MLGI research report examines the lessons to be drawn from the failure of Government’s Operation Clean Audit 2014
Launched in 2009 by the late Minister for Cooperative Governance and Traditional Affairs (COGTA), Sicelo Shiceka, Operation Clean Audit 2014 (OCA 2014) was the flagship of the first Zuma Government’s broader plan to “turnaround” local government.
OCA 2014 had two targets: First, by 2011, no municipality or provincial department should have a disclaimer or adverse opinion or fail to submit financial statements for auditing (No ADFS)
Second, by 2014 all municipalities and provincial departments should achieve a clean audit.
Analyzing statistical data in the Auditor-General’s reports since 2006, the MLGI research report shows that unless there is a miracle the majority of the country’s municipalities will fail to meet the goals set for OCA 2014:
• Although there was improvement, the target of 0 ADFs by 2011/12 was missed, with 35 percent of municipalities still receiving ADFs by the target year.
• Achieving the 2014 target for clean audits is now highly improbable
• According to the wider definition of a clean audit used by COGTA, which includes an unqualified opinion with findings, only 44 percent of municipalities received clean audits in the 2011/12 financial year.
• If OCA 2014 is to meet its objective an improvement in the order of 278 percent will be required in the target year (2014/15). On present trends, the 2014 clean audit target will only be reached in 2022/23
• According to the strict definition of clean audit used by the Auditor-General, which includes only unqualified audits without findings, on present trends, it will take 120 years for all municipalities to achieve a clean audit.
The research found that OCA 2014 was primed for failure as a result of four miscalculations in its design and implementation:
• OCA 2014 objectives were based on an assumption that COGTA had adequate information about the actual circumstances in all municipalities and provincial departments. In fact there were huge information asymmetries that made the targets unrealistic, if not arbitrary.
• The OCA targets were never adjusted to the actual audit results in the years leading to 2014/15. As a result a gap between the ideal and actual trends in compliance opened and widened each year, and OCA 2014 could only measure failure.
• COGTA had no direct control over the levers for change in municipalities and provincial departments that affected the quality of audit outcomes
• There was no sanction for municipalities and provinces failing to meet the OCA targets
The report is complemented by the launch of the OCA 2014 Barometer, a series of graphical representations of the key data and trends in the report.
The report is the first in a series of research studies using OCA 2014 as a case study of policy making in a complex system of multi-level government. The studies employ statistical analysis to examine the decision-making at key stages, the evidence upon which decisions were based, and the consequences that ensued. Forthcoming studies will build on this work examining –
- The audit outcomes of provincial departments,
- The relationship between service delivery protests and good governance,
- The use of section 139 intervention powers,
The studies lay the analytical groundwork for the forthcoming publication later this year of MLGI’s Municipal and Provincial Audit Consistency Barometers, a Good Governance Index, and a revised Service Delivery Protest Barometer.
View the full report here:
Operation Clean Audit 2014: Why it failed and what can be learned
Operation Clean Audit 2014 Barometer