leaders who are able to provide explanations and additional evidence in support of the transactions they are reporting on.â€
Unqualified with findings
138 (41%) received financially unqualified opinions with findings, which means that they accounted accurately for financial transactions that they have carried out. But, they may not have been transparent in the way in which they conducted their activities or followed the required processes. Makwetu says that this is worrying because:
“When these basic control deficiencies persist, they fester into the environment until there is no way to account for transactions and activities. When auditees start to conduct public business according to their own defined rules rather than those generally accepted and approved, poor governance becomes inevitable. This is usually prominent in environments where there is lack of transparency and consequences.â€
Qualified audit opinions
84 (25%) received qualified audit opinions, which means that they were unable to adequately and accurately account for all the financial effects of the transactions and activities they conducted.
8 (2%) received adverse opinions, demonstrating extreme levels of lack of accountability for financial statements.
â€œHere, all business cycles of the institution have deficient controls. This state of affairs increases the levels of financial exposure and multiplies the prospects for significant losses that could result in most service delivery and programme objectives not being achieved.â€
59 (18%) received disclaimed audit opinions because they were unable to provide the required evidence to enable auditors to perform tests to satisfy themselves regarding the fair presentation of financial statements.
â€œSuch environments are characterised by a failure to provide credible evidence to support amounts and disclosures in financial statements.â€
Non-compliance with relevant laws and regulations
90% of those audited had findings on compliance with laws and regulations.
Cases of irregular expenditure were reported in 83% of those audited. This totalled R11.6 billion (4.3%) of the total combined expenditure. R8 billion of this represents goods and services that were received despite the processes governing procurement not being followed. The balance of R3.6 billion is at risk due to lack of supporting documentation, meaning that the auditors were not able to confirm whether goods or services were received or not.
AGSAâ€™s comments on record keeping and document control
In the Consolidated general report on the audit outcomes of Local Government 2012-13, the AGSA notes that there has been no overall improvement in record keeping in local government and says that:
â€œThe effect of poor record keeping can be seen in the many financial statements that received a disclaimer of opinion or unqualified opinion as a result of limitations experienced in finding sufficient and appropriate evidence for the amounts and information in the financial statements. Similarly, we determined that performance reports were unreliable as a result of a lack of supporting information and we could not audit procurement processes because of missing or non-existent documentation.â€
Whatâ€™s to be done about the situation?
The report outlines a number of actions that local government can take to achieve clean audits.
â€œWith these simple practical steps, the dawn of a substantially improved financial management and performance reporting in local government will be accelerated. This is a goal within reach and a key ingredient in building trust in the credibility and accountability of local government. This could add to the arsenal required to restore trust in local governmentâ€™s capacity to deliver services to citizens.â€
The report also identifies root causes that should be addressed to improve the quality of audit outcomes. These include:
â€¢ slow response by political leadership in addressing the root causes of poor audit outcomes
â€¢ lack of consequences for poor performance and transgressions
â€¢ key positions vacant or key officials lacking appropriate competencies
Additional focus on records management in future audits
In 2012, the AGSA and the National Archives and Records Service of South Africa, acknowledged â€œthe importance of effective and efficient management of public records as a cornerstone of a transparent and accountable governmentâ€ entered into a Memorandum of Understanding to engage and cooperate on various issues pertaining to records management. One of the consequences of this is that the AGSA will, in future, include records management in its regular audits. As reported at the 2014 Records Management Seminar, this will be done to â€œassess whether the auditee implemented sound records management principles that ensure the proper creation, maintenance, use and disposal of records to achieve efficient, transparent and accountable governance.â€
At the AGSAâ€™s 2014 Records Management Seminar a speaker, while applauding this action, asked whether the AGSA would consider entering into similar MOUâ€™s with provincial archives which are responsible for the proper management and care of all provincial and local government records.
What is at stake when record keeping is inadequate?
In a democracy, citizens expect their government to be open and accountable and they expect to have access to information about the activities of government. Likewise, democratic governments commit themselves to being efficient and accountable. Citizens need information to ensure that their needs are being met, and to act when they perceive that they are not. If government is to be successful, it needs information to ensure that it understands and responds to citizenâ€™s needs. None of this is possible without good record keeping.
If records â€“ and information â€“ are well managed and preserved citizens will have access to information about what government is doing, has done or plans to do. They will feel confident that their rights are being respected and upheld and they will have the resources that they require to hold government to account. Government will be able to find the information that they need to support decision-making and ensure continuity of operations and demonstrate a commitment to accountability. Government and citizens can work together to address issues of service delivery and allegations of corruption on the basis of sound and credible information.
Jo-Anne Duggan is the Director of the Archival Platform.