pfma 2011-12 oversight responsibilities of national and … · 2017. 3. 27. · section 81(2) an...

CONSOLIDATED GENERAL REPORT on NATIONAL and PROVINCIAL audit outcomes

PFMA 2011-12Oversight responsibilities of national and provincial legislature and accountability of the executive

1

Ourreputation promise/mission

The Auditor-General of South Africa (AGSA) 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.

FOREWORD

CONSOLIDATED gENErAL rEpOrT ON NATIONAL AND prOVINCIAL AUDIT OUTCOmES Of 2011-12

3

CONSOLIDATED GENERAL REPORT ON NATIONAL AND PROVINCIAL AUDIT OUTCOMES OF 2011-12

5 risk areas

Key controls

Pervasive root causes

Slow progress towards clean audits with slightly more regressions than improvements

6% (31) 3% (16) 2% (12)

3% (17) 5% (24) 6% (27)

14% (74) 14% (72) 14% (66)

55% (297) 53% (279) 47% (226)

22% (117) 25% (132) 31% (152)

2011-12 (536) 2010-11 (523) 2009-10 (483)

Financially unqualified with no

findings

Financially unqualified with

findings

Qualified with findings

Adverse, disclaimer with findings Audits outstanding

Limited progress made in addressing five key risk areas and regression in overall status of key controls

IT controls

Unchanged

HR

Unchanged

Supply chain management

Minimal improvement

Material mistakes in AFS submitted

for audit

Unchanged

Predetermined objectives

Improvement

Leadership Financial and performance management Governance

16% 21%

12%

35%

38%

27%

49% 41%

61%

No significant control weaknesses Control weaknesses are being addressed Control weaknesses are not being addressed

Regression Unchanged

Vacancies in key positions, leadership instability and ineffective performance management

Internal controls not effective – checks and balances not performed

Not all role players are providing the level of assurance required


4

FOREWORD

It is a pleasure to present to Parliament my 2011-12 general report on audit outcomes of departments, legislatures, public entities and other entities in the national and provincial spheres of government.

In response to the 2010-11 audit outcomes, commitments were made by the executive and oversight bodies to intensify their efforts in bringing positive change within the administration.

Despite my expectation that these commitments would drive improvements towards clean audits, the audit outcomes for the year show a general stagnant trend, with less than a quarter of auditees obtaining clean audit opinions and 52 not able to sustain their prior year clean audit opinion. My report shows that many leaders did not own and drive these commitments, so the commitments are left to flounder until the next audit starts. In this regard, I single out two significant commitments made a year ago:

• The executive committed to meet with my office quarterly for at least an hour. About 78% of them have made time at least three times in the past year to meet and share the results of our assessment of the risks and controls and to consider the status of commitments made and make new commitments. Although the engagements were well received, only small movements in audit outcomes can be seen. This was due to frequent leadership changes resulting in disruption in the implementation of commitments, our message being ignored, or our conversation not being compelling and persuasive enough. We therefore undertake to continue with the quarterly engagements, but with greater emphasis on quality conversations leading to increased impact.

• Parliament and legislatures committed to improve the collaboration between their respective public accounts committees and portfolio committees. We have yet to see more concentrated efforts in this regard as an uncoordinated approach will continue to weaken the effectiveness of oversight.

Of special concern is the increase in auditees with material findings on non-compliance with legislation, bringing it to 74%. Even though I have stressed for the past three years the urgent need to address the quality of the financial statements submitted for audit and weaknesses in supply chain management, human resource management and information technology controls, there has been minimal improvement.

The usefulness and reliability of the annual performance reports continue to improve, which is gratifying. I am now able to make a clearer assessment of service delivery risks but not to the full extent necessary (as some key departments responsible for national outcomes, such as those in the health, education and human settlement sectors, continue to have material shortcomings). Based on the annual performance reports, about 42% of auditees achieved 80% or fewer of their planned service delivery targets, while some departments had significantly underspent their conditional grants and capital budgets. My report further highlights risks to the financial health of national and provincial government flowing from poor budget management, cash and debtors management of departments and the financial management of some public entities. These indicators reflect that the fiscus could be placed under further pressure if such risks are not addressed.

In this general report, I raise three areas that require corrective steps by those charged with governance to achieve improvements in the audit outcomes:

• Vacancies in key positions and instability in leadership positions affect the pace of sustainable improvements. Ineffective performance management is evident at some auditees, which means that officials who perform poorly are not dealt with decisively. A concerted effort is required to address the challenges in human resource capacity and productivity.


5

• Effective internal controls to prevent, detect and correct non-compliance with legislation and mistakes in the financial and performance reports are lacking. Overall the effectiveness of key controls has regressed, as they were not designed and implemented in a sustainable manner. Checks and balances for all key processes, monthly reporting and validation processes to ensure the credibility of all management information are basic controls which skilled professional should be able to implement.

