NMB Internal Audit Tender Awarded to Province

SEPTEMBER 29, 2014

The Nelson Mandela Bay Metropolitan Municipality has awarded a tender that it estimates will exceed R10 million over three years for the co-sourcing on internal audit services.

Payment is made at an hourly rate with a maximum of 10 000 hours a year.

In a report to Council, City Manager Mpilo Mbambisa points out that in terms of the Municipal Finance Management Act (MFMA) all municipalities are required to have an internal audit unit.

The MFMA also states that the unit must prepare a “risk-based audit plan and internal audit plan” for each financial year.

In addition, it is required to advise the City Manager as the Accounting Office and report to the audit committee on the implementation of the audit plan on matters including internal audit, internal controls, risk and risk management and loss control.

It must also report on compliance with the MFMA, Division of Revenue Act and any other applicable legislation.

Mbambisa says that “due to limited resources and capacity” within Internal Audit and Risk Assurance the MFMA mandate “cannot be fulfilled”.

As a result there is a need for a “co-sourcing partner”.

The City Manager says that acceptance of the contract is “imperative as it directly impacts on the municipality’s ability to cover the audit projects listed in the annual audit plans in order to address the risks and controls within the municipality”.

He says that approval of the appointment of a service provider will “ensure continuity in the use of specialised audit services”.

Failure to do so would “severely impact Internal Audit and Risk Assurance’s ability to complete the annual audit plan to provide assurance to Council and management on the adequacy and effectiveness of controls, Risk Management and Governance controls”.

It would also “severely impact Internal Audit’s ability to evaluate all identified high risk areas pertaining to internal controls, Risk Management and governance processes within Council.”

The CM adds that Internal Audit “plays a pivotal role in maintaining good corporate governance”. - MetroMinutes