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Presentation to the Portfolio Committee on Tourism

Fundamentals of effective Internal Control

21 July 2010

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Reputation promise/mission

The Auditor-General has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

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Introduction: Why the need for internal control?

An organisation needs internal control to:

• Provide reasonable assurance that they will achieve their operating, financial and non-financial reporting and compliance objectives

• The process of internal control entails the implementation of effectively designed policies, procedures and practices to ensure that the entity’s objectives are met.

• Management is involved in the approval of these policies and procedures and continuous monitoring of their implementation

should be in place.

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Fundamentals of effective internal control

1. Leadership• Tone at the top – creating an environment

favorable to good financial management and service delivery

• Identifying key controls aimed at achieving the organisation’s objectives

• Assessing skills / competencies of finance staff, ensuring the right staff mix, and managing consultants to ensure effective skills transfer

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Fundamentals of effective internal control(cont.)

2. Financial and performance management• Monthly financial statements and quarterly performance

reports, plus continuous monitoring of both

• Implementation of sound financial and performance management systems

• Proper controls over documentation to ensure that they are easily retrievable

• Operating basic internal controls for an efficient financial and performance management environment

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Fundamentals of effective internal control(cont.)

3. Governance

• Adequately resourced and effectively functioning internal audit and audit committee

• Maintenance of effective risk management strategies, including fraud prevention plans

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AGSA initiatives to promote oversight

Oversight focus

• Performance information – including both the strategic and annual performance plans and the annual performance report

• Financial and performance information/management• Compliance information• AGSA visibility• Engagement with Executive Authorities

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Questions and Discussions!