• Government should be monitored in a thorough, diligent and collaborative manner. My office only provides independent assurance on the credibility of financial and performance information and compliance with selected legislation. We are not the only provider of assurance to the citizens that government is delivering services in a responsible and accountable manner. The monitoring functions vested in senior management, accounting officers, internal audit, audit committees and executive authorities should be better exercised so that audit outcomes and service delivery issues are dealt with through self-monitoring, while audit provides an external validation. The treasuries, offices of the premiers, public service administration and other coordinating/monitoring institutions should fulfil their role envisaged in legislation to guide, support, coordinate and monitor government. The legislatures and Parliament should be scrupulous and courageous in performing their oversight function in order to make an impact on clean administration. My assessment (detailed in this report) is that not all of these role players are providing the level of assurance required to create the momentum towards improve audit outcomes.

A common reaction to the audit outcomes is the question posed by many about the need for officials to be accountable, and for there to be consequences for poor performance, misappropriation of state resources and fraud. In response, we have highlighted in a separate booklet, the range of legislation at the government’s disposal that enables remedies to be applied where there has been transgression. These must be used where necessary to reverse the culture of “business-as-usual”. It is my assessment that the full power of the law is yet to be activated, leading to commentators asking “What can be done?” or saying “There are no consequences”.

Highlighting these remedies provides a starting point for our responsible leaders and the relevant legislatures and departments to take action. All parties have to play their part.

Although progress towards clean audits is slow, I am encouraged by examples of commitments by leaders and officials which translated into improved audit outcomes and I am confident similar results can be achieved by all auditees. In conjunction with various key role players, my office has provided input towards the development of solutions to the challenges highlighted in this report, and will in future share assessments of progress in joint sessions with the Head of Government Business and Parliament and through similar engagements in the provinces.

It is through all our efforts and the work of auditors that we will contribute towards strengthening our democracy through auditing.

Auditor-GeneralPretoriaMarch 2013

OVERSIGHT RESPONSIBILITIES


7

AN

NEx

URE

: ExT

RAC

TS F

ROM

LEG

ISLA

TIO

N

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Fina

ncia

l mis

cond

uct b

y ac

coun

ting

offi

cer

PFM

ASe

ctio

n81

(1)(a

) &

(b)

An

acco

untin

g offi

cer f

or a

dep

artm

ent c

omm

its a

n ac

t of fi

nanc

ial m

isco

nduc

t if h

e/sh

e w

ilful

ly o

r neg

ligen

tly—

(a) f

ails

to c

ompl

y w

ith a

requ

irem

ent o

f sec

tion

38, 3

9, 4

0, 4

1 or

42;

or

(b)

incu

rs o

r per

mits

an

unau

thor

ised

exp

endi

ture

, an

irreg

ular

exp

endi

ture

or a

fr

uitle

ss a

nd w

aste

ful e

xpen

ditu

re.

Trea

sury

Re

gula

tions

4.1.

3

If an

acc

ount

ing

office

r is

alle

ged

to h

ave

com

mitt

ed fi

nanc

ial m

isco

nduc

t, th

e re

leva

nt

trea

sury

, as

soon

as

it be

com

es a

war

e of

the

alle

ged

mis

cond

uct,

mus

t ens

ure

that

th

e re

leva

nt e

xecu

tive

auth

ority

initi

ates

an

inve

stig

atio

n in

to th

e m

atte

r and

, if t

he

alle

gatio

ns a

re c

onfir

med

, hol

ds a

dis

cipl

inar

y he

arin

g in

acc

orda

nce

with

the

pres

crip

ts

and

agre

emen

ts a

pplic

able

in th

e pu

blic

ser

vice

.

Trea

sury

Re

gula

tions

3.1.

14

Shou

ld a

repo

rt to

an

audi

t com

mitt

ee, w

heth

er fr

om th

e in

tern

al a

udit

func

tion

or a

ny

othe

r sou

rce,

impl

icat

e th

e ac

coun

ting

office

r in

frau

d, c

orru

ptio

n or

gro

ss n

eglig

ence

, the

ch

airp

erso

n of

the

audi

t com

mitt

ee m

ust p

rom

ptly

repo

rt th

is to

the

rele

vant

exe

cutiv

e au

thor

ity.

PFM

ASe

ctio

n 84

A c

harg

e of

fina

ncia

l mis

cond

uct a

gain

st a

n ac

coun

ting

office

r or o

ffici

al re

ferr

ed to

in

sect

ion

81 o

r an

offici

al re

ferr

ed to

in s

ectio

n 82

mus

t be

inve

stig

ated

, hea

rd a

nd d

ispo

sed

of in

term

s of

the

stat

utor

y or

oth

er c

ondi

tions

of a

ppoi

ntm

ent o

r em

ploy

men

t app

licab

le

to th

at a

ccou

ntin

g offi

cer,

mem

ber o

r offi

cial

, and

any

regu

latio

ns p

resc

ribed

by

the

min

iste

r in

term

s of

sec

tion

85.

