Dr Meyer's Speech at IIASA at Western Cape Regional Conference 2017

Address by the Western Cape Minister of Finance, Dr Ivan Meyer at the 2017 Institute of Internal Auditors of South Africa, Western Cape Regional Conference at Goudini Spa, Rawsonville on 11 October 2017.

The CEO of the Institute of Internal Auditors, Ms Claudelle van Eck

The Management Committee Members of the Institute of Internal Auditors Western Cape

Delegates

Colleagues

Ladies and Gentlemen

Good Morning and thank you for the opportunity to address you this morning.

The conference comes at a time when the credibility of the Internal Auditing Profession is going through its greatest challenge yet.

The Institute of Internal Auditors of South Africa, having spent years of building public confidence in the ability and integrity of its members and the organization as a whole now faces it greatest challenge yet.

Current media reports paint a gloomy picture of wanton corruption, lawlessness and thievery and the response is where are the checks and balances?

This question is echoed in comments made by the AGSA, Mr Kimi Makwetu in which he highlights the importance of accountability in the management of municipal affairs, starting with appropriate planning focused on the needs of citizens, instituting appropriate internal control and supervision that will ensure proper financial and performance management. 

He also mentions respect for the law in the running of municipalities, monitoring by all political and administrative leadership that budget and performance targets are appropriately achieved, and that there are consequences for mismanagement and non-performance.

These comments would be equally applicable to many a provincial and /or national department.

Perhaps we need to start at the beginning.

Good Financial Governance as a concept is bandied about fairly loosely at times without giving serious consideration to what it may mean.

Two years ago I had the wonderful opportunity to attend a Good Financial Governance Course arranged by the GIZ under the auspices of the Federal Ministry for Economic Development and what I learnt is that good financial governance implies that a country has effective and accountable state institutions and financial administrations based on the rule of law and that is has efficient audit institutions and parliamentary and civil society control mechanisms and institutions.

It therefore makes sense that there are three dimensions to good financial governance, namely:

The Normative Dimension of Good Governance

• Pro Poor and sustainable policy design
• Human Rights
• Democracy and Rule of Law
• A capable and transparent state
• Cooperative Conduct within the International Community

Political economy Dimension:

• Political Will
• Political Steering capacity
• Policy coherence
• Change Management
• Interests and Incentives
• Consultation and Cooperation Mechanisms

Technical Dimension

Public Financial Management.

• Revenues
• Financial Control
• Public Procurement
• Debt Management
• Fiscal Decentralisation.

In the Western Cape we have actively and deliberately embraced these three dimensions.

Brand Western Cape is currently perceived as relatively fraud and corruption free. 

Many of you are the keys drivers in ensuring resilient processes that prevent misuse (corruption) and theft of Provincial resources (inclusive of on local government level) which can be summarised as follows:

Chief Risk Officers

Assist management in identifying risk impacting on the accomplishment of objectives.  This includes ensuring that the risk management process is resilient enough to identify fraud and corruption related risks.

Management

Design controls to mitigate the risks and ensure the implementation and continued performance of those controls.  Proper consequence management where there is deviation from the system of internal control.

Internal Audit

Provide independent assurance on the control design and whether the controls are functioning as intended.

Audit Committee

Oversee the functioning of the abovementioned, as well as ensuring adequate combined assurance on the functioning of the system of internal control.  Advise the executive authority accordingly.

However, you do not work in isolation. There is a context.

It must be noted that

• The pessimistic global and national economic outlook puts South Africa in a precarious situation of an increasing demand for socio-economic programmes to eradicate unemployment, poverty and inequality, but with dwindling fiscal resources
• South Africa’s national debt levels places the country under severe pressure to stabilise debt through fiscal consolidation and return public finances to a sustainable path
• State owned enterprises such as ESKOM, SAA, SANRAL and the South African Post Office continue be place a burden on the fiscus.
• The unsustainable bloated civil service and wage bill needs to be reduced:
• National and provincial governments need to enforce compensation of employees’ upper limits and these upper limits needs to be assented as part of the Division of Revenue Act
• Corruption must be decisively dealt with: hinders investment, reduces growth, restricts trade, and distorts the size and composition of government expenditure, exacerbates   poverty and erodes the tax base, further undermining the quality of public services
• Steps must be taken to mitigate the impact of the drought: South Africa is experiencing its worst drought in 35 years, resulting in crop losses and loss of raw materials for the entire agri-processing value chain and broader economy.

That said, how do we move forward to protect brand Western Cape from the scourge of fraud and corruption?

• Display zero tolerance to fraud and corruption to extent that people believe that reporting of fraud and corruption will have positive outcomes.  Good wins over evil scenario.  Officials need to believe that whistleblowing is the right and safe thing to do.
• Continued and enhanced focus on mGAP and eGAP tools to monitor financial governance
• In terms of local government, PT to drive the district model to support and enhance assurance processes within municipalities.
• The Western Cape Government will only engage service providers who align to our ethical standards.

Let me conclude by saying that as we move forward the Western Cape will strengthen adherence to some of its key policy principles such as:

• Constitutionalism: The belief system of government, laws and principles according to which a state is governed, controlled or limited by the Constitution.
• Rule of Law: Where individuals are guaranteed rights and where independent institutions protect these rights and limit and disperse political power.
• Evidence Based: Evidence based practices uses information and knowledge more effectively, methodically and creatively for policy-making and policy delivery. It is an approach where evidence takes centre stage in the decision making process through promoting accountability.
• Partnerships: Partnerships are about different stakeholders pooling resources for a common goal. The public service partners with a variety of role-players including Non‑Governmental Organisations (NGOs), Universities, Foundations, international partners and Governments and private business in support of common goals.
• Citizen Centric: Following a citizen centric approach focuses on facilitating citizens’ access to government, improving consultation and providing a citizen-centered approach to service delivery and
• Public Value: The aim of creating and recognising public value is to be more responsive to and effective in addressing the issues which are most important to the public.

I thank you.