SECTION 1: INTERPRETATION AND BACKGROUND
CHAPTER 1 - DEFINITIONS
In this Framework, unless the context indicates otherwise -
“Accounting Officer” means:
a) In relation to a municipality, the Municipal Manager (as referred to in section 60 of the MFMA), and
b) in relation to a municipal entity, the Chief Executive Officer (as referred to in section 93 of the MFMA).
The designated public auditor of the municipality or municipal entity, being the person appointed as Auditor-General in terms of section 193 of the Constitution, and includes a person -
(a) acting as Auditor-General
(b) acting in terms of a delegation by the Auditor-General; or
(c) designated by the Auditor-General to exercise a power or perform a duty of the Auditor-General
“Audit Committee” means:
An independent committee constituted to review the control, governance and risk management within the Institution, established in terms of section 166 of the MFMA.
“Categories of Municipalities” means:
Category A, B or C municipality referred to in Section 155 (1) of the Constitution.
The capability of the Institution to execute its mandate and includes the sufficiency and competency of administrative, financial management and technical human resources, as well as infrastructure that enables the Institution to perform.
“Chief Risk Officer” means:
A senior official who is the head of the risk management unit.
"Combined assurance" means:
A process that seeks to optimise the scope of assurance to the Institution by harmonising the work of various providers of assurance through eliminating fragmentation and duplication of efforts.
(a) In relation to a municipality, the Municipal Council as referred to in section 18 of the Municipal Structures Act, and as defined in section 1 of the MFMA; and,
(b) in relation to a municipal entity, the Municipal Council of its parent municipality.
“The Constitution” means:
The Constitution of the Republic of South Africa, the supreme law of the Republic
“Enterprise-wide Risk Management (ERM)” means:
A systematic, co-ordinated and inclusive process which uses the Institution's strategy and objectives as the focal point to manage the range of risks and optimisation of opportunities to enhance the achievement of the strategy and objectives.
“Executive Authority” means:
a) In relation to a municipality, the Municipal Council as referred to in section 18 of the Municipal Structures Act, and as defined in section 1 of the MFMA; and
b) in relation to a municipal entity, the Municipal Council of its parent municipality
The Local Government Risk Management Framework.
A risk that has actualised.
“Inherent Risk” means:
The exposure arising from risk factors in the absence of deliberate management intervention(s) to exercise control over such factors.
A municipality or a municipal entity.
“Integrated Development Plan (IDP)” means:
A single, inclusive and strategic plan aimed at the integrated development and management of a municipality, as envisaged in Chapter 5 of the Municipal Systems Act.
“Internal Auditing” means:
An independent, objective assurance and consulting activity designed to add value and improve the institution’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
“King IV” means:
The King Code of Corporate Governance for South Africa, 2016 for corporate governance best practice (Specifically “Part 6.2: Supplement for municipalities”).
Collectively, all levels of management personnel and officials of the Institution responsible for planning, organising, leading and controlling institutional activities. In other words, everyone except the Chief Risk Officer, Chief Audit Executive and staff reporting to them, who are deemed to be independent of management in the exercise of their responsibilities for risk management.
Municipal Finance Management Act (Act No. 56 of 2003), whose aim is to secure sound and sustainable management of the financial affairs of municipalities and other institutions in the local sphere of government; to establish treasury norms and standards for the local sphere of government; and to provide for matters connected therewith.
“Municipal Entity” means:
a) A company, co-operative, trust, fund or any other corporate entity established in terms of any applicable national or provincial legislation and which operates under the ownership control of one or more municipalities, and includes, in the case of a company under such ownership control, any subsidiary of that company, or
b) a service utility.
“Municipal Manager” means:
A person appointed in terms of section 82 (a) or (b) of the Municipal Structures Act, who is the head of administration and also the accounting officer for the municipality.
When referred to as —
a) an institution, means as a municipality as described in section 2 of the Municipal Systems Act 32 of 2000; and
b) a geographic area, means a municipal area determined in terms of the Local Government: Municipal Demarcation Act, 1998 (Act No. 27 of 1998);
“Municipal Services” means:
Any local government matters listed in Part B of Schedules 4 and Part B in Schedules 5 to the Constitution, and any function assignment to a municipality in Section 9 or 10 of the Municipal Systems Act (Act 32 of 2000).
“Operational Risk” means:
Risks that affect the achievement of the SDBIP, mainly resulting from inadequate or failed internal processes, actions of staff, loss of key personnel, failure of IT systems, failure of equipment, the actions of regulatory authorities, customers, suppliers and the public, as well as other external events that impact on the objectives.
“Other Official” means:
An official other than the Accounting Officer, Management, Chief Risk Officer and his/her staff.
“Residual Risk” means:
The exposure remaining after the mitigating effects of management intervention(s) to control such exposure, i.e. the remaining risk after management has put in place measures to control the inherent risk.
a) The effect of uncertainty on the achievement of the Institution’s IDP and SDBIP caused by the presence of risk factors; and/or
b) The failure to optimise opportunities to enhance the achievement of the IDP and SDBIP.
"Risk Appetite" means:
The level of risk which is established through a rigorous analytical process (including consideration of cost versus benefit) that the Institution is prepared and able to accept in furtherance of its objectives.
“Risk Factor” means:
Any threat or event which creates, or has the potential to create risk.
“Risk Intelligence” means:
Information that is purposively identified, collected, analysed, presented and communicated for use in risk management decisions.
“Risk Management” means:
A systematic, coordinated set of activities and methods used to direct an organization and to control risks, including a set of principles, a framework and a process.
“Risk Management Committee” means:
A committee appointed by the Accounting Officer to apply specialist skills, knowledge and experience and assist him/her to dispose of his/her responsibilities for all matters concerned with the establishment, maintenance and functioning of Institution’s system of risk management, especially the management of priority risks.
“Risk Management Unit” means:
A business unit which reports to and supports the Chief Risk Officer to fulfil his/her functions.
“Risk Maturity” means:
The sophistication and capability of the Institution to manage risks. Maturity is exhibited by the level of: risk culture, risk governance, risk management processes and Institutional competence [skills, knowledge, experience].
“Risk Owner” means:
The person accountable for managing a particular risk linked to the objective(s) he/she is responsible for.
“Service Delivery and Budget Implementation Plan (SDBIP)” means:
A detailed plan approved by the mayor of a municipality in terms of section 53(I)(c)(ii) of the MFMA for implementing the municipality‘s delivery of municipal services and its annual budget.
“Senior Manager” means:
(a) in relation to a municipality, a manager referred to in section 56 of the Municipal Systems Act; or
(b) in relation to a municipal entity, a manager directly accountable to the Chief Executive Officer of the entity
"Strategic Risk" means:
Risks connected with strategy selection, implementation or revision which affects the achievement of the IDP. Strategic risks occur both from poor business decisions as well as the failure to effectively implement good decisions.