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Trea

sury

Re

gula

tions

4.1.

4A

trea

sury

may

dire

ct th

at a

n offi

cial

oth

er th

an a

n em

ploy

ee o

f the

inst

itutio

n co

nduc

t th

e in

vest

igat

ion

or is

sue

any

reas

onab

le re

quire

men

t reg

ardi

ng th

e w

ay in

whi

ch th

e in

vest

igat

ion

shou

ld b

e pe

rfor

med

.

PFM

ASe

ctio

n 86

A

n ac

coun

ting

office

r is

guilt

y of

an

offen

ce a

nd li

able

on

conv

ictio

n to

a fi

ne o

r im

pris

onm

ent f

or a

per

iod

not e

xcee

ding

five

yea

rs, i

f tha

t acc

ount

ing

office

r wilf

ully

or i

n a

gros

sly

negl

igen

t way

fails

to c

ompl

y w

ith a

pro

visi

on o

f sec

tion

38, 3

9 or

40.

PFM

ASe

ctio

n 65

(1)(b

)

The

exec

utiv

e au

thor

ity re

spon

sibl

e fo

r a d

epar

tmen

t or p

ublic

ent

ity m

ust t

able

in th

e N

atio

nal A

ssem

bly

or a

pro

vinc

ial l

egis

latu

re, a

s m

ay b

e ap

prop

riate

, the

find

ings

of a

di

scip

linar

y bo

ard

and

any

sanc

tions

impo

sed

by s

uch

a bo

ard,

whi

ch h

ad h

eard

a c

ase

of

finan

cial

mis

cond

uct a

gain

st a

n ac

coun

ting

office

r or a

ccou

ntin

g au

thor

ity in

term

s of

se

ctio

n 81

or 8

3.

Fina

ncia

l mis

cond

uct o

f offi

cial

s

PFM

A Se

ctio

n 81

(2)

An

offici

al o

f a d

epar

tmen

t, a

trad

ing

entit

y or

a c

onst

itutio

nal i

nstit

utio

n to

who

m a

po

wer

or d

uty

is a

ssig

ned

in te

rms

of s

ectio

n 44

com

mits

an

act o

f fina

ncia

l mis

cond

uct i

f he

/she

wilf

ully

or n

eglig

ently

fails

to e

xerc

ise

that

pow

er o

r per

form

that

dut

y.

PFM

ASe

ctio

n 84

A c

harg

e of

fina

ncia

l mis

cond

uct a

gain

st a

n ac

coun

ting

office

r or o

ffici

al re

ferr

ed to

in

sec

tion

81, o

r an

offici

al re

ferr

ed to

in s

ectio

n 82

, mus

t be

inve

stig

ated

, hea

rd a

nd

disp

osed

of i

n te

rms

of th

e st

atut

ory

or o

ther

con

ditio

ns o

f app

oint

men

t or e

mpl

oym

ent

appl

icab

le to

that

acc

ount

ing

office

r, m

embe

r or o

ffici

al, a

nd a

ny re

gula

tions

pre

scrib

ed

by th

e m

inis

ter i

n te

rms

of s

ectio

n 85

.

Trea

sury

Re

gula

tions

4.1.

1

If an

offi

cial

is a

llege

d to

hav

e co

mm

itted

fina

ncia

l mis

cond

uct,

the

acco

untin

g offi

cer

of th

e in

stitu

tion

mus

t ens

ure

that

an

inve

stig

atio

n is

con

duct

ed in

to th

e m

atte

r and

, if

confi

rmed

, mus

t ens

ure

that

a d

isci

plin

ary

hear

ing

is h

eld

in a

ccor

danc

e w

ith th

e pr

escr

ipts

and

agr

eem

ents

app

licab

le in

the

publ

ic s

ervi

ce.


8

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Trea

sury

Re

gula

tions

4.2.

1 Th

e ac

coun

ting

office

r mus

t adv

ise

the

exec

utiv

e au

thor

ity, r

elev

ant t

reas

ury

and

the

Audi

tor-

Gen

eral

of a

ny c

rimin

al c

harg

es it

has

laid

aga

inst

any

per

son

in te

rms

of s

ectio

n 86

of t

he a

ct.

Trea

sury

Re

gula

tions

4.2.

2 Th

e re

leva

nt tr

easu

ry m

ay d

irect

an

inst

itutio

n to

lay

crim

inal

cha

rges

aga

inst

any

per

son

shou

ld a

n ac

coun

ting

office

r fai

l to

take

app

ropr

iate

act

ion.

Trea

sury

Re

gula

tions

4.3.

