Measuring municipal audit consistency can be a useful policy tool

The data in the Auditor-General’s reports on local government can be used, not only as an annual scorecard of how many municipalities complied with their audit obligations, but as a measure of the resilience of local government as a public institution.

In line with this the Multilevel Government Initiative (MLGI) of the Community Law Centre at the University of the Western Cape (UWC) released a research report, titled: Municipal Audit Consistency Barometer (MAC-B):Using consistency in audit outcomes to measure resilience in local government as well as the effectiveness of national and provincial interventions to address serious financial problems in municipalities.

The report makes four main findings:
• A disclaimer should automatically put a municipality under a special “watch”
• The failure to intervene in cases of repeated disclaimer must be explained
• Targets for improvement should be based on consistency in audit outcomes4
• Establishing an intergovernmental information management system around s139 is more important than introducing new legislation.

The report uses consistency in municipal audit outcomes over the five-year term of local government as the basis for systematic measurement of municipal performance, capability, compliance, and accountability, and in designing appropriate policy interventions.

According to this report, resilience in local government is not only the outcome of the conduct of municipalities. It is also a product of how the national and provincial spheres of government discharge their own constitutional responsibilities to build resilient local government. One of those is the responsibility to take corrective intervention to correct serious and persistent financial problems in municipalities, under section 139 of the Constitution. Consistently bad audit outcomes are a ground for intervention. Audit data can thus be used to assess the utility of this intergovernmental mechanism in promoting resilience in local government. These are the issues examined in this report.

Our previous report Operation Clean Audit 2014: Why it failed and what can be learned examined the impact of national government’s policy that all municipalities must achieve clean audits by 2014 (OCA 2014) and identified the risks that arise when policy is not based on sound statistical analysis. This report shows how measuring consistency in municipal audit outcomes over the five-year term of office of local government can be a useful proxy for analysing, not only the resilience of local government, but also the utility of the provincial and national powers of corrective intervention under s139 of the Constitution.
Report
Quick bites