1. Department of Agriculture, Forestry and Fisheries (DAFF)
Portfolio overview
16 April 2013

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 governance in the public sector through auditing, thereby building public confidence.

3. Purpose of meeting
To brief the portfolio committee on the progress made by the department from previous audit cycle.

4. Agenda Prior year audit outcomes Silver bullets for the portfolio
Action plans developed by department
Audit of predetermined objectives
Budget 2013/14 and key issues
Combined assurance
Clean administration
Conclusion

5. PRIOR YEAR AUDIT OUTCOMES

6. 2011-12 Audit outcomes Auditee Audit opinion 2011-12
Financial audit opinion
Financial audit opinion
Predetermined objectives
Compliance with laws and regulations
Department 1
Department of Agriculture, Forestry and Fisheries (DAFF)
Entities 2
Onderstepoort Biological Products Ltd (OBP) 3
National Agricultural Marketing Council (NAMC) 4
Agricutural Research Council (ARC) 5
Ncerha Farms 6
Marine Living Resources Fund (MLRF) 7
Perishable Products Export Control Board (PPECB)
Financially unqualified with no findings
Qualified, with findings
Material findings identified
Financially unqualified with findings
Adverse, disclaimer, with findings
No material findings

7. 2011-12 Key control assessment
DAFF & Entities

8. 2011-12 Status of key focus areas

9. 2011-12 Status of key focus areas

10. SILVER BULLETS FOR THE PORTFOLIO

11. Silver bullets for the portfolio
What DAFF needs to change to achieve clean audit outcomes by 2014
Lack of monitoring of compliance with laws and regulations
Lack of discipline of credible comprehensive monthly reporting
Ineffective internal audit function
Skills and policies for pre-determined objectives are lacking

12. ACTION PLANS DEVELOPED BY DEPARTMENT

13. Action plans developed by the department?
Yes
Audit matrix (action plan) drafted
Continues monitoring
Updated quarterly
However repeat findings are still reoccurring

14. Root causes not addressed
Oversight responsibility regarding compliance and reporting not exercised
Lack of understanding of the principles of FMPPI
Action plans not sufficiently implemented
Reported disclosure notes incomplete
Non review of compliance with laws and regulations
Root Causes not addressed resulted in repeat findings

15. AUDIT OF PREDETERMINED OBJECTIVES

16. Audit of Predetermined Objectives
OVERSIGHT:
Parliament, provincial legislature or municipal council
Identify desired impacts
Assess and adjust Specify
performance
indicators
Monitor Set targets
and take corrective and allocate
action resources
Policy development
Strategic Planning
INSTITUTION
National department
Provincial department
Municipality
Public entity
Municipal entity
Operational planning and budgeting
End-year reporting
Implementation and in-year reporting

17. Audit of Predetermined Objectives
Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual performance report of departments and their entities.
Audit consists of the following Main Criteria:
Definition:
Compliance with regulatory requirements
Existence
Timeliness
Usefulness
Relevance
Measurability
Presentation
Consistency
Reliability
Validity
Accuracy
Completeness

18. Audit of Predetermined Objectives
2011/12 Audit Outcomes
Compliance with regulatory requirements
Existence
Timeliness
Usefulness
Presentation
Measurability
Relevance
Consistency
Reliability
Validity
Accuracy
Completeness
Additional Matter paragraphs included in audit report: >20% of targets not achieved and material adjustments were made to the annual performance report submitted for audit
No matters reported
Reported in audit report

19. Audit of Predetermined Objectives
Usefulness of 2012/13 Annual Performance Report
Performance information must be presented using the National Treasury Annual reporting guidelines. Actual performance information in tables and narrative in annual report must be consistent. Reasons for major variances between planned and actual performance must be explained and should be supported by corroborating evidence.
Requirement
Presentation
Conclusion
Can only conclude once the Annual Performance Report is made available on 31 May 2013.
Objectives, indicators and targets must be consistent between planning and reporting documents.
Requirement
Consistency
A total of 44% of the indicators and targets as per the annual performance plan are not consistent with the indicators and targets as per the approved strategic plan as required by the National Treasury Framework for Strategic Plans and Annual Performance Plans.
Conclusion
Requirement
Indicators should be well-defined and verifiable. Targets should be specific, measurable and time-bound.
Measurability
Conclusion
No material findings reported.
The indicators relate logically and directly to an aspect of the institution's mandate, and the realisation of strategic goals and objectives
Requirement
Relevance
Conclusion
No material findings reported.

