An investigation into the effectiveness of the auditcommittees in local government with reference to eThekwini Municipality.

Abstract

The Audit Committee is a vital component of accountability and governance for those charged with responsibility of governance. Audit Committees have progressively been perceived as an integral part of modern control structures and governance practices in both the public service and private sector. The fundamental purpose of this study is to investigate the effectiveness of Audit Committees in the local government with reference to eThekwini Municipality. The researcher explored the effectiveness of the support from the Audit Committee to the internal audit function capacity and furthermore, to the Office of the Auditor General in the accomplishment of the best practice auditing in a municipality. The objectives that were developed for this study were to establish the effectiveness of Audit Committees, identify the perceived characteristics of the effective Audit Committee and also to investigate the perceived relationship between the Audit Committee and a good control environment. The researcher endeavours to answer the question of how effective local government Audit Committees are, in helping the municipality to discharge their service delivery mandates. It is clear that the Audit Committee cannot work all alone in the event that it wishes to be effective. Management, External Auditors (Auditor General of South Africa) and Internal Auditors all play a critical part in the effectiveness of the Audit Committee. A mixed methodology was used in this study since a structured questionnaire was used to collect quantitative data as well as reviewing audit documents, such as, the Audit Committee Charter, minutes of meetings, etc. in order to gain more insight into auditing process and procedures. The research instrument that was used consisted of structured and unstructured questions, as well as open ended questions. The target population comprised of the standing committee members as well as all the Audit Committee members totalling 20. Therefore, this study takes a census approach where all 20 members responded to the structured and unstructured questionnaire. The study concluded that the Audit Committee at eThekwini, which was selected for the study, complies with legal requirements and best practice regarding the suggested functions of committees. The Audit Committee can, however, still improve its effectiveness in its performance of certain key functions in the areas of oversight of risk management, reporting, and internal control environment as per recommendations.