2005-06 Overview of National Audit Outcomes Presentation to SCOPA, SA Fakie, Auditor-General, 18 October 2006

Overview Audit opinions 2005-06 analysed – situation has deteriorated Challenges ahead Communication and participation of senior management in the audit process Leadership role of National Treasury Guidance and advice to departments Other areas eg. IT systems and performance information

Governance Arrangements (G) Strategic Issues People (P1) Process (P2) Governance Arrangements (G) Skills Efficient process Simple, Effective, Understandable Accountability/ Consequences Vacancies Performance management systems Checks and balances In year monitoring Monthly management accounts Audit committee Internal audit External audit Limitation of IT systems

Summary of the Audit Opinions of National Votes 2005 -2006 2004-2005 Disclaimer 1 Qualified (except for) 10 7 Matters emphasised 21 24 Clean reports 2 Qualified Departments (Number of consecutive years in brackets) Correctional Services (5) Defence (4) Health (3) Home Affairs (6) Independent Complaints Directorate (1) Justice (1) Labour (2) Land Affairs (1) Parliament (3) Transport (2) Water Affairs and Forestry (1)

What are the qualification issues? Traditional qualification issues Asset management Accounts receivable and revenue Traditional matters emphasised that have been elevated to qualification issues Personnel Other expenditure

Qualifications analysed by cluster 2005-06 2004-05 Justice and Protection 4 2 Economic services and infrastructure 3 1 Social services Central Government Administration Financial and administration service Qualified Departments (Number of consecutive years in brackets) Correctional Services (5) Defence (4) Health (3) Home Affairs (6) Independent Complaints Directorate (1) Justice (1) Labour (2) Land Affairs (1) Parliament (3) Transport (2) Water Affairs and Forestry (1)

Best and worst audit opinions Disclaimer Independent Complaints Directorate Six Public Entities Most Qualification Issues Department of Correctional Services Home Affairs Clean Reports Public Service Commission Public Enterprises

Quality and timeliness of audit information Submission of substandard financial statements and the late submission of supporting documentation resulted in material amendments to financial statements after submission Lack of involvement of senior departmental management does affect the audit process Forums such as audit committees and audit steering committees are not being used

National Treasury responsibilities - building block of good financial reporting Standards Guidance IT systems

Performance information Lack of information provided by Departments and other entities Despite the phased in approach, there were still reporting items in audit reports for 17 National Departments