1. Department of Agriculture, Forestry and Fisheries (DAFF)
Audit outcome for year ended 31 March 2012
17 October 2012

2. 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. 2

3. To brief the Portfolio Committee on: DAFF Portfolio
Purpose of the meeting
To brief the Portfolio Committee on: DAFF Portfolio
Subject
Slide number
1.Portfolio Audit outcomes and key control status
4 - 8
2.Progress on previous commitments 9
3.Recommendation commitments for clean administration
10 -13
4. Key focus areas 14
5. Other matters of interest
6. Pyramid of Accountability 17
7. Combined level of assurance 18 3

4. 1. Portfolio audit outcomes and key control status
Opinions
2010/11
2011/12
Entity
Financial Statements
Predetermined Objectives
Compliance
Department of Agriculture, Forestry and Fisheries
Unqualified opinion
Adverse
Expenditure management, Financial and performance management
, HR Management
supply chain management, Human resource plan and material adjustment on financial statements
Onderstepoort Biological Products Ltd
Qualified
Findings on material adjustment on financial statement, Expenditure management, Internal audit and audit committee.
Findings on strategic planning and performance management, assets management, internal audit, supply chain managements and expenditure management 4

5. 1. Portfolio audit outcomes and key control status
Opinions
2010/11
2011/12
Entity
Financial Statements
Predetermined Objectives
Compliance
NAMC
Unqualified
No Material Findings
None identified
ARC
Findings on material adjustment on financial statements and expenditure management
Findings on material adjustment on financial statements and assets management
PPECB 5

6. 1. Portfolio audit outcomes and key control status
Opinions
2010/11
2011/12
Entity
Financial Statements
Predetermined Objectives
Compliance
Ncera Farms
Unqualified
Adverse
Findings on strategic planning, Audit committee and internal audit
Disclaimer
Findings on Material adjustment on financial statements, Audit committee, risk management strategy and internal audit
MLRF
No Material Findings
Findings on audit committee. 5

7. 1. Portfolio audit outcomes and key control status
Dept/Entity
Key control status (regression/ improvement/ unchanged)
Leadership
Financial and Performance Management
Governance
DAFF
Onderstepoort Biological Products Ltd
NAMC
ARC 6

8. 1. Portfolio audit outcomes and key control status
Dept/Entity
Key control status (regression/ improvement/ unchanged)
Leadership
Financial and Performance Management
Governance
PPECB
Ncera Farms
MLRF 6

9. Further analysis on DAFF key controls classified as causing concern

10. 2. Progress on prior year commitments
Commitment made
DAFF
OBP
NAMC
ARC
PPECB
NCERA Farm
MLRF
Current Status
Comment
Commitment to address findings identified during the audit. X
Intervention required overall
There are repeat findings on the Pre-determined objective.
For the department, repeat findings on compliance on Supply chain management.
Commitment to appoint/Increase capacity of Internal Audit
In progress
The department have increased capacity on internal audit, however, the internal audit plan is still to be tabled for thee audit committee for approval.
Commitment to reassess the composition of the chairperson of the board and audit committee
Addressed
Commitment Addressed

11. 3. Recommended commitments for clean administration
DAFF
OBP
NAMC
ARC
PPECB
NCERA FARM
MLRF
Consultants skills transfer to be monitored and evaluated monthly progress reports from consultants on skill transfer 
Effective implementation of approved organisational structure, taking into account the:
skills gap identified and develop
IT systems producing credible financial and non financial information
bodies with skills relevant to finance, performance , compliance and information system
Sustainability of in house Internal Audit
Monitoring and compliance unit strengthened responsibility(compliance)
Management self assessment using key control document. 10

12. 3. Recommended commitments for clean administration
DAFF
OBP
NAMC
ARC
PPECB
NCERA FARM
MLRF
Monitor compliance with policies and procedures and take decisive action on non compliance 
Monitoring of bad planning by entities resulting in an increase in non compliance with PFMA, Treasury Regulations etc.
Identify and monitor strengths and weaknesses of the portfolio (Sustainability)
Develop checks and balances to ensure credibility of all information.
Monthly financial and performance reports that include disclosure items
In line with best practice, update SCM policies to ensure that approval of requests to deviate from normal SCM process by the accounting officer/authority is based on recommendations by the bid adjudication committee based on their evaluation of the submission for such a request. 11

13. 3. Recommended commitments for clean administration
DAFF
OBP
NAMC
ARC
PPECB
NCERA FARM
MLRF
Effective utilisation of Internal Audit: review internal audit scope to include adequate coverage of AOPO and Compliance in their plans 
Training programs to incorporate:
understanding of why AFS are prepared (for operational management purposes, eg analysis of financial performance )
understanding of why key controls are essential
understanding of why service delivery reporting is critical
Continuous professional and skills development for all staff and monitoring thereof
Quarterly reinforcement of clean administration processes by Accounting Officer 12

14. Supply Chain Management Material errors in AFS submitted
4. Key focus areas
Auditee
Supply Chain Management
AOPO HR
IT controls
Material errors in AFS submitted
DAFF
No improvement
Some improvement
OBP
NAMC
No matters
ARC
Regression
PPECB
NCERA Farm
No Improvement
MLRF 13

15. 5. Other Matters of interest
Auditee
Irregular Expenditure
Fruitless and Wasteful
Movement
2010/11
2011/12
DAFF R R
R3 000
R15 000
OBP R R
R94 631 R
NAMC R0
ARC R R
R8 632
PPECB 14

16. 5. Other Matters of interest
Auditee
Irregular Expenditure
Fruitless and Wasteful
Movement
2010/11
2011/12
NCERA Farm R0
MLRF
R8 756 14

17. PYRAMID OF ACCOUNTABILITY
Speaker/ Legislature
SCOPA/PC’s
Executives
Accountable Leadership
Audit Committee
Internal Audit
Skills, competence ethics and integrity
Daily, weekly, monthly financial and performance disciplines
Embedded systems of IC underpinned by policies and procedures
Monthly reporting on financial and performance/ Interim financial statements
Understanding of requirements as well as cause and effect
Accountable and transparent government
"Public Accountability"
Oversight
Flow of credible information
Re-enforcing accountability at all levels, escalation and robust communication
Reporting and governance
"Assurance Agents"
The bottom layer of the pyramid illustrates the foundation for the first line of defence in administration (that ensures credibility of information) being skills, competence, etc; embedded systems of IC; understanding of requirements, cause and effect. Daily, weekly monthly financial and performance disciplines (including reporting will be fully supported and fit into this environment easily.
For the reporting and governance layer, the foundation is effective and accountable leadership and effective internal audit and they support the audit committee with credible information for them to be effective in carrying out their functions. With both layers functioning properly, credible information will be submitted and reported to oversight committees.
"First in of defence"
Administration 15

18. Independent assurance
Combined Assurance Providers in the South African Public Sector
Management assurance
First level of assurance
Oversight assurance
Second level of assurance
Independent assurance
Third level of assurance
Senior manage-
ment
Accounting Officer / Authority
Executive Authority
Coordinating / monitoring Institutions
Internal Audit
Audit Committee
Oversight (Portfolio committee
and councils)
Public Accounts Committee
External
audit
Required Assurance Levels
Extensive
Extensive
Extensive
Extensive
Extensive
Extensive
Extensive
Extensive
Extensive

19. Thank You 17