Municipal Timeline

Municipal Financial Statements from previous financial year must be submitted to the Auditor-General

Posted on by The CAN Team

Section 126 of the Municipal Finance Management Act outlines the requirements for the preparation, submission, and auditing of annual financial statements by municipalities and municipal entities. It establishes clear responsibilities for accounting officers and the Auditor-General, ensuring timely financial reporting and accountability. Here’s a detailed breakdown:

Key Provisions of Section 126

  1. Preparation and Submission by Municipalities:

    • The accounting officer of a municipality is responsible for preparing the annual financial statements.
    • These statements must be submitted to the Auditor-General within two months after the end of the financial year.
    • For municipalities required to prepare consolidated annual financial statements under Section 122(2), these statements must be submitted within three months after the financial year-end.
  2. Responsibilities for Municipal Entities:

    • The accounting officer of a municipal entity must prepare the entity’s annual financial statements.
    • These statements must be submitted to:
      • The parent municipality, and
      • The Auditor-General within two months after the end of the financial year.
  3. Role of the Auditor-General:

    • The Auditor-General must:
      • Audit the submitted financial statements.
      • Submit an audit report to the accounting officer within three months of receiving the financial statements.
    • If the audit cannot be completed within three months, the Auditor-General must submit a report explaining the reasons for the delay to:
      • The relevant municipality or municipal entity,
      • The relevant provincial legislature, and
      • Parliament.
  4. Finality of the Audit Report:

    • Once the Auditor-General submits the audit report, no person other than the Auditor-General can alter either:
      • The audit report, or
      • The financial statements to which the report relates.

Purpose of Section 126

The primary objective of this section is to:

  • Ensure Timeliness: By setting strict deadlines for submission and auditing, the provision promotes timely financial accountability.
  • Promote Transparency: The submission of financial statements allows for scrutiny by the Auditor-General, public officials, and other stakeholders.
  • Safeguard Integrity: Prohibiting alterations to the audit report or financial statements ensures the accuracy and credibility of the audit process.

Responsibilities by Stakeholder

  1. Accounting Officers:

    • Ensure the accurate and timely preparation of financial statements.
    • Adhere to submission deadlines to avoid non-compliance.
  2. Auditor-General:

    • Conduct thorough audits within the prescribed timeframe.
    • Communicate delays transparently and ensure accountability for any postponements.

Implications of Non-Compliance

  1. For Municipalities and Entities:

    • Failure to meet submission deadlines may lead to intervention by oversight bodies, including provincial or national governments, as outlined in other sections of the MFMA (e.g., Section 133).

 

  1. For the Auditor-General:

    • Delays in auditing require formal reporting, ensuring that any setbacks are documented and justified to the relevant legislative bodies.

Conclusion

Section 126 of the MFMA sets the foundation for efficient financial management and accountability in municipalities and municipal entities. By defining clear timelines and responsibilities, it ensures the timely preparation, submission, and auditing of financial statements, which are critical for maintaining public trust and effective governance.

The CAN Team