1

The

acco

untin

g offi

cer m

ust,

as s

oon

as th

e di

scip

linar

y pr

ocee

ding

s ha

ve b

een

com

plet

ed, r

epor

t to

the

exec

utiv

e au

thor

ity, t

he D

epar

tmen

t of P

ublic

Ser

vice

and

Ad

min

istr

atio

n an

d th

e Pu

blic

Ser

vice

Com

mis

sion

on

the

outc

ome,

incl

udin

g—a)

the

nam

e an

d ra

nk o

f the

offi

cial

aga

inst

who

m th

e pr

ocee

ding

s w

ere

inst

itute

d;b)

the

cha

rges

, ind

icat

ing

the

finan

cial

mis

cond

uct t

he o

ffici

al is

alle

ged

to h

ave

com

mitt

ed;

c) t

he fi

ndin

gs;

d) a

ny s

anct

ion

impo

sed

on th

e offi

cial

; and

e) a

ny fu

rthe

r act

ion

to b

e ta

ken

agai

nst t

he o

ffici

al, i

nclu

ding

crim

inal

cha

rges

or c

ivil

proc

eedi

ngs.

Trea

sury

Re

gula

tions

4.3.

4

The

acco

untin

g offi

cer o

f an

inst

itutio

n m

ust,

on a

n an

nual

bas

is, s

ubm

it to

the

prov

inci

al

trea

sury

(if a

pplic

able

), th

e N

atio

nal T

reas

ury

and

the

Audi

tor-

Gen

eral

a s

ched

ule

of—

(a) t

he o

utco

me

of a

ny d

isci

plin

ary

proc

eedi

ngs

and/

or c

rimin

al c

harg

es;

(b)

the

nam

es a

nd ra

nks

of o

ffici

als

invo

lved

; and

(c) t

he s

anct

ions

and

any

furt

her a

ctio

ns ta

ken

agai

nst t

hese

offi

cial

s.

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

una

utho

rise

d ex

pend

itur

e, ir

regu

lar a

nd fr

uitl

ess

and

was

tefu

l exp

endi

ture

PFM

ASe

ctio

n 1

“una

utho

rise

d ex

pend

itur

e” m

eans

—(a

) ove

rspe

ndin

g of

a v

ote

or a

mai

n di

visi

on w

ithin

a v

ote;

(b)

expe

nditu

re n

ot in

acc

orda

nce

with

the

purp

ose

of a

vot

e or

, in

the

case

of a

m

ain

divi

sion

, not

in a

ccor

danc

e w

ith th

e pu

rpos

e of

the

mai

n di

visi

on.

PFM

ASe

ctio

n 1

“fru

itle

ss a

nd w

aste

ful e

xpen

ditu

re” m

eans

exp

endi

ture

whi

ch w

as m

ade

in v

ain

and

wou

ld h

ave

been

avo

ided

had

reas

onab

le c

are

been

exe

rcis

ed.

PFM

ASe

ctio

n 1

“irr

egul

ar e

xpen

ditu

re” m

eans

exp

endi

ture

, oth

er th

an u

naut

horis

ed e

xpen

ditu

re,

incu

rred

in c

ontr

aven

tion

of o

r not

in a

ccor

danc

e w

ith a

requ

irem

ent o

f any

app

licab

le

legi

slat

ion,

incl

udin

g—(a

) thi

s ac

t; or

(b)

the

Stat

e Te

nder

Boa

rd A

ct, 1

968

(Act

No.

86

of 1

968)

, or a

ny re

gula

tions

mad

e in

te

rms

of th

at a

ct; o

r(c

) any

pro

vinc

ial l

egis

latio

n pr

ovid

ing

for p

rocu

rem

ent p

roce

dure

s in

that

pro

vinc

ial

gove

rnm

ent.

PFM

ASe

ctio

n 40

(3)(b

)

The

annu

al re

port

and

aud

ited

finan

cial

sta

tem

ents

mus

t inc

lude

par

ticul

ars

of a

ny

mat

eria

l los

ses

resu

lting

from

crim

inal

con

duct

, and

any

una

utho

rised

exp

endi

ture

, irr

egul

ar e

xpen

ditu

re a

nd fr

uitle

ss a

nd w

aste

ful e

xpen

ditu

re th

at o

ccur

red

durin

g th

e fin

anci

al y

ear.

Trea

sury

Regu

latio

ns9.

1.1

The

acco

untin

g offi

cer o

f an

inst

itutio

n m

ust e

xerc

ise

all r

easo

nabl

e ca

re to

pre

vent

and

de

tect

una

utho

rised

, irr

egul

ar a

nd fr

uitle

ss a

nd w

aste

ful e

xpen

ditu

re, a

nd m

ust f

or th

is

purp

ose

impl

emen

t effe

ctiv

e, e

ffici

ent a

nd tr

ansp

aren

t pro

cess

es o

f fina

ncia

l and

risk

m

anag

emen

t.

