MFMA compliance for municipalities and municipal entities
Section 62 makes the municipal manager personally responsible for effective systems of financial and risk management and internal control. Dimeri holds each MFMA duty as a tracked obligation with an owner, the control that satisfies it and the evidence behind it, so the position is known before the audit rather than after it.
What the MFMA requires
The Local Government: Municipal Finance Management Act 56 of 2003 does for municipalities what the PFMA does for national and provincial government. It establishes the municipal manager as accounting officer, sets out what that person is answerable for, and builds a reporting rhythm around the budget year that runs monthly, quarterly and annually.
Section 62(1)(c) is the anchor. The accounting officer must take all reasonable steps to ensure that the municipality has and maintains effective, efficient and transparent systems of financial and risk management and internal control, a system of internal audit operating under the control and direction of an audit committee, an appropriate procurement and provisioning system, and a system for properly evaluating all major capital projects before a commitment is made. Sections 165 and 166 then give the internal audit unit and the audit committee their own standing, including the audit committee's duty to advise council on risk management and internal control.
The MFMA is also unusually explicit about what happens when money is spent it should not have been. Section 32 deals with unauthorised, irregular and fruitless and wasteful expenditure and makes political office bearers and officials liable for expenditure they knowingly or negligently caused. That, combined with the Auditor-General's material irregularity powers, is why the expenditure register and consequence management are not administrative housekeeping in local government.
The obligations Dimeri tracks
The MFMA runs on a calendar. Dimeri holds the duties and the dates together, so a deadline that is about to be missed is visible while there is still time to act.
Financial and risk management systems
Effective, efficient and transparent systems of financial and risk management and internal control, maintained and demonstrable throughout the year.
- Municipal risk register with named owners per directorate
- Risk assessment cycle with scheduled reviews
- Control library linked to the risks it treats
- Evidence captured as controls operate
Internal audit unit and audit committee
An internal audit unit operating under the control and direction of an audit committee, with the committee advising council on risk management, internal control and compliance.
- Risk based internal audit plan tied to the register
- Findings tracked to closure with owners and dates
- Audit committee packs drawn from live data
- Committee advice to council recorded and followed up
Unauthorised, irregular and fruitless expenditure
Steps to prevent it, a duty to report it, and liability for the political office bearers and officials who caused it.
- Expenditure register with classification and root cause
- Responsible person recorded against each item
- Consequence management tracked to an outcome
- Recovery and write off decisions evidenced
Evaluation of major capital projects
A system for properly evaluating all major capital projects before a commitment is made, which in practice means a documented assessment a court or an auditor could follow.
- Project risk assessments held against the capital programme
- Feasibility and affordability evidence attached
- Approval trail from assessment to commitment
- Post commitment monitoring of project risks
Reporting cycle
Monthly budget statements, a mid year budget and performance assessment, annual financial statements to the Auditor-General within two months of year end, and an annual report tabled within seven months.
- Statutory reporting calendar with owners and reminders
- Performance information linked to supporting evidence
- Prior year audit findings carried into the current cycle
- Annual report inputs assembled through the year
Financial misconduct
Allegations of financial misconduct investigated and dealt with, including the disciplinary board arrangements introduced by the financial misconduct regulations.
- Case register with status and outcome
- Investigation evidence held with the case
- Reporting to council, treasury and where required the police
- Trend reporting on repeat causes
How Dimeri covers MFMA
Municipal risk teams are usually small and the reporting load is heavy. Dimeri is built so the same record serves the audit committee, council, the provincial treasury and the Auditor-General without being rewritten for each.
One register, every audience
The municipal risk register feeds the risk committee report, the audit committee pack, the section 71 reporting narrative and the annual report. Each audience gets its own view of the same underlying record, so the versions cannot contradict one another.
Expenditure with its cause attached
Irregular expenditure is recorded with the control that failed, not only the amount and the reference. That turns the annual disclosure note into a by-product of the year's work and gives consequence management something specific to act on.
Entities consolidated with the parent
Municipal entities carry their own duties under the Act. Dimeri holds each entity's register separately and rolls it into a group view for the parent municipality, so the accounting officer sees the whole picture without chasing spreadsheets.
Shared credit with SCM and the Public Audit Act
A procurement control that satisfies section 62(1)(c)(iii) usually also satisfies obligations under the MFMA Supply Chain Management Regulations. Map it once and it counts in both, including in the material irregularity work the Auditor-General drives.
Getting MFMA coverage in place
- 1
Load the obligation set and the calendar
The MFMA duties and their statutory dates arrive together, pre-mapped to the SCM Regulations and the PSRMF, so the first thing you see is what is due and who holds it.
- 2
Assign by directorate
Owners are set at the level the municipality actually works, so corporate services, technical services, community services and finance each see their own obligations rather than one undifferentiated list.
- 3
Bring in prior year findings
Outstanding Auditor-General findings, internal audit findings and material irregularities are loaded as tracked actions. Repeat findings are the single most common audit outcome in local government and they are usually a follow up failure.
- 4
Run the reporting rhythm
Monthly, quarterly, mid year and annual reporting run off the same live record, with reminders ahead of each statutory date and escalation when an owner goes quiet.
MFMA questions
Does the MFMA apply to municipal entities as well as municipalities?
Yes. Municipal entities carry duties under the Act through their accounting officer and board of directors, and the parent municipality has its own oversight responsibilities in respect of them. Dimeri holds each entity's obligations separately and consolidates them into a group view for the parent.
What does section 62 actually require of the municipal manager?
Section 62(1)(c) requires the accounting officer to take all reasonable steps to ensure the municipality has and maintains effective, efficient and transparent systems of financial and risk management and internal control, a system of internal audit under the control and direction of an audit committee, an appropriate procurement and provisioning system, and a system for properly evaluating all major capital projects before a commitment is made.
How does Dimeri help with repeat audit findings?
Repeat findings usually happen because a management action was agreed and then not followed to completion. Dimeri holds every finding as an action with a named owner, a due date and escalation, and carries unresolved items forward into the next cycle automatically rather than letting them fall off a spreadsheet.
Can we report to council and the audit committee from the same data?
Yes, and that is the point. Council reporting, audit committee packs and provincial treasury returns are generated from the same register, so the figures reconcile by construction instead of being reconciled by hand each quarter.
Is this a substitute for legal advice?
No. This page describes how Dimeri structures MFMA obligations for tracking and evidence. It is not legal advice, and your legal advisers should confirm which provisions apply to your municipality or entity.
Put MFMA on one register
Every requirement mapped to a control with a named owner, the evidence held against it, and one view of where you stand.