Presentation to the Portfolio Committee on Finance Audit outcomes of Statistics South Africa for 2009-10 19 October 2010 1

Reputation promise of the Auditor-General of South Africa (AGSA) “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 constitutional democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.” 2

Summary of 2009-10 Audit outcomes – Statistics South Africa Department 2009-10 2008-09 Opinion on financial statements:   Disclaimer Adverse Qualified Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations 1 Financially unqualified with no findings on predetermined objectives or compliance with laws Total number of audits reported on Entities with findings arising from AGSA other legal reporting responsibilities: Predetermined objectives Compliance with laws and regulations 3

Statistics South Africa – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes Leadership Auditees who have improved/ maintained previous good practice Auditees where Improvements are required Departments Public entities Provision of adequately skilled resources capable of implementing the financial reporting framework and performance management requirements, as well as adequate evaluation of the performance of existing staff : Financial Statements Predetermined objectives 1 - Ensuring that proper actions are taken to address audit findings; key controls are implemented to mitigate risk of misstatement of financial statements and report on predetermined objectives: Leadership’s implementation of action plans to address user access control deficiencies (Information Systems) Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work. Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Statistics South Africa – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes Financial and performance management Auditees who have improved/ maintained previous good practice Auditees where Improvements are required Departments Public entities Appropriate systems are in place to support the preparation of financial statements and performance reports: Financial Statements Predetermined objectives - 1 Review of the financial statements and other information by management for completeness and accuracy prior to submission for audit: Proper record keeping and management, ensuring that supporting documents are properly filed and easily retrievable: 4. Application systems susceptible to compromised data integrity (Information Systems) User access control Security management Business Continuity Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Statistics South Africa – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes Governance Auditees who have improved/ maintained previous good practice Auditees where Improvements are required Departments Public entities Maintaining effective risk assessments and strategies including fraud prevention plans to address identified weaknesses: Financial Statements Predetermined objectives 1 - Ensuring effective internal audit functions that monitor the adequacy and implementation of internal control: Establishment of functioning audit committees that promotes independent accountability and service delivery: An IT governance framework that directs the positioning of IT, resource requirements, risk and internal control management (Information Systems). Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Financial statement qualification areas There were no areas of qualification

Financial statement areas Statistics South Africa – PFMA audit outcomes 2009-10 Misstatements corrected Financial statement areas Entities impacted Capital Assets None Current Assets Liabilities Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Financial statement areas Statistics South Africa – PFMA audit outcomes 2009-10 Misstatements corrected Financial statement areas Entities impacted Revenue None Expenditure 6. Other disclosures Statistics South Africa Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Statistics South Africa – PFMA audit outcomes 2009-10 Fruitless and wasteful expenditure Entity and Reasons Amount – 2009/10 Statistics South Africa (Services procured and paid for but not utilised) R263 000 Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Statistics South Africa – PFMA audit outcomes 2009-10 Irregular Expenditure Entity and Reasons Amount – 2009/10 Statistics South Africa (Overtime exceeding 30% of gross monthly basic salary) R1, 015 million Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Statistics South Africa – PFMA audit outcomes 2009-10 Unauthorized Expenditure Entity and Reasons Amount – 2009/10 Statistics South Africa None Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15) Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported. Notes to include discussion on commitments made that did not address the problems or that were not actioned. Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

Type of audit conclusion Report on predetermined objectives Indication of audit conclusions not included in audit report General ■ Phase-in approach by the AGSA since 2005-06 together with National Treasury ■ Stakeholder engagements to clarify approach and essence of auditing of predetermined objectives have taken place and will continue throughout 2010-11 ■ In 2010-11 departments and entities will need to take decisive action to address the areas requiring improvement in order to position themselves for a positive audit outcome on predetermined objectives Type of audit conclusion Department Public entities Disclaimer Adverse Qualified Unqualified 1 Total number of audits reported on The total number of audits must be equal to one less than the number on slide # 3,since predetermined objectives do no apply to the Revenue Fund 13 13

Statistics South Africa Findings on reporting of predetermined objectives 2009-10 Category of finding Department Public entities 2009-10 2008-09 Non-compliance with regulatory requirements 0% 100% Reported information not useful Reported information not reliable Information not submitted for audit by 31 May 2010 Total number of audits reported on 1 Findings for 2009-010 are available on the AS: MIS 2008-09 findings to be extracted for the provincial General Report 14 14

Top categories of prohibited actions/non-adherence Statistics South Africa Findings on compliance with laws and regulations 2009-10 Top categories of prohibited actions/non-adherence Number Percentage Department SCM issues that resulted in irregular expenditure 0% Payments not done within 30 days HR Management General/ fiduciary and reporting responsibilities of accounting officers and internal audit not operating effectively throughout the year Public entities General/ fiduciary and reporting responsibilities Internal audit Audit committee and strategic/ corporate plans This data to be drawn from ‘compliance workbooks’ completed by ABUs Limited to non-compliance issues included in audit reports 15 15

Top 5 findings on procurement and contract management Statistics South Africa 2009-10 Findings on procurement and contract management Top 5 findings on procurement and contract management Number Percentage Public entities 3 price quotations not invited - reasons not recorded and approved 0% The fraud prevention plan did not include specific measures for preventing and detecting fraud in the procurement process. R500 000 with no competitive bidding - reasons not recorded and approved A list of prospective suppliers from whom to invite price quotations was not in place. SCM policies and procedures were not in place for the acquisition of goods and services. This data to be drawn from ‘Procurement and contract management workbooks’ completed by ABUs. 16 16

Statistics South Africa audit outcomes 2009-10 Audits not conducted by the Auditor-General of South Africa None   Sources and guidance for this slide are as for corresponding slide for audits conducted by the AGSA