1. Environmental Affairs portfolio audit outcomes 2010-11
28 September 2011

2. Environmental Affairs portfolio audit outcomes 2010-11
Audits conducted by the AGSA
Department
Public entities
Financially unqualified with no findings on predetermined objectives or compliance with laws and regulations 1 2 3
Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations
Financially unqualified financial statements
100%
Qualified opinion
Adverse opinion
Disclaimer of opinion
Financially qualified financial statements 0%
Total number of audits reported on 5
Number of audit reports not issued by 31 August 2011
Total number of audits
Total number of auditees in which findings arose from the AGSA's other legal reporting responsibilities:
Predetermined objectives findings only
Compliance with laws and regulations findings only
Findings on both predetermined objectives and compliance with laws and regulations
2010/11:
Unqualified with no compliance and/or PDO findings
DEA
SAWS
iSimangaliso
Unqualified with compliance and/or PDO findings
SANBI – only compliance findings
SANParks – only compliance findings
(Compliance findings are mainly due to material misstatements corrected and SCM issues)
2009/10:
SANParks
iSimangaliso –
SANBI – PDO findings

3. Audit outcomes comparison with 2009-10 to 2010-11 Department and public entities
2010/11:
Unqualified with no compliance and/or PDO findings (3 out of 5 audits = 60%)
DEA
SAWS
iSimangaliso
Unqualified with compliance and/or PDO findings (2 out of 5 audits = 40%)
SANBI – only compliance findings
SANParks – only compliance findings
(Compliance findings are mainly due to material misstatements corrected and SCM issues)
2009/10:
Unqualified with no compliance and/or PDO findings (4 out of 5 audits = 80%)
SANParks
iSimangaliso –
Unqualified with compliance and/or PDO findings (1 out of 5 audits = 20%)
SANBI – PDO findings

4. Movement in audit outcomes from 2009-10 Department and Public Entities
Movement in audit outcome over Department and Public entities
Audit opinion
Improvement
Unchanged
Regressed
Total reported on
Prior year opinion on audits outstanding
Financially unqualified with no findings 3 4
Financially unqualified with findings 2 1
Qualified
Disclaimer / Adverse
Total 5 3 1 1
Unchanged:
Unqualified with no compliance and/or PDO findings
DEA
SAWS
iSimangaliso
Unqualified with compliance and/or PDO findings
SANBI
Regressed:
SANParks – was previous year unqualified with no compliance and/or PDO findings

5. Areas of material misstatements in financial statements
No material misstatements:
Department
DEA
Public entities
SAWS
iSimangaliso
Misstatements corrected during the audit:
Capital assets (2 out of 4 entities = 50%)
SANBI
SANParks
Other disclosure items (2 out of 4 entities = 50%)

6. Corrections of material misstatements identified by auditors
No material misstatements (3 out of 5 audits = 60%):
DEA
SAWS
iSimangaliso
All material misstatements corrected (2 out of 5 audits = 40%):
SANParks
SANBI

7. Predetermined objectives (PDO) findings Departments and public entities
No predetermined objective findings were reported in the various audit reports of the department and the public entities
Some of the findings included in the management reports are:
Inconsistencies between ENE and strategic planning
Under-performance in relation to set targets
Consistency of planned and reported pre-determined objectives
Improvement of process and controls for the planning and reporting on predetermined objectives
Reason for variance was not included in the Performance Report
Performance targets not measurable or specific
Annual performance misstated
Performance information controls
Management report items:
Inconsistencies between ENE and strategic planning
DEA
Under-performance in relation to set targets
Consistency of planned and reported pre-determined objectives
SANParks
Improvement of process and controls for the planning and reporting on predetermined objectives
Reason for variance was not included in the Performance Report
iSimangoliso
Performance targets not measurable or specific
SANBI
Annual performance misstated
Performance information controls

8. Areas of findings on non-compliance with laws and regulations
Annual financial statements and annual report
SANBI
Expenditure management
SANParks

9. Unauthorised, irregular, and fruitless and wasteful expenditure Department and public entities*
2009/10:
No unauthorized expenditure (DEA), irregular expenditure and fruitless and wasteful expenditure disclosed
2010/11:
SANParks irregular R (current year); R was indentified in the current year in respect of previous year [correction made in the 2010/11 financial statements]
* Amounts are actual (no extrapolation of errors)/Based on actual disclosures and samples tested

