1. 20 April 2015
Presentation to the Standing Committee on Appropriations (Introduction) Presented by: CE - Vusi Msibi 15 April 2016

2. Reputation promise/mission
The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

3. Sector auditing objectives
The purpose is to provide a consistent, holistic and diagnostic approach to matters affecting government service delivery in each sector. Our vision is to provide a fuller picture by following a holistic approach that encompasses government’s strategic vision for the sectors and, in so doing, address the critical service delivery matters.

4. Determination of sector focus areas for audit
Significance of amounts as per budget/actual expenditure of each focus areas
Significance and relevance of the focus areas to the mandate of the departments
Matters of national, community, public or media interest, MTSF and NDP
Outputs of significant interest to the public such as those which impact on quality of service delivery

5. Regularity audit versus Sector audit
Sector audits
Mandatory audit in terms of the PFMA and the Public Audit Act (PAA) (section 188 of the Constitution and further regulated in the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA)
The sector approach forms an integral part of the audit of the financial statements, predetermined objectives, compliance with legislation, internal control and other AGSA focus areas such as human resource management, procurement and contract management. The sector focus areas and criteria are developed and updated for each audit cycle
Reflects an opinion or conclusion on annual financial statements, predetermined objectives and compliance with laws and regulations
Reporting is factual and does not include an audit opinion
Reporting is done annually as part of the regularity audit process for all national and provincial departments, their entities and municipalities
Focusing on identifying sector-specific risks within key service delivery departments identified, i.e. presently the health, education, public works, water and sanitation and housing sectors
Reviews and confirms the assertions of the annual financial statements and the annual performance report
Incorporates the evaluation of the 3 E’s at organisational, programme or project level. The audit team is an integrated team that includes performance auditors, information systems auditors and regularity auditor
Reporting at entity level and tabled in the relevant Legislature/Parliament
Reporting at either entity level i.e. standalone sector report and tabled at the relevant Legislature/Parliament or included in the annual general report which is tabled in the relevant Legislature/Parliament. The sector report summarises audit findings related to the selected service delivery focus areas

6. Xx Month xxxx
Education sector focus areas audit outcomes Presented by: SM – Godfrey Diale

7. Discussion points History of audited education focus areas
PFMA
Discussion points
History of audited education focus areas
Education sector focus areas audit outcomes
Root causes
Sector challenges
Summary of regularity audit outcomes

8. SECTOR FOCUS AREAS (History)
PFMA
SECTOR FOCUS AREAS (History)

9. FOCUS AREAS a 9 2014-15 PFMA Sector focus areas 2014-15 2013-14
Infrastructure – quality education needs the right physical environment a
Professional development of teachers – teachers need to be qualified and have a personal stake in their careers
Learner transport – learners need to be able to get to schools safely, easily and regularly
Information management – unreliable information as one of the causes for South Africa’s education challenges
Education materials – quality education needs quality education materials
School nutrition– hungry children cannot learn properly
Workplace learning – contribution to the economy with skills and expertise
School finance management – funds transferred to schools are used for the purposes intended 9

10.
PFMA 1
Focus area 1: Teacher professional development 1

11. Findings on Teacher professional development
PFMA
While WC has allocated funds to all its 8 education districts – GP only allocated operational expenses and LP managed training centrally which resulted in district specific training needs not addressed
2. All provinces are required to establish PTDI and only GP, LP and WC established these. However; the following shortcomings were identified in all three provinces audited:
In Limpopo, there was limited budget impacting negatively on the implementation of training
In Gauteng, the training budget was not timeously made available to the PTDI impacting negatively on planned training.
In WC, the training provided by PTDI was not in all cases based on individual educators training needs
NB: GP, LP and WC were the 3 provinces that had fully established PTDI in financial year thus these were the only provinces scoped for audit.
With no findings
With findings

12.
PFMA 2
Focus area 2: Learner Transport Scheme 2

13. Findings on procuring resourcing on LTS
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

14. Findings on delivering of quality LTS on time
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

15.
PFMA 3 3
Focus area 3: Information Systems

16. Findings on HEDCOM’s six priorities (EMIS)
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

17.
PFMA 4
Focus area 4: Learner Teacher Support Material 4

18. Findings on identifying the needs and planning for LTSM
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

19. Findings on procuring the LTSM according to budget and other regulations
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

