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TheworkoftheAuditor-GeneralofSouthAfrica
July2017
Reputa8onpromise/mission
TheAuditor-GeneralofSouthAfricahasacons5tu5onalmandateand,astheSupremeAuditIns5tu5on(SAI)ofSouthAfrica,existstostrengthenourcountry’sdemocracybyenablingoversight,accountabilityandgovernanceinthepublicsectorthroughaudi5ng,therebybuildingpublicconfidence.
TheAGSAhasproducedthe‘MillionbagsofR1millioneach’whichexplainstheroleoftheAGSAass5pulatedbytheSAcons5tu5on.
MillionBags
3000+
Asthesupremeauditins5tu5onofSouthAfrica,wearecommiEedtoprofessionalism
500+ Chartered accountants(SA)
42 Masters
34 Chartered certified accountants
64 Certified information system auditors
332 Registered government auditors
Offices in all the provinces
Continuously investing in our staff through study
support, internal training and development
programmes
employees
Asthesupremeauditins5tu5onofSouthAfrica,wearewell-respectedlocallyandinterna8onally
UN auditors for 12 years
Chair of the Public Sector Committee
Rio conference International key note address
Active involvement
Secretariat host
African Union Current audit
Current audit
Support and guidance
Record management workshop
Annual conference
Study tours Leading by example
Asthesupremeauditins5tu5onofSouthAfrica,wearearesponsibleci8zen
Largest trainee auditor scheme in South Africa
AGSA busaries Thuthuka bursary fund
and accredited universities
Support and uplift disadvantaged communities in South Africa
Educational visits; Boy and Girl learner days
1300+ trainee auditors
Centenary scholarships
(legacy project)
Typesofaudits
MandatoryAudits
Discre8onaryAudits
Regulatoryaudits
Inves5ga5ons
Performanceaudits
Specialaudits
Differentoutcomestoanaudit
AUDITCYCLES
Auditprocess:
v Riskassessment
v Riskresponse
v Repor5ng-tothemanagementoftheauditeeandexecu5veauthority
-publishedinauditees’annualreport
TheimportanceofaccountabilityasapillaroftheSouth-Africandemocracy
MFMA2015-16–auditoutcomes
Gaut
eng
2
16 24
15 10
2014-15 2015-16
Lim
popo
4 6 2 1 1
14 10
12 16
2014-15 2015-16
Mpum
alang
a
4 2
5 8
10 8
2 3
2014-15 2015-16
KwaZ
ulu-
Nata
l
1 2 1 8 6
37 43
22 16
2014-15 2015-16
Free
Sta
te
4 3 3 8 3
15 16
1 1
2014-15 2015-16
North
Wes
t 1
7 7
10 12
9 6
2014-15 2015-16
East
ern
Cape
6 4 2
20 15
22 25
7 10
2014-15 2015-16
North
ern
Cape
6 8 4
13 11
9 9 2 2
2014-15 2015-16
Wes
tern
Cap
e
1 1 1 8 5
23 25
2014-15 2015-16
Movementperprovince(allauditees)
2
5
3
7
2
5
4
2
2
8
14
6
4
3
1
14
4
10
3
1
2
5
7
2
1
2
1
80% (171)
65% (140)
61% (132)
Slow response to
improving key controls
and addressing risk
areas
Inadequate consequences for
poor performance
and transgressions
Instability or vacancies
in key positions
Management (accounting officers and senior management), the political leadership (mayor and council) and oversight bodies MPACs and portfolio committees) do not respond with the required urgency to our messages about addressing risks and improving internal controls
If officials who deliberately or negligently ignore their duties and contravene legislation are not held accountable for their actions, such behaviour can be seen as acceptable and tolerated.
The instability and prolonged vacancies in key positions can cause a competency gap that leads to a high demand for consultants and support.
MFMA2015-16–rootcauses
27% 23% 25%
60% 61% 49%
13% 16% 26%
Senio
r
ma
nage
ment
Munic
ipal m
anag
ers /
ch
ief ex
ecuti
ve of
ficer
s
Mayo
rs Assurance provider
Responsibility
Senior managers
• Task/project leadership • “Doing the basics right” • Supervision and review • Timely implementation of action plans and recommendations
Municipal managers/ CFOs
• Administrative leadership, guidance and oversight • Enabling delivery • Monitor and report on progress of action plans • Hold staff accountable • Investigate all allegations of fraud • Reporting channel between administrative and political leadership
Mayors
• Political leadership, guidance and oversight • Reporting channel between executive leadership and legislature • Political accountability
Provides assurance Provides some assurance Provides limited/no assurance
Firstlevelofassurance–leadership/management
Inter
nal a
udit
units
Audit
comm
ittees
Trea
surie
s, co
oper
ative
go
vern
ance
de
partm
ents,
pr
emier
’s off
ices
2% 3% 16% 16% 25%
45% 43%
64%
37% 38%
11%
Assurance provider
Responsibility
Internal audit • Report to strengthen control environment • Advise on organisational systems, processes and practices • Advise on organisational effectiveness
Audit committee
• Interrogate and advise management • Review financial and performance reporting before audit • Ensure appropriate reaction to findings
Coordinating / monitoring departments
