Audit of Performance Information
(AoPI)
Click to edit Master subtitle style
AGSA approach
Reputation promise/mission
The Auditor-General 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.
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
Background



Supreme audit institutions (SAIs) do not only conduct
financial audits
Also provides assurance on performance information
produced by government departments and entities
Why was this necessary?

Public sector reforms

Improving public reporting

Providing better information on what taxpayers are
getting for their taxes
Difference between AoPI and performance
auditing
Performance Information (PI)
= Non-Financial Information about the Service Delivery of Government
PA
Performance Auditing
AoPI
Audit of Performance Information

Part of Regularity Auditing
Focused on non-financial information in
Annual Report


Focused on a specific government
policy or management process




Audit criteria:

Compliance (has this
happened), as part of
regularity audit process

Quality of PI (as per audit
criteria)
Done by audit professionals
Individual audits

Audit criteria are the 3E’s:

Economy

Efficiency

Effectiveness
Done by subject matter experts
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
Legislative requirements - auditing
Sections 20(2)(c) and 28(1)(c) of PAA
An audit report must reflect an opinion or conclusion
relating to the performance of the auditee against
predetermined objectives





Applicable to all spheres of government, including:
national, provincial and local government
public entities
those the AG opts to perform and opts not to perform
institutions funded with public monies
institutions that receive money for public purposes
Legislative requirements – planning,
budgeting and reporting


PFMA
Treasury Regulations
National Treasury guidance:

Annual report preparation guide

Framework for managing programme performance
information
PFMA sections 40(3)(a) & 55(2)(a):
The annual report and audited
financial statements must
fairly present the state of affairs of (...)
and its performance against
Legislative requirements – reporting:
predetermined objectives
PFMA sections 40(3)(a) & 55(2)(a):
The annual report and audited financial statements must
fairly present the state of affairs of (...) and its performance
against predetermined objectives
II. Treasury Regulations:
Performance management process
Oversight
by Parliament, provincial legislature or municipal council
Policy development
Identifying desired impacts
Evaluation and
adjustment
Strategic planning
INSTITUTION
End-year reporting
Monitoring and
management
national department
provincial department
municipality
state controlled institution
municipal entity
Implementation
Specification of
outcomes and outputs
Implementation
planning and
budgeting
Setting targets and
resource allocation
II. Treasury Regulations
Departments
Public entities
Strategic planning
Chapter 5
Chapters 29 & 30
Implementation planning
and budgeting
Chapter 5
Chapters 29 & 30
Implementation
Chapter 5
Chapter 29 & 30
Reporting
Chapter 18
18.3.1(b)
Chapter 28
III. Guidelines and frameworks issued
by the National Treasury






Treasury guidelines - Preparation of the Estimates of National Expenditure
Treasury guidelines – Preparation of Expenditure Estimates for the Medium
Term Expenditure Framework
Treasury Practice Note 4 of 2009-2010 Submission of corporate plans in
terms of section 52 of the PFMA
Treasury guidelines applicable to provincial departments - Pre-determined
indicators and targets.
Provincial Budget and Programme Structures for publication - Budget.
Framework for strategic plans and annual performance plans, issued by the
National Treasury, August 2010. (Note: Although the principles in this
Framework will only be audited with the 2011-12 audit cycle the NT
encourage all auditees to implement the principles as soon as possible).
III. Annual report guidance
Format and content of reporting on pi
Departments (national & provincial):

Under programme performance section in AR

Reporting requirements as per guide:

Must report on each and every performance measure
and target specified in its strategic and performance
plan

Where unable to do so, this must be stated explicitly

State the reasons for major variances between target
and actual
III. Annual report guidance
Format – Departments (national and provincial)
SubOutputs Performance
programme
measures
/service
delivery
indicators
Reasons for major variances
Actual
performance
against target
Target
Actual
III. Annual report guidance
Format – Public entities
Goal
Key
Performance
indicator
Target
Performance
results
Reason
for
variance
IV. NT Framework for managing programme
performance information



Applicable to all entities in the national, provincial and
local spheres of government
Copies available at
http://www.treasury.gov.za/publications/guidelines
Contents:







Introduction
Planning, budgeting and reporting
Key performance information concepts
Developing performance indicators
Managing performance information
Publishing performance information
Roles and responsibilities
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
AG strategy to audit performance information
■ Phase-in approach by the AGSA since 2005-06 together with National
Treasury
■ Stakeholder engagements to clarify approach and essence of AOPI has
taken place and will continue throughout 2011
■ Summary of findings for 2010 arising from the audit of reporting on
predetermined objectives:
.
18
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
AGSA audit approach – 10/11 and beyond




Understanding and testing of the internal policies, procedures
and controls related to the management of performance
information.
Understanding and testing of systems and controls relevant to
collecting, monitoring and reporting performance information.
Audit and confirm:
- Existence of performance information
- Consistency of performance information between:
 Strategic/annual performance plan, quarterly reports and
annual performance report
- Presentation in annual report
Audit and compare reported performance information to relevant
source documentation and conduct procedures to ensure validity,
accuracy and completeness of reported performance information.
Audit criteria
Main criteria
Sub-criteria
1. Compliance with reporting
requirements
Existence
Timeliness
Presentation
2. Usefulness
Measurability
Relevance
Consistency
3. Reliability
Validity
Accuracy
Completeness
Performance information framework
AGSA recognises the following as sources of criteria against
which the performance management system and annual
performance report will be evaluated as a basis for an audit
conclusion/opinion:



All relevant laws and regulations
Framework for the managing of programme performance information,
issued by the National Treasury
Relevant frameworks, circulars and guidance issued by the National
Treasury and the Presidency regarding the planning, management,
monitoring and reporting of performance information.
Submission of performance information
to AG
All departments and entities must submit the annual
performance information for audit purposes with the annual
financial statements by 31 May to enable the auditors to perform
the necessary final audit procedures.
Audit reporting
Management report (interim and final)

Report on all material shortcomings identified during
execution of audit procedures and audit programmes
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
Audit reporting
Audit report 2010-11:

No separate audit opinion on performance information in audit report
BUT an indication what the impact on audit opinion would have been
in an annexure to the management report
Audit report – way forward:

One audit report containing audit opinion on financial statements,
other matters and audit opinion on performance information

Audit opinion on performance information to be report under “other
legal and regulatory responsibilities” heading in audit report

Format:




Audit opinion: Unmodified or qualified or adverse or disclaimer of opinion
Basis for qualified or adverse or disclaimer of opinion
Emphasis of matter
Other matters
Audit report - examples
Qualified audit opinion: (audit findings are material)






Lack of reporting on all the objectives, indicators and targets as per
the approved strategic or annual performance plan
Reporting on objectives, indicators and targets in addition (not
approved) to those as per the approved strategic or annual
performance plan
Reasons for variances between planned and actual performance is
not included
Logical link between objectives, indicators and targets do not exist
Objectives, indicators and targets not consistent between plan and
annual performance report
Changes to planned objectives, indicators and targets are not
disclosed
The above can lead to adverse or disclaimer of audit opinions in
the case of audit findings being pervasive
Audit report - examples
Qualified audit opinion: (audit findings are material)




Lack of effective, efficient and transparent systems and internal
control to provide sufficient, appropriate audit evidence to
substantiate reported performance information
Sufficient audit evidence not provided to substantiate reported
performance information
Evidence provided to substantiate reported performance information
not valid, accurate or complete
Annual performance report was provided too late to conduct any
audit work on reported information
All of the above can lead to a disclaimer of opinion in the case of
audit findings being pervasive
Outline






Background
Legislative requirements
AG strategy to AoPI
Audit approach
Audit reporting
Role of the internal auditor
ROLE OF THE INTERNAL AUDITOR
Annual internal audit plan to identify planned audit work relevant to:

Performance management

Performance measurement

Performance reporting at different levels within the department or entity
Internal auditors to assess and audit the following:

Risks and control measures over performance information

Alignment of objectives, indicators/measures and targets between strategic/annual
performance plan, budget, quarterly report and annual report.

Risks and control measures of the systems used to manage and report
performance information (this should include both manual and electronic systems)

The accuracy, completeness and validity of performance information reported in
quarterly and annual report
DISCUSSION AND
QUESTIONS
Click to edit Master subtitle style