20. Findings on prompt delivery of LTSM in the right quantities
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

21.
PFMA 5
Focus area 5: National school nutrition programme 5

22. Findings in identifying the needs and planning for NSNP
PFMA
No findings
New findings
Repeat findings
FS, GP, LP, NW, WC
Improved
Stagnant or limited progress
Regressed

23. Services delivery findings at provincial level in the NSNP
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

24.
PFMA 6
Focus area 6: School finance management 6

25. Findings on the management of school finance
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

26.
PFMA 7
Focus area 7: Basic education infrastructure 7

27. Basic education infrastructure
PFMA
Budget
For the financial year, the infrastructure budget was R9,8 billion, which was segmented into:
EIG R6,9 billion
ASIDI R2,9 billion. 27

28. Basic education infrastructure
PFMA
No findings
New findings
Repeat findings
Improved
Stagnant or limited progress
Regressed

29.
PFMA 8 8
Root Causes

30. Root Causes Root causes should be addressed 2014-15 PFMA
Inadequate attention to daily management disciplines
Slow response by the political leadership and senior management
Inadequate consequences for poor performance and transgressions
Root causes should be addressed

31. Root causes should be addressed (top three)
PFMA
Root causes
Recommendation
Lack of consequences for poor performance and transgressions
In order to improve the performance and productivity of officials, leadership should set the tone by implementing sound performance management processes, evaluating and monitoring officials’ performance and consistently demonstrating that poor performance has consequences.
Daily disciplines
Discipline of preparing accurate and credible monthly financial and performance reports to prevent non-compliance with laws and regulations
Slow response by political leadership and senior management in addressing the root causes of poor audit outcomes
Leadership and senior management should continue to equip themselves with knowledge and skills they need to perform their oversight and governance duties.
Ensure that senior management addresses, in a sustainable manner, the weaknesses in key controls reported by the AGSA and internal auditors.
Leadership should hold one another accountable.

32.
PFMA 9
Challenges facing the education sector 9

33. Challenges facing the education sector
Lack of clean audit outcomes
It is of concern that only one department within the education sector achieved clean audit outcomes
Action plans not always implemented and monitored
Action plans do not always address root causes and recommendations provided
Action plans do not include definite actions that need to be implemented to address the matters, with timelines and responsibilities assigned.
Progress not reported to the audit committee.  

34. Challenges facing education sector (Cont…)
Proper record keeping and availability of the evidence that supports all
amounts and disclosures in the financial statements does not always take
place
Not maintained throughout the year.
Reliance on audit effort especially disclosure notes and PDO’s.
Limited support provided by internal audit on proper record keeping for assurance to HODs.
Policy and planning
Some PEDs did not have approved and/or comprehensive policies and procedures for reporting on performance.
No links between the performance agreements and APPs to hold staff accountable for poor performance.
Human resource capacity, skills and competencies required to manage and report on performance of most PEDs were lacking.

35. Challenges facing education sector (Cont…)
Internal audit
Staffing resources in terms of vacancies and or skills and experience contribute to the effectiveness of internal audit at some PEDs.
Slow response by management in addressing the findings of internal audit at some PEDs rendering internal audit as ineffective.
Budget management
Findings still exist with regard to the extent of unauthorised expenditure / material underspending.
The lack of financial management discipline particularly with regard to overspending on compensation of employees is not addressed (The latter significantly impacts the extent of unauthorised expenditure).

36. Challenges facing education sector (Cont…)
Infrastructure management
Lack of monitoring and oversight by the education departments over implementing agents appointed resulting in delays ranging from four months to four years and poor-quality workmanship.
The extent of irregular expenditure emanating from infrastructure projects.

37. 10. Consolidated audit outcomes for the education sector
Auditee
Outcomes (2014/15)
Outcomes (2013/14)
Movement
Audit Opinion
PDOs
Non-compliance with laws and regulations
Eastern Cape
Qualified
Yes
Free State
Unqualified with findings
Gauteng No
KwaZulu-Natal
Limpopo
Disclaimer
Mpumalanga
Northern Cape
North West
Western Cape
Unqualified without findings
Basic Education

38. Financial statements areas qualified (uncorrected material misstatements)
PFMA
Finding addressed from
previous year
New findings
Repeat findings 38