Briefing to the Portfolio Committee on Home
Affairs
Audit outcomes of the Home Affairs portfolio for the 2014-15
financial year
13 October 2015
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.
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Purpose of the presentation
Annually oversight committees set aside time to focus on assessing the
performance of departments. On completion of the process, portfolio
committees are required to develop department-specific reports, namely
budgetary review and recommendations reports (BRRR) which express the
committee`s view on the department’s budget for recommendation to the
National Treasury ahead of the following year`s budget period.
Our role as the AGSA is to reflect on the audit work performed to assist the
portfolio committee in its oversight role in assessing the performance of the
departments taking into consideration the objective of the committee to
produce a BRRR.
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1. Overall audit outcomes for Home Affairs portfolio
2014-15
PFMA
Unqualified no
findings
Unqualified with
findings
Qualified with
findings
Adverse with
findings
Disclaimer with
findings
3 auditees
4 auditees
4 auditees
4
2. Auditor-General six key focus areas
Quality of submitted
financial statements
Quality of submitted
performance reports
Compliance with
legislation
2014-15
PFMA
Good
Concerning
Intervention
required
Financial health
Human resource
management
Information
technology
Improvement
Stagnant or
limited
progress
Regressed
5
3.1 Quality of submitted financial statements
2014-15
PFMA
Outcome
after corrections
2014-15
Outcome if
NOT corrected
1 auditee
Financially unqualified
with / without findings
Avoided qualifications
by correcting material
misstatements
during audit process
2013-14
Outcome if
NOT corrected
33%
(1)
Financially qualified
(qualified/ disclaimed
with findings)
Outcome
after corrections
1 auditee
67%
(2)
6
3.2 Quality of annual performance reports
Annual performance reports of 33% were reliable and useful
compared with 33% in the previous year
2014-15
PFMA
With no findings
With findings
Improved
Usefulness
Reliability
Stagnant or
little
progress
Regressed
All auditees that submitted information, did so in time
for audit
7
3.3 Quality of submitted annual performance
reports
Outcome
after corrections
2014-15
Outcome if
NOT corrected
0 auditee
Avoided findings by
correcting material
misstatements
during audit process
2013-14
Outcome if
NOT corrected
2014-15
PFMA
Annual performance
report not materially
misstated
Annual performance
report contained
material
misstatements
Outcome
after corrections
0 auditees
8
3.4 Most auditees did not comply with legislation
in the following areas
Quality of annual
financial statements
submitted
Prevention of unauthorised,
irregular and/ or fruitless and
wasteful expenditure
2014-15
PFMA
Management of
procurement and or
contracts
Good
Concerning
Intervention
required
Management of
strategic planning
and performance
Human resource &
consequence
management
Internal audit &
Audit committee
Improvement
Stagnant or
limited
progress
Regressed
9
3.5 Financial health of the portfolio
Focus areas Status
for
financial
health
Comment
Accrual /
Payables
Payables which exceed the payment term of 30 days as
required in Treasury Regulation 8.2.3 amount to R72.1
million. This amount, in turn, exceeds the voted funds to be
surrendered of R0.37 million as per the statement of
financial performance by R71.73 million. The amount of
R71.73 million would therefore have constituted
unauthorised expenditure had the amounts due been paid
in a timely manner.
