1. Briefing to the Portfolio Committee on Department of Correctional Services audit outcomes for the financial year
14 October 2015

2. 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.

3. 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.

4. Content Overall audit outcomes for the department 5
Unauthorised/ irregular / fruitless and wasteful expenditure
Combined assurance

5. 1. Overall audit outcomes for the department
Key controls
Overall stagnation in audit outcomes
Assurance levels
Audit area F P C
Effective leadership
Senior management
Provides limited/no assurance
First level
Human resource controls
Accounting officer
Provides some assurance
ICT governance and controls
Audit action plans
Provides some assurance
Executive authority
Proper record keeping
Second level
Provides limited/no assurance
Internal audit unit
Daily and monthly controls
Review and monitor compliance
Provides some assurance
Audit committee
F = Financial
P = Performance
C = Compliance
Good
Concerning
Intervention required 2 3 1
… the risk areas and …
… attention is given to the key controls and …
… the key role players need to assure that …
… and the commitments are honoured.
To improve the audit outcomes … 4
… the root causes are addressed … 5 6
Risk areas
Status of key commitments by minister
Most common root causes
Addressed qualification on assets
Quality of submitted financial statements
Quality of submitted performance reports
Instability or vacancies in key positions
Supply chain management
The minister committed to be available for all the quarterly key control meetings and also to drive the implementation process of his commitments as well as to report to AGSA on quarterly basis,.
Key officials lack appropriate competencies.
Commitments by previous minister:
Ensure that all long-outstanding debtors are prioritised and paid timeously
Strengthen internal controls
Address internal control deficiencies in IT, Performance reporting and human resources
Enhance the impact on service delivery
Commitments by current minister:
Track on the progress made on implementing action plans to address prior year audit findings
Implement a system for performance information
Financial health
Human resource management
Information technology
Lack of consequences for poor performance and transgressions
Good
Concerning
Intervention required
Not implemented
In progress
Implemented
New

6. 1.1 Quality of submitted financial statements
Outcome if NOT corrected
Outcome after corrections
Legend:
Financially unqualified with findings
Financially qualified (qualified/ disclaimed with findings)
0 auditee
Avoided qualifications by correcting material misstatements
during audit process
Outcome if NOT corrected
Outcome after corrections
0 auditee
100% (1)

7. 1.2 Quality of annual performance report
The report submitted for audit was not reliable and useful similar to the previous year.
The auditee submitted the information in time for audit
Legends:
With no findings
With findings
Improvement
Stagnant or limited progress
Regressed
Usefulness
Reliability

8. 1.3 The department did not comply with legislation in the following areas
Quality of annual financial statements submitted
Prevention of unauthorised, irregular and/ or fruitless and wasteful expenditure
Management of procurement and or contracts
Legends:
With no findings
Intervention required
With findings
Improvement
Stagnant or limited progress
Regressed
Management of strategic planning and performance
Human resource & consequence management
Internal audit & Audit committee

9. 2. U,I,FW expenditure Unauthorised expenditure Irregular expenditure
Fruitless and wasteful expenditure
Legends:
Decrease in incurred expenditure
No change
Increase in incurred expenditure
Finding not repeated
New finding
Repeat finding
Expenditure not in accordance with the budget vote/ overspending of budget or programme
Expenditure incurred in contravention of key legislation; goods delivered but prescribed processes not followed
Expenditure incurred in vain and could have been avoided if reasonable steps had been taken. No value for money!
Definitions
DCS
Nil R R

10. 3. Combined assurance – 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 officers/ 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
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 and 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
committees /
councils)
Public
accounts
committee
National Assembly
Extensive
Required assurance levels
Role of independent assurance
Oversight (portfolio committees) – 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

11. Questions