TheworkoftheAuditor-GeneralofSouthAfrica

July2017

Reputa8onpromise/mission

TheAuditor-GeneralofSouthAfricahasacons5tu5onalmandateand,astheSupremeAuditIns5tu5on(SAI)ofSouthAfrica,existstostrengthenourcountry’sdemocracybyenablingoversight,accountabilityandgovernanceinthepublicsectorthroughaudi5ng,therebybuildingpublicconfidence.

TheAGSAhasproducedthe‘MillionbagsofR1millioneach’whichexplainstheroleoftheAGSAass5pulatedbytheSAcons5tu5on.

MillionBags

3000+

Asthesupremeauditins5tu5onofSouthAfrica,wearecommiEedtoprofessionalism

500+ Chartered accountants(SA)

42 Masters

34 Chartered certified accountants

64 Certified information system auditors

332 Registered government auditors

Offices in all the provinces

Continuously investing in our staff through study

support, internal training and development

programmes

employees

Asthesupremeauditins5tu5onofSouthAfrica,wearewell-respectedlocallyandinterna8onally

UN auditors for 12 years

Chair of the Public Sector Committee

Rio conference International key note address

Active involvement

Secretariat host

African Union Current audit

Current audit

Support and guidance

Record management workshop

Annual conference

Study tours Leading by example

Asthesupremeauditins5tu5onofSouthAfrica,wearearesponsibleci8zen

Largest trainee auditor scheme in South Africa

AGSA busaries Thuthuka bursary fund

and accredited universities

Support and uplift disadvantaged communities in South Africa

Educational visits; Boy and Girl learner days

1300+ trainee auditors

Centenary scholarships

(legacy project)

Typesofaudits

MandatoryAudits

Discre8onaryAudits

Regulatoryaudits

Inves5ga5ons

Performanceaudits

Specialaudits

Differentoutcomestoanaudit

AUDITCYCLES

Auditprocess:

v  Riskassessment

v  Riskresponse

v  Repor5ng-tothemanagementoftheauditeeandexecu5veauthority

-publishedinauditees’annualreport

TheimportanceofaccountabilityasapillaroftheSouth-Africandemocracy

MFMA2015-16–auditoutcomes

Gaut

eng

2

16 24

15 10

2014-15 2015-16

Lim

popo

4 6 2 1 1

14 10

12 16

2014-15 2015-16

Mpum

alang

a

4 2

5 8

10 8

2 3

2014-15 2015-16

KwaZ

ulu-

Nata

l

1 2 1 8 6

37 43

22 16

2014-15 2015-16

Free

Sta

te

4 3 3 8 3

15 16

1 1

2014-15 2015-16

North

Wes

t 1

7 7

10 12

9 6

2014-15 2015-16

East

ern

Cape

6 4 2

20 15

22 25

7 10

2014-15 2015-16

North

ern

Cape

6 8 4

13 11

9 9 2 2

2014-15 2015-16

Wes

tern

Cap

e

1 1 1 8 5

23 25

2014-15 2015-16

Movementperprovince(allauditees)

2

5

3

7

2

5

4

2

2

8

14

6

4

3

1

14

4

10

3

1

2

5

7

2

1

2

1

80% (171)

65% (140)

61% (132)

Slow response to

improving key controls

and addressing risk

areas

Inadequate consequences for

poor performance

and transgressions

Instability or vacancies

in key positions

Management (accounting officers and senior management), the political leadership (mayor and council) and oversight bodies MPACs and portfolio committees) do not respond with the required urgency to our messages about addressing risks and improving internal controls

If officials who deliberately or negligently ignore their duties and contravene legislation are not held accountable for their actions, such behaviour can be seen as acceptable and tolerated.

The instability and prolonged vacancies in key positions can cause a competency gap that leads to a high demand for consultants and support.

MFMA2015-16–rootcauses

27% 23% 25%

60% 61% 49%

13% 16% 26%

Senio

r

ma

nage

ment

Munic

ipal m

anag

ers /

ch

ief ex

ecuti

ve of

ficer

s

Mayo

rs Assurance provider

Responsibility

Senior managers

•  Task/project leadership •  “Doing the basics right” •  Supervision and review •  Timely implementation of action plans and recommendations

Municipal managers/ CFOs

•  Administrative leadership, guidance and oversight •  Enabling delivery •  Monitor and report on progress of action plans •  Hold staff accountable •  Investigate all allegations of fraud •  Reporting channel between administrative and political leadership

Mayors

•  Political leadership, guidance and oversight •  Reporting channel between executive leadership and legislature •  Political accountability

Provides assurance Provides some assurance Provides limited/no assurance

Firstlevelofassurance–leadership/management

Inter

nal a

udit

units

Audit

comm

ittees

Trea

surie

s, co

oper

ative

go

vern

ance

de

partm

ents,

pr

emier

’s off

ices

2% 3% 16% 16% 25%

45% 43%

64%

37% 38%

11%

Assurance provider

Responsibility

Internal audit •  Report to strengthen control environment •  Advise on organisational systems, processes and practices •  Advise on organisational effectiveness

Audit committee

•  Interrogate and advise management •  Review financial and performance reporting before audit •  Ensure appropriate reaction to findings

Coordinating / monitoring departments

•  Guide and enable service delivery in coordinated effort (OTP) •  Ensure proper inter-governmental coordination (OTP) •  Hold cabinet / executive committee accountable (OTP) •  Monitor and provide oversight (OTP) •  Guide proper financial management / SCM (Treasuries) •  Skills development (Treasuries) •  Guide proper strategic planning and performance

management (Cogta) •  Facilitate the fight against corruption (Cogta)

