The South African Experience Presented by the Office of the Auditor-General Republic of South Africa Coping with Challenges

 National Departments and their related entities  Provincial Departments and their related entities (health and education predominately delivered at this level)  Municipalities South African Context Mandate of the Auditor-General :

 Standard setting  Determined by the Auditor-General  In line with INTOSAI and now also IFAC  This has involved extensive participation in the national and international arena eg. Auditing statements public sector perspectives Setting an Auditing Framework

 Technical Advancement  Audit approach aligned with recognised practice  Development of internal technical guidelines and support Setting an Auditing Framework

 Technical Advancement (cont)  electronic working papers  training including SAICA and ACCA Setting an Auditing Framework

 Quality Assessment  Business Unit Level  Central Quality Reviews  External Practice Review Setting an Auditing Framework

PARLIAMENT GENERAL REPORTS ON AUDIT OUTCOMES AT NATIONAL, PROVINCIAL AND LOCAL ENTITIES ACTIVITY REPORT BY AUDITOR-GENERAL Annual audit reports, included in annual reports of National, Provincial and Local entities Audit activities AUDITS BEING CONDUCTED AUDITORS SUMMARY OF AUDIT OUTCOMES ANALYSES OF AUDIT ACTIVITIES GENERAL REPORT FLOW TO PARLIAMENT

 Guidance on Audit Reporting has been issued to the staff  Agreeing on where audit findings should be disclosed e.g. Management letter, emphasis of matter  Audit reports included in the annual reports of entities  General Report on Audit Outcomes Consistency of audit findings

 Predominately under the domain of Provincial Government  Representing 69% of the total Provincial expenditure Health and Education Sectors

Reporting on audit opinions on the education sector Province ExpenditureBudget (Over)/Under- spending audit opinion audit opinion R million Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL 7 865, , , , , , , , , , , , , , , , , , , ,6 253,3 208,3 238,5 75,9 10,2 16,0 6,6 57,4 66,0 932,2 Q U Q Q Q U Q Q Q Q U Q Q Q Q Q Q U

Reporting on audit opinions on the health sector Province ExpenditureBudget (Over)/Under- spending audit opinion audit opinion R million Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL 4 221, , , , , ,6 517, , , , , , , , , ,3 509, , , ,9 (328,9) (587,3) Q U Q Q Q U Q Q U Q Q Q Q Q Q Q Q U (69,2) (66,2) (289,3) 55,4 85,7 (8,4) 35,8 (2,2)

Transversal Report was conducted in the education sphere some of the primary findings:  The proportion of personnel expenditure to total budget was in a number of provinces in excess of the national norm set by the Minister  Educators were found who were beyond retirement age which was in contravention of the regulations Performance Audits of a Transversal nature

Transversal Report was conducted in the education sphere some of the primary findings:  Although a shortage of mathematics and physics educators were identified. The colleges who train educators were not factoring this into their policies and procedures Performance Audits of a Transversal nature

Transversal Report was conducted in the education sphere some of the primary findings:  The issue of loss time for educators through absenteeism was found throughout  42% of educators were found to be underqualified (against national standards) Performance Audits of a Transversal nature

Current Initiatives  There are numerous current initiatives to further enhance and improve our process and products.  This includes:  Compliance

Current Initiatives  Financial management/corporate governance  Auditing of performance management information

Current Initiatives  Audit Focus Areas these are:  Capacity  Control environment  Procurement

Current Initiatives  Audit Focus Areas cont:  Human Resource Management  Asset Management  Delivery of Basic services

PUBLIC SECTOR FINANCIALS OF A A1 A2 A3 Cabinet Portfolio “A” Private Sector Current Issues cont. Sectorial Reporting

Current Initiatives  Centralised audit outcomes information  Auditing transversal audit outcomes  Auditing of performance management information

Challenges Faced  Lack of operating framework at provincial level  Need for improvement in communication channels between national, provincial and local government. This is in respect of auditees as well as auditors

Challenges Faced (continued)  Overall Governance Framework is not adequate at the entities therefore it is difficult to audit the real issues, for example:  service delivery  corporate governance

Challenges Faced (continued)  Often purpose of auditors is to provide an opinion on annual financial statements, therefore, may not see the bigger picture  Issues may be important transversally may not warrant disclosure in individual audit reports  More involvement of public account committees

Vision for the future  Sectorial reports on the delivery of services and financial management in key sectors such as health and education  Indication on whether the situation is improving or not against a pre-set criteria

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