REPORT TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON THE FINDINGS OF THE AUDITOR GENERAL AND THEIR RECOMMENDATIONS ON THE ANNUAL REPORT

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING 1 Irregular expenditure – failure to advertise the Internal Audit and Consulting Services Recommendation Request for ratification from the Department of National Treasury ACTION A letter requesting for ratification of the irregular expenditure was prepared and sent to the National Treasury on 29 th April 2010.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING 2 Donations that were received on behalf of the Department of Mineral Energy Recommendation Regulator to communicate the contravention with the DME and recommend that the unspent portion of the sponsorship received be paid into the relevant revenue fund. ACTION The Regulator no longer receives donations on behalf of the DME. The account has also been closed.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING 3 Irregular expenditure on the opening of an account Recommendation The Regulator to pay the unspent portion of sponsorship amount into a relevant revenue fund. ACTION The account was closed as at 30 th March 2010

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING 4 Major decisions were taken without the formation of a quorum. (Audit Committee) Recommendation Confirmation of a quorum should be included as part of the agenda for each meeting and the Chairperson should verify that the quorum as per Charter has been met. Charter must be reviewed to ensure the committee is able to meet its requirements in terms of its composition. ACTION The audit charter was amended as per the recommendation. All audit committee meetings held during the 2009/2010 financial year met quorum requirements.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING 5 Non compliance with legislation 5.1 Risk assessment not performed Recommendation The risk register be prepared as per the risk management plan of the SADPMR and be regularly reviewed and updated. ACTION A risk assessment has been prepared. The divisional risks and top ten organisational risks have been sent to the Audit Committee for recommendation to the Board.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING No supply chain function Recommendation A supply chain management unit should be established within the SADPMR taking into account the size of the organisation. An existing staff member may be delegated to perform the supply chain functions together with existing duties where it is considered possible and compatible. ACTION A Procurement Officer was appointed in December 2009 and the supply chain processes are now being followed in conjunction with the Bid Adjudication Committee which consists of all managers, chaired by the CFO and overseen by the CEO.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING No declaration of interest Recommendation All audit committee members adhere to the SADPMR’s Audit Charter by ensuring that all members are independent, by obtaining and reviewing all independence declarations. ACTION All committee and Board members have declared their interest for the 2009/2010 financial year.

AUDIT FINDINGS ON THE SADPMR ANNUAL REPORT, RECOMMENDATIONS AND MITIGATIONS BY MANAGEMENT FINDING Late submission of strategic plan and budget Recommendation Management to put processes in place to ensure compliance with the Treasury Regulations and make possible arrangements to adhere to the submission deadlines. Where an extension for approval has been granted by the executive authority, management should keep written correspondence to this regard. ACTION The strategic plan and budget were submitted on 30 th September The strategic plan and budget for the financial year were approved on the 6 th April 2010 by the Minister of Mineral Resources.

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