Clean Audit Opinion: GMT 2013

Ducharme Consulting assisted the Government Motor Transport (GMT) in the Western Cape, a PFMA Trading Entity, in its preparation of GAAP annual financial statements for 2012/2013, for which GMT received a clean audit opinion.

DC is extremely proud to have GMT as a client and to be in such a trusted relationship for many years now, moving from a qualified audit opinion in 2006/2007 to unqualified audit opinions for the years following and progressing to a clean audit in 2012/2013. A clean audit is where the financial statements are free of material errors or omissions (financially unqualified audit opinion) and there are no material findings by the Auditor General on reporting of performance against pre - determined objectives or on the compliance by the entity with laws and regulations. In comparison, a financially unqualified audit opinion with findings is where the financial statements are unqualified but findings have been raised on the reporting of performance against pre - determined objectives or on the compliance by the entity with laws and regulations. A qualified audit opinion is where the financial statements contain material misstatements in specific amounts or there is insufficient evidence for the auditor to conclude that specific (identified) amounts included in the financial statements are not materially overstated or understated.

GMT’s progression to a clean audit is of importance in view of the Government’s Operation Clean Audit 2014. The Auditor-General South Africa’s Consolidated General Report on National and Provincial Audit Outcomes (PFMA 2011-2012) indicated that less than a quarter of public sector auditees obtained clean audit opinions. The AGSA’s overview is that there is slow progress towards clean audits with slightly more regressions than improvements. It is also indicated that there will still be a continuing high level of non-compliance with laws and regulations as well as high levels of unauthorised, irregular and fruitless and wasteful expenditure. In general, limited progress has been made in addressing the five key risk areas (Supply chain management; Predetermined objectives; Human Resources ; Information Technology; and Material mistakes in Annual Financial Statements submitted for audit ) and a regression on overall status of key controls (Leadership; financial and performance management; and governance).

It is also worth noting that the impact and value of a clean audit opinion for the Western Cape GMT stretches further than GMT itself. Since the 2012 financial year, all GMTs had to account for all permanently allocated vehicles as finance leases which resulted in the reclassification of approximately 5,500 vehicles as finance leases. This process itself resulted in amended amortisation schedules per lease (NPV, lease terms, finance lease instalments and interest calculations.), assessment of useful lives and residual values of leased assets, lease register updates, accounting journals and AFS disclosures notes. This is particularly of note as GMT provides finance lease information to all provincial departments and trading & public entities which prepares financial statements (or disclosure note information) according to GRAP. GMT provides the following information impacting the underlying financial statements of those entities, such as for:

  • Provincial departments: Notes to the financial statements disclosing lease commitments, daily tariffs charged, and vehicle information
  • Public- and Trading entities preparing GRAP financial statements: asset registers, finance lease registers, notes to the annual financial statements and journals to account for finance lease liabilities.


We trust that GMT will achieve the same success in its transition from the standards of GAAP to the standards of GRAP in the preparation of their annual financial statements for 2014. We also wish to acknowledge the efforts of all the staff of GMT in this great achievement.