Portfolio Committee on Arts and Culture 15 March 2010

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.

Focus areas Separation of powers Content of the annual report

Separation of Powers

TWO DIMENSIONS OF OVERSIGHT From planning to audit: a closer look at parliament’s oversight role TWO DIMENSIONS OF OVERSIGHT FINANCIAL/FIDUCIARY NON-FINANCIAL/RESULTS EX ANTE Scrutiny of financial forecasts: How much money will be used by whom for which type of input? In other words, is government doing things right? Scrutiny of forecasts of expected achievements. What is tax payers’ money expected to buy? In other words, is government aiming to achieve the right things? Budget Preparation Phase Legislative Phase In-YEAR Monitoring the use of money during the spending year. Is spending on track? Will spending be more, or less? Is government spending on what it said it would? Scrutiny of achievements of spending during the spending year. Is the pace of implementation of policies and legislation as projected in budget documentation? THE BUDGET CYCLE 3 PHASES OF OVERSIGHT Implementation Phase EX POST Scrutiny of financial outturns (by main categories of financial classification). Was there compliance with Parliament’s appropriations Scrutiny of actual achievements. What did taxpayers’ money buy? Did government achieve what it said it would? Was money used effectively, efficiently? Reporting and Audit Phase

Contents of the Annual Report Content Introduction by Executives Performance information Report by the Audit Committee Report by the Auditor General Human Resource management SCOPA resolutions

Important information: Performance information Consistent with approved strategic objectives Format provide: Objectives Output Measurable target Actual Performance results Reason for Variances SERVICE DELIVERY!

Information: Report of the Audit committee Members Number of meetings Effectiveness of internal control Quality of quarterly reports

Report by the Audit Committee : State Theatre of South Africa (p36 of annual report) System of internal control was not effective Matters previously reported has not been addressed Qualification on income has been addressed on a sustainable basis Qualification on assets must be addressed by 31 March 2010 Findings on performance information have been attended to

Report of the Auditor-General Financial statements Audit opinion on financial statement Emphasis of Matter Non Compliance Control deficiencies Governance requirements Other reporting responsibilities Non compliance Relevance Reliability Investigations

Audit opinions Unqualified with no other matters (Clean) The ideal Unqualified with other matters Financial statements were corrected due to material misstatements Ineffective internal audit/ audit committee Non compliance with laws and regulations Qualified “Except for” Adverse Material and pervasive Disagreement Disclaimer Material and pervasive limitation of scope

PFMA Audit Outcomes 2008-09 – Arts and Culture Summary of audit opinions 2007-08 Disclaimer 2 Adverse Qualified 1 4 5 Financially unqualified (with other matters) 15 10 no other matters) 6 8 Total reported on 25 Total not reported on Total Type of audit opinion Departments Entities 12 12

Key internal control element PFMA Audit Outcomes 2008-09 Drivers of audit outcomes: Fundamental elements of internal control Key internal control element Leadership Tone from the top Commitment and accountability Availability of management Financial management Day to day responsibilities and processes (Reconciliations, monitoring and review) that will ensure quality financial statements Clear understanding of roles and responsibilities Governance Effective audit committee Effective internal audit Risk management

Financial Statements Notes highlighted in audit report Compensation compared to total expenditure Significant variances year on year Fruitless and wasteful expenditure Irregular expenditure Disciplinary cases and action Department (unauthorised and virement)

Human Resource Management Compensation in relation to total budget Vacancies Employment changes and reasons why staff leave the entity Sick leave Labour relations Skills development Performance rewards

Questions?