30 January 2014 Department of Agriculture, Forestry and Fisheries (DAFF) Briefing to the Portfolio Committee

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.

Purpose of meeting To brief the Portfolio Committee on progress made by the department on commitments made.

Agenda Audit outcomes 2012-13 Key control assessment Key focus areas Status of commitments made Audit of Predetermined Objectives (AoPO): Q2 review comments AoPO: 2014-15 draft Annual Performance Plan (APP) audit Clean administration Pyramid of accountability Conclusion and way forward

Audit outcomes 2012-13

Audit outcomes 2012-13 Audit opinions 2012-13 Department 1 Auditee Audit opinions 2012-13 Financial audit opinion Predetermined objectives Compliance with laws and regulations Department   1 Department of Agriculture, Forestry and Fisheries (DAFF) Entities 2 Onderstepoort Biological Products Ltd (OBP) 3 National Agricultural Marketing Council (NAMC) 4 Agricultural Research Council (ARC) 5 Ncera Farms 6 Marine Living Resources Fund (MLRF) 7 Perishable Products Export Control Board (PPECB) Financially unqualified with no findings Qualified, with findings Financially unqualified with findings Adverse, disclaimer, with findings Status improved from previous year (no material findings). Same status as previous year (with material findings).   Same status as previous year (no material findings). Situation has deteriorated from prior year.

Key control assessment

Key control assessment DAFF

Key control assessment OBP NAMC

Key control assessment ARC NCERA

Key control assessment MLRF PPECB

Key focus areas

Key focus areas (Quarter 2) Human Resource Management includes the audit of consultants

Status of commitments made

Quarter 2: Commitments

Status of implementation of commitments Quarter 2: Commitments Status of implementation of commitments No Commitment Status 1. Ensure monthly reporting that is complete and accurate for financial (including disclosure notes) and performance information. 2nd Quarter Assessment: Financials – Only 6 monthly AFS are prepared with full disclosure notes not monthly. AoPO - Quarterly Monitoring Reports don’t agree to detailed listings. Not addressed. 2. Perform annual risk assessment to ensure an adequate and valued audit programme for the department. 2nd Quarter Assessment: No current risk assessment in place . The department indicated the risk assessment will be finalised in January 2014. 3. Capacitate the internal audit function to be fully effective and functional. 2nd Quarter Assessment: The internal audit is still not operating effectively, no reports issued to date etc. 4. Align performance agreements of senior management with the department’s goals. 2nd Quarter Assessment: To be followed up during interim audit. In progress. 5. Revise the staff establishment specially to ensure there is sufficient staff to carry out the monitoring and evaluation function (AoPO). 2nd Quarter Assessment: New appointments have been made in the M&E unit, however repeat findings on both usefulness and reliability has been identified during the interim audit. 6. Manage deviation from the procurement process in a transparent manner.

Audit of predetermined objectives

Audit of predetermined objectives – prior year outcomes 2012-13 Audit outcomes Compliance with regulatory requirements Usefulness Reliability E x i s t e n c T i m e l n s P r e s n t a i o C o n s i t e c y M e a s u r b i l t y R e l v a n c V a l i d t y A c u r a y C o m p l e t n s Additional matter paragraphs included in the audit report: > Material adjustments were made to the annual performance report submitted for audit. No matters reported Reported in audit report

Audit of predetermined objectives – general findings Q2 Lists provided to support targets reported do not agree to the reported targets (Reliability). No reason for variance provided (must include over achievement) and/or reason for variances not auditable (Usefulness). Targets not verifiable (Usefulness). Target not specific and measurable and/or indicators do not link to targets (Usefulness).

Audit of predetermined objectives – 2014-15 draft APP Usefulness of 2014-15 DRAFT annual performance report s During our review of the 2014-15 annual performance plan we have identified the following: Various targets in the APP do not tie up with the targets listed in the strategic plan Lack of Technical Indicator Descriptions (TID) or incomplete TIDs Various targets included in the APP not included in the Strategic Plan Various targets unverifiable DAFF still has the opportunity to correct the findings before submission of the final draft APP for approval.

Clean administration

Clean Audit Clean administration Financially Unqualified AFS No material findings on Predetermined Objectives No material findings on Compliance Financially Unqualified AFS

Pyramid of accountability

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 Flow of credible information Re-enforcing accountability at all levels, escalation and robust communication

Conclusion and way forward

Conclusion and way forward The above assessment indicates that there is still work to be done in the movement towards clean administration however if focus is placed on addressing the root causes through implementation of the recommendations in the way forward, clean administration can be achieved. Overall assessment Appointment of audit committee members in terms of the Treasury Regulations; Predetermined Objectives (AoPO);and Capacitating internal audit. Focus Areas Focussed quarterly key controls assessments and discussions; Action against transgressors (consequence management); and Timely implementation of action plans to address root caused and not findings. Way forward

Thank You