An examination of the factors contributing to adverse audit outcomes in the KwaZulu-Natal liquor authority.

Abstract

The KwaZulu-Natal Liquor Authority (KZNLA) is a relatively new public entity of the Department of Economic Development and Tourism in the KwaZulu-Natal Province, established on 1 August 2012. The mandate of the entity is to control and regulate the retail sale and micro manufacturing of liquor in the province. In view of that, this study aimed at investigating the factors behind the increasing number of adverse financial audit outcomes in the KZNLA. The specific objectives of the study were to examine the availability of governance processes and their role on audit outcomes within KZNLA, to explore the relationship between internal audit units and governance units in the KZNLA, as well as to determine the management of financial records by the KZNLA. In order to achieve the objectives, the study employed the mixed method research design to gather data from a sample of 30 participants selected from a population of 90 employees, using purposive sampling, a non-probability sampling technique. The study employed a questionnaire which contained both quantitative and qualitative questions. The study findings indicated that the poor audit reports at KZNLA were caused by the ineffective management control systems and procedures. It was also noted that this apathy, as indicated by the findings, reflects poor management – poor working ethics. Based on these findings, the study recommended the need to change the organisational culture and values to be performance-based, increasing risk awareness to all the employees, enhancing and integrating the existing financial system (PASTEL) and that of the Liquor Management System, staff development through training, as well as awareness programmes on policies and procedures.