Department of Agriculture, Forestry and Fisheries (DAFF)

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Presentation transcript:

Department of Agriculture, Forestry and Fisheries (DAFF) Audit outcome for year ended 31 March 2012 17 October 2012

Reputation promise/mission The Auditor-General of South Africa 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. 2

To brief the Portfolio Committee on: DAFF Portfolio Purpose of the meeting To brief the Portfolio Committee on: DAFF Portfolio Subject Slide number 1.Portfolio Audit outcomes and key control status 4 - 8 2.Progress on previous commitments 9 3.Recommendation commitments for clean administration 10 -13 4. Key focus areas 14 5. Other matters of interest 15 - 16 6. Pyramid of Accountability 17 7. Combined level of assurance 18 3

1. Portfolio audit outcomes and key control status Opinions 2010/11 2011/12 Entity Financial Statements Predetermined Objectives Compliance Department of Agriculture, Forestry and Fisheries Unqualified opinion Adverse Expenditure management, Financial and performance management , HR Management supply chain management, Human resource plan and material adjustment on financial statements Onderstepoort Biological Products Ltd Qualified Findings on material adjustment on financial statement, Expenditure management, Internal audit and audit committee. Findings on strategic planning and performance management, assets management, internal audit, supply chain managements and expenditure management 4

1. Portfolio audit outcomes and key control status Opinions 2010/11 2011/12 Entity Financial Statements Predetermined Objectives Compliance NAMC Unqualified No Material Findings None identified ARC Findings on material adjustment on financial statements and expenditure management Findings on material adjustment on financial statements and assets management PPECB 5

1. Portfolio audit outcomes and key control status Opinions 2010/11 2011/12 Entity Financial Statements Predetermined Objectives Compliance Ncera Farms Unqualified Adverse Findings on strategic planning, Audit committee and internal audit Disclaimer Findings on Material adjustment on financial statements, Audit committee, risk management strategy and internal audit MLRF No Material Findings Findings on audit committee. 5

1. Portfolio audit outcomes and key control status Dept/Entity Key control status (regression/ improvement/ unchanged) Leadership Financial and Performance Management Governance DAFF Onderstepoort Biological Products Ltd NAMC ARC 6

1. Portfolio audit outcomes and key control status Dept/Entity Key control status (regression/ improvement/ unchanged) Leadership Financial and Performance Management Governance PPECB Ncera Farms MLRF 6

Further analysis on DAFF key controls classified as causing concern

2. Progress on prior year commitments Commitment made DAFF OBP NAMC ARC PPECB NCERA Farm MLRF Current Status Comment Commitment to address findings identified during the audit. X Intervention required overall There are repeat findings on the Pre-determined objective. For the department, repeat findings on compliance on Supply chain management. Commitment to appoint/Increase capacity of Internal Audit In progress The department have increased capacity on internal audit, however, the internal audit plan is still to be tabled for thee audit committee for approval. Commitment to reassess the composition of the chairperson of the board and audit committee Addressed Commitment Addressed

3. Recommended commitments for clean administration DAFF OBP NAMC ARC PPECB NCERA FARM MLRF Consultants skills transfer to be monitored and evaluated monthly progress reports from consultants on skill transfer  Effective implementation of approved organisational structure, taking into account the: skills gap identified and develop IT systems producing credible financial and non financial information bodies with skills relevant to finance, performance , compliance and information system Sustainability of in house Internal Audit Monitoring and compliance unit strengthened responsibility(compliance) Management self assessment using key control document. 10

3. Recommended commitments for clean administration DAFF OBP NAMC ARC PPECB NCERA FARM MLRF Monitor compliance with policies and procedures and take decisive action on non compliance  Monitoring of bad planning by entities resulting in an increase in non compliance with PFMA, Treasury Regulations etc. Identify and monitor strengths and weaknesses of the portfolio (Sustainability) Develop checks and balances to ensure credibility of all information. Monthly financial and performance reports that include disclosure items In line with best practice, update SCM policies to ensure that approval of requests to deviate from normal SCM process by the accounting officer/authority is based on recommendations by the bid adjudication committee based on their evaluation of the submission for such a request. 11

3. Recommended commitments for clean administration DAFF OBP NAMC ARC PPECB NCERA FARM MLRF Effective utilisation of Internal Audit: review internal audit scope to include adequate coverage of AOPO and Compliance in their plans  Training programs to incorporate: understanding of why AFS are prepared (for operational management purposes, eg analysis of financial performance ) understanding of why key controls are essential understanding of why service delivery reporting is critical Continuous professional and skills development for all staff and monitoring thereof Quarterly reinforcement of clean administration processes by Accounting Officer 12

Supply Chain Management Material errors in AFS submitted 4. Key focus areas Auditee Supply Chain Management AOPO HR IT controls Material errors in AFS submitted DAFF No improvement Some improvement OBP NAMC No matters ARC Regression PPECB NCERA Farm No Improvement MLRF 13

5. Other Matters of interest Auditee Irregular Expenditure Fruitless and Wasteful Movement 2010/11 2011/12 DAFF R1 060 000 R34 750 000 R3 000 R15 000 OBP R7 900 000 R11 950 000 R94 631 R474 187 NAMC R0 ARC R2 320 000 R1 020 000 R8 632 PPECB 14

5. Other Matters of interest Auditee Irregular Expenditure Fruitless and Wasteful Movement 2010/11 2011/12 NCERA Farm R0 MLRF R8 756 14

PYRAMID OF ACCOUNTABILITY Speaker/ Legislature SCOPA/PC’s Executives Accountable Leadership Audit Committee Internal Audit Skills, competence ethics and integrity Daily, weekly, monthly financial and performance disciplines Embedded systems of IC underpinned by policies and procedures Monthly reporting on financial and performance/ Interim financial statements Understanding of requirements as well as cause and effect Accountable and transparent government "Public Accountability" Oversight Flow of credible information Re-enforcing accountability at all levels, escalation and robust communication Reporting and governance "Assurance Agents" The bottom layer of the pyramid illustrates the foundation for the first line of defence in administration (that ensures credibility of information) being skills, competence, etc; embedded systems of IC; understanding of requirements, cause and effect. Daily, weekly monthly financial and performance disciplines (including reporting will be fully supported and fit into this environment easily. For the reporting and governance layer, the foundation is effective and accountable leadership and effective internal audit and they support the audit committee with credible information for them to be effective in carrying out their functions. With both layers functioning properly, credible information will be submitted and reported to oversight committees. "First in of defence" Administration 15

Independent assurance Combined Assurance Providers in the South African Public Sector Management assurance First level of assurance Oversight assurance Second level of assurance Independent assurance Third level of assurance Senior manage- ment Accounting Officer / Authority Executive Authority Coordinating / monitoring Institutions Internal Audit Audit Committee Oversight (Portfolio committee and councils) Public Accounts Committee External audit Required Assurance Levels Extensive Extensive Extensive Extensive Extensive Extensive Extensive Extensive Extensive

Thank You 17