Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)Chapter 14 : General Treasury Matters166. Audit committees |
| (1) | Each municipality and each municipal entity must have an audit committee, subject to subsection (6). |
| (2) | An audit committee is an independent advisory body which must— |
| (a) | advise the municipal council, the political office-bearers, the accounting officer and the management staff of the municipality, or the board of directors, the accounting officer and the management staff of the municipal entity, on matters relating to— |
| (i) | internal financial control and internal audits; |
| (ii) | risk management; |
| (iii) | accounting policies; |
| (iv) | the adequacy, reliability and accuracy of financial reporting and information; |
| (v) | performance management; |
| (vi) | effective governance; |
| (vii) | compliance with this Act, the annual Division of Revenue Act and any other applicable legislation: |
| (viii) | performance evaluation; and |
| (ix) | any other issues referred to it by the municipality or municipal entity; |
| (b) | review the annual financial statements to provide the council of the municipality or, in the case of a municipal entity, the council of the parent municipality and the board of directors of the entity, with an authoritative and credible view of the financial position of the municipality or municipal entity, its efficiency and effectiveness and its overall level of compliance with this Act, the annual Division of Revenue Act and any other applicable legislation; |
| (c) | respond to the council on any issues raised by the Auditor-General in the audit report; |
| (d) | carry out such investigations into the financial affairs of the municipality or municipal entity as the council of the municipality, or in the case of a municipal entity, the council of the parent municipality or the board of directors of the entity, may request; and |
| (e) | perform such other functions as may be prescribed. |
| (3) | In performing its functions, an audit committee— |
| (a) | has access to the financial records and other relevant information of the municipality or municipal entity; and |
| (b) | must liaise with— |
| (i) | the internal audit unit of the municipality; and |
| (ii) | the person designated by the Auditor-General to audit the financial statements of the municipality or municipal entity. |
| (4) | An audit committee must— |
| (a) | consist of at least three persons with appropriate experience, of whom the majority may not be in the employ of the municipality or municipal entity, as the case may be; and |
| (b) | meet as often as is required to perform its functions, but at least four times a year. |
| (5) | The members of an audit committee must be appointed by the council of the municipality or, in the case of a municipal entity, by the council of the parent municipality. One of the members who is not in the employ of the municipality or municipal entity, must be appointed as the chairperson of the committee. No councilor may be a member of an audit committee. |
| (6) | A single audit committee may be established for— |
| (a) | a district municipality and the local municipalities within that district municipality; and |
| (b) | a municipality and municipal entities under its sole control. |