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A Case Study of a South African Municipality

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A Case Study of a South African Municipality THE ROLE OF MANAGEMENT CONTROL ON SERVICE DELIVERY IN LOCAL GOVERNMENT: A CASE STUDY OF A SOUTH AFRICAN MUNICIPALITY by Mmathume Norman Nkadimeng Submitted in accordance with the requirements for the degree of Master of Philosophy in the subject Management Accounting at the UNIVERSITY OF SOUTH AFRICA Supervisor: Prof. L Julyan Co-supervisor: Mrs M Lötter February 2019 DECLARATION Student number: 3724-404-3 I, Mmathume Norman Nkadimeng, hereby declare that the study titled “The role of management control on service delivery in local government: A case study of a South African municipality” is my original work and that I have not submitted it to any other institution than the University of South Africa. i ACKNOWLEDGEMENTS This study would not have been successfully completed had it not been for the support, encouragement and guidance of the following people: My late mom, Mareketle Anna Nkadimeng, who had faith in my abilities and imbued confidence in me. This study is yours, mom. My late brother, Mmamang Sydney Nkadimeng, for the healthy sibling rivalry that kept me on my toes over the years. We both pursued education relentlessly until your untimely death. Till we meet again, Phahlana. My wife, Nokhanya Nkadimeng, for allowing me the time to study and to compromise family time as a result. I undertake to make up for the lost time. My older children Nomathemba and Omphile for understanding that, like them, daddy was a student and had to do his homework. Thank you both, daddy will now make time for you. My supervisor, Prof Leoni Julyan, for the thorough supervision she provided to me. At times I wondered whether the study would ever be completed but her insights and guidance always triggered breakthroughs. Thank you, Prof. My co-supervisor, Mrs Marianne Lötter, for her support. I learnt to pay attention to detail from her. Victor Khanye Local Municipality for the permission to conduct my study at their municipality and the participants for their valuable insights. Mr. Hugo van der Walt who served as an external coder. Mrs Shaw who edited the dissertation. Thank you all. ii ABSTRACT The management control systems package has been the subject of recent studies but no study was found that examined the role of management control on service delivery in local government. The Victor Khanye Local Municipality in South Africa has experienced repeated service delivery protests attributed to a deficiency in the delivery of basic municipal services. An in-depth analysis was conducted on selected planning and budgeting aspects of the management control systems package and their role in the delivery of basic municipal services. This qualitative case study, carried out with semi- structured interviews, found that the Integrated Development Plan (IDP), the Service Delivery and Budget Implementation Plan (SDBIP) and the budget were used to improve the delivery of basic municipal services. Further research may be conducted on factors inhibiting 100% alignment between the IDP, the SDBIP and the budget, and to determine the role of a quarterly review system for low ranking employees on service delivery. KEYWORDS: Basic municipal services; budget; control; Integrated Development Plan; local government; management control; service delivery; Service Delivery and Budget Implementation Plan. iii TABLE OF CONTENTS DECLARATION .................................................................................................................... i ACKNOWLEDGEMENTS .................................................................................................... ii ABSTRACT ......................................................................................................................... iii LIST OF FIGURES ............................................................................................................. vii LIST OF TABLES............................................................................................................... vii LIST OF ABBREVIATIONS .............................................................................................. viii CHAPTER 1: INTRODUCTION ............................................................................................ 1 1.1 Background ........................................................................................................................................ 1 1.2 Rationale ............................................................................................................................................ 3 1.3 Problem statement ............................................................................................................................. 4 1.4 Aim and objectives of the study ......................................................................................................... 6 1.5 Significance ........................................................................................................................................ 6 1.6 Thesis statement ................................................................................................................................ 7 1.7 Delineations and limitations ............................................................................................................... 7 1.8 Definition of terms .............................................................................................................................. 8 1.9 Research methodology ...................................................................................................................... 8 1.9.1 Research design ........................................................................................................................ 9 1.9.2 Literature review ........................................................................................................................ 9 1.9.3 Empirical study......................................................................................................................... 10 1.10 Presentation structure of the research ........................................................................................... 11 CHAPTER 2: MANAGEMENT CONTROL THEORY AND LITERATURE ......................... 13 2.1 Introduction ...................................................................................................................................... 13 2.2 Review of management control literature ........................................................................................ 13 2.3 Management control concept........................................................................................................... 14 2.4 Evolution of management control theory ......................................................................................... 15 2.4.1 Classical phase of management control theory ....................................................................... 15 2.4.2 Modern phase of management control theory ......................................................................... 16 2.4.3 Post accounting phase of management control theory ........................................................... 17 2.5 Overview of management control frameworks ................................................................................ 18 2.5.1 The performance management systems framework ............................................................... 19 2.5.2 Object of control framework ..................................................................................................... 21 2.5.3 The Balanced Scorecard ......................................................................................................... 22 2.5.4 Levers of control ...................................................................................................................... 23 2.5.5 Framework of management control ......................................................................................... 24 2.5.6 The management control systems package ............................................................................ 25 2.6 Controls as per the management control systems package ............................................................ 26 2.6.1 Cultural controls ....................................................................................................................... 26 iv 2.6.2 Planning controls ..................................................................................................................... 27 2.6.3 Cybernetic controls .................................................................................................................. 28 2.6.4 Reward and compensation controls ........................................................................................ 28 2.6.5 Administrative controls ............................................................................................................. 29 2.6.6 The rationale in support of the management control systems package .................................. 30 2.7 The use of the management control systems package ................................................................... 30 2.7.1 The use of the management control systems package in the private sector .......................... 30 2.7.2 The use of the management control systems package in the public sector ............................ 33 2.8 Summary .......................................................................................................................................... 33 CHAPTER 3: FRAMEWORK FOR DELIVERY
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