SADCOPAC Conference Accountability and Transparency in SOEs– opportunities and challenges for the Public Accounts Committees. September 2012

© 2012 Deloitte Touche Tohmatsu Limited Topics What does accountability and transparency mean? What are existing mechanism for accountability and transparency (Governance)? Key Challenges and Opportunities for PAC Questions to ponder on? 2

© 2012 Deloitte Touche Tohmatsu Limited ACCOUNTABILITY AND TRANSPARENCY – WHAT DOES IT MEAN “Corporate governance is all those structures, systems, processes, procedures, and controls within an organisation, at both oversight/monitoring level and within the management structures of the organisation, that are designed to ensure that this organisation achieves its business objectives. That it does so within sensible risk management parameters; and that it does so efficiently, effectively, ethically and equitably.” Oversight accountability Direction, leadership, guidance, independence, objectivity, external experience, policy, strategy, review, monitor, oversee Management accountability Execute, do, deliver, manage, evaluate, implement, run operations, performance, output, Results Practical Realities and Challenges Role of Board of Directors Role of Executive Management Role of Chairman of the Board Role of Chief Executive Officer

© 2012 Deloitte Touche Tohmatsu Limited EXISTING GOVERNANCE MECHANISM Constitution PFMA and MFMA Company’s Act King III

© 2012 Deloitte Touche Tohmatsu Limited KEY CHALLENGES AND OPPORTUNITIES FOR PAC Overlapping mandates of oversight bodies Potential gaps may exist in the oversight process Conflicting messages from oversight bodies Duplication of oversight efforts / inefficiencies Opportunities Collaboration between different oversight bodies Clarification of roles and responsibilities of PACs vs Portfolio Committees vs Shareholding Department. Contribute in the establishment of a more efficient oversight mechanism with resolutions and action plans that are streamlined/ aligned to ensure a common outcome

© 2012 Deloitte Touche Tohmatsu Limited KEY CHALLENGES AND OPPORTUNITIES FOR PAC Skills and capacity (support staff and researchers) Ask right questions Thorough understanding of the reports received and business of the SOEs Ability to hold SOEs accountable Opportunities Up skilling of the support staff Identification of sources of information that PAC can rely on

© 2012 Deloitte Touche Tohmatsu Limited KEY CHALLENGES AND OPPORTUNITIES FOR PAC PACs are currently perceived not to have "teeth" in the oversight process. are PACs sufficiently geared to interrogate the performance of SOEs in collaboration with Portfolio Committees Limited powers on consequence management by PAC Opportunities Joint briefings and hearings of the PACs and Portfolio Committees Involvement of the AG as well as the chair of risk committees, Audit Committee and/or the Chief Audit Executive of SOEs should also be considered to provide informed insights to the PAC that may shape the way in which they exercise their oversight mandate. Identification of opportunities around "combined assurance". PACs might want get a good sense of who is providing assurance on the different key areas of SOEs. This will enable them to understand where the sources of information is coming from so that they engage with these providers of assurance appropriately.

© 2012 Deloitte Touche Tohmatsu Limited Food for thought - Some questions to ponder on …. 8 Shouldn’t PAC have direct interaction with the SOE’s Boards, the Chairpersons or Chief Audit Executives? Should the PACs provide oversight directly at SOE level? Who should ensure that the relevant Shareholding departments responsible for oversight of SOEs (e.g. DPE, DoT, etc) and the Executive Authorities are held accountable? How can oversight bodies get reassurance that executive’s reports about known and emerging enterprise risk exposures are reliable? Do PACs have a role/ say in the evaluation of SOE boards to determine performance? To what extent can the PACs rely or be informed by the oversight performed by the shareholding departments In terms of understanding the business of SoEs, is it not necessary for PACs to have structured visits on site at the operations of SOEs for two or three days (i.e. walkthrough of the operations)

© 2012 Deloitte Touche Tohmatsu Limited CONCLUSION “We should all be concerned about the future because we will have to spend the rest of our lives there.” Charles F Kettering

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