Trea

sury

Regu

latio

ns9.

1.5

The

amou

nt o

f the

una

utho

rised

, irr

egul

ar a

nd fr

uitle

ss a

nd w

aste

ful e

xpen

ditu

re m

ust b

e di

sclo

sed

as a

not

e to

the

annu

al fi

nanc

ial s

tate

men

ts o

f the

inst

itutio

n.


9

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

PFM

ASe

ctio

n 38

(1)(h

)

The

acco

untin

g offi

cer f

or a

dep

artm

ent o

r tra

ding

ent

ity m

ust t

ake

effec

tive

and

appr

opria

te d

isci

plin

ary

step

s ag

ains

t any

offi

cial

in th

e se

rvic

e of

the

depa

rtm

ent w

ho—

i) co

ntra

vene

s or

fails

to c

ompl

y w

ith a

pro

visi

on o

f thi

s ac

tii)

com

mits

an

act w

hich

und

erm

ines

the

finan

cial

man

agem

ent a

nd in

tern

al c

ontr

ol

syst

em o

f the

dep

artm

ent;

oriii

) mak

es o

r per

mits

an

unau

thor

ised

exp

endi

ture

, irr

egul

ar e

xpen

ditu

re o

r fru

itles

s an

d w

aste

ful e

xpen

ditu

re.

Trea

sury

Regu

latio

ns9.

1.3

Whe

n an

acc

ount

ing

office

r det

erm

ines

the

appr

opria

tene

ss o

f dis

cipl

inar

y st

eps

agai

nst

an o

ffici

al in

term

s of

sec

tion

38(1

)(g) o

f the

act

, the

acc

ount

ing

office

r mus

t tak

e in

to

acco

unt—

(a) t

he c

ircum

stan

ces

of th

e tr

ansg

ress

ion;

(b)

the

exte

nt o

f the

exp

endi

ture

invo

lved

; and

(c) t

he n

atur

e an

d se

rious

ness

of t

he tr

ansg

ress

ion.

Trea

sury

Regu

latio

ns9.

1.4

The

reco

very

of l

osse

s or

dam

ages

resu

lting

from

una

utho

rised

, irr

egul

ar o

r fru

itles

s an

d w

aste

ful e

xpen

ditu

re m

ust b

e de

alt w

ith in

acc

orda

nce

with

regu

latio

n 12

.

PFM

ASe

ctio

n 38

(1)(g

)

On

disc

over

y of

any

una

utho

rised

, irr

egul

ar o

r fru

itles

s an

d w

aste

ful e

xpen

ditu

re, t

he

acco

untin

g offi

cer m

ust i

mm

edia

tely

repo

rt, i

n w

ritin

g, p

artic

ular

s of

the

expe

nditu

re to

th

e re

leva

nt tr

easu

ry a

nd, i

n th

e ca

se o

f irr

egul

ar e

xpen

ditu

re in

volv

ing

the

proc

urem

ent

of g

oods

or s

ervi

ces,

also

to th

e re

leva

nt te

nder

boa

rd.

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

PFM

ASe

ctio

n 34

1) U

naut

horis

ed e

xpen

ditu

re d

oes

not b

ecom

e a

char

ge a

gain

st a

reve

nue

fund

exc

ept

whe

n:a)

the

exp

endi

ture

con

stitu

tes

over

spen

ding

of a

vot

e an

d Pa

rliam

ent o

r a p

rovi

ncia

l le

gisl

atur

e, a

s m

ay b

e ap

prop

riate

, app

rove

s, as

a d

irect

cha

rge

agai

nst t

he re

leva

nt

reve

nue

fund

, an

addi

tiona

l am

ount

for t

hat v

ote

whi

ch c

over

s su

ch o

vers

pend

ing;

or

b) t

he e

xpen

ditu

re is

una

utho

rised

for a

noth

er re

ason

and

Par

liam

ent o

r a p

rovi

ncia

l le

gisl

atur

e, a

s m

ay b

e ap

prop

riate

, aut

horis

es th

e ex

pend

iture

as

a di

rect

cha

rge

agai

nst t

he re

leva

nt re

venu

e fu

nd.

2) If

Par

liam

ent o

r a p

rovi

ncia

l leg

isla

ture

doe

s no

t app

rove

in te

rms

of s

ubse

ctio

n (1

)(a

) an

addi

tiona

l am

ount

for t

he a

mou

nt o

f any

ove

rspe

ndin

g, th

at a

mou

nt b

ecom

es

a ch

arge

aga

inst

the

fund

s al

loca

ted

for t

he n

ext o

r fut

ure

finan

cial

yea

rs u

nder

the

rele

vant

vot

e.

Poss

ible

frau

d an

d co

rrup

tion

Trea

sury

Regu

latio

ns16

A9.

