PFMA Audit status of the Communications Portfolio 21 April 2015

Our reputation promise/mission The Auditor-General of South Africa (AGSA) 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.

Matters to be covered in this presentation: Purpose of the presentation Summary of 2013/14 audit outcomes Current year audit status Clean administration

Purpose of the presentation To provide the honourable members of the Portfolio Committee with the necessary information on the audit status for the portfolio of Communications, which covers, inter alia: Audit outcomes Action plans Audit status

PFMA 5 Prior year audit outcomes R8 170 million ( instances)

PFMA Movement Audit outcome 1 1 Movement in audit outcomes (prior year) Improved UnchangedRegressed Unqualified with no findings Media Development & Diversity Agency (MDDA) Unqualified with findings Independent Communications Authority of South Africa (ICASA), Government Communication and Information System (GCIS), Brand SA, Film & Publication Board (FPB) Qualified with findings South African Broadcasting Corporation (SABC) Adverse or disclaimed with findings

PFMA 7 Prior year audit report matters and current status thereof R8 170 million ( instances)

PFMA 8 South African Broadcasting Corporation (SABC) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other TV licenceConsultants have been appointed/ still in the process of being appointed Application to SARS has made End of April 2015No audit work has been done thus far on the system developments as the components are not ready for audit yet. IT Auditors will be involved in the entire process of system developments Property, plant & equipment Consultant is finalising the complete and accurate fixed asset register End of April 2015No audit work has been performed thus far until the complete & accurate fixed asset register. This is not ready for audit yet. None Deferred Tax, Tax payable & Income Tax Accounting firm has been appointed to do tax reviews End of May 2015Assessing the scope of the work done by the tax experts Potential liabilities (to SARS) as a result of clean up.

PFMA 9 South African Broadcasting Corporation (SABC) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other Other payablesAccounting firm has been appointed to do tax reviews End of May 2015Assessing the work done by the VAT expert but no audit work done to date as section was no ready for audit Qualification on VAT, linked to PPE and TV licence qualifications Deferred Government Grant Consultant is finalising the complete Fixed asset register End of April 2015Included in scope for final audit only due to clean up of assets Matter linked to the PPE qualification Mobile IncomeEntity has instructed the service organisations to provide the Assurance Reports May 2015Issued requests for the Assurance Reports to the external auditors of service organisations There has been some engagement between AGSA & service organisations’ external auditors

PFMA 10 South African Broadcasting Corporation (SABC) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other IFRS DisclosureConsultant engaged to review the age analysis End of May 2015The age analysis will be reviewed as part of the final audit, no work planned for interim This requires system configurations to allocate payments to the correct invoices Irregular, fruitless & wasteful expenditure Accounting firm appointed to review all the contracts/ quotation for the past three years. There was also forensic audit instigated End of May 2015None thus far. Once the entire population (expenditure for the prior years) has been reviewed then some audit work will be done. This is not ready for audit yet. Four year audits will be conducted in order to resolve the qualification

PFMA 11 South African Broadcasting Corporation (SABC) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other AOPO – usefulness of objective 1A; 1B; 2; 4A; 5 (Measurability & consistency) Prior year findings were considered in the preparation of the current year corporate plan (financial year 2014/15) Done alreadyCompliance on the AOPO was assessed at the interim audit Pre-review of the corporate plans/ APP was conducted during the 2013/14 financial year audit (before it was approved) and input was given AOPO – reliability of objective 1A; 1B; 2; 4A; 5 (Limitation of scope) Prior year findings were considered in the preparation of the current year corporate plan (financial year 2014/15) End of May 2015 (APR) None

12 South African Broadcasting Corporation (SABC) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Compliance matters: Strategic planning and performance management Annual Financial Statements, performance report and annual report Procurement and contract management Expenditure management Revenue management Asset management Consequence management

PFMA 13 Independent Communications Authority of SA (ICASA) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other AOPO – usefulness of objective 4 (consistency) Management presented a workshop to its staff on the matter hoping it will assist in reporting. Proper review of the APR to be done before submission. Workshop done 16 April Review to be done week before submission of APR to AG This review can only be done when the final APR is received The AG was part of the workshop 16 April and presented information on AOPO that was helpful to the management team. Expenditure management – irregular expenditure incurred as a result of SCM non compliance To date no action of progress can be confirmed. A forensic audit has been started by the entity No estimated date on completion Cannot give more detail other than there are still weaknesses in the system and the finding will most likely be repeated. None

PFMA 14 Independent Communications Authority of SA (ICASA) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other Internal audit – did not evaluate the control efficiencies and provide recommendations to management on improvement throughout the year No actions notedN/AInterim assessment of internal audit indicates the unit has functioned in terms of their plan during the year. None

PFMA 15 Government Communications Information System (GCIS) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other Annual financial statements had significant adjustment after submission Internal audit unit was requested to perform detail checks on controls. Finance staff has prepared interim management reports in an effort to ensure controls are in place for this not to occur. End of AprilInternal Audit reviewed interim AFS. Issues identified largely addressed. AG verification of interim AFS has not yielded significant issues. The work done by internal audit not been verified yet. AG worked closely with internal audit to ensure work done will have a positive impact. Identified a few instances of non- compliance with SCM regulations that could potentially result in material non compliance.

PFMA 16 Government Communications Information System (GCIS) R8 170 million ( instances) ICASA R7 million SABC R million GCIS R0.3 million Brand SA R0.4 million FPB R1 million Qualification Area Progress by the entity Estimated completion date Interim audit work performed Other HR compliance – verification of qualification and other claims made in applications of potential employees not verified Management has put proper controls in place to make sure this happens for every person appointed Done alreadyInterim verification indicated that claims on applications are verified prior to appointment None

PFMA 17 Brand SA Compliance matter noted in prior year (AFS submitted subject to material amendments). No matters to be reported as no follow up done yet. Film and Publication Board (FPB) Compliance matter noted in prior year (AFS submitted subject to material amendments). No matters to be reported as no follow up done yet. Media Development Diversity Agency (MDDA) No follow up matters as clean audit was issued last year.

PFMA 18 Current Audit Status R8 170 million ( instances)

PFMA 19 South African Broadcasting Corporation (SABC) Two interim audits were completed (9 months audit work) Final audit will commence on the 5 th May 2015 Independent Communications Authority of South Africa (ICASA) Two interim audits were completed (11 months audit work) Final audit will commence 15 th May 2015 Government Communication and Information Systems (GCIS) One interim conducted (10 months audit work) Final audit will commence 15 th May 2015 R8 170 million ( instances)

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