Briefing to the Portfolio Committee on Police Audit outcomes of the Police portfolio for the 2014-15 financial year 13 October 2015

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. Need to consider the following All information to be included needs to have been audited and is accurate and correct If information included is not audited then it needs to be specified as such or specified that this was based on a sample tested

Purpose of the presentation Annually oversight committees set aside time to focus on assessing the performance of departments. On completion of the process, portfolio committees are required to develop department-specific reports, namely budgetary review and recommendations reports (BRRR) which express the committee`s view on the department’s budget for recommendation to the National Treasury ahead of the following year`s budget period. Our role as the AGSA is to reflect on the audit work performed to assist the portfolio committee in its oversight role in assessing the performance of the departments taking into consideration the objective of the committee to produce a BRRR.

 X The scope of AGSA audits Provide assurance that AFS are free from misstatements that will affect users Do not provide assurance on the appropriateness of the departmental budgets Report on usefulness and reliability of the information in the annual performance report Do not provide commentary on service delivery Report on material non-compliance with relevant key legislations Do not report on ALL legislations – only key selected requirements from relevant legislations are audited Identifying the key internal control deficiencies to be addressed We assess the risk of fraud, but we are not responsible for – Fraud identification Fraud prevention

Contents Slide no. 1. Overall audit outcomes of the Police portfolio 6 2. AGSA’s six key focus areas 7-13 3. Irregular expenditure identified for the portfolio 14 4. Combined assurance and assessment of assurance providers 15-16 5. Drivers of key controls for the portfolio 17 6. Root causes and recommendations 18 7. Minister’s commitments to address root causes 19

1. Overall audit outcomes of the Police portfolio 2014-15 PFMA Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings 4 auditees 3 auditees 3 auditees

2. AGSA’s six key focus areas 2014-15 PFMA Quality of submitted financial statements Quality of submitted performance reports Compliance with legislation (SCM) Good Concerning Intervention required Human resource management Information technology Financial health Improvement Stagnant or limited progress Regressed

2.1 Quality of submitted financial statements 2014-15 PFMA Outcome if NOT corrected Outcome after corrections 2 auditees Financially unqualified with findings Financially qualified (qualified/ disclaimed with findings) 2014-15 Avoided qualifications by correcting material misstatements during audit process Outcome if NOT corrected Outcome after corrections DOP 2 auditees 2013-14 8

2.2 Quality of submitted performance reports 1 2014-15 PFMA Annual performance reports of were reliable and useful compared to 1 in the previous year With no findings With findings Improved Usefulness Reliability Stagnant or little progress Regressed 9

2.2 Quality of submitted performance reports (continued) Auditee Programme Not useful reliable DOP Programme 2: visible policing   x CSP Programme 3: legislation and policy development Programme 4: civilian oversight, monitoring and evaluation PSIRA Programme 3: communication, registrations (CRM) and training

2.2 Quality of submitted performance reports (continued) 2014-15 PFMA Outcome if NOT corrected Outcome after corrections Annual performance report not materially misstated Annual performance report contained material misstatements 1 auditee 2014-15 Avoided findings by correcting material misstatements during audit process Outcome if NOT corrected Outcome after corrections 2013-14 1 auditee 11

2.3 Auditees did not comply with legislation in the following areas: 2014-15 PFMA Quality of annual financial statements submitted Prevention of irregular as well as fruitless and wasteful expenditure Management of procurement and/or contracts Good Concerning Intervention required Management of strategic planning and performance Human resource management Internal audit and audit committee Improvement Stagnant or limited progress Regressed

2.4 Information technology 2014-15 PFMA 2014-15 PFMA Status of the information technology focus areas Security management Good Concerning Intervention required User access management IT service continuity Improved IT governance Stagnant or little progress Regressed IT controls for the financial systems of DOP & IPID were evaluated; PSIRA was subjected to an assessment of internal controls by means of questionnaires; CSP was not subjected to an IT audit.

3. Irregular expenditure identified for the portfolio 2014-15 PFMA Expenditure incurred in contravention of key legislation IE - firearm registration system included in the AFS in prior year Identified by auditees Identified by auditors 14

4. Combined assurance and assessment of assurance providers 4 4. Combined assurance and assessment of assurance providers 4.1 Complimentary mandate Senior management Accounting officers/ authority Executive Required assurance levels Extensive Management’s assurance role Senior management – take immediate action to address specific recommendations and adhere to financial management and internal control systems Accounting officer/authority – hold officials accountable on implementation of internal controls and report progress quarterly and annually Executive authority – monitor the progress of performance and enforce accountability and consequences Management assurance First level of assurance officer/ Oversight assurance Second level of assurance Coordinating / monitoring institutions Internal audit Audit committee Extensive Required assurance levels Oversight’s assurance role National Treasury/DPSA – monitor compliance with laws and regulations and enforce appropriate action Internal audit – follow up on management’s actions to address specific recommendations, conduct own audits on the key focus areas in the internal control environment, and report on quarterly progress Audit committee – monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans Independent assurance Third level of assurance Oversight (portfolio committee / council) Public accounts committee National Assembly Extensive Required assurance levels Role of independent assurance Oversight (portfolio committee) – review and monitor quarterly progress on the implementation of action plans to address deficiencies Public accounts committee – exercise specific oversight on a regular basis on any report which it may deem necessary National Assembly – provide independent oversight on the reliability, accuracy and credibility of national and provincial government

4.2 Assessment of assurance providers for the portfolio 2014-15 PFMA First level Improved Stagnant or little progress Second level Regressed Third level Provides assurance Provides some assurance Provides limited/ no assurance Vacancy Not established/ evaluated 16

Drivers of internal control Financial & performance management 5. Drivers of key controls for the portfolio 2014-15 PFMA Drivers of internal control Department & entities Leadership Financial & performance management Governance Effective leadership culture Oversight responsibility HR management Policies and procedures Action plans IT governance Proper record keeping Processing and reconciling controls Reporting Compliance IT system controls Risk management Internal audit Audit committee Department of Police   Independent Police Investigative Directorate Civilian Secretariat for Police Private Security Industry Regulatory Authority Good Concerning Intervention required Improved Stagnant or little progress Regressed

6. Root causes and recommendations 2014-15 PFMA Root cause Recommendation Lack of consequences for poor performance and transgressions Management should hold staff responsible for information included in the AFS and performance reports accountable Slow response by management Management should ensure that recommendations from auditors (external and internal) are implemented Action plans should be monitored and tracked by the relevant parties Instability or vacancies in key positions The key positions at manager level should be filled with skilled staff 18

7. Minister’s commitments to address root causes 2014-15 PFMA

Questions