PC Briefing note Transport Portfolio 14 October 2014

Reputation promise/mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. Enable oversight, accountability and governance – through this presentation we hope to capacitate the Portfolio Committee to execute its oversight functions. By executing your mandated functions, it is trusted that there will be improvement overall in the audit outcomes.

Overall regression in audit outcomes Outcomes per audit area Audit outcomes 2013-14: Transport Portfolio Overall regression in audit outcomes Financial statements Performance reports Outcomes per audit area Compliance with legislation Slide read together with pages 4 and 5 of narrative document RTMC Qualified – Asset management Most common non compliance matters were: SCM ; Material misstatements to AFS Performance information – usefulness (consistency of reporting and SMART principles) and reliability (evidence to support reported performance) criteria Unqualified Qualified Adverse/disclaimer Audits outstanding With no findings With findings

Accounting officer/authority Audit outcomes 2013-14: Transport Portfolio Assurance levels Senior management Accounting officer/authority Executive authority Internal audit unit Audit committee Portfolio committee Third level First level Second level Consider the contribution by all role players in audit outcomes and the extent to which the outcomes were influenced. Provides assurance Provides some assurance Provides limited/ no assurance Vacancy Not established

Audit outcomes 2013-14: Transport Portfolio Key controls Performance reports Compliance with legislation Financial statements Audit areas Effective leadership 9 2 1 10 8 3 Human resources controls 5 6 1 7 ICT governance and controls 5 2 7 8 4 Audit action plans 7 4 1 6 2 8 3 Proper record keeping 5 4 3 7 1 8 Daily and monthly controls 5 2 6 3 4 Drivers of internal controls that would influence audit outcomes positively. If all these key drivers are working well, there should be clean administration. We consider: Leadership effectiveness in terms of taking action to address audit findings, making sure that the entity or Department has adequate skills and competence, is action taken against transgressors to prevent repeat non compliance or other matters?; do they review compliance and other matters in a timely manner and regularly? Financial and performance management – is the discipline of daily and monthly reconciliations being exercised, do they keep proper records (sufficient and appropriate) for all matters in financial statements and performance reports. Review and monitor compliance 7 3 2 5 4 Good Concerning Intervention required

Audit outcomes 2013-14: Transport Portfolio Quality of submitted financial statements Information technology Financial health Supply chain management Human resource management Risk areas Quality of submitted performance reports Read together with pages 6 to 12 of narrative document. Good Concerning Intervention required

Most common root causes Audit outcomes 2013-14: Transport Portfolio Most common root causes Key officials lack appropriate competencies A root cause at auditees 6 Improved Unchanged Regressed Instability or vacancies in key position Slow response by management 4 These were the most common root causes identified in the Portfolio which gave rise to the lack of positive movement in audit outcomes

Status of key commitments by minister Audit outcomes 2013-14: Transport Portfolio Status of key commitments by minister (1) Implementation of the action plan to address the prior year audit findings; (2) Managing the take over of major IT related contracts; (3) Management of vacancies; (4) Contract management over all entities in the portfolio; and (5) Enhance performance and consequence management (1) Review governance structures and strengthening oversight at Public Entities. (2) To meet regularly with the chairpersons of the boards and audit committees of public entities. Implemented In progress

Oversight model OVERSIGHT: Parliament, provincial legislature or municipal council Identify desired impacts Assess and adjust Specify performance indicators Monitor and take Set targets corrective action and allocate resources Policy development Strategic Planning Accountability INSTITUTION National department Provincial department Municipality Public entity Municipal entity Operational planning and budgeting AGSA advises the committee members on the Interim work done the Annual Performance Plan. Budgeting process including the Medium Term Budgeting Framework. Quarterly reporting done throughout during implementation on both performance and budget. End year reporting includes budget review processes to determine whether money spent is in line with Targets achieved. End-year reporting Implementation and in-year reporting

How does clean administration improve service delivery Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY Robust financial performance management systems Oversight and accountability of all Independent and relevant reporting by the AG Value adding by Auditor-General through messages and interactions Commitment and ethical behaviour Robust financial and performance management systems Transparent and stable reporting systems Budgeting and planning processes Focussed information management platforms Strong internal audit capabilities Oversight and accountability Reporting to enable effective oversight Applying consequences for transgressions and poor performance Commitment and ethical behaviour by all Visible commitment by all players in the public service Demonstrated impeccable ethical behaviour and professionalism Auditor General Independent and relevant reporting by the AG Value-adding input expressed by the AG

Considerations for Portfolio Committees when dealing with performance monitoring Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan Does the entity have adequate resources (human and financial) available to achieve predetermined objectives Are the targets realistic (can it be done) How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.) The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports)

Commitments required from Portfolio Committee Monitor vacancy management in Portfolio to ensure all key posts ate filled with appropriately skilled and competent people in a timely manner Monitor implementation of action plans to improve audit outcomes regularly Monitor process to transfer e-Natis system from the service provider Request regular feedback from the Department on key issues impacting entities in the Portfolio as identified through the oversight process.

Questions