10. Financial sustainability (going concern) Public entities
SANBI:
Although SANBI has prepared financial statements on a going concern basis, events or conditions have identified which, individually or collectively, cast significant doubt on SANBI’s ability to continue as a going concern, unless additional sources of funding can be obtained.
Management have disclosed in note 21 of the financial statements, relating to going concern, that they are engaged in various initiatives to ensure the sustainability of SANBI.
The initiatives are mainly premised on obtaining additional funding from National Treasury. At the date of the financial statements, the request has not formally been communicated to National Treasury and there is thus uncertainty as to the outcome thereof.
The following going concern indicators were identified during the audit:
National Treasury has emphasised that SANBI should not depend on project funding to finance day to day running costs.
SANBI has a net current liability position.
Government grants are not sufficient to cover the expenses incurred by SANBI. Additional sources of income are via donors, sponsorships, admission fees and other grants and this has been declining due to a decrease in economic activity. SANBI needs to seek new sources of finance or dispose of substantial assets to generate more income.
Financial support from government underlies the going concern assumption for SANBI.
Deficits have been reported since the 2008 financial year.
There is evidence of postponement of the payments to creditors on due dates. Some suppliers are paid as and when funds become available.
There is evidence of slowing collections from debtors.
There is excessive reliance on transactions with related parties as funding is primarily received from the government, particularly DEA.
SANBI has difficulty obtaining financing for necessary new project developments or other necessary investments.
There has been or is likely to be reduced funding from the government. The government grant has remained in line with prior years, whilst expenditure is on the increase due to inflation.

11. Four focal points (based on prior audit, risk assessment)
Procurement/SCM
Increase in irregular expenditures
Uncompetitive and/or unfair procurement processes
Inadequate controls
HR Management
HR planning and organization
Predetermined Objective
Reporting
Credibility of reporting on achievements
Alignment of 12 National goals to strategic plans and delivery agreements
Usefulness of reported information
(No PDO findings reported in the various audit reports)
IT Management
Security and user access management controls lacking
Program change management lacking
IT service continuity not adequate
Procurement / SCM:
Increase in irregular expenditure
SANParks
Uncompetitive and/or unfair procurement processes
SANBI
Inadequate controls
HR Management:
HR planning and organization
DEA – organizational structure not aligned to strategic plan
Predetermined objective reporting:
No risk areas that needs to be addressed. No findings on predetermined objects were reported in the audit reports of DEA, SANBI, SAWS, SANParks and iSimangoliso
IT management:
Security and user access management controls lacking
DEA
SAWS
Program change management lacking
IT service continuity not adequate

12. Progress in addressing high risk areas
Concern rating scale
Number of auditees
Status of interventions proposed after audit cycle
Current year impact 5
Partially implemented
Neutral (60%) 4 3 1 2 -1 -2
Improved (40%) -3 -4 -5
No concern from previous audit cycle = 2 auditees
Higher
Lower

13. Summary of findings on supply chain management
Uncompetitive or unfair procurement processes (2 out of 4 audits [PE] = 50%)
SANBI
SANParks
Inadequate controls (1 out of 4 audits [PE] = 25%)
In comparison to National (departments and public entities) the portfolio had more findings around competitive and unfair procurement processes and inadequate controls
Action plans should be put in place to address the findings

14. Findings on HR management focus areas
HR planning and organization
DEA: organisational structure not aligned to strategic plan
No HR finding at public entities
SANParks
SAWS
SANBI
iSimangoliso

15. Progress made in implementing key controls
Key controls that need attention
Leadership
Oversight responsibility
SANParks
Financial – in progress
Compliance – in progress
SAWS
SANBI
HR Management
DEA
Performance – intervention required
Policies & procedures
Action plans
Performance – in progress
IT governance
Financial and performance management
Proper record keeping
Financial – intervention required
Reporting
Compliance
IT Systems controls
Governance
Internal audit

16. Findings on IT control focus areas
Security Management
DEA
SANParks
User Access Control
SAWS
Program Change Management
IT Service Continuity

17. Assessment of monitoring capacity and effectiveness at the time of the audit
Role players
Assessment of monitoring capacity and effectiveness at the time of the audit
Supply chain management
Predetermined objectives
Financial management
Turnaround plans
IT Controls
HR management
Governance structures
Oversight Accountability
Executive leadership (Minister)
Legislative oversight (NCOP, NA Portfolio Committees)
The following should be addressed for the portfolio:
SCM
In comparison to National (all national and public entities) the portfolio had more findings around uncompetitive and unfair procurement processes and inadequate contract management
PDO
A concern is that there was inadequate presentation of information and reliability of information identified.
Turnaround plans
Going concern issues relating to SANBI
Portfolio committees can request quarterly reports on performance and areas of non compliance. Actions taken to address the issues around this area should be reviewed