1(b)

The

acco

untin

g offi

cer m

ust i

nves

tigat

e an

y al

lega

tions

aga

inst

an

offici

al o

r oth

er

role

pla

yer o

f cor

rupt

ion,

impr

oper

con

duct

or f

ailu

re to

com

ply

with

the

supp

ly c

hain

m

anag

emen

t sys

tem

, and

whe

n ju

stifi

ed—

a) t

ake

step

s ag

ains

t suc

h offi

cial

or o

ther

role

pla

yer a

nd in

form

the

rele

vant

trea

sury

of

such

ste

ps; a

ndb)

repo

rt a

ny c

ondu

ct th

at m

ay c

onst

itute

an

offen

ce to

SA

PS.

Trea

sury

Regu

latio

ns16

A9.

3

The

Nat

iona

l Tre

asur

y an

d ea

ch p

rovi

ncia

l tre

asur

y m

ust e

stab

lish

a m

echa

nism

—(a

) to

rece

ive

and

cons

ider

com

plai

nts

rega

rdin

g al

lege

d no

n-co

mpl

ianc

e w

ith th

e pr

escr

ibed

min

imum

nor

ms

and

stan

dard

s; a

nd(b

) to

mak

e re

com

men

datio

ns fo

r rem

edia

l act

ions

to b

e ta

ken

if no

n-co

mpl

ianc

e w

ith a

ny n

orm

s an

d st

anda

rds

is e

stab

lishe

d, in

clud

ing

reco

mm

enda

tions

for c

rimin

al

step

s to

be

take

n in

the

case

of c

orru

ptio

n, fr

aud

or o

ther

crim

inal

offe

nces

.


10

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Prev

entio

n an

d Co

mba

ting

of C

orru

pt

Activ

ities

Act

(PRE

CCA)

Sect

ion

34

1) A

ny p

erso

n w

ho h

olds

a p

ositi

on o

f aut

horit

y an

d w

ho k

now

s or

oug

ht re

ason

ably

to

hav

e kn

own

or s

uspe

cted

that

any

oth

er p

erso

n ha

s co

mm

itted

an

offen

ce u

nder

th

e ac

t or t

he o

ffenc

e of

thef

t, fr

aud,

ext

ortio

n, fo

rger

y or

utt

erin

g a

forg

ed d

ocum

ent

invo

lvin

g an

am

ount

of R

100

000

or m

ore,

mus

t rep

ort s

uch

know

ledg

e or

sus

pici

on o

r ca

use

such

kno

wle

dge

or s

uspi

cion

to b

e re

port

ed to

any

pol

ice

offici

al.

2) A

ny p

erso

n w

ho fa

ils to

com

ply

with

sub

sect

ion

(1) i

s gu

ilty

of a

n off

ence

.3)

The

follo

win

g pe

rson

s ho

ld a

pos

ition

of a

utho

rity:

••Th

e di

rect

or-g

ener

al o

r hea

d, o

r equ

ival

ent o

ffice

r, of

a n

atio

nal o

r pro

vinc

ial

depa

rtm

ent;

••In

the

case

of a

mun

icip

ality

, the

mun

icip

al m

anag

er a

ppoi

nted

in te

rms

of s

ectio

n 82

of t

he L

ocal

Gov

ernm

ent:

Mun

icip

al S

truc

ture

s Ac

t, 19

98 (A

ct N

o. 1

17 o

f 199

8);

••A

ny p

ublic

offi

cer i

n th

e se

nior

man

agem

ent o

f a p

ublic

bod

y;••

Any

hea

d, re

ctor

or p

rinci

pal o

f a te

rtia

ry in

stitu

tion;

••Th

e m

anag

er, s

ecre

tary

or a

dire

ctor

of a

com

pany

as

defin

ed in

the

Com

pani

es A

ct,

1973

(Act

No.

61

of 1

973)

, inc

ludi

ng a

mem

ber o

f a c

lose

cor

pora

tion

as d

efine

d in

th

e Cl

ose

Corp

orat

ions

Act

, 198

4 (A

ct N

o. 6

9 of

198

4);

••Th

e ex

ecut

ive

man

ager

of a

ny b

ank

or o

ther

fina

ncia

l ins

titut

ion;

••A

ny p

artn

er in

a p

artn

ersh

ip;

••A

ny p

erso

n w

ho h

as b

een

appo

inte

d as

chi

ef e

xecu

tive

office

r or a

n eq

uiva

lent

offi

cer o

f any

age

ncy,

aut

horit

y, b

oard

, com

mis

sion

, com

mitt

ee, c

orpo

ratio

n, c

ounc

il,

depa

rtm

ent,

entit

y, fi

nanc

ial i

nstit

utio

n, fo

unda

tion,

fund

, ins

titut

e, s

ervi

ce o

r any

ot

her i

nstit

utio

n or

org

anis

atio

n, w

heth

er e

stab

lishe

d by

legi

slat

ion,

con

trac

t or a

ny

othe

r leg

al m

eans

;••

Any

oth

er p

erso

n w

ho is

resp

onsi

ble

for t

he o

vera

ll m

anag

emen

t and

con

trol

of t

he

busi

ness

of a

n em

ploy

er; o

r••

Any

per

son

cont

empl

ated

in p

arag

raph

s (a

) to

(i), w

ho h

as b

een

appo

inte

d in

an

actin

g or

tem

pora

ry c

apac

ity.

