Briefing to the Portfolio Committee on the Department of Rural Development and Land Reform on the audit outcomes for the 2013/2014 financial year Presenters: Eugene De Haan 1 5 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. 2

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 Purpose of presentation 3

Opinions 2013/142012/13 EntityFinancial Statements Predetermine d Objectives ComplianceFinancial Statements Predetermined Objectives Compliance DRD&LR Unqualified opinion Unqualified opinion Expenditure management, Strategic management and performance management, Financial statements, performance and annual reports Unqualified opinionQualified on usefulness and reliability Expenditure management, Financial statements, performance and annual reports, HR Management Agricultur al Land Holding Account (ALHA) Unqualified opinion Not applicable – (Audited with DRD&LR) Expenditure management and revenue management Unqualified opinionNot applicable – (Audited with DRD&LR) Expenditure management and revenue management Audit outcomes for the portfolio 4

Opinions 2013/142012/13 EntityFinancial Statements Predetermined Objectives ComplianceFinancial Statements Predetermined Objectives Compliance Deeds Trading Account Unqualified opinion Adverse opinion on usefulness, unqualified reliability Expenditure management, SCM management, Financial and performance management, HR Management Unqualified opinion Adverse opinion on Usefulness and reliability Expenditure management, SCM management, Financial and performance management, HR Management Ingonyama Trust Board Qualified opinion – Property, plant and Equipment and royalty revenue Qualified opinion on usefulness and reliability Budget and Annual financial statements. Qualified opinion – immovable assets and provisions Unqualified opinion Expenditure management; Asset management; Revenue Management; Annual financial statements. Regression: Budget; Procurement and contract management. Audit outcomes for the portfolio 5

Compliance with legislation (C) Audit outcomes for the portfolio 6

Assurance Levels Audit outcomes for the portfolio 7

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Audit outcomes for the portfolio 11

12 Identify desired impacts Assess and adjustSpecify performance indicators Monitor and take Set targets corrective action and allocate resources End-year reporting Strategic Planning Implementation and in-year reporting Operational planning and budgeting Policy development INSTITUTION National department Provincial department Municipality Public entity Municipal entity INSTITUTION National department Provincial department Municipality Public entity Municipal entity OVERSIGHT: Parliament, provincial legislature or municipal council OVERSIGHT: Parliament, provincial legislature or municipal council Oversight model Accountability

13 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 Role of Portfolio Committees (Rule 201) Oversight component - Portfolio committee mandate

14 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 Considerations for Portfolio Committees when dealing with performance monitoring

Senior management Senior management Accounting officers/ authority Accounting officers/ authority Executive authority Executive authority 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 Management assurance First level of assurance Senior management Senior management Accounting officers/ authority Accounting officers/ authority Support oversight – complimentary mandate Oversight assurance Second level of assurance Oversight assurance Second level of assurance Coordinating / Monitoring institutions Coordinating / Monitoring institutions Internal audit Internal audit Audit committee 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 Independent assurance Third level of assurance Oversight (portfolio committees / councils) Oversight (portfolio committees / councils) Public accounts committee 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 15

16 Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY How does clean administration improve service delivery

17 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

18 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 Accountability and remedies to address transgressions and poor performance

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