Ngoepe, Noko Lesedi Mpho2024-10-032024-10-032023-02-17https://hdl.handle.net/20.500.14519/756A modified audit opinion is one of the characteristics of poor municipal performance. In general, the modified audit opinion results from the inability to perform certain audit procedures, and no other procedures can be undertaken to produce the required quality of reliable audit evidence. As a result, modified audit opinions are becoming more common in municipalities where there is a scope limitation. Modified audit opinions have had the most widespread negative impact on the going concern possibilities of any type of audit opinion. As stated, this study is motivated by the various circumstances that can be identified in the context of a modified audit opinion; thus, references to the main concepts of modified audit opinion are made where appropriate. The current study aims to investigate the root causes of modified audit opinions obtained by the Polokwane Local Municipality in the period 2015/16 to 2019/20. The problem that motivated this study was the researcher's belief that modified audit opinions paint a worrying picture of municipalities with poor audit outcomes. Despite increased attention paid to improving local government audit outcomes, annual financial statements do not meet quality standards, there is insufficient evidence behind financial statements, financial statements contain material misstatements, there is insufficient monitoring for corrective action, and municipal managers are politically influenced and do not act on irregularities. The study begins with a review of legislative frameworks as the primary impetus for local government, as well as the literature, policy documents and contemporary articles. The review of literature assessed some of the various approaches to general elements of modified audit opinions. This aided in identifying patterns within various academic contributions and explaining how modified opinions are expressed. To comprehend and define the concept of modified audit opinion, a thorough review of the literature was conducted to gain a necessary background, which in turn shed light on several key concepts. Insights are extrapolated from literature, and patterns, themes and subthemes are identified. The triangulation of literature and empirical data research revealed that there is agreement with the study's findings. The interpretivism research design was used. Using a qualitative approach, this study sought to gain a clear understanding of the audit committees, chief financial officer's (CFO), divisional managers', audit manager's and internal auditor's perceptions of the root causes of modified audit opinions obtained by the Polokwane NLocal Municipality. This was accomplished through qualitative data collection and analysis methods, specifically in-depth personal interviews with participants from the financial management unit and textual analysis of previous annual reports. A series of semi-structured interviews with 11 financial management unit and audit committee members were conducted. Data were collected through e-interviews using Computer Mediated Communications (CMCs), and were then analysed and coded systematically through Hermeneutic Unit of Atlas.ti™ Version 22. A representative from each division was interviewed and organisational documents were researched. A preliminary investigation was conducted with the supervisors and employees of the municipality to ensure the questions stated were answered. This investigation aided in the refinement of information-gathering plans for substance and strategies to be considered. After establishing and describing the study's research methodology, the analysis and results of the study were presented, organised according to the order of the questions in the pre-defined interview guide. The information gathered concerns the participants' perceptions of a modified audit opinion in terms of themes and sub-themes. The findings of this study showed that the major hurdles to achieving a better audit opinion within the Polokwane Local Municipality were (1) different interpretations of Generally Recognised Accounting Practices (GRAP), (2) lack of proper implementation of internal controls, (3) instability key staff vacancies, (4) poor records management, (5) insufficient or inadequate audit evidence, (6) lack of financial statement quality, (7) capacity constraints, (8) insufficient monitoring and corrective action, (9) lack of accountability and effective consequences management and (10) previous audit finding and recommendations not corrected. Modified audit opinions can take a variety of forms, depending on how seriously the auditor believes the financial statements' accuracy is jeopardised. However, the revised audit opinion does not necessarily imply that there was any wrongdoing but is merely an indication that the financial statements are likely to misrepresent the organisation's compliance with laws, financial statement presentation and predetermined standards. These findings shed light on the topic of modified audit opinion, which, despite the interest shown by scholars in the topic, is still in its infancy in terms of research. The findings of this study also showed that modified audit opinions are prevalent in municipalities, as local government finances continue to deteriorate and serious weaknesses in financial reporting are identified. The findings showed that the respondents in this study attributed changes in audit opinion to poor governance, accountability and consequence management in order to put local government back on track and provide high-quality service delivery. This dissertation's main contribution is to highlight the critical intervention of reducing modified audit opinions and its importance in improving the Polokwane Local Municipality’s audit opinions. The findings substantiated local and international literature. The study makes recommendations on how to mitigate the effects of modified audit opinions.1-225 PagesenCC0 1.0 Universalhttp://creativecommons.org/publicdomain/zero/1.0/Audit qualityAdverse audit opinionMunicipalityModified audit opinionAudited financial statementsDisclaimer of audit opinionQualified audit opinionThesis