Internal Audit Plan and Its Alignment to Risk Strategy Makhosandile Kwaza

Are Internal Auditors Watchdogs?

If you do not plan any way is the correct way

What is Internal Audit Plan

Legislative framework Section 165 (2) (a) of the MFMA requires that the Internal Audit of a municipality or municipal entity to prepare a risk-based audit plan and an internal audit program for each financial year. On the other hand, section 45 (a) of requires that the results of performance management in term of section 41 (1) (c) be audited as part of the municipality’s internal auditing processes.

International Standards for Professional Practice of Internal Auditing (ISPPIA) Standard 2010 requires that the chief audit executive to establish risk-based plans to determine the priorities of the internal audit activity, consistent with the organization’s goals. Standard 2010.A1 – The internal audit activity’s plan of engagements must be based on a documented risk assessment, undertaken at least annually. The input of senior management and the board must be considered in this process.

Risk Management A result of the risk assessment Strategic level – municipal wide risks Departmental level – departmental risks IA plan takes into account strategic risks; departmental risk and other factors like AG findings

Time allocation

Linking your plan to strategic risk No. Objective Risk name Context / Root cause 2012/2013 1 To provide quality and sustainable drinking water in an integrated manner, to all consumers in the district Climate change, drought and floods (Sustainability) Restricted water availability (worst drought in 130 years Climate change and associated disasters Lack of integrated water reporting 2 To increase internal and external project spending to 80% of projected expenditure by 2015 Poor project management Co-ordination of activities Lack of monitoring and evaluation Roll over's Procurement deviation of SCM policy Project Management Capacity (Skills & Personnel) IDP/Budget process Supply Chain Management Processes

Linking your plan to strategic risk No. Objective Risk name Context / Root cause 2012/2013 3 Provision of adequate, portable and sustainable water services infrastructure by 2014 Poor asset management Outdated infrastructure (Inherited old infrastructure) Increased maintenance costs Loss of revenue opportunity on water and sanitation services Underutilisation of resources Poor fleet management Poor implementation of asset disposal policy Lack of asset management planning Infrastructure asset management review Asset management review Fleet management review Asset disposal review 4 To ensure that the district remains financially viable Inadequate funding and revenue management Insufficient funds to meet mandate (MTEF) Inefficient utilisation of existing funds (poor cost itemisation) Poor systems – revenue collection Customer care Leakages – water 2/3 (two thirds) of district dominated by indigent dependent on grant funding Revenue management review Water leakages review

Operational plan