Abstract
Local government in South Africa from Musina to Cape Town have faced strategic financial management challenges of budget shortfalls, financial shambles and distress, leading to unmaintained infrastructure, deteriorating services quality, increasing municipal deprivation and intensifying social exclusion which is the unfortunate history of many municipalities. Municipal effective control leads to design, muster and fiscal wealth may accumulate effective approaches that accomplish its duty to be answerable to its inhabitants. Financial control and stewardship are preceded by the interconnected management facets towards augmenting the growing design, catalytic and hands-on route. Financial control is facilitated by effective reporting and auditing is chiefly paramount for accountability in the local government environment. Weak municipal management accountability and oversight institutions prevailing in local government compromise its integrity and a potential loss to the public’s confidence. Local government is confronted, by municipal fiscal administration morass and forgone fiscal reserves. The efficient budget implementation should conform to the will of the legislature’s authorizations. The financial position of municipalities in terms of the business model represents assets, liabilities and equity and displays the financial health at a specific time. The community and major stakeholders use financial statements to determine the financial position of any organization. The financial position and health determine how efficiently a municipality is expanding its resources and investment. This paper seeks to close the gap that other studies have not ventured to. This paper qualitatively and descriptively explores municipal financial management enigma and proposes a turnaround to get local government finances right
Highlights
Local governments are under increasing economic force to do extra with fewer resources (Farvacque-Vitkovic and Kopanyi, 2014)
Resilient local government financial controls are a fundamental driver for both productivity and long-term growth
Despite several financial management reforms that took place in South Africa’s local government since the dawn of democracy, municipalities are still faced with financial management conundrums
Summary
Local governments are under increasing economic force to do extra with fewer resources (Farvacque-Vitkovic and Kopanyi, 2014). Financial Management: According to (Mazibuko and Fourie, 2013b) municipal financial management is preceded by the interconnected management facets towards augmenting the growing budget design, catalytic and hands-on route Such budgetary process enables growth for capital investment for infrastructure development, maintenance of and repairs to existing infrastructure and generating revenue. Municipal financial management predominantly mirrors four pillars namely: budgeting or financial plan, accounting, financial reporting and auditing (Shah, 2006). According to (Simson, Sharma, Aziz, 2011), the various municipal procedures are designed in the financial plan phase. Such a yearly progression targets safeguarding public disbursement is a healthy prearranged implementation and accounted for. Simson, Sharma and Aziz (2011), hypothesize that financial reports are aimed at cultivating budget compliance They deliver wealth for internal or external actors to evaluate management routine. External auditing so designed when implemented in harmony with the legislation may deliver municipal amenities according to the wishes of the electorate
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