1. PC Briefing note
Transport Portfolio
14 October 2014

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.
Enable oversight, accountability and governance – through this presentation we hope to capacitate the Portfolio Committee to execute its oversight functions. By executing your mandated functions, it is trusted that there will be improvement overall in the audit outcomes.

3. Overall regression in audit outcomes Outcomes per audit area
Audit outcomes : Transport Portfolio
Overall regression in audit outcomes
Financial statements
Performance reports
Outcomes per audit area
Compliance with legislation
Slide read together with pages 4 and 5 of narrative document
RTMC Qualified – Asset management
Most common non compliance matters were:
SCM ; Material misstatements to AFS
Performance information – usefulness (consistency of reporting and SMART principles) and reliability (evidence to support reported performance) criteria
Unqualified
Qualified
Adverse/disclaimer
Audits outstanding
With no findings
With findings

4. Accounting officer/authority
Audit outcomes : Transport Portfolio
Assurance levels
Senior management
Accounting officer/authority
Executive authority
Internal audit unit
Audit committee
Portfolio committee
Third level
First level
Second level
Consider the contribution by all role players in audit outcomes and the extent to which the outcomes were influenced.
Provides assurance
Provides some assurance
Provides limited/ no assurance
Vacancy
Not
established

5. Audit outcomes 2013-14: Transport Portfolio
Key controls
Performance reports
Compliance
with legislation
Financial
statements
Audit areas
Effective leadership 9 2 1 10 8 3
Human resources controls 5 6 1 7
ICT governance and controls 5 2 7 8 4
Audit action plans 7 4 1 6 2 8 3
Proper record keeping 5 4 3 7 1 8
Daily and monthly controls 5 2 6 3 4
Drivers of internal controls that would influence audit outcomes positively. If all these key drivers are working well, there should be clean administration.
We consider:
Leadership effectiveness in terms of taking action to address audit findings, making sure that the entity or Department has adequate skills and competence, is action taken against transgressors to prevent repeat non compliance or other matters?; do they review compliance and other matters in a timely manner and regularly?
Financial and performance management – is the discipline of daily and monthly reconciliations being exercised, do they keep proper records (sufficient and appropriate) for all matters in financial statements and performance reports.
Review and monitor
compliance 7 3 2 5 4
Good
Concerning
Intervention required

6. Audit outcomes 2013-14: Transport Portfolio
Quality of submitted financial statements
Information technology
Financial health
Supply chain management
Human resource management
Risk areas
Quality of submitted performance reports
Read together with pages 6 to 12 of narrative document.
Good
Concerning
Intervention required

7. Most common root causes
Audit outcomes : Transport Portfolio
Most common root causes
Key officials lack appropriate competencies
A root cause at auditees 6
Improved
Unchanged
Regressed
Instability or vacancies in key position
Slow response by management 4
These were the most common root causes identified in the Portfolio which gave rise to the lack of positive movement in audit outcomes

8. Status of key commitments by minister
Audit outcomes : Transport Portfolio
Status of key commitments by minister
(1) Implementation of the action plan to address the prior year audit findings; (2) Managing the take over of major IT related contracts; (3) Management of vacancies; (4) Contract management over all entities in the portfolio; and (5) Enhance performance and consequence management
(1) Review governance structures and strengthening oversight at Public Entities. (2) To meet regularly with the chairpersons of the boards and audit committees of public entities.
Implemented
In progress

9. Oversight model OVERSIGHT:
Parliament, provincial legislature or municipal council
Identify desired impacts
Assess and adjust Specify performance
indicators
Monitor and take Set targets
corrective action and allocate
resources
Policy development
Strategic Planning
Accountability
INSTITUTION
National department
Provincial department
Municipality
Public entity
Municipal entity
Operational planning and budgeting
AGSA advises the committee members on the Interim work done the Annual Performance Plan.
Budgeting process including the Medium Term Budgeting Framework.
Quarterly reporting done throughout during implementation on both performance and budget.
End year reporting includes budget review processes to determine whether money spent is in line with Targets achieved.
End-year reporting
Implementation and in-year reporting

10. How does clean administration improve service delivery
Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY
Robust financial performance management systems
Oversight and accountability of all
Independent and relevant reporting by the AG
Value adding by Auditor-General through messages and interactions
Commitment and ethical behaviour
Robust financial and performance management systems
Transparent and stable reporting systems
Budgeting and planning processes
Focussed information management platforms
Strong internal audit capabilities
Oversight and accountability
Reporting to enable effective oversight
Applying consequences for transgressions and poor performance
Commitment and ethical behaviour by all
Visible commitment by all players in the public service
Demonstrated impeccable ethical behaviour and professionalism
Auditor General
Independent and relevant reporting by the AG
Value-adding input expressed by the AG

11. Considerations for Portfolio Committees when dealing with performance monitoring
Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan
Does the entity have adequate resources (human and financial) available to achieve predetermined objectives
Are the targets realistic (can it be done)
How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.)
The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP
The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports)

12. Commitments required from Portfolio Committee
Monitor vacancy management in Portfolio to ensure all key posts ate filled with appropriately skilled and competent people in a timely manner
Monitor implementation of action plans to improve audit outcomes regularly
Monitor process to transfer e-Natis system from the service provider
Request regular feedback from the Department on key issues impacting entities in the Portfolio as identified through the oversight process.

13. Questions