1. Portfolio Committee on Arts and Culture 15 March 2010

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.

3. Focus areas
Separation of powers
Content of the annual report

4. Separation of Powers

5. TWO DIMENSIONS OF OVERSIGHT
From planning to audit: a closer look at parliament’s oversight role
TWO DIMENSIONS OF OVERSIGHT
FINANCIAL/FIDUCIARY
NON-FINANCIAL/RESULTS
EX ANTE
Scrutiny of financial forecasts: How much money will be used by whom for which type of input? In other words, is government doing things right?
Scrutiny of forecasts of expected achievements. What is tax payers’ money expected to buy? In other words, is government aiming to achieve the right things?
Budget Preparation Phase
Legislative Phase
In-YEAR
Monitoring the use of money during the spending year. Is spending on track? Will spending be more, or less? Is government spending on what it said it would?
Scrutiny of achievements of spending during the spending year. Is the pace of implementation of policies and legislation as projected in budget documentation?
THE BUDGET CYCLE
3 PHASES OF OVERSIGHT
Implementation Phase
EX POST
Scrutiny of financial outturns (by main categories of financial classification). Was there compliance with Parliament’s appropriations
Scrutiny of actual achievements. What did taxpayers’ money buy? Did government achieve what it said it would? Was money used effectively, efficiently?
Reporting and Audit Phase

6. Contents of the Annual Report Content
Introduction by Executives
Performance information
Report by the Audit Committee
Report by the Auditor General
Human Resource management
SCOPA resolutions

7. Important information: Performance information
Consistent with approved strategic objectives
Format provide:
Objectives
Output
Measurable target
Actual Performance results
Reason for Variances
SERVICE DELIVERY!

8. Information: Report of the Audit committee
Members
Number of meetings
Effectiveness of internal control
Quality of quarterly reports

9. Report by the Audit Committee : State Theatre of South Africa (p36 of annual report)
System of internal control was not effective
Matters previously reported has not been addressed
Qualification on income has been addressed on a sustainable basis
Qualification on assets must be addressed by 31 March 2010
Findings on performance information have been attended to

10. Report of the Auditor-General
Financial statements
Audit opinion on financial statement
Emphasis of Matter
Non Compliance
Control deficiencies
Governance requirements
Other reporting responsibilities
Non compliance
Relevance
Reliability
Investigations

11. Audit opinions Unqualified with no other matters (Clean)
The ideal
Unqualified with other matters
Financial statements were corrected due to material misstatements
Ineffective internal audit/ audit committee
Non compliance with laws and regulations
Qualified
“Except for”
Adverse
Material and pervasive Disagreement
Disclaimer
Material and pervasive limitation of scope

12. PFMA Audit Outcomes 2008-09 – Arts and Culture Summary of audit opinions
Disclaimer 2
Adverse
Qualified 1 4 5
Financially unqualified (with
other matters) 15 10
no other matters) 6 8
Total reported on 25
Total not reported on
Total
Type of audit opinion
Departments
Entities 12 12

13. Key internal control element
PFMA Audit Outcomes Drivers of audit outcomes: Fundamental elements of internal control
Key internal control element
Leadership
Tone from the top
Commitment and accountability
Availability of management
Financial management
Day to day responsibilities and processes (Reconciliations, monitoring and review) that will ensure quality financial statements
Clear understanding of roles and responsibilities
Governance
Effective audit committee
Effective internal audit
Risk management

15. Financial Statements Notes highlighted in audit report
Compensation compared to total expenditure
Significant variances year on year
Fruitless and wasteful expenditure
Irregular expenditure
Disciplinary cases and action
Department (unauthorised and virement)

16. Human Resource Management
Compensation in relation to total budget
Vacancies
Employment changes and reasons why staff leave the entity
Sick leave
Labour relations
Skills development
Performance rewards

17. Questions?