1. National PFMA audit outcomes 2009-10

2. Reputation promise
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 constitutional’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

3. National – PFMA audit outcomes 2009-10
Summary of audit outcomes
Audit outcomes
Departments
(including Parliament and National Consolidation)
Public entities (including trading, constitutional institutions and other types of entities)
Opinion on financial statements:
Disclaimer 3 7
Adverse 2
Qualified 12 17 23
Financially unqualified with findings on predetermined objectives and/or compliance with laws
and regulations 19 16 89
101
Financially unqualified with no findings on predetermined objectives or compliance with laws 4 6
110 87
Total number of audits reported on 35 34
222
220
Number of audits not finalised – 30September 2010 1
Total number of audits
225
221
Entities with findings arising from AGSA other legal reporting responsibilities:
Predetermined objectives 24 22 92
Compliance with laws and regulations 21 76 68
Note changes in categories
Where reports have findings on predetermined objectives and compliance, the total number of reports with these findings must be indicated in the two bottom lines of the table. (The same report may be included in the analysis of the opinion on the financial statements, predetermined objectives and on compliance.)
All audits to be included - even those outstanding from previous years, where financial statements have not been submitted for auditing
The auditee numbers (opinions and findings) required for this slide are available on the AS: MIS
These may have to be inserted and added up manually if the table is not yet available on AS: MIS
All information captured into the AS: MIS must be verified for accuracy and completeness
Note the date for inclusion of reports finalised is 31 August 2010
Do not include audits with 30 June year ends
Note inclusion of legislature and revenue fund in analysis of departments
Annexure 1

4. National – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes
Leadership
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Departments
Public entities
Provision of adequately skilled resources capable of implementing the financial reporting framework and performance management requirements, as well as adequate evaluation of the performance of existing staff :
Financial Statements
Predetermined objectives 17
176 18 46 20
167 15 54
Ensuring that proper actions are taken to address audit findings; key controls are implemented to mitigate risk of misstatement of financial statements and report on predetermined objectives: 14
150 21 72 16
137 19 84
Leadership’s implementation of action plans to address user access control deficiencies (Information Systems) 7 8 42
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work.
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
Note: Departments include Parliament and National Consolidation, Public entities include trading and other types of entities
Annexure 2 - Drivers – Departments
Annexure 2 - Drivers - Public entities

5. National – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes
Financial and performance management
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Departments
Public entities
Appropriate systems are in place to support the preparation of financial statements and performance reports:
Financial Statements
Predetermined objectives 15
172 20 50 16
151 19 70
Review of the financial statements and other information by management for completeness and accuracy prior to submission for audit: 13
139 22 83 17
147 18 74
Proper record keeping and management, ensuring that supporting documents are properly filed and easily retrievable:
189 33
170 51
4. Application systems susceptible to compromised data integrity (Information Systems)
User access control
Security management
Business Continuity 2 4 7 8 21 26 23 43 42 29
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
Note: Departments include Parliament and National Consolidation, Public entities include trading and other types of entities
Annexure 2 - Drivers – Departments
Annexure 2 - Drivers - Public entities

6. National – PFMA audit outcomes 2009-10 Drivers of improved audit outcomes
Governance
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Departments
Public entities
Maintaining effective risk assessments and strategies including fraud prevention plans to address identified weaknesses:
Financial Statements
Predetermined objectives 23
185 12 37 27
182 8 39
Ensuring effective internal audit functions that monitor the adequacy and implementation of internal control: 26
197 9 25 36
Establishment of functioning audit committees that promotes independent accountability and service delivery: 30
206 5 16
202 19
An IT governance framework that directs the positioning of IT, resource requirements, risk and internal control management (Information Systems). 4 22 28
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
Note: Departments include Parliament and National Consolidation, Public entities include trading and other types of entities
Annexure 2 - Drivers - Departments
Annexure 2 - Drivers - Public entities

7. National – PFMA audit outcomes 2009-10
Financial statement qualification areas at Departments
This graph combines the results of departments and entities
This graph will be drawn off the AS: MIS - As an interim measure, an Excel workbook template can be provided to generate the graph
Note that the denominator for the current and previous year must be indicated in the heading
Qualified includes disclaimer and adverse opinions in this instance

8. National – PFMA audit outcomes 2009-10
Financial statement qualification areas at public entities
This graph combines the results of departments and entities
This graph will be drawn off the AS: MIS - As an interim measure, an Excel workbook template can be provided to generate the graph
Note that the denominator for the current and previous year must be indicated in the heading
Qualified includes disclaimer and adverse opinions in this instance