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Trea

sury

Regu

latio

ns16

A9.

1(f)

The

acco

untin

g offi

cer m

ust c

ance

l a c

ontr

act a

war

ded

to a

sup

plie

r of g

oods

or

serv

ices

—i)

if th

e su

pplie

r com

mitt

ed a

ny c

orru

pt o

r fra

udul

ent a

ct d

urin

g th

e bi

ddin

g pr

oces

s or

th

e ex

ecut

ion

of th

at c

ontr

act;

orii)

if a

ny o

ffici

al o

r oth

er ro

le p

laye

r com

mitt

ed a

ny c

orru

pt o

r fra

udul

ent a

ct d

urin

g th

e bi

ddin

g pr

oces

s or

the

exec

utio

n of

that

con

trac

t tha

t ben

efite

d th

at s

uppl

ier.

Poor

wor

k pe

rfor

man

ce –

offi

cial

s

Publ

ic S

ervi

ce

Regu

latio

n (P

SR)

Chap

ter 1

, pa

rt V

III/

B1

An

exec

utiv

e au

thor

ity s

hall

dete

rmin

e a

syst

em o

f per

form

ance

man

agem

ent a

nd

deve

lopm

ent f

or e

mpl

oyee

s in

her

or h

is d

epar

tmen

t oth

er th

an e

mpl

oyee

s w

ho a

re

mem

bers

of t

he s

enio

r man

agem

ent,

cons

iste

nt w

ith th

e pr

inci

ples

in re

gula

tion

VIIIA

.

Publ

ic S

ervi

ce

Regu

latio

n(P

SR)

Chap

ter 4

, pa

rt II

I/A

The

perf

orm

ance

of a

per

son

appo

inte

d to

a p

ost i

n th

e se

nior

man

agem

ent s

hall

be

man

aged

in a

ccor

danc

e w

ith a

per

form

ance

agr

eem

ent.

Such

an

agre

emen

t sha

ll be

lin

ked

to th

e de

part

men

t’s s

trat

egic

goa

ls a

nd s

hall

mee

t with

the

crite

ria p

resc

ribed

in

this

par

t.

Publ

ic S

ervi

ce

Regu

latio

n(P

SR)

Chap

ter 1

, pa

rt V

III/

D1

The

empl

oyee

’s su

perv

isor

sha

ll in

form

the

empl

oyee

in w

ritin

g of

the

outc

ome

of th

e as

sess

men

t and

, if t

he e

mpl

oyee

’s pe

rfor

man

ce is

uns

atis

fact

ory,

of t

he re

ason

s fo

r tha

t as

sess

men

t.

Publ

ic S

ervi

ce

Regu

latio

n (P

SR)

Chap

ter 4

, pa

rt II

I/B2

(c)

Such

per

form

ance

agr

eem

ent s

hall

enab

le th

e pe

rson

to w

hom

that

mem

ber r

epor

ts to

as

sess

his

or h

er w

ork

and

prov

ide

appr

opria

te s

uppo

rt.

Publ

ic S

ervi

ce

Regu

latio

n (P

SR)

Chap

ter 1

, pa

rt V

III/E

In th

e ca

se o

f uns

atis

fact

ory

perf

orm

ance

, an

exec

utiv

e au

thor

ity s

hall—

(a) p

rovi

de s

yste

mat

ic re

med

ial o

r dev

elop

men

tal s

uppo

rt to

ass

ist t

he e

mpl

oyee

to

impr

ove

her o

r his

per

form

ance

;(b

) if

the

perf

orm

ance

is s

o un

satis

fact

ory

as to

be

poor

and

the

desi

red

impr

ovem

ent c

anno

t be

effec

ted,

con

side

r ste

ps to

dis

char

ge th

e in

divi

dual

for

unfit

ness

or i

ncap

acity

to c

arry

out

his

or h

er d

utie

s.


