Portfolio Committee on Appropriations Audit of predetermined objectives 26 March 2013.

Portfolio Committee on Appropriations

Audit of predetermined objectives

26 March 2013

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Reputation promise/mission

The Auditor-General of South Africa 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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Topics for discussion

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Audits performed by AGSA

General approach and outcome

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Audit of Predetermined Objectives

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Combined assurance

Oversight assuranceSecond level of assurance

Coordinating /Monitoringinstitutions

Internalaudit

Auditcommittee

Extensive Extensive Extensive

Required assurance levels

Oversight’s assurance role•National Treasury/ DPSA – monitor compliance with laws and regulations and enforce appropriate action•Internal audit – follow up on management’s actions to address specific recommendations and conduct own audits on the Strategic Plans & APP and quarterly progress•Audit committee – monitor the implementation of commitments on corrective action made by management as well as quarterly progress on the plans

Seniormanagement

Accountingofficers/authority

Executiveauthority



Management’s assurance role•Senior management – take immediate action to address specific recommendations and adhere to financial management and control systems•Accounting officers/ authority – hold officials accountable implementation of plan and report quarterly and annually progress•Executive authority – monitor the progress of performance and enforce accountability and consequences

Management assuranceFirst level of assurance

Seniormanagement

Accountingofficers/authority

Independent assuranceThird level of assurance

Oversight(portfolio

committees / councils)

Publicaccounts

committee

External audit



Role of independent assurance•Oversight (portfolio committees /councils) – review strategic and performance plans as well as the accounting officer’s quarterly reports on performance•Public accounts committee – exercise specific oversight on a regular basis•External audit – provide independent assurance on the usefulness of plans and the reliability and credibility of reported performance information and identify instances non-compliance

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Clean administration – from annual audits

*Not qualified, disclaimed or adverse opinionGeneral approach and outcome

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Annual audit of reported actual performance against predetermined Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual objectives, indicators and targets as contained in the annual performance report . performance report .

Annual audit of reported actual performance against predetermined Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual objectives, indicators and targets as contained in the annual performance report . performance report .

Integral part of the annual regularity audit process, confirming the • Compliance with laws and regulations• Usefulness of performance reporting• Reliability of performance reporting

Integral part of the annual regularity audit process, confirming the • Compliance with laws and regulations• Usefulness of performance reporting• Reliability of performance reporting

Audit of predetermined objectives defined as:

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An audit report must reflect an opinion or conclusion relating to the performance of the

auditee against predetermined objectives

An audit report must reflect an opinion or conclusion relating to the performance of the

auditee against predetermined objectives

Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA)Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA)Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA)Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA)

Applicable to all spheres of governmentApplicable to all spheres of governmentApplicable to all spheres of governmentApplicable to all spheres of government

Legislative requirements - auditing

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Public Finance Management Act (PFMA), 1999 (Act No.1 of 1999)Public Finance Management Act (PFMA), 1999 (Act No.1 of 1999)

Treasury Regulations issued in terms of the PFMA, 2002Treasury Regulations issued in terms of the PFMA, 2002

Public Service Regulations (PSR), Part III B: (Only applicable to departments)Public Service Regulations (PSR), Part III B: (Only applicable to departments)

Guidelines, instruction notes, practice notes, issued by National TreasuryGuidelines, instruction notes, practice notes, issued by National Treasury

Framework for managing programme performance information (issued by the National Treasury in May 2007)

Framework for strategic and annual performance plans(issued by National Treasury in August 2010)

Framework for managing programme performance information (issued by the National Treasury in May 2007)

Framework for strategic and annual performance plans(issued by National Treasury in August 2010)

Legislative requirements for planning, budgeting & reporting of performance info

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Audit of predetermined objectives

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Public sector reforms Improving public reportingProviding better information

on what taxpayers are getting for their taxes

Why was this necessary?Why was this necessary?

