PFMA audit outcomes 2009-10 Portfolio – Minister of Police

Reputation promise 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.

Minister of Police – PFMA audit outcomes 2009-10 Summary of audit outcomes Audit outcomes Departments Public Entities 2009-10 2008-09 Opinion on financial statements:   Disclaimer - 1 Adverse Qualified Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations 2 Financially unqualified with no findings on predetermined objectives or compliance with laws Total number of audits reported on Predetermined objectives Compliance with laws and regulations 1. Compliance with laws and regulations PSIRA and ICD had findings on compliance with laws and regulations 2. The five year outcomes are reflected below; Auditee 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Audit Opinion DoP Unqualified ICD Disclaimer Qualified PSIRA * Qualification * Note 1: PSIRA was audited by AGSA for the first time 2008/09

Minister of Police – PFMA audit outcomes 2009-10 Drivers to improve audit outcomes Leadership Audit Oversight responsibility Tone at the top Action to mitigate risks Improvements noted Improvements required DoP   X  X ICD PSIRA Percentage 100% 0% 33% Oversight responsibility: Oversight to ensure accurate, valid and complete reported performance information, requires improvement at all 3 auditees.

Minister of Police – PFMA audit outcomes 2009-10 Drivers to improve audit outcomes Financial and performance management Audit Quality reliable AFS Proper record keeping Adequate systems Improvements noted Improvements required DoP  X   X ICD PSIRA

Minister of Police – PFMA audit outcomes 2009-10 Drivers to improve audit outcomes Governance Audit Risk identification Fraud Prevention Internal audit Audit Committees Improve -ments noted Improve-ments required Improve-ments noted DoP X   X    X ICD   X PSIRA

Minister of Police - PFMA audit outcomes 2009-10 Financial statement qualification areas PSIRA: Due to the Ministers commitment and intervention,PSIRA managed to resolve all 2008/09 qualifications except for VAT. The ultimate outcome of a VAT audit by SARS on the final deregistration could not be determined. Hence sufficient & appropriate audit evidence could not be obtained with regard to the existence, valuation, allocation & completeness of the VAT liability. As a result of the change in leadership commitment and guidance, ICD – Progressed from qualified to unqualified in 2009/10

Minister of Police– PFMA audit outcomes 2009-10 Material misstatements corrected (ICD and PSIRA) Audit Assets Liabilities Income Expenditure Irregular Expenditure Disclosure ICD x PSIRA

Minister of Police – PFMA audit outcomes 2009-10 Findings on reporting of predetermined objectives Category of finding Departments Public Entity 2009-10 2008-09 Non-compliance with regulatory requirements 2 1 - Reported information did not meet criteria Reported information not reliable Source information not submitted The report of predetermined objectives was not submitted for audit on 31st May 2010 Total number of audits with findings Audit DoP ICD PSIRA 2009-10 Non-compliance with regulatory requirements x   x Reported information did not meet criteria - x Reported information not reliable Source information not submitted The report of predetermined objectives was not submitted for audit on 31st May 2010 -  Total number of audits reported on 1 9 9

Minister of Police – PFMA audit outcomes 2009-10 An extract from the audit reports - No supporting source documentation Finding DOP Programme 2 – the number of escapes from police custody. The completeness of the reported target could not be established, as not all supporting source documentation (notifications forms) could be provided for audit purposes Programme 3 – percentage of organised crime related cases referred to court (% organised crime project investigations [OCPI] successfully terminated) and conviction rate. The validity, accuracy and completeness of the reported indicator could not be established as relevant source documentation (CAS printouts) could not be provided for audit purpose . ICD Sufficient appropriate audit evidence in relation to the actual reported achievement of Programme 2 (Investigation of Complaints) could not be obtained. There were also no satisfactory audit procedures that I could performs to obtain the required assurance as to the validity, accuracy and completeness of the reported information

Minister of Police – PFMA audit outcomes 2009-10 An extract from the audit reports – Reliability of reported performance information Finding PSIRA The particulars of the PSIRA’s strategic objectives and outcomes under the registration subprogram as identified and agreed on by the executive authority in the strategic plan, were not reported in the annual performance report

Minister of Police – PFMA audit outcomes 2009-10 An extract from the audit reports – Completeness of reported targets could not be verified Finding DoP Programme 2: Visible policing – police action conducted to prevent contact and property-related crimes and crimes dependent on police action for detection. The operation planning administration system (OPAM) is utilized for reporting on recoveries of cannabis. The source documentation (SAPS 13 register) used to update (support) this system is not sufficient to determine completeness of this indicator

Minister of Police– PFMA audit outcomes 2009-10 Findings on compliance with laws and regulations (PSIRA/ICD) Finding 2009-10 Percentage Lack of an efficient,, effective and transparent system of financial and risk management and internal control including an approved fraud prevention plan. 2 67% Lack of a proper system for properly evaluating all major capital projects prior to a final decision on the project ,collecting all revenue due and mechanisms in place to prevent fruitless & wasteful expenditure. 1 33% The final strategic plan and the projection of revenue and expenditure for the financial year were not submitted to the executive authority at least one month before the start of the financial year. There was no audit committee in operation throughout the year The entity accumulated surpluses without formal approval from the National Treasury Non-adherence to requirement - the accounting officer did not report the particulars of irregular expenditure discovered to the National Treasury Audit DoP ICD PSIRA Lack of effective efficient systems - x Lack of a system to evaluate capital projects Non submission of strategic plan and budget Audit Committee Accumulated surpluses Reporting of irregular expenditure to National Treasury

Minister of Police – PFMA audit outcomes 2009-10 Findings on procurement and contract management resulting in irregular expenditure Findings Number Amount ® 1. Three price quotations not invited – neither the reasons there for recorded or approved. 1 33% 2. Three price quotations not invited ; reasons for deviation not justified . 3. There were no prospective supplier list in existence. 4. Deviation from competitive bidding not justified 2 67% 5. There were neither processes for SCM officials to report breaches / non compliance nor were the SCM officials aware of the processes. 6. The SCM officials were not adequately trained 7. No risk assessment was conducted on procurement / contract management during the year. DoP ICD PSIRA 1. Three quotations not invited – reasons not recorded - x 2. Three quotations not invited – reasons not justified 3. No supplier list 4. Deviation from bidding process not justified 5. Neither processes for SCM officials/ nor SCM officials aware of processes 6. SCM officials not adequately trained 7. No risk assessment 14 14

Minister of Police – PFMA audit outcomes 2009-10 Fruitless and irregular expenditure Audit Fruiteless expenditre Irregular expenditure Disclosed in 31 May AFS Additional expenditure identified during the audit Disclosed in 31 May 2010 AFS R’000 DOP 1,127,000 - 3 399,000 ICD 14,000 145,810 PSIRA 3,575,660 Total  3,413,000 3,721,470