Question

In: Finance

1 explain the role of risk management in preventing unauthorised, irregular and fruitless and wasteful expenditure....

1 explain the role of risk management in preventing unauthorised, irregular and fruitless and wasteful expenditure.

2 discuss the three principles of the King IV report on corporate governance that pertain to organisational ethics, risk governance and compliance with laws.

3 Critically discuss the role of national government in helping to alleviate the problem of financial distress experienced by many municipalities.

4 discuss the obligations of municipalities and its accounting officers with regards to unauthorised, irregular as well as fruitless and wasteful expenditure, as prescribed by Municipal Finance Management Act 56 of 2003.

5 distinguish, with examples, between unauthorised, irregular as well as fruitless and wasteful expenditure.

Solutions

Expert Solution

As per policy, only one question is allowed to answer at a time, so answering Q1 here :

Answer 1)

The role of risk management in preventing unauthorised, irregular and fruitless and wasteful expenditure is to do investigations and identifying the critical issues and providing recommendations. The risk management has the responsibilities for coordinating and supporting the organisation’s overall risk management process. The risk management submit its report to the Committee and the Internal Auditing/ Accounting Officer. The management through investigations could identify issues like:

1) The unathorised and wasteful expenditures are taking place due to i) not following procedures ii) not adopting the budgeting accounting iii) not following the rules and regulations iv) the department heads are taking due care.

2) The payments to the expenses do not follow the budgeted cash flow.

3) the projects are mostly overruns the scheduled time.

After picking up the issues, the risk management do recommendations for controlling the unauthorized and irregular waste expenditures, which could be:

a) The budgetary accounting procedures are strictly applied.

b) The rules and regulations should be followed and department head should be made responsible for it.

c) The straight consequence management is implemented if regulations are not followed.

d) Policy manual should be provided to each and every department and make everyone to know and follow it.

e) Communications channels should be strengthened so that free follow of views takes place.

f) Each and every expenditure should be documented.

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