Internal controls underpinning audit outcomes in South African Municipalities

Abstract

The internal control is defined as a process designed to provide assurance regarding the achievement of the entity's objectives through the coordinated efforts of everyone within the entity. This paper relied on Auditor-General of South Africa (AGSA) reports to establish the internal controls underpinning the audit outcomes in South African municipalities. Therefore, a qualitative research design using document analysis was implemented to achieve the paper's objectives. Data was collected through secondary data available in the public domain. The criterion sampling method was used for metropolitan municipalities whilst a simple random sampling method was used for district and local municipalities. The basic internal controls identified by the AGSA were examined and from these, five basic categories of internal control were identified. The findings revealed that internal controls are essential in achieving positive and clean audit outcomes. The paper recommends that the municipal leadership should attain adequate training to ensure that instability and under-performance of employees could be timely addressed. Furthermore, financial management risk can be reduced through implementation and managing internal control systems and monitoring by relevant assurance providers such as internal audit functions.