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Relationship between Municipal Governance and Assurance Quality

Author

Listed:
  • Kgobalale N. Motubatse

    (Tshwane University of Technology, South Africa)

  • Collins C. Ngwakwe

    (University of Limpopo, South Africa)

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.

Suggested Citation

  • Kgobalale N. Motubatse & Collins C. Ngwakwe, 2020. "Relationship between Municipal Governance and Assurance Quality," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 18(4 (Winter), pages 285-300.
    • Handle: RePEc:mgt:youmgt:v:18:y:2020:i:4:p:285-300
    DOI: 10.26493/1854-6935.18.285-300
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    References listed on IDEAS

    as
    1. Marlene Davies, 2009. "Effective working relationships between audit committees and internal audit—the cornerstone of corporate governance in local authorities, a Welsh perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 13(1), pages 41-73, May.
    2. DeZoort, F. Todd & Hermanson, Dana R. & Houston, Richard W., 2003. "Audit committee support for auditors: The effects of materiality justification and accounting precision," Journal of Accounting and Public Policy, Elsevier, vol. 22(2), pages 175-199.
    3. repec:eme:aaaj00:09513579610116349 is not listed on IDEAS
    4. Bert George & Sebastian Desmidt & Julie De Moyer, 2016. "Strategic decision quality in Flemish municipalities," Public Money & Management, Taylor & Francis Journals, vol. 36(5), pages 317-324, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    financial statement; financial management; municipal governance; assurance report; performance report; service delivery;
    All these keywords.

    JEL classification:

    • H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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