Presentation on SOE’s 16 August 2011

Reputation promise/mission 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.

Mandate of AGSA The AGSA has as its core to perform the audit function as per the Public Audit Act, 2004. Accordingly the auditor’s report reflects views on: financial information (through the auditor's opinion on the financial statements) performance against predetermined objectives (based on the findings on reporting on performance against predetermined objectives reflected under Report on other legal and regulatory requirements in the auditor's report) compliance with applicable laws and regulations relating to financial matters, financial management and other related matters (reflected under Report on other legal and regulatory requirements in the auditor's report)

Mandate of AGSA (Continued) Accordingly the auditor’s report reflects views on (Continued): internal control as indicated by the status of internal control that resulted in qualifications of the opinion on the financial statements, and the findings on the report on predetermined objectives, and compliance with laws and regulations (reflected under Report on other legal and regulatory requirements in the auditor's report).

Relationship with State Owned Enterprises (SOE) Selection criteria considered: Request from parliament Request from the entity Public interest Internal capacity Specialist industry and technical knowledge The AGSA audit directive also establishes a close relationship between the SOE, appointed auditors and AGSA ito the audit focuses and reporting requirements.

Oversight of SOE by Portfolio Committee (PC) The SOE annual report, key components includes: Annual Finance Statements, presentation by the entity, with focus on performance of the entity. Audit Report (AR), presentation by the entity on obtaining and sustaining a clean AR, no modifications, or other matters. Key visits to SOEs, to better understand the operations and challenges, and internal control environment. Directors’ report on the key activities and sustainability of the entity. Where applicable the status of turnaround strategies. Insight into fruitless, wasteful and irregular expenditure. Challenges relating to supply chain management, human resource management and service delivery.

Auditing of predetermined objectives (AOPO) Aim is to improve service delivery by: Increasing strategic focus of government Making more efficient and effective use of limited resources through introducing more systematic monitoring and evaluation: Identifying suitable indicators and regularly measuring or monitoring them Carrying out periodic evaluations of the impact of government’s work on society Analysing the results of monitoring and evaluation Using this analysis to: inform government decisions continuously improve government programmes promote evidence-based policy making. The Medium Term Strategic Framework has been translated into a set of 12 outcomes

AOPO (Continued)

Service delivery in SOEs SOE to presentation to the PC on the mandate, including an understanding of the business and environment that the entity operates in. SOE to present the Annual Report on performance. Encourage site visits to the SOEs.

Strategic plans and improved audit outcomes SOE can present on the mandate and broad strategic focus. SOE can present plans to drive and sustain clean audit outcomes. Firm commitment from the SOE on the delivery of clean audit outcomes.

Current issues with SOEs Key focus areas would be SCM, compliance and Predetermined Objectives, beyond the regularity audit. General Report write – up on SOEs (in progress), will include: Summary of audit outcomes on audits not conducted by the AGSA (includes SOEs), areas are: Audit Opinion, Fruitless and wasteful expenditure, Irregular expenditure, Material losses and material impairment of assets, Findings on reporting on predetermined objectives, Findings on compliance with laws and regulations, Funding of operations/financial sustainability/going concern.