• Guide and enable service delivery in coordinated effort (OTP) • Ensure proper inter-governmental coordination (OTP) • Hold cabinet / executive committee accountable (OTP) • Monitor and provide oversight (OTP) • Guide proper financial management / SCM (Treasuries) • Skills development (Treasuries) • Guide proper strategic planning and performance
management (Cogta) • Facilitate the fight against corruption (Cogta)
Provides assurance
Provides some assurance Provides limited/no assurance Not established
Secondlevelofassurance–internalindependentassuranceandoversight
Munic
ipal c
ounc
ils
Munic
ipal p
ublic
ac
coun
ts
comm
ittees
1% 27% 32% 44%
47% 41%
56%
26% 25%
Portf
olio c
ommi
ttees
on
loca
l gov
ernm
ent
Assurance provider
Responsibility
Municipal council/ MPAC
• Enable proper financial oversight • Interrogate the audit outcomes • Ensure corrective action / proper consequence management
Portfolio committees
• Review strategic plans and related budgets, and guide government on appropriate delivery targets and resource use
• Review performance reports and guiding appropriate action • Ensure proper consequence management
External audits
• Engage pro-actively • Conducti annual audits and reporting on these • Engage with governance structures • Enable the work of oversight
Provides assurance Provides some assurance
Provides limited/no assurance
Not established
Thirdlevelofassurance–externalindependentassuranceandoversight
18
MFMA2015-16–analysisofkeyareas
35% (93)
33% (87)
32% (83)
Financial viability of municipalities is on a steady decline
• incurred a deficit
• in net current liability position
• were able to pay their creditors in less than 30 days
• took more than 120 days to pay their creditors
• are able to collect monies owed to them in less than 90 days
• took more than 120 days to collect money owed to them
• deem more than 10% of their debt to be non-recoverable Good
Ofconcern
Interven8onrequired
90%
44%
46%
39%
17%
30%
44%
MFMA2015-16–financialhealth
2015-16 MFMA
R10 824 m (64%)
R6 916 m (63%)
R5 969 m (47%)
R6 065 m (36%)
R4 139 m (37%)
R5 965 m (53%)
2015-16 2014-15 2013-14
R16 889 m (236 municipalities [90%])
R11 334 m (225 municipalities [86%]) R11 055 m
(231 municipalities [88%])
Identified by auditees Identified during audit
31% (R5 269 m)
19% (R2 179 m)
24% (R2 662 m)
Incurredinpreviousyears–iden8fiedincurrentyear
96% (2014-15: 97%) of occurrences were related to contraventions of SCM prescripts
EC R5 657 million (34%)
FS R361 million (2%)
GP R1 500 million (9%)
KZN R2 361 million (14%)
LP R1 714 million (10%)
MP R2 279 million (13%)
NC R287 million (2%)
NW R2 520 million (15%)
WC R210 million (1%)
Provincial breakdown of irregular expenditure
incurred
MFMA2015-16–irregularexpenditure
25% 43% 32% Leadership
23% 47% 30% Financial and performance management
37% 38% 25% Governance
Good Ofconcern Interven8onrequired
MFMA2015-16–statusofinternalcontrols
Accountabilitydefined
PLAN
DO
CHECK ACT
RethinkingconsequencemanagementfromanAuditor-Generalpointofview
• Aimedatrestoringthestrengthoffinancialandperformancemanagementingovernment,moreefficientlyempoweringoversightandfacilita5ngappropriateconsequencemanagement
• CurrentengagementwithSCoAG
• Interna5onalbenchmarks
• Op5ons:
• Rightofreferral(certainrepeatfindingfromAG’sgeneralreportstriggerautoma5creferraltoappropriatebodytoinves5gatefurtherandtakeappropriateac5on,appropriatelyfundedandwithfeedbacklooptoAG),
• Rightofsurcharging,• Other
AGPowers
PublicAuditAct(PAA)
AGSAasavalue-addingSAI
Nextsteps
SACons8tu8on
v Thecons5tu5onalmandateoftheAGSAistostrengthendemocracy.v Thiswedothroughaudi5ngandrepor5ngonallna5onalandprovincialstate
departmentsandadministra5ons,allmunicipali5es,andanyotherins5tu5onoraccoun5ngen5tyrequiredbyna5onalorprovinciallegisla5ontobeauditedbytheAuditor-GeneralSec5on188(1)oftheCons5tu5onoftheRepublicofSouthAfrica,1996.
v TheAGSAfurtherenjoystheaddi5onalfunc5onsandpowersprovidedforinthePublicAuditAct,2004(ActNo.25of2004)(PAA).
v ThePAAbroadensthescopeoftheAGSA’smandatebysubjec5ngaddi5onal
en55estoitsaudits.
v ThePAAalsoaddsaddi5onalpowers,suchasunrestrictedaccesstoinforma5on,todigdeepintothesystemsofauditeestobringthegoodandthebadintothepubliceye.
v TheAGSAcanonlybeeffec5veifitisempoweredbyappropriatemechanismstofollowuponauditrecommenda5ons.
v IftheAGSAfocusedonauditsaroundservicedeliveryandachievementof
governmentgoals,thePAAneedsamendmentinanumberofareas.
v Appropriatefollow-upmechanismsarebeingdesignedforinclusionisthePublicAuditAmendmentBill,2017
v Follow-upmechanismswillincludemandatoryreferralofcertainauditoutcomesforfurtherinves5ga5onbyappropriatelyposi5onedinves5ga5ngagencies
v TheAGSAproducescollateralfortheconsump5onofpublicservantsandci5zens.Theseareaimedatclarifyingtheauditoutcomesandincludes.
§ AGSAApp
§ Booklets(abridgedGR)
§ Mediarelease(invariouslanguages)
§ Socialmediapla^orms(twi_er,Facebook,LinkedIn,YouTube)
Communica8onproducts
HowtogetintouchwiththeAGSA