The corporate governance practices of audit committees in the KwaZulu-Natal local government municipalities.
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Date
2020
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Abstract
For several decades, the Audit Committee has been a subject of substantial research interest in
developed countries, including the United States of America, the United Kingdom and Australia.
However, in emerging economies, Audit Committee remains a relatively new topic with their
current practices not ideal for municipalities to fully benefit from them, as their contribution
remains an illusion to communities. The problem derived from the comprehensive academic
literature is that Audit Committees in the public sector are not deemed to be an effective instrument
(governance structure) of the governing body because the practices culminating in good corporate
governance are not understood and supported by the governing bodies, or that the Audit
Committees themselves are not cognisant of their practices, are not effectively constituted, or take
on responsibilities outside of their remit. The study investigates the corporate governance practices
of Audit Committees in KwaZulu-Natal local government municipalities, a public sector sphere.
The primary data was collected through questionnaire surveys and supplemented with semistructured
interview surveys from four distinct (although significant) sample groups (i.e., Audit
Committee Chairpersons, Municipal Managers, Chief Financial Officers, and Internal Auditors).
The study employed a sequential explanatory mixed-methods approach. Data were analysed using
-Statistical Package for Social Sciences (SPSS) for quantitative data Semi-structured interviews
were transcribed and analysed qualitatively.
The study emphasises the effectiveness of Audit Committee, which can execute its oversight role
and responsibilities in relation to the quality of audit in the public sector. More specifically, the
observations made in the study include: The lack of guidelines on minimum expertise
(qualifications and “appropriate experience”) of Audit Committee members in the legislation
creates room for wrong persons to be Audit Committee members; communities in KwaZulu-Natal
local government have little to no knowledge of Audit Committees and their oversight roles; the
municipal administration does not provide proper support for Audit Committees to discharge their
duties; and although the Audit Committees are playing an essential role in some areas including
financial reporting, external auditing, and internal auditing, there is a still considerate scope where
the Audit Committees can play a more proactive and robust role. The study concludes by
accentuating the need for Audit Committee effectiveness in KwaZulu-Natal local government,
which includes: The adoption of a corporate governance framework (based on standardised sound
governance principles) that will address the uniqueness of the local government sphere through a
code of corporate governance and a corporate governance framework; strengthen municipal
leadership to ensure that leaders possess official skills to enable them to realise the vision of the
institution; promulgation of codes of ethics for local government to deal with problems of ethics,
transparency, and accountability, and offer measures on non-compliance to this code of ethics;
making financial sustainability center-stage of each municipality; and implementation of the
municipal intervention (including local participatory governance) in a way it was initially
conceived and written.
Description
Doctoral Degree. University of KwaZulu-Natal, Durban.