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.

Reputation promise/mission

1. Background 2. Mandate of the AGSA 3. Planning, budgeting and reporting cycle 4. Legislative requirements 5. AGSA strategy to the audit of predetermined

objectives 6. AG Directive requirements 7. Audit Criteria 8. Audit approach 9. Audit reporting

Contents

If you do not measure results,

you cannot tell success from failure

If you cannot see success,

you cannot reward it

If you cannot reward success,

you are probably rewarding failure

If you cannot see success,

you cannot learn from it

If you cannot recognize failure,

you cannot correct it

If you cannot demonstrate results,

you cannot win public support

Adapted from Osborne and Gaebler, 1992, Reinventing Government

The power of measuring results

Public sector

reforms

Improving public

reporting

Providing better

information on

what taxpayers are

getting for their

taxes

Why was this necessary?

Supreme audit institutions (SAIs) do not only conduct financial audits

Also provides assurance on performance information produced by government departments and entities

1. Background

Annual audit of reported actual performance against predetermined objectives, indicators/measures and targets.

Integral part of the annual regularity audit, confirming the credibility of the reported performance information in the annual performance reports of •national and provincial departments •public entities, constitutional institutions, trading entities •Parliament and provincial legislatures

Audit of predetermined objectives defined

as:

Constitution

of SA

Public Audit Act of 2004

Functions of the AGSA:

Regularity(financial, performance

information and compliance) and

performance audits

Investigations and special audits

2. Mandate of the AGSA

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)

Applicable to all spheres of government

Legislative requirements - Auditing

9

3. The planning, budgeting and reporting cycle

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

Treasury Regulations issued in terms of the PFMA, 2002

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

Guidelines, Instruction Notes, Practice Notes issued by National Treasury

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

4. Legislative requirements for planning, budgeting

& reporting cycle

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.

Submission of performance information to

AGSA

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)

5. AGSA strategy to the audit of predetermined

objectives

All relevant laws and regulations

Framework for the managing of programme performance

information (issued by the National Treasury)

Circulars and guidance issued by the National Treasury regarding

the planning, management, monitoring and reporting of

performance information

The following represents the performance management and reporting

framework against which the performance information will be evaluated

as a basis for the audit conclusions:

6. AG Directive

Refer to annual AG Directive

Main criteria Sub-criteria

Existence

Timeliness

Presentation

Measurability

Relevance

Consistency

Validity

Accuracy

Completeness

Compliance with regulatory

requirements

Usefulness

Reliability

7. Audit criteria

Understand and test the design and implementation of the performance management systems, processes, and relevant controls

1

Test the measurability, relevance, presentation & consistency of planned and reported performance information 2

Conclude on the usefulness of the report on predetermined objectives 3

Conclude on the reliability of the reported performance for selected programmes or objectives 5

8. Audit approach

Test the reported performance information to relevant source documentation to verify the validity,

accuracy & completeness of reported performance information 4

Refer to annual AG Audit Directive

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

9. Audit reporting – Management report

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

9. Audit reporting – Auditor’s report

18

PFMA 2010-11 Audit Outcomes

Predetermined objectives

Total number of auditees reported on 38

Auditees with no findings

26%

10

Na

tio

na

l

de

pa

rtm

en

ts

Pro

vin

cia

l

de

pa

rtm

en

ts

Le

gis

latu

res

Pu

bli

c e

nti

tie

s

To

tal

Auditees with findings

50 7 247 314

45% 70% 63% 57%

28 65 3 144 240

74% 55% 30% 37% 43%

115 10 391 554

19

Categories of predetermined objectives findings (Percentage are out of total number of auditees, per auditee type)

Total number of auditees with findings

Non-compliance 14

Na

tio

na

l

de

pa

rtm

en

ts

Pro

vin

cia

l

de

pa

rtm

en

ts

Le

gis

latu

res

Pu

bli

c

en

titi

es

To

tal

29 1 86 130

Variances not explained

Performance information not useful

Performance information not reliable

37% 25% 10% 22% 23%

6 13 2 21 42

16% 11% 20% 5% 8%

21 31 3 89 144

55% 27% 30% 23% 26%

16 50 2 57 125

42% 43% 20% 15% 23%

28 65 3 144 240

20

Root causes of defective service delivery reports

Inadequate

formal

planning for

PDO reporting

PDO reporting

not included in

performance

agreements

Structures not

capacitated

Organisation

al structures

not aligned

Inadequate

internal audit

testing

systems and

data

Ineffective

audit

committee

oversight

Lack of

monitoring by

leadership

Poorly defined

roles and

responsibilities

Lack of

accountability

and

consequences

for actions

Do not meet regulatory

requirements

Not useful

Not reliable

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Drivers of sustainability

• Challenge credibility

of information

• Confirm adequate

resources for service

delivery

• Regular reliable

monthly management

information

• Provide credible

information

• Robust and reliable

structures and systems

• Internal audit to

validate key controls

and provide

assurance on

performance reports

• Audit Committees to

validate performance

reports to executive

Leadership Financial and

Performance

Management

Governance