audit of predetermined objectives pfma 2014-15. reputation promise/mission the auditor-general of...
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Topics to discuss 1. Background 2. Legislative requirements and framework for performance management and reporting 3. Audit process4. PFMA audit outcomes5. Roles and responsibilities 3TRANSCRIPT
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Audit of predetermined objectives PFMA 2014-15
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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, exists to strengthen ourcountry’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.
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Topics to discuss
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Background
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Audits performed by the AGSA
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Clean administration – from annual audits
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Annual audit of reported actual performance against Annual audit of reported actual performance against predetermined objectives, indicators and targets as predetermined objectives, indicators and targets as contained in the annual performance report contained in the annual performance report
It is an integral part of the annual regularity audit process, confirming –
• compliance with related laws and regulations• usefulness of performance information• reliability of performance reporting
Audit of predetermined objectives defined
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An audit report must reflect an opinion or conclusion on the performance of the auditee against predetermined
objectives
Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA) require that:
Applicable to all spheres of governmentApplicable to all spheres of government
Auditing requirements
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Legislative requirements and framework for performance management and reporting
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Public Finance Management Act , 1999 (Act No. 1 of 1999) (PFMA)
Treasury Regulations issued in terms of the PFMA, 2002
National Treasury Framework for managing programme performance information (issued by the National Treasury in May 2007)
This represents the performance management and reporting framework against which the performance information should be managed and reported.
The principles and requirements set out in the framework are used as a basis for the audit.
Guidelines, instruction notes issued by National Treasury
National Treasury Framework for strategic plans and annual performance plans(issued by the National Treasury in August 2010)
Legislative requirements and framework
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Performance planning, budgeting and reporting cycle
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Chapter 5: Strategic planning requirements for departments, trading entities and constitutional institutionsChapter 29: Corporate planning requirements for schedule 2, 3B and 3D public entitiesChapter 30: Strategic planning requirements for schedule 3A and 3C public entitiesPublic Service Regulations, part III B.1(a), (g): Only applicable to departments
Treasury Regulations issued in terms of the PFMATreasury Regulations issued in terms of the PFMA
Strategic planning and budgeting requirements
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Section 40(3)(a): Applicable to departments, constitutional institutions and trading entities.
Section 55(2)(a): Applicable to public entities.
PFMAPFMA
Chapter 18: Reporting requirements for departments, trading entities and constitutional institutions
Chapter 28: Reporting requirements for all public entities
PSR, part III B.1(f)(i)-(iii) & J.1, J.3: Monitoring and management of performance information for departments
TreasuryTreasury RegulationsRegulations issued in issued in terms of the PFMAterms of the PFMA
Reporting requirements
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Annual performance report submission
All departments, constitutional institutions, trading entities and public entities must submit the annual performance report for audit purposes with the annual financial statements (by 31 May) to enable the auditors to perform the necessary final audit procedures.
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Key performance accountability documents
• Consistent structures to facilitate understanding and accountability
• Enable linkage between plans and actual performance
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AppropriateAvoid unintended consequences and encourage service delivery improvements
ReliableMust be accurate enough for its intended use and respond to changes
RelevantMust relate logically and directly to an aspect of the institution's mandate
Well definedClear, unambiguous definition so that data will be collected consistently and will be easy to understand and use
VerifiablePossible to validate the processes and systems
Cost-effectiveUsefulness of the indicator must justify the cost of collecting the data
Good performance indicators should be:
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SMART performance targets
SS
MM
AA
RR
TT
Nature and required level of performance can be clearly identified
Required performance can be measured
Realistic given existing capacity
Required performance is linked to achievement of goal
Time period/deadline for delivery is specified
PECIFICPECIFIC
EASURABLEEASURABLE
ELEVANTELEVANT
CHIEVABLECHIEVABLE
IME BOUNDIME BOUND
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Audit process
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Completed phased audit approach
Audit to the extent necessary to express an audit conclusion
Audit conclusion in the management report for all departments, constitutional institutions, trading entities and public entities
Audit reports contain material audit findings – not audit opinions
Phased-in approach Factual audit findings
reported in both management and audit reports
No audit opinion in audit reports
Interaction with stakeholders (NT, Presidency, DPSA) to determine and test audit approach
Inputs to drafting of NT frameworks (FMPPI)
2004-05 to 2008-09 2009-10 to 2014-15
AGSA strategy
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Validity
Accuracy
Completeness
Applicable to performance management and reporting
PresentationMeasurabilityRelevanceConsistency
Compliance with regulatory Compliance with regulatory requirementsrequirements
UsefulnessUsefulness
ReliabilityReliability
Audit criteria
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Understand and test the design and implementation of the performance management systems, processes and
relevant controls 11
Test the measurability, relevance, presentation and consistency of planned and reported performance information22
Conclude on the reliability of the reported performance for selected programmes or objectives55
Test the reported performance information against relevant source documentation to verify the validity,
accuracy and completeness of reported performance information44
Audit approach
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USEFULNESS of reported performance for selected programmes or objectives
RELIABILITY of the reported performance for selected programmes or objectives
Audit reporting – Management report
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Compliance findings relevant to the performance management and reporting
Audit reporting – Auditor’s report
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Audit outcomes PFMA 2013-14
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Quality of annual performance reports (overall)
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With no findings
With findings
• The annual performance reports of of the auditees
were useful and reliable
• Slight improvement over 2012-13
64%2013-14PFMA
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Auditees with material findings on usefulness
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2013-14PFMA
Departments Public entities
160 departments
158 departments
293 public entities
288public entities
Improved
Regressed
Stagnant or limited progress
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PDO findings
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Roles and responsibilities
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Roles and responsibilities:
Ministers/MECs Accounting officer or head of an institution (assisted by chief information officer)
Line managers Other officials
To ensure that institutions under their control set up appropriate performance information systems
Accountable for establishing and maintaining the systems to manage performance information
Accountable for establishing and maintaining the performance information processes and systems within their areas of responsibility
Responsible for capturing, collating and checking performance data relating to their activities
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The functions of internal audit relevant to performance information and management should typically include the following:
Monitoring of internal controls relating to performance information processes
Examination of the usefulness and reliability of performance information
Review of critical performance management activities Review of compliance with laws and regulations relevant to
performance planning, management and reporting Risk management
Also refer to Treasury Regulations (TR) 3.2.11 - 3.2.12 (applicable to departments) and TR 27.2.10 -27.2.11 (applicable to public entities) for the responsibilities of the internal audit function
Role of internal audit
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Review of draft the APP 2015-16
• Programme 3 - HIV/AIDS, TB , Maternal and Child Care and Programme 5- Hospital, Tertiary Health Services and Human
Resource Development were reviewed as part of an interim audit on the annual performance plan.
• Indicators and targets were reviewed for usefulness• All findings reported to management were satisfactorily addressed
with the final APP
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THANK YOU
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