Provides assurance

Provides some assurance Provides limited/no assurance Not established

Secondlevelofassurance–internalindependentassuranceandoversight

Munic

ipal c

ounc

ils

Munic

ipal p

ublic

ac

coun

ts

comm

ittees

1% 27% 32% 44%

47% 41%

56%

26% 25%

Portf

olio c

ommi

ttees

on

loca

l gov

ernm

ent

Assurance provider

Responsibility

Municipal council/ MPAC

•  Enable proper financial oversight •  Interrogate the audit outcomes •  Ensure corrective action / proper consequence management

Portfolio committees

•  Review strategic plans and related budgets, and guide government on appropriate delivery targets and resource use

•  Review performance reports and guiding appropriate action •  Ensure proper consequence management

External audits

•  Engage pro-actively •  Conducti annual audits and reporting on these •  Engage with governance structures •  Enable the work of oversight

Provides assurance Provides some assurance

Provides limited/no assurance

Not established

Thirdlevelofassurance–externalindependentassuranceandoversight

18

MFMA2015-16–analysisofkeyareas

35% (93)

33% (87)

32% (83)

Financial viability of municipalities is on a steady decline

•  incurred a deficit

•  in net current liability position

•  were able to pay their creditors in less than 30 days

•  took more than 120 days to pay their creditors

•  are able to collect monies owed to them in less than 90 days

•  took more than 120 days to collect money owed to them

•  deem more than 10% of their debt to be non-recoverable Good

Ofconcern

Interven8onrequired

90%

44%

46%

39%

17%

30%

44%

MFMA2015-16–financialhealth

2015-16 MFMA

R10 824 m (64%)

R6 916 m (63%)

R5 969 m (47%)

R6 065 m (36%)

R4 139 m (37%)

R5 965 m (53%)

2015-16 2014-15 2013-14

R16 889 m (236 municipalities [90%])

R11 334 m (225 municipalities [86%]) R11 055 m

(231 municipalities [88%])

Identified by auditees Identified during audit

31% (R5 269 m)

19% (R2 179 m)

24% (R2 662 m)

Incurredinpreviousyears–iden8fiedincurrentyear

96% (2014-15: 97%) of occurrences were related to contraventions of SCM prescripts

EC R5 657 million (34%)

FS R361 million (2%)

GP R1 500 million (9%)

KZN R2 361 million (14%)

LP R1 714 million (10%)

MP R2 279 million (13%)

NC R287 million (2%)

NW R2 520 million (15%)

WC R210 million (1%)

Provincial breakdown of irregular expenditure

incurred

MFMA2015-16–irregularexpenditure

25% 43% 32% Leadership

23% 47% 30% Financial and performance management

37% 38% 25% Governance

Good Ofconcern Interven8onrequired

MFMA2015-16–statusofinternalcontrols

Accountabilitydefined

PLAN

DO

CHECK ACT

RethinkingconsequencemanagementfromanAuditor-Generalpointofview

•  Aimedatrestoringthestrengthoffinancialandperformancemanagementingovernment,moreefficientlyempoweringoversightandfacilita5ngappropriateconsequencemanagement

•  CurrentengagementwithSCoAG

•  Interna5onalbenchmarks

•  Op5ons:

•  Rightofreferral(certainrepeatfindingfromAG’sgeneralreportstriggerautoma5creferraltoappropriatebodytoinves5gatefurtherandtakeappropriateac5on,appropriatelyfundedandwithfeedbacklooptoAG),

•  Rightofsurcharging,•  Other

AGPowers

PublicAuditAct(PAA)

AGSAasavalue-addingSAI

Nextsteps

SACons8tu8on

v  Thecons5tu5onalmandateoftheAGSAistostrengthendemocracy.v  Thiswedothroughaudi5ngandrepor5ngonallna5onalandprovincialstate

departmentsandadministra5ons,allmunicipali5es,andanyotherins5tu5onoraccoun5ngen5tyrequiredbyna5onalorprovinciallegisla5ontobeauditedbytheAuditor-GeneralSec5on188(1)oftheCons5tu5onoftheRepublicofSouthAfrica,1996.

v  TheAGSAfurtherenjoystheaddi5onalfunc5onsandpowersprovidedforinthePublicAuditAct,2004(ActNo.25of2004)(PAA).

v  ThePAAbroadensthescopeoftheAGSA’smandatebysubjec5ngaddi5onal

en55estoitsaudits.

v  ThePAAalsoaddsaddi5onalpowers,suchasunrestrictedaccesstoinforma5on,todigdeepintothesystemsofauditeestobringthegoodandthebadintothepubliceye.

v  TheAGSAcanonlybeeffec5veifitisempoweredbyappropriatemechanismstofollowuponauditrecommenda5ons.

v  IftheAGSAfocusedonauditsaroundservicedeliveryandachievementof

governmentgoals,thePAAneedsamendmentinanumberofareas.

v  Appropriatefollow-upmechanismsarebeingdesignedforinclusionisthePublicAuditAmendmentBill,2017

v  Follow-upmechanismswillincludemandatoryreferralofcertainauditoutcomesforfurtherinves5ga5onbyappropriatelyposi5onedinves5ga5ngagencies

v TheAGSAproducescollateralfortheconsump5onofpublicservantsandci5zens.Theseareaimedatclarifyingtheauditoutcomesandincludes.

§  AGSAApp

§  Booklets(abridgedGR)

§  Mediarelease(invariouslanguages)

§  Socialmediapla^orms(twi_er,Facebook,LinkedIn,YouTube)

Communica8onproducts

HowtogetintouchwiththeAGSA