9. National - PFMA audit outcomes 2009-10
Transversal material misstatements corrected at Departments

10. National - PFMA audit outcomes 2009-10
Transversal material misstatements corrected at public entities

11. Departments (including Parliament and National Consolidation)
National – PFMA audit outcomes
Findings on reporting of predetermined objectives
Category of finding
Departments (including Parliament and National Consolidation)
Public entities (including trading, constitutional institutions and other types of entities)
Non-compliance with regulatory requirements
56%
44%
22%
29%
Reported information not useful
53%
47%
28%
19%
Reported information not reliable
17%
15%
Information not submitted for audit by 31 May 2010 3% 6% 2%
Total number of audits with findings 24 22 92 89
Findings for are available on the AS: MIS
findings to be extracted for the provincial General Report 11 11

12. Top 3 categories of non-compliance and SCM issues
National – PFMA audit outcomes
Findings on compliance with laws and regulations
Top 3 categories of non-compliance and SCM issues
Number
Percentage
Departments (including Parliament and National Consolidation)
SCM issues that resulted in irregular expenditure (Irregular expenditure relating to SCM at departments = R 59 Million) 18
53%
Payments not done within 30 days 15
44%
HR Management 11
32%
General/ fiduciary and reporting responsibilities of accounting officers and internal audit not operating effectively throughout the year 6
18%
Transversal material misstatements corrected 25
74%
Public entities (including trading, constitutional institutions and other types of entities)
SCM issues that resulted in irregular expenditure (Irregular expenditure relating to SCM at entities = R 337 million) 52
24%
General/ fiduciary and reporting responsibilities 22
10%
Internal audit 21
Audit committee 8%
106
48%
This data to be drawn from ‘compliance workbooks’ completed by ABUs
Limited to non-compliance issues included in audit reports
Annexure 3 - Compliance issues 12 12

13. Top 5 findings on procurement and contract management
National – PFMA audit outcomes
Findings on procurement and contract management resulting in irregular expenditure
Top 5 findings on procurement and contract management
Number
Percentage
Amount
Departments (including National Revenue Fund) R
3 price quotations not invited - reasons not recorded and approved 15
44%
Preference point system not applied in procurement > R30 000 7
21%
Competitive bidding deviation not justified 6
18%
Awards to suppliers who failed to provide valid tax clearance certificates
3 price quotations not invited - deviation not justified 5
15%
Public entities (including trading, constitutional institutions and other types of entities) 26 9%
R with no competitive bidding - reasons not recorded and approved 12 7%
This data to be drawn from ‘Procurement and contract management workbooks’ completed by ABUs.
Annexure 4 13 13

14. Interest identified in suppliers
National – PFMA audit outcomes
Findings on procurement and contract management – interest in suppliers
Interest identified in suppliers
Number of entities/
departments
Number of instances
Interest identified in suppliers
Employees of department/ entity 15 59
Close family members of employees 2
Close family members of other role-players in SCM process – not employed by department/ entity 1 14
Non-compliance or irregularities identified where interest identified
Supplier did not declare the interest 7
Employee did not have approval for performing other remunerative work (departments only) 3 13
Person with interest did not declare interest 4 8
Person with interest was involved in making award to supplier
Interest was not included in annual declarations (senior managers at departments only)
This data to be drawn from ‘Procurement and contract management workbooks’ completed by ABUs. 14 14

15. Unauthorised expenditure
National – PFMA audit outcomes Irregular and Unauthorised expenditure
Annexure 4
Department
Unauthorised expenditure
Department of Transport
R 362,394,000

16. Most significant findings
National – PFMA audit outcomes
Findings from audit of human resource management at departments
Most significant findings
Number
Percentage
Human Resource Management
No human resource plan 13
38%
Performance agreements of senior managers not signed             8
24%
Acting allowances paid more than 12 months                                     
Management of vacancies
Positions vacant for more than 12 months : Senior Management 11
32%
Positions vacant for more than 12 months: Finance division 9
26%
No improvement in overall vacancy rate
No improvements in senior management vacancy rate 7
21%
This data to be drawn from ‘Human resource workbooks’ completed by ABUs 16 16

