1. Presentation to the Portfolio Committee of Small Business Development

2. 1 1 2 2014-15 PFMA The 2013-14 audit outcomes and our key messages

3. A steady improvement in audit outcomes Unqualified audit opinions on financial statements increased slightly from 338 to 357 Quality of annual performance reports improved from 236 to 256 auditees with no findings Non-compliance with legislation reduced slightly but remain high at 72% 3 2013-14 PFMA Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings Audits outstanding Improved Stagnant or little progress Regressed

4. Key actions leadership was advised to take Get basics right: Fill vacancies with competent officials Respond to outcomes through action plans and well-coordinated initiatives Implement basic controls Insist on regular and credible reports Pay attention to compliance with legislation Hold people accountable Enforce compliance and monitor Make it part of daily disciplines Demonstrate ethical leadership Encourage and support proactive audit committees and internal audit functions 4 2013-14 PFMA Improved Unchanged Regressed Good Concerning Intervention required Slow response to address the root causes of poor audit outcomes 230 auditees 74% Key positions vacant or key officials lacking appropriate competencies 139 auditees Inadequate consequences for poor performance and transgressions 129 auditees 42% Improved UnchangedRegressed 45%

5. 2014-15 key audit outcomes 2 2014-15 PFMA 5 2

6. 2014-15 PFMA 6 Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings Audits outstanding Audit outcomes only slightly improved over 2013-14 Figure 2: Audit outcomes (departments) Figure 1: Audit outcomes (all auditees) Figure 3: Audit outcomes (public entities) 468 auditees461 auditees455 auditees435 auditees449 auditees

7. Overall audit outcomes for the Trade and Industry portfolio Unqualified without findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings 11 auditees 7

8. Figure 2: Compliance with key legislation per auditee type (completed audits) Figure 3: Findings on compliance with key legislation – departmentsFigure 1: Three-year trend – compliance with key legislation Figure 4: Findings on compliance with key legislation – public entities With no findingsWith findings Quality of the financial statements submitted Management of procurement and contracts Human resource management Prevention of unauthorised, irregular and fruitless and wasteful expenditure 50% (83) Establishment and/or control of expenditure and/or payments within 30 days 50% (83) 36% (61) 41% (67) 31% (51) 38% (62) 51% (83) 44% (72) 49% (79) 62% (101) Quality of the financial statements submitted Billing and controls of revenue Prevention of unauthorised, irregular and fruitless and wasteful expenditure 48% (132) Consequence management 30% (82) 14% (38) 14% (36) 13% (37) 12% (30) 30% (85) 29% (79) 32% (87) 53% (147) Management of procurement and contracts Departments Public entities 2014-152013-14 Compliance with legislation only slightly improved – some improvement in main compliance areas 8

9. Figure 2: Supply chain management findings per auditee type (completed audits) Figure 1: Status of supply chain management 165 departments275 Public entities With no findings With findingsWith material findings Figure 3: Findings on supply chain management Awards to employees Limitation on planned scope of audit of awards Uncompetitive or unfair procurement processes Inadequate contract management Awards to close family members of employees There are some improvement in SCM but the non-compliance remain high 440 auditees434 auditees 9

10. No material misstatements Material misstatements Figure 1: Three-year trend – findings on annual performance reporting (Of the 468 auditees, 46 are not required to report on performance) (78 auditees (19%) [2013-14: 79 (19%)] avoided findings due to the correction of material misstatements during the audit process) Figure 2: Improvement in quality of annual performance reports submitted for audit (completed audits) With no findings With findings Outstanding audits Outcome if NOT corrected Outcome after corrections Public entities (239 completed audits) Outcome if NOT corrected Outcome after corrections Departments (165 completed audits) Outcome if NOT corrected Outcome after corrections All auditees 10 Figure 2: Status of submitted annual performance reports (completed audits) Quality of annual performance reports slightly improved – both submitted and after audit No material misstatements Material misstatements

11. Senior management Accounting officers/ authorities Executive authorities Internal audit unitsAudit committees First level of assurance Management/leadership Second level of assurance Internal independent assurance and oversight Third level of assurance External independent assurance and oversight Coordinating/ monitoring departments Assurance by key role players are improving Public accounts committees Portfolio committees 11 2014-15 PFMA Provides assurance Provides some assurance Provides limited/no assurance Not established Improved Stagnant or little progress Regressed The assessment of the third level of assurance is still in process

12. Assessment of vacancies of key role players at the Department of Small Business Development 12 2014-15 PFMA Improvement Stagnant or little progress Regressed 12 2014-15 PFMA 12 Senior Management level: There are key vacancies, these include the CFO and the head of SCM. The director of finance is currently acting. Accounting Officer: The accounting officer was appointed in (September 2015) Internal Audit: There are vacancies as currently there’s only one internal audit member. Audit Committee: No audit committee members have been appointed as yet.

13. Root causes 13 2014-15 PFMA Slow response to address the root causes of poor audit outcomes 230 auditees 74% Key positions vacant or key officials lacking appropriate competencies 139 auditees Inadequate consequences for poor performance and transgressions 130 auditees 42% 45% Improved Unchanged Regressed

14. Audit outcomes of public entities in the portfolio Unqualified no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimer with findings 14 *SEDA finding relates to material misstatements in the financial statements that were subsequently corrected by management 2014-15 PFMA 14 2013-14 PFMA Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings Audits outstanding Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings Audits outstanding

15. Questions