2014-15
PFMA
Good
Concerning
Intervention
required
10
10
3.6 Information technology
2014-15
2014-15
PFMA
PFMA
Status on the information technology focus areas
Departments
Security
management
User access
management
IT service
continuity
IT governance
Public entities
Good
Concerning
Intervention
required
Improved
Stagnant or
little progress
Regressed
11
4. UIFW expenditure definitions
2014-15
PFMA
Unauthorised
expenditure
Expenditure not in
accordance with the
budget vote
Irregular
expenditure
Expenditure incurred in
contravention of key
legislation
Fruitless and
wasteful
expenditure
Expenditure that should
not have been incurred
(incurred in vain that could
have been avoided and no
value for money)
12
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4.1 Unauthorised expenditure for portfolio
2014-15
PFMA
Identified
by auditees
Identified
by auditors
13
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4.2 Irregular expenditure for portfolio
2014-15
PFMA
Identified
by auditees
Identified
by auditors
14
14
4.3 Fruitless and wasteful expenditure for portfolio
2014-15
PFMA
Identified
by auditees
Identified
by auditors
15
15
5. Driver of key controls for portfolio
2014-15
PFMA
Governance
Audit committee
Internal audit
Risk management
IT systems controls
Compliance
Good
Reporting
Processing and reconciling
controls
Proper record keeping
IT governance
Action plans
Policies and procedures
Oversight responsibility
Effective leadership culture
Department & Entities
HR management
Drivers of internal control
Financial & performance
Leadership
management
Concerning
Intervention
required
Improvement
Department of Home Affairs
Government Printing Works
Stagnant or
little
progress
Electoral Commission
Regressed
16
6. Combined assurance – complimentary mandate
Management assurance
First level of assurance
Senior
management
Accounting
officers/
authority
Executive
authority
Required assurance levels
Extensive
Extensive
Extensive
Management’s assurance role
Oversight assurance
Second level of assurance
Coordinating /
Monitoring
institutions
Internal
audit
Audit
committee
Required assurance levels
Extensive
Extensive
Extensive
Oversight’s assurance role
• Senior management – take
• National Treasury/ DPSA – monitor
immediate action to address specific
compliance with laws and regulations
recommendations and adhere to
and enforce appropriate action
financial management and internal
• Internal audit – follow up on
control systems
management’s actions to address
• Accounting officers/ authority –
specific recommendations and
hold officials accountable on
conduct own audits on the key
implementation of internal controls
focus areas in the internal control
and report progress quarterly and
environment and report on quarterly
annually
progress
• Executive authority – monitor the
• Audit committee – monitor risks and
progress of performance and enforce
the implementation of commitments
accountability and consequences
on corrective action made by
management as well as quarterly
progress on the action plans
Independent assurance
Third level of assurance
Oversight
(portfolio
committees /
councils)
Public
accounts
committee
National
Assembly
Required assurance levels
Extensive
Extensive
Extensive
Role of independent assurance
• Oversight (portfolio committees)
– review and monitor quarterly
progress on the implementation of
action plans to address
deficiencies
• Public accounts committee –
exercise specific oversight on a regular
basis on any report which it may deem
necessary
• National Assembly – provide
independent oversight on the
reliability, accuracy and credibility
of National and provincial government
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2014-15
PFMA
First
level
6.1 Assessment of assurance providers for
portfolio
Improvement
Second
level
Stagnant or
little
progress
Third
level
Regressed
Provides
assurance
Provides some
assurance
Provides limited/
no assurance
Vacancy
Not
Established/
Evaluated
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7. Root causes should be addressed (top three)
Inadequate reconciliations and quality of annual financial statements
•
Accounting records were not accurate, valid and complete for all areas. Lack of daily and monthly reconciliations .
2014-15
PFMA
2014-15
2013-14
Slow response by management
Improved
Stagnant or
little
progress
•
Action plans compiled by management were not addressed in a timely manner to ensure that internal control
deficiencies were addressed to prevent repeat findings.
Regressed
Organisational culture
•
Information was not provided in a timely manner for audit and management did not design and implement standard
operating procedures in all areas.
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7.1 Root causes & Recommendations (top three)
Root causes
Recommendation
Inadequate
reconciliations and
quality of annual
financial statements
Standard operating procedures/daily and monthly processing and
reconciling controls must be implemented.
2014-15
PFMA
Sufficient and appropriate accounting records must be maintained
for non-financial system balances.
Oversight and accountability from management must be improved.
Slow response by
management
Action plans must be detailed, establish roles and responsibilities
and must be implemented in a timely manner.
MOA’s must be developed, assessed and implemented.
Improved oversight: accounting officer/accounting authority/audit
committee must establish and communicate principals for
accountability and consequence management.
Organisational
culture
Information required for audit and management’s responses to matters
raised during the audit and by monitoring institutions must be provided
in a timely manner.
Compile complete quarterly financial statements.
Prioritise the development and implementation of standard operating
procedures, including day-end, month-end, year-end and compliance
processes.
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8. Minister commitments to address root causes
Not implemented
In progress
Implemented
2014-15
PFMA
New
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Questions