17. National – PFMA audit outcomes 2009-10
Findings of information systems audits
General General controls I
Departments (including Parliament and National Consolidation)
Public entities (including trading and other types of entities)
Number
Percentage
Lack of IT governance framework to direct the positioning of IT, resource requirements, risk and internal control management 23
85% 28
56%
Inadequate security management controls to prevent unauthorised access to the operating systems (e.g. Windows, Linux, etc.) that grant access to the application systems 26
93% 42
84%
Inadequate user access controls to detect and prevent unauthorised access, capturing and approval of transactions on the application systems that are used to prepare the financial statements (e.g. BAS, PERSAL, LOGIS) 43
86%
Lack of business continuity and disaster recovery plans that would ensure the availability of financial and performance information in instances of data loss or disaster 29
58%
Key matters to be addressed
DPSA (using SITA) in collaboration with NT, to prescribe a comprehensive IT governance framework which provides guidance towards IT strategic alignment and decision making, resourcing, risk management and internal control
Accounting officers to ensure implementation of the comprehensive IT governance framework
In the interim, Accounting Officers to implement actions plans developed to address IT related audit findings and recommendations
ISA will populate slide
Annexure 5 - IT Audit Focus areas 17 17

18. Audits not conducted by the AGSA
National – PFMA audit outcomes
Audits not conducted by the AGSA

19. National – PFMA audit outcomes 2009-10
Summary of audit outcomes – Audits not conducted by the AGSA
Audit outcomes
Major Schedule 2 entities
Opinion on financial statements:
Disclaimer
Adverse
Qualified
Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations 4
Financially unqualified with no findings on predetermined objectives or compliance with laws and regulations 13
Total number of audits reported on 17
Number of audits not finalised at 30 September 2010
Total number of audits
Predetermined objectives 3
Compliance with laws and regulations
Note changes in categories
Where reports have findings on predetermined objectives and compliance, the total number of reports with these findings must be indicated in the two bottom lines of the table. (The same report may be included in the analysis of the opinion on the financial statements, predetermined objectives and on compliance.)
All audits to be included - even those outstanding from previous years, where financial statements have not been submitted for auditing
The auditee numbers (opinions and findings) required for this slide are available on the AS: MIS
These may have to be inserted and added up manually if the table is not yet available on AS: MIS
All information captured into the AS: MIS must be verified for accuracy and completeness
Note the date for inclusion of reports finalised is 31 August 2010
Do not include audits with 30 June year ends
Note inclusion of legislature and revenue fund in analysis of departments
Listing of Major SOEs

20. National – PFMA audit outcomes 2009-10
Findings on reporting of predetermined objectives – Audits not conducted by the AGSA
Findings on predetermined objectives
Alexkor Limited
South African Airways (Pty) Limited
South African Broadcasting Corporation 1
Non-compliance with regulatory requirements 2
Reported information not useful 3
Reported information not reliable 4
Information not submitted for audit by 31 May 2010
Note changes in categories
Where reports have findings on predetermined objectives and compliance, the total number of reports with these findings must be indicated in the two bottom lines of the table. (The same report may be included in the analysis of the opinion on the financial statements, predetermined objectives and on compliance.)
All audits to be included - even those outstanding from previous years, where financial statements have not been submitted for auditing
The auditee numbers (opinions and findings) required for this slide are available on the AS: MIS
These may have to be inserted and added up manually if the table is not yet available on AS: MIS
All information captured into the AS: MIS must be verified for accuracy and completeness
Note the date for inclusion of reports finalised is 31 August 2010
Do not include audits with 30 June year ends
Note inclusion of legislature and revenue fund in analysis of departments

21. National – PFMA audit outcomes 2009-10
Findings on compliance with laws and regulations – Audits not conducted by the AGSA
Areas of non-compliance with laws and regulations
Alexkor Limited
South African Airways (Pty) Limited
South African Broadcasting Corporation
Transnet Limited 1
Audit committee (section 77 of PFMA and TR 27) 2
General responsibilities of accounting authorities (section 51 of PFMA) 3
Internal audit (section 51 (1)(a)(ii) of PFMA and TR 4
Irregular expenditure - SCM related (R'000)
187,225
867,000
Note changes in categories
Where reports have findings on predetermined objectives and compliance, the total number of reports with these findings must be indicated in the two bottom lines of the table. (The same report may be included in the analysis of the opinion on the financial statements, predetermined objectives and on compliance.)
All audits to be included - even those outstanding from previous years, where financial statements have not been submitted for auditing
The auditee numbers (opinions and findings) required for this slide are available on the AS: MIS
These may have to be inserted and added up manually if the table is not yet available on AS: MIS
All information captured into the AS: MIS must be verified for accuracy and completeness
Note the date for inclusion of reports finalised is 31 August 2010
Do not include audits with 30 June year ends
Note inclusion of legislature and revenue fund in analysis of departments