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Legislation - Municipal Entity

 

Contents

1       Introduction

1.1    Accounting Officer / Authority

1.1.1 Section 95 (c)(i) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

1.2    Management, Other Personnel, Chief Risk Officer, Risk Champions

1.2.1 Section 105 of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

1.3    Internal Auditors

1.3.1 Section 165 (2) (a), (b)(iv) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

1.3.2 Section 2110 - Risk Management of the International standards for the Professional Practice of Internal Auditing

1.4    Audit Committee

1.4.1 Section 166 (2)(a)(ii) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

 

1 Introduction

1.1 Accounting Officer / Authority

1.1.1 Section 95 (c)(i) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

Section 95 (c)(i) of the MFMA requires that:

"The accounting officer of a municipal entity is responsible for managing the financial administration of the entity, and must for this purpose take all responsible steps to ensure -

(c) that the entity has and maintains effective, efficient and transparent systems -

·         of financial and risk management and internal control."

1.2 Management, Other Personnel, Chief Risk Officer, Risk Champions

1.2.1 Section 105 of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

The extension of general responsibilities in terms of Section 105 of the MFMA to other officials of municipal entities implies that responsibility for risk management vests at all levels of management and that it is not limited to only the accounting officer and internal audit.

1.3 Internal Auditors

1.3.1 Section 165 (2) (a), (b)(iv) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

Section 165 (2) (a), (b)(iv) of the MFMA requires that:

"(2) The internal audit unit of a municipality or municipal entity must -

(a) prepare a risk based audit plan and an internal audit program for each financial year;

(b) advise the accounting officer and report to the audit committee on the implementation on the internal audit plan and matters relating to:

·         (iv) risk and risk management."

1.3.2 Section 2110 - Risk Management of the International standards for the Professional Practice of Internal Auditing

Section 2110 - Risk Management of the International standards for the Professional Practice of Internal Auditing states:

"The internal audit activity should assist the organisation by identifying and evaluating significant exposures to risk and contributing to the improvements of risk management and control systems.

2110. A1 - The internal audit activity should monitor and evaluate the effectiveness of the organisation's risk management system.

2110. A2 - The internal audit activity should evaluate risk exposures relating to the organisation's governance, operations, and information systems regarding the:

·         Reliability an integrity of financial and operational information;

·         Effectiveness and efficiency of operations;

·         Safeguarding of assets;

·         Compliance with laws, regulations, and contracts.

2110. C1 - During consulting engagements, internal auditors should address risk consistent with the engagement's objectives and be alert to the existence of other significant risks.

2110. C2 - Internal Auditors should incorporate knowledge of risks gained from consulting engagements into the process of identifying and evaluating significant risk exposures of the organisation."

1.4 Audit Committee

1.4.1 Section 166 (2)(a)(ii) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA)

Section 166 (2)(a)(ii) of the MFMA states:

"(2) An audit committee is an independent advisory body which must -

(a) advise the municipal council, the political office-bearers, the accounting officer and the management staff of the municipality, or the board of directors, the accounting officer and management staff of the municipal entity, on matters relating to -

·         (ii) risk management."

 


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