Crisis check for municipalities

South African municipalities have been struggling to remain financially sustainable during the last five years.  COVID-19 will increase the risk significantly as unemployment increases and the ability of debtors to pay their municipal bills decreases.

This should lead to an in-depth analysis of the current financial and operational affairs at municipalities.  This is the time to get all five lines of assurance around the table to drill into the current strengths, weaknesses, risk and opportunities facing the local government sphere.  The next two years will determine whether the current number of municipalities in South Africa dwindle even further.  With local elections around the corner (2021) municipalities will need to have all their processes functioning effectively to ensure they continue operating in the foreseeable future.  There is simply no money to bailout any local government institution.  If anything, such money should be reserved for public sector entities that are critical to the economic recovery…..read more

Disaster response directions

In consideration of the magnitude and severity of the COVID-19 pandemic, Cabinet in its special Cabinet meeting held on 15 March 2020, resolved to declare a National State of Disaster, which was duly declared under Government Gazette No. 43096. This was followed by the National Address by the President of the Republic of South Africa, during which address the President announced extra ordinary measures to curb and contain the spread of the virus….read more

Revenue management master class

One of the most pressing challenges facing cities on the African continent in the twenty first century is the ability for municipalities to effectively collect and manage city revenue. Clearly local government revenues in many African states are generally not enough to develop and provide adequate urban services to the region’s fast growing urban populations and most cities have chronic budget deficits. Municipal governments’ ability to generate revenue through taxation is limited because of the central governments’ prerogative of imposing taxes and determining tax rates. The only substantial revenue source, which is almost universally at the disposal of local authorities, is property taxation but it has shortcomings in its potential to increase revenues (e.g. need for periodic reassessments to update property values). Another key challenge is the low rate of actual tax collection.

While there is a need for greater sharing of revenue sources between central and local government, the yield potential of sources currently available to local authorities is far from being fully exploited. Thus, significant results could be achieved through improvements in collection from currently available revenue sources, especially property rates, business licenses and service charges and additional sources of revenue could be investigated…..read more

Combined Assurance

Combined assurance is about assurance providers (internal and external) working more closely together to ensure:

  • Assurance in the right areas is obtained
  • Assurance is obtained from the right resources
  • Assurance is obtained in the most cost-effective way possible

The ‘right amount of assurance’ depends on the risk appetite of the organisation. There should be alignment of control validation/assurance approaches and efforts across the organisation, driving efficiency and the right levels of comfort. Risk management is the foundation of the combined assurance process and organisations should establish risk-based criteria for dealing with control failures on a consistent and strategically aligned basis to ensure organisational objectives and goals are achieved.

Principle 3.5 of the King III Report introduced combined assurance as a recommended governance practice. The recommendation was made following a general understanding that more can be done to improve assurance coverage and quality through better coordination of assurance providers.

King IV expands on this concept by indicating that a combined assurance model incorporates and optimises all assurance services and functions so that, taken as a whole, these enable an effective control environment, support the integrity of information used for decision-making by management, the governing body and its committees; and support the integrity of the organisation external reports.  King IV recommendations do not prescribe the design of the model, but allow for the governing body to exercise its judgement in this regards…….read more

Creating 1000 entrepeneurs

South Africa needs entrepreneurs to turn the economy around.  We need to create jobs.  Many people have done this successfully over time.  One of the legends in this field is Bill Gross.  His video on youtube has been watched more than 3 million times.  Without misusing his logic and presentation, we include it here free of charge to motivate fellow South African to get moving……read more