11

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

Poor

wor

k pe

rfor

man

ce –

sup

plie

rs

PFM

ASe

ctio

n 38

(1)(a

)(i)

The

acco

untin

g offi

cer f

or a

dep

artm

ent m

ust e

nsur

e th

at th

e de

part

men

t has

and

m

aint

ains

effe

ctiv

e, e

ffici

ent a

nd tr

ansp

aren

t sys

tem

s of

fina

ncia

l and

risk

man

agem

ent

and

inte

rnal

con

trol

PFM

ASe

ctio

n 38

(1)(b

)Th

e ac

coun

ting

office

r for

a d

epar

tmen

t is

resp

onsi

ble

for t

he e

ffect

ive,

effi

cien

t, ec

onom

ical

and

tran

spar

ent u

se o

f the

reso

urce

s of

the

depa

rtm

ent o

r tra

ding

ent

ity.

PFM

ASe

ctio

n 38

(1)(c

)(ii)

The

acco

untin

g offi

cer f

or a

dep

artm

ent m

ust t

ake

effec

tive

and

appr

opria

te s

teps

to

pre

vent

una

utho

rised

, irr

egul

ar a

nd fr

uitle

ss a

nd w

aste

ful e

xpen

ditu

re a

nd lo

sses

re

sulti

ng fr

om c

rimin

al c

ondu

ct

Pref

eren

tial

Proc

urem

ent

Regu

latio

n13

(1)(b

)A

n or

gan

of s

tate

mus

t, up

on d

etec

ting

that

any

of t

he c

ondi

tions

of t

he c

ontr

act h

ave

not b

een

met

, act

aga

inst

the

tend

erer

or p

erso

n aw

arde

d th

e co

ntra

ct.

Pref

eren

tial

Proc

urem

ent

Regu

latio

n13

(2)

An

orga

n of

sta

te m

ay, i

n ad

ditio

n to

any

oth

er re

med

y it

may

hav

e ag

ains

t the

per

son

cont

empl

ated

in re

gula

tion

13(1

)—••

disq

ualif

y th

e pe

rson

from

the

tend

erin

g pr

oces

s;••

reco

ver a

ll co

sts,

loss

es o

r dam

ages

it h

as in

curr

ed o

r suff

ered

as

a re

sult

of th

at

pers

on’s

cond

uct;

••ca

ncel

the

cont

ract

and

cla

im a

ny d

amag

es w

hich

it h

as s

uffer

ed a

s a

resu

lt of

hav

ing

to m

ake

less

favo

urab

le a

rran

gem

ents

due

to s

uch

canc

ella

tion;

••re

stric

t the

tend

erer

or c

ontr

acto

r, its

sha

reho

lder

s an

d di

rect

ors,

or o

nly

the

shar

ehol

ders

and

dire

ctor

s w

ho a

cted

on

a fr

audu

lent

bas

is, f

rom

obt

aini

ng b

usin

ess

from

any

org

an o

f sta

te fo

r a p

erio

d no

t exc

eedi

ng 1

0 ye

ars,

afte

r the

aud

i alte

ram

pa

rtem

(hea

r the

oth

er s

ide)

rule

has

bee

n ap

plie

d; a

nd••

refe

r the

mat

ter f

or c

rimin

al p

rose

cutio

n.

LEG

IsLA

tIo

nsE

ctI

on

REq

uIR

EMEn

t

oth

er o

n co

mpl

ianc

e w

ith

legi

slat

ion

– PF

MA

PFM

ASe

ctio

n 38

(h)(i

)

The

acco

untin

g offi

cer f

or a

dep

artm

ent m

ust t

ake

effec

tive

and

appr

opria

te d

isci

plin

ary

step

s ag

ains

t any

offi

cial

in th

e se

rvic

e of

the

depa

rtm

ent w

ho c

ontr

aven

es o

r fai

ls to

co

mpl

y w

ith a

pro

visi

on o

f thi

s ac

t.

12

over

view

of f

ull r

epor

tMessage from

the Auditor-General

Slow progress towards clean audits with more regressions than

improvements (Part 1)

117 auditees achieved clean audits (Part 1)

Some progress made towards improving the reliability and usefulness of

service delivery reporting

(Part 1)

High levels of unauthorised, irregular as well as fruitless and

wasteful expenditure(Part 1)

12

38

39

9169

Continuing high level

of non-compliance

with laws and

regulations(Part 1)

79

13

Audit outcomes of ministerial portfolios and commitments made

for improvement(Part 2)

Audit outcomes and weaknesses in implementation of key national programmes in Health, Human Settlements, Education, Social

Development and Public Works sectors(Part 3)

the audit outcomes of 3 provinces

regress (Part 4)

Indications of financial health issues at some

departments and public entities

(Part 1)

HR and IT management needs further attention

(Part 1)

Executive leadership, coordinating institutions and legislative oversight should

strengthen their contributions(Part 1)

Auditees’ internal control systems are not improving

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428

470

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– RP07/2013 – IsBn: 978-0-621-41523-0

– Visit our website, – www.agsa.co.za,

– to view the complete

– Consolidated general report on the 2011-12 national and provincial audit outcomes.

pfma 2011-12 oversight responsibilities of national and … · 2017. 3. 27. · section 81(2) an...

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