1. 15 October 2013
Audit outcomes - Briefing to the Chairperson of the Department of Mineral Resources PC

2. 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 governan in the public sector through auditing, thereby building public confidence.

3. Agenda Subject Slide number
1.Portfolio audit outcomes and key control status
4 – 9
2.Progress on previous commitments 10
3. Key focus areas 11
4. Other matters of interest 12
5. Pyramid of Accountability 13
6. Combined level of assurance 14

4. 1. Portfolio audit outcomes and key control status
Opinions
2011/12
2012/13
Entity
Financial Statements
Predetermined Objectives
Compliance
Department of Mineral Resources (DMR)
Unqualified opinion with findings on compliance and predetermined objectives
Unqualified
Revenue management, Significant adjustments to the AFS, HR management and expenditure management
Qualified opinion
Financial and performance management,
HR Management , Revenue management and non-compliance with enabling Act (MPRDA)
South African Diamond and Precious Metals Regulator (SADPMR)
No findings
The State Diamond Trader (SDT)
Council for Mineral Technology Research (MINTEK)

5. 1. Portfolio audit outcomes and key control status - Continues
Opinions
2011/12
2012/13
Entity
Financial Statements
Predetermined Objectives
Compliance
Mine Health Safety Council (MHSC)
Unqualified opinion with findings on compliance and predetermined objectives
Unqualified
Irregular and fruitless and wasteful expenditure, Procurement management and Significant adjustments to AFS
Adverse
Irregular and fruitless and wasteful expenditure, Procurement management and Internal audit
Council for Geosciences (CGS)
Procurement and contract management, Material adjustments to the AFS and irregular and fruitless and wasteful expenditure
Procurement and contract management, Material adjustments to the AFS and Asset management

6. 1. Portfolio audit outcomes and key control status
Dept/Entity
Key control status (regression/ improvement/ unchanged)
Leadership
Financial and Performance Management
Governance
DMR
SADPMR
SDT
MINTEK
MHSC
CGS

7. 2. Further analysis on DMR key controls classified as causing concern:
2. Further analysis on DMR key controls classified as causing concern: Leadership
  Good   In progress   Intervention required

8. 3. Further analysis on DMR key controls classified as causing concern:
3. Further analysis on DMR key controls classified as causing concern: Financial and performance management
  Good   In progress   Intervention required

9. 4. Further analysis on DMR key controls classified as causing concern:
4. Further analysis on DMR key controls classified as causing concern: Governance
  Good   In progress   Intervention required

10. 5. Progress on prior year commitments
Commitment made
Current Status
Comment
The filling of key vacancies to facilitate effective monthly reporting
In progress
The CFO position has subsequently been filied. There are key positions that are still to be filled.
Timeous review of the rehabilitation provision for mines through the use of specialists
Implemented
No issues were raised during the 2012/13 audit on this area
The governance structures (Internal audit) to review all financial information produced.
Although the reviews were performed by internal audit, concerns still exists as shown by the qualified opinion due to misstatements on receivables.
Relook at the structure of support provided to the DG. Improve the quality of information and daily disciplines of junior staff members
New
The commitment will reviewed during the course of the 2013/14 financial year

11. 6. Key focus areas Auditee Supply Chain Predetermined Objectives
HR Management
IT Controls
Material errors in submitted AFS
DMR
Some improvement
No matters
No improvement
SADPMR
SDT
MINTEK
MHSC
CGS

12. 7. Other matters of interest
Auditee
Irregular Expenditure
Fruitless and Wasteful
Movement
2011/12
2012/13
DMR
R21.4m
R24.7m
SADPMR
SDT
MINTEK
MHSC
R6.9m
R9.6m
CGS
R 0.80

13. 8. PYRAMID OF ACCOUNTABILITY
Speaker/ Legislature
SCOPA/PC’s
Executives
Accountable Leadership
Audit Committee
Internal Audit
Skills, competence ethics and integrity
Daily, weekly, monthly financial and performance disciplines
Embedded systems of IC underpinned by policies and procedures
Monthly reporting on financial and performance/ Interim financial statements
Understanding of requirements as well as cause and effect
Accountable and transparent government
"Public Accountability"
Oversight
Flow of credible information
Re-enforcing accountability at all levels, escalation and robust communication
Reporting and governance
"Assurance Agents"
The bottom layer of the pyramid illustrates the foundation for the first line of defence in administration (that ensures credibility of information) being skills, competence, etc; embedded systems of IC; understanding of requirements, cause and effect. Daily, weekly monthly financial and performance disciplines (including reporting will be fully supported and fit into this environment easily.
For the reporting and governance layer, the foundation is effective and accountable leadership and effective internal audit and they support the audit committee with credible information for them to be effective in carrying out their functions. With both layers functioning properly, credible information will be submitted and reported to oversight committees.
"First in of defence"
Administration

14. 9. Assurance Model
The assurance model mirrors the accountability model.

15. Thank you