Relationship between Municipal Governance and Assurance Quality

Kgobalale N. Motubatse and Collins C. Ngwakwe
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Kgobalale N. Motubatse: Tshwane University of Technology, South Africa
Collins C. Ngwakwe: University of Limpopo, South Africa

Managing Global Transitions, 2020, vol. 18, issue 4 (Winter), 285-300

Abstract: This paper examines the relationship between municipal governance quality and assurance quality. The paper’s pertinence lies in the deteriorating state of municipal service delivery and the Auditor General South Africa’s (2016) recurring reporting of poor financial management in the vast majority South Africa’s municipalities. Hence, the objective of the paper is to analyse the relationship between municipal governance quality (with quality of performance reports as the proxy) and the municipal assurance quality (with financial statement quality as a proxy). Data was collected from the archives of the Auditor General’s consolidated municipal audit reports for the 2016/2017 and 2017/2018 fiscal years. The data was subjected to quantitative analysis using the fixed and random effects panel data regression methods. Findings from the statistical analysis in both models show that the quality of performance reports is significantly related to the quality of assurance, with a p value of less than 0.05. The findings suggest that real improvement in municipalities’ public service delivery and financial management depends on the level of improvement in governance quality, and the latter requires that bureaucrats tackle the now perennial issue of poor governance quality. This paper offers practical and research based recommendations, most important of which is the need to implement quarterly quality-of-governance and assurance checks in the municipalities, thus avoiding the extended delays associated with the annual audit cycle. The second recommendation is for further research to examine the relationship between governance quality and assurance quality in the national government sphere, to determine the degree to which the challenges experienced are similar to those at the municipal level.

Keywords: financial statement; financial management; municipal governance; assurance report; performance report; service delivery (search for similar items in EconPapers)
JEL-codes: H79 H83 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.26493/1854-6935.18.285-300

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