Briefing to the Portfolio Committee on The Department of Agriculture, Forestry and Fisheries and its entities on the audit outcomes for the 2013/2014 financial year Presenters: Meisie Nkau and Fanie Kok 14 October 2014

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 presentation To provide members of parliament with the necessary information/guidance on the audit outcomes for the portfolio to enable the Portfolio Committee to effectively execute their oversight function One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations.

Audit outcomes of the portfolio (AGSA audits) Stagnation in audit outcomes Audit outcomes area Financial statements (F) Compliance with legislation (C) Performance reports (P) One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations. Unqualified Qualified Adverse/disclaimer Audits outstanding With no findings in audit report With findings in audit report

Audit outcomes for the portfolio Number Auditee Movement 2013-14 audit outcomes Findings on predetermined objectives Findings on non-compliance Audit opinion Predetermined objectives Compliance with legislation Reported information not useful Reported information not reliable Material misstatement or limitations in submitted AFS Unauthorised, irregular, as well as fruitless and wasteful expenditure Expenditure management Audit committees Internal audit Strategic planning and performance management Transfer and conditional grants Procurement management Departments   1 Agriculture, Forestry and Fisheries Public entities 2 Agricultural Research Council 3 Marine Living Resources Fund 4 National Agricultural Marketing Council 5 Onderstepoort Biological Products Ltd Public entities (Not audited by the AGSA) 6 Ncera Farms (Pty) Ltd 7 Perishable Products Export Control Board Unqualified Qualified Adverse/disclaimer Audits outstanding With no findings in audit report With findings in audit report

Audit outcomes of the portfolio 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 One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations. DAFF DAFF DAFF DAFF DAFF NAMC OBP No matters reported Reported in audit report

Audit outcomes for the portfolio Assurance levels First level Senior management Accounting officer/authority Executive authority Second level Internal audit unit Audit committee Third level Portfolio committee Provides assurance Provides some assurance Provides limited/ no assurance Vacancy Not established

Audit outcomes for the portfolio Key controls Audit areas Financial statements Performance reports Compliance with legislation Effective leadership 5 4 1 Human resources controls 3 2 4 1 ICT governance and controls 1 3 Audit action plans 5 3 2 1 Proper record keeping 3 2 1 4 Daily and monthly controls 3 2 1 Review and monitor compliance 3 2 1 Good Concerning Intervention required Not assessed

Audit outcomes for the portfolio Quality of submitted financial statements Quality of submitted performance reports Supply chain management Financial Health Human resource management Information technology Good Concerning Intervention required

Audit outcomes for the portfolio Most common root causes Slow responses by management A root cause at auditees 4 Key officials lack appropriate competencies A root cause at auditees 2 Lack of consequences for poor performance and transgressions A root cause at auditees 1 Improved Unchanged Regressed

Audit outcomes for the portfolio Status of key commitments by minister Align the performance agreements of senior management with the departments strategic goals. Implement a plan to identify specific areas where service delivery will take place. Ensure linkage between the budget to the targets in the strategic plan. Checks and balances to ensure credibility and completeness of financial and performance reports will be implemented. Plan to support agricultural schools and encourage youngsters to study in the agricultural field. Collaborate with the provincial MECs to ensure proper monitoring and evaluation of DoRA funds. Strengthen the monitoring and evaluation unit within the department. Empower the internal audit function to be fully effective and functional. Manage deviation from the procurement process in a transparent manner. Investigate ways to ensure that the Marine Living Resource Fund establish their own board to enable better oversight responsibility. Not implemented In progress Implemented New

Oversight model OVERSIGHT: Parliament, provincial legislature or municipal council Identify desired impacts Assess and adjust Specify performance indicators Monitor and take Set targets corrective action and allocate resources Policy development Strategic Planning Accountability INSTITUTION National department Provincial department Municipality Public entity Municipal entity Operational planning and budgeting AGSA advises the committee members on the Interim work done the Annual Performance Plan. Budgeting process including the Medium Term Budgeting Framework. Quarterly reporting done throughout during implementation on both performance and budget. End year reporting includes budget review processes to determine whether money spent is in line with Targets achieved. End-year reporting Implementation and in-year reporting

Oversight component - Portfolio committee mandate Role of Portfolio Committees (Rule 201) consider, amend, approve or reject legislation (bills in its portfolio) 1. Legislation consider and approve budgets and monitor expenditure of the Departments and entities reporting to them 2. Budgets consider progress reports (monitoring) from line-function departments, and provincial and local government authorities and entities on their respective mandates 3. Mandates ensure that all appropriate executive organs of state in its portfolio are held accountable for their actions (oversight); and 4. Accountability conduct oversight over the executive authority and consult/liaise with any other executive organ of state and make recommendations 5. Oversight

Are the targets realistic (can it be done) Considerations for Portfolio Committees when dealing with performance monitoring Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan Does the entity have adequate resources (human and financial) available to achieve predetermined objectives Are the targets realistic (can it be done) How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.) The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports) The Portfolio committee should approve and track changes to strategic plans and annual performance reports

Support oversight – complimentary mandate Senior management Accounting officers/ authority Executive Required assurance levels Extensive Management’s assurance role Senior management – take immediate action to address specific recommendations and adhere to financial management and internal control systems Accounting officers/ authority – hold officials accountable on implementation of internal controls and report progress quarterly and annually Executive authority – monitor the progress of performance and enforce accountability and consequences Management assurance First level of assurance Oversight assurance Second level of assurance Coordinating / Monitoring institutions Internal audit Audit committee Extensive Required assurance levels Oversight’s assurance role National Treasury/ DPSA – monitor compliance with laws and regulations and enforce appropriate action Internal audit – follow up on management’s actions to address specific recommendations and conduct own audits on the key focus areas in the internal control environment and report on quarterly progress Audit committee – monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans Independent assurance Third level of assurance Oversight (portfolio committees / councils) Public accounts committee National Assembly Extensive Required assurance levels Role of independent assurance Oversight (portfolio committees) – review and monitor quarterly progress on the implementation of action plans to address deficiencies Public accounts committee – exercise specific oversight on a regular basis on any report which it may deem necessary National Assembly – provide independent oversight on the reliability, accuracy and credibility of National and provincial government

How does clean administration improve service delivery Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY Robust financial performance management systems Oversight and accounta-bility of all Independent and relevant reporting by the AG Commit-ment and ethical behaviour Robust financial and performance management systems Transparent and stable reporting systems Budgeting and planning processes Focussed information management platforms Strong internal audit capabilities Oversight and accountability Reporting to enable effective oversight Applying consequences for transgressions and poor performance Commitment and ethical behaviour by all Visible commitment by all players in the public service Demonstrated impeccable ethical behaviour and professionalism Auditor General Independent and relevant reporting by the AG Value-adding input expressed by the AG

Accountability and remedies to address transgressions and poor performance A common reaction to the general reports relates to the questions posed by many, including key role players in government, about the need for accountability and consequences and how these can be enforced. Legislation provides the answer to this question as it clearly defines accountability and the remedies. Details are available on pages 44 to 65 of our booklet: In Brief: The Auditor-General of South Africa

Accountability and remedies to address transgressions and poor performance This AGSA booklet highlights the legislation that enables remedies to be applied where national and provincial departments are guilty of transgressions and poor performance. It addresses the following typical matters reported in the general reports: Failure to comply with legislated obligations and responsibilities Unauthorised, irregular and fruitless and wasteful expenditure Possible fraud and corruption Poor work performance – officials and suppliers Other non-compliance with legislation

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