If you do not measure results, you cannot tell success from failure

If you cannot see success, you can not reward it

If you cannot reward success, you are probably rewarding failure

If you cannot see success, you can not learn from and improve on it

If you cannot recognize failure, you cannot correct it

If you cannot demonstrate results,you cannot win public support (Service Delivery !!!)

Adapted from Osborne and Gaebler, 1992, Reinventing Government

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Completed phased audit approach Audit to the extent necessary to

express an audit opinion Audit opinion in the management

report Audit reports contain audit findings

– not audit opinions

Completed phased audit approach Audit to the extent necessary to

express an audit opinion Audit opinion in the management

report Audit reports contain audit findings

– not audit opinions

Adopted a phased-in approach Factual audit findings reported in

both management and audit reports No audit opinion in audit reports –

only findings Regular interaction with stakeholders

(NT, Presidency, DPSA) to determine and test audit approach

Provided inputs to drafting of NT Frameworks (FMPPI)

Adopted a phased-in approach Factual audit findings reported in

both management and audit reports No audit opinion in audit reports –

only findings Regular interaction with stakeholders

(NT, Presidency, DPSA) to determine and test audit approach

Provided inputs to drafting of NT Frameworks (FMPPI)

AGSA strategy to the audit of predetermined objectives

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Auditing the planning, budgeting and reporting cycle

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ExistenceExistence

TimelinessTimeliness

PresentationPresentation

MeasurabilityMeasurability

RelevanceRelevance

Consistency Consistency

ValidityValidity

AccuracyAccuracy

CompletenessCompleteness

Compliance with regulatory Compliance with regulatory requirementsrequirementsCompliance with regulatory Compliance with regulatory requirementsrequirements

UsefulnessUsefulnessUsefulnessUsefulness

ReliabilityReliabilityReliabilityReliability

Audit criteria

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AGSA Audit process

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Audit reporting – Management report

An audit conclusion will be prepared and included in the management reports for all departments, constitutional institutions, trading entities, public entities, Parliament and provincial legislatures

An audit conclusion will be prepared and included in the management reports for all departments, constitutional institutions, trading entities, public entities, Parliament and provincial legislatures

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Usefulness of information: Audit findings focus on the consistency, relevance, measurability & presentation of reported performance information.

Reliability of information:

Audit findings focus on the validity, accuracy & completeness of reported performance information

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Predetermined objectives

COMPLIANCE WITH LAWS AND REGULATIONS

Report non-compliance matters in relation to the performance management and reporting processes

Audit reporting – Auditor’s report

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DPME - Audit of Predetermined Objectives

No matters reported Reported in audit report

Additional Matter paragraph included in audit report: >20% of targets not achieved

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DPME - Root Causes

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DPME - Recommendations and way forward

Key driver of internal control

Recommendations for improvement

Leadership Exercise oversight responsibility regarding financial and performance reporting, compliance and related internal controls

Action plans to address internal control deficiencies should be specific, time bound and progress should be monitored

Training and development of relevant performance management staff

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Performance management system

Develop and implement standard operating procedures

Management to ensure clear definitions and technical standards for indicators and targets are developed

Supporting documentation (data definitions)

Ensure adherence to FMPPI

Clearly defined roles and responsibilities

Individual performance contracts should be aligned to the organisational objectives

Continuous monitoring and reporting of performance

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Governance The audit committee should report on the acceptability of the quarterly reports submitted to National Treasury and should also ensure that internal audit provides assurance on a quarterly basis and monitors implementation of the action plans

Internal audit should monitor the reporting against predetermined objectives on a regular basis

Reporting on predetermined objectives should be included in risk management strategy and practices

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Audit of Predetermined Objectives - NYDA

No matters reported Reported in audit report

Portfolio Committee on Appropriations Audit of predetermined objectives 26 March 2013.

Documents

Transcript of Portfolio Committee on Appropriations Audit of predetermined objectives 26 March 2013.