20. Audit of Predetermined Objectives
Usefulness of 2013/14 Annual Performance Report
Performance information must be presented using the National Treasury Annual reporting guidelines. Actual performance information in tables and narrative in annual report must be consistent. Reasons for major variances between planned and actual performance must be explained and should be supported by corroborating evidence.
Requirement
Presentation
Conclusion
Can only conclude once the Annual Performance Report is made available on 31 May 2014.
Objectives, indicators and targets must be consistent between planning and reporting documents.
Requirement
Consistency
Can only conclude once the Annual Performance Report is made available on 31 May 2014.
Conclusion
Indicators should be well-defined and verifiable. Targets should be specific, measurable and time-bound.
Requirement
Measurability
No material findings identified.
Conclusion
The indicators relate logically and directly to an aspect of the institution's mandate, and the realisation of strategic goals and objectives
Requirement
Relevance
Conclusion
No material findings identified.
Non-material findings reported: “SMART” principles

21. BUDGET 2013/14 & Key issues

22. Compliance requirements
“The Minister must table the annual budget for a financial year in the National Assembly before the start of that financial year or, in exceptional circumstances, on a date as soon as possible after the start of that financial year, as the Minister may determine”.
“When the annual budget is introduced in the National Assembly or a provincial legislature, the accounting officer for each department must submit to Parliament or the provincial legislature, as may be appropriate, measurable objectives for each main division within the department’s vote. The relevant treasury may co-ordinate these submissions and consolidate them in one document.”
“Multi-year budget projections.— (1) The Minister (of finance) and the MEC for finance in a province must annually table in the National Assembly and in that province’s provincial legislature, respectively, a multi-year budget projection of – (a) the estimated revenue expected to be raised during each year of the multi-year period; and (b) the estimated expenditure expected to be incurred per vote during each year”
Section 27 (1)
Section 27 (4)
Section 28
Public Finance Management Act No. 1 of 1999

23. Compliance requirements
5.1  Annual preparation of strategic plans
“5.1.1  Each year, the accounting officer of an institution must prepare a strategic plan for the forthcoming MTEF period for approval by the relevant executive authority.”
6.1 Accounting Officer
“6.1.3  An accounting officer of a budget vote must ensure that the budget submission for that vote includes appropriate supporting information in respect of constitutional institutions and public entities receiving transfers on that vote.”
AOPO immaterial findings
Treasury Regulations
5.2  Submission and contents of strategic plans
“5.2.1  In order to facilitate the discussion of individual votes, the approved strategic plan must be tabled in Parliament or the relevant legislature at least 10 days prior to the discussion of the department’s budget vote.”
6.2 Format of annual budget
“6.2.1 The annual budget documentation, as presented to Parliament or a provincial legislature, must conform to the formats as determined by the National Treasury.”
Findings noted in 12/13
No findings noted in 12/13

24. Total to be appropriated Increase / (decrease) in budget
Budget comparison
VOTE 26: & comparison
Number
Programme
Total to be appropriated
R'000
R'000
Increase / (decrease) in budget 1
Administration  
50 965  2
Agriculture Production, Health and Food Safety     3
Food Security and Agrarian Reform     4
Trade Promotion and Market Access  
19 567  5
Forestry  
(77 275)  6
Fisheries  
22 209 
Total    

25. Key issues on the departments budget
Service delivery
Utilisation vs
In DAFF did not achieve 51% of the planned targets per their strategic plan. However, 99% of the vote was spent during the 2011/12 financial year, this requires significant improvement to achieve more efficient service delivery.
Reliability of AoPO
Validity, Accuracy and Completeness of reported predetermined objectives could not be verified in

26. National Development Plan (NDP) 2030
“Realise a food trade surplus, with one-third produced by small-scale farmers or households.”
Number of subsistence and smallholder producers trained on industry focused farmer training
Number of smallholder producers (Smallholder producers accessing financial services through CASP and MAfisa)
NDP
DAFF Strategic Plan

27. National Development Plan (NDP) 2030
Ensure household food and nutrition security
Report on Zero Hunger Campaign implementation
Approved Business Case on Zero  
Hunger
Gazetted Green Paper (National Food Security Policy)
NDP
DAFF Strategic Plan

28. COMBINED ASSURANCE

29. Combined assurance First level of assurance: Management assurance
Human resources capacity and productivity
Attention to credibility of management information
Effective operation of daily controls (checks and balances)
Monthly reporting (Financial,
service delivery,
compliance and IT controls)
Timeous filling of vacancies with right skills
Effective performance management
Maintaining leadership stability
Second and third level of assurance: Oversight and audit (independent assurance)
Effectiveness of assurance providers
Management implement action plans and report thereon
Effective monitoring of commitments by oversight
Validating credibility of management information

30. CLEAN ADMINISTRATION

31. Clean Audit Clean administration Financially Unqualified AFS
No material findings on Compliance
No material findings on Predetermined Objectives
Clean Audit

32. Conclusion Overall assessment Focus Areas Way forward
The above assessment indicates that there is still work to be done in the movement towards clean administration however if focus is place on silver bullets and way forward it can be achieved.
Focus Areas
Supply Chain Management (SCM);
Predetermined Objectives (AoPO);
Misstatements in AFS (Completeness of disclosure notes); and
Capacitating internal audit.
Way forward
Adequate preparation of complete Monthly AFS with full disclosure notes;
Preparation of Monthly Key Controls by auditees;
Focussed Quarterly key controls assessments and discussions;
Action against transgressors (consequence management); and
Timely implementation of action plans to address root caused and not findings.

33. Thank You