1. Presentation to the Portfolio Committee on Transport
Consolidated audit outcomes of Department of Transport and its entities for
19 October 2010 1

2. Reputation promise of the Auditor-General of South Africa (AGSA)
“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 constitutional democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.” 2

3. Summary of 2009-10 Audit outcomes – Department of Transport and entities
Public entities
Opinion on financial statements:
Disclaimer
Adverse 1
Qualified
Financially unqualified with findings on predetermined objectives and/or compliance with laws
and regulations 7 9
Financially unqualified with no findings on predetermined objectives or compliance with laws 2
Total number of audits reported on
11 *
11 **
Entities with findings arising from AGSA other legal reporting responsibilities:
Predetermined objectives 6 8
Compliance with laws and regulations
* Autopax Passenger Services (Pty) LTD included in analysis for the first time in
**The Urban Transport Fund was included in the analysis for This entity ceased to exist effective 31 March 2009 3

4. Department of Transport and entities – PFMA audit outcomes Drivers of improved audit outcomes
Leadership
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Department
Public entities
Provision of adequately skilled resources capable of implementing the financial reporting framework and performance management requirements, as well as adequate evaluation of the performance of existing staff :
Financial Statements *
Predetermined objectives 1 5 - 6
Ensuring that proper actions are taken to address audit findings; key controls are implemented to mitigate risk of misstatement of financial statements and report on predetermined objectives: 8 3 7
Leadership monitoring and nurturing of public entities
N/A
4. Leadership’s implementation of action plans to address user access control deficiencies (Information Systems) ***
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work.
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
* Includes Autopax Passenger Services (Pty) LTD – Autopax Passenger Services excluded from analysis of predetermined objectives as this is included in PRASA
***Information systems audits done at only 5 entities. The IT audit of the department is at the reporting stage at the date of this presentation.

5. Department of Transport and entities – PFMA audit outcomes Drivers of improved audit outcomes
Financial and performance management
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Department
Public entities
Appropriate systems are in place to support the preparation of financial statements and performance reports:
Financial Statements *
Predetermined objectives 1 7 - 4 5
Review of the financial statements and other information by management for completeness and accuracy prior to submission for audit: 6
Proper record keeping and management, ensuring that supporting documents are properly filed and easily retrievable: 3
4. Application systems susceptible to compromised data integrity (Information Systems) ***
User access control
Security management
Business Continuity 2
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
* Includes Autopax Passenger Services (Pty) LTD – Autopax Passenger Services excluded from analysis of predetermined objectives as this is included in PRASA
***Information systems audits done at only 5 entities. The IT audit of the department is at the reporting stage at the date of this presentation.

6. Department of Transport and entities – PFMA audit outcomes Drivers of improved audit outcomes
Governance
Auditees who have improved/ maintained previous good practice
Auditees where Improvements are required
Departments
Public entities
Maintaining effective risk assessments and strategies including fraud prevention plans to address identified weaknesses:
Financial Statements *
Predetermined objectives 1 5 - 6 4
Ensuring effective internal audit functions that monitor the adequacy and implementation of internal control: 7 3
Establishment of functioning audit committees that promotes independent accountability and service delivery:
An IT governance framework that directs the positioning of IT, resource requirements, risk and internal control management (Information Systems).***
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit
* Includes Autopax Passenger Services (Pty) LTD – Autopax Passenger Services excluded from analysis of predetermined objectives as this is included in PRASA
***Information systems audits done at only 5 entities. The IT audit of the department is at the reporting stage at the date of this presentation.

7. Financial statement qualification areas
Completeness of penalty income (revenue) - CBRTA
Completeness and existence of accounts receivable - CBRTA
Transactions of Road Traffic Infringement Agency (RTIA) included in the records of Road Traffic Management Corporation – resulting in overstatement of Trade and other receivables/Cash and cash equivalents/Trade and other payables/Income/Operating expenditure/Staff costs/Property, plant and equipment - RTMC

8. Financial statement areas
Department of Transport and entities– PFMA audit outcomes Transversal material misstatements corrected
Financial statement areas
Entities impacted
Capital Assets
PRASA/RSR/DLCA/CBRTA/RTMC
Current Assets
Liabilities
PRASA/RSR/DLCA/CBRTA/RTMC/SAMSA
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

9. Financial statement areas
Department of Transport and entities– PFMA audit outcomes Transversal material misstatements corrected
Financial statement areas
Entities impacted
4. Revenue
PRASA/CBRTA/PORTS Regulator/RTMC
5 Expenditure
PRASA/RSR/DLCA/SAMSA/CBRTA/RTMC
6. Other disclosures
DLCA/CBRTA/ PORTS Regulator
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

10. Department of Transport and entities– PFMA audit outcomes 2009-10 Fruitless and wasteful expenditure
Entity and Reasons
Amount – 2009/10
Road Traffic Management Corporation – employees paid after resignation/interest/discontinued system R
Ports Regulator of South Africa – interest on late payment of suppliers
R 6 219
Cross Border Road Transport Agency – inadequate planning and project management of office renovations R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

11. Department of Transport and entities– PFMA audit outcomes 2009-10 Fruitless and wasteful expenditure
Entity and Reasons
Amount – 2009/10
Road Accident Fund – sheriff and interest costs as a result of the delay in payment of claims expenditure R
Driving Licence Card Account – contracts and bank account not properly managed R
South African Civil Aviation Authority – officials reinstated after suspension R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

12. Department of Transport and entities– PFMA audit outcomes 2009-10 Fruitless and wasteful expenditure
Entity and Reasons
Amount – 2009/10
Passenger Rail Agency of South Africa – interest on overdue supplier accounts R
National Department - Accommodation and flight tickets not cancelled in a timely manner/interest on delay in payment of bus subsidies R
TOTAL R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

13. Department of Transport and entities– PFMA audit outcomes 2009-10 Irregular Expenditure
Entity and Reasons
Amount – 2009/10
National Department of Transport – Contracts extended without prior approval/Procurement procedures not followed/services rendered after expiry of tax certificate R
South African Maritime Safety Authority – expenditure incurred prior to budget being approved R
Cross Border Road Transport Agency – non compliance with supply chain management prescripts R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

14. Department of Transport and entities– PFMA audit outcomes 2009-10 Irregular Expenditure
Entity and Reasons
Amount – 2009/10
Road Traffic Management Corporation – tender process not followed/transaction fee owed to Department of Transport used irregularly R
TOTAL R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

15. Department of Transport and entities– PFMA audit outcomes 2009-10 Unauthorized Expenditure
Entity and Reasons
Amount – 2009/10
National Department of Transport – Overspending on Public Transport Program to pay bus subsidies – funds made available by National Treasury to make payment, however due to the fact that this was not part of the original appropriation to the Department, it was considered as unauthorized expenditure R
Note: 3 separate slides dealing with (1) Leadership, (2) Financial and performance management and (3) Governance. This includes issues addressed and to be addressed. (previously slides #4 and #15)
Details of the ‘Key leadership matters addressed/to be addressed ’ should be drawn from management reports
Reflect on how well stakeholder engagements / key control review have been done and why things may not have moved / commitments didn’t work
Notes to the slides should be specific when an entity is the main reason for the issues or when there are specific reasons for the matters reported.
Notes to include discussion on commitments made that did not address the problems or that were not actioned.
Note those entities who avoided qualifications by correcting material misstatements in financial statements identified during the audit

16. Type of audit conclusion
Report on predetermined objectives
Indication of audit conclusions not included in audit report
General
■ Phase-in approach by the AGSA since together with National Treasury
■ Stakeholder engagements to clarify approach and essence of auditing of predetermined objectives have taken place and will continue throughout
■ In departments and entities will need to take decisive action to address the areas requiring improvement in order to position themselves for a positive audit outcome on predetermined objectives
Type of audit conclusion
Department
Public entities
Disclaimer 1
Adverse 2
Qualified
Unqualified 5
Total number of audits reported on 10
The total number of audits must be equal to one less than the number on slide # 3,since predetermined objectives do no apply