General Report on Audit Outcomes 2003-04 Presentation by the Auditor-General to the Standing Committee on Public Accounts 25 August 2004

General Report on Audit Outcomes Report Based on the Audit Findings from the National and Provincial Departments and National Public Entities Audits are conducted in line with South African Auditing Standards and are subject to external quality assurance processes

National Departments Review Audits of 33 of the 34 Votes finalised by 31 July 2004. Department of Foreign Affairs resubmitted Annual Financial Statements on 29 July 2004. 10 Departments (30%) out of the 33 audit reports issued, received qualified audit opinions (2002/03 - 8 Departments (24%)).

National Departments Review 4 Major areas were identified which resulted in qualifications: Limitation of scope (Lack of audit evidence) Donor funding DORA Prior year balances

National Departments Review Limitation of scope - 2 areas resulted in a limitation of scope: Income statement and balance sheet (7 departments - 18 qualification paragraphs) Disclosure notes (5 departments - 6 qualification paragraphs)

National Departments Review Lack of policies to ensure completeness of donor funds (Parliament) DORA - Fundamental deficiencies on transfer payments (Health) Unresolved matters on prior year balances (DPW)

National Departments Review - Emphasis of Matter (EOM) Transfer payments Internal control problems remains a problem and in fact particular attention needs to be drawn to asset management Reliance on Internal Audit still not satisfactory Audit committees

National Departments Review - Emphasis of Matter (EOM) Non-compliance with legislation IS Audits revealed significant shortcomings Report on SCOPA resolutions

Future Focus Financial Management Other issues Looking at linking findings to root causes as part of initiative to improve financial management 2004 and background Framework for departmental policies and procedures Continuous improvement and refinement Other issues Follow up on SCOPA resolutions to be rolled out throughout audits Report on Focus Areas to broaden “audit scope”

Focus areas Areas included in audit scrutiny that do not necessary reflect clearly when auditing financial statements. Examples include: Human Resource Management Procurement Additional focus areas will be considered during forthcoming senior management workshop

Specialised Audits Auditor-General mandates includes non regular reporting on performance aspects and special investigations. These areas currently include: Management of sick leave Housing Objective is to increase these types of reports

Consolidated financial statements First time implementation Basis of consolidation - cash and accrual 30 June deadline to submit CFS Current status Communication

Proposed Oversight and Audit Cycle 31 August - First briefing on audit outcomes for national departments September - prioritisation of reports; adoption of programme for hearings October & November - SCOPA hold priority hearings (Feb to July - further hearings) Priority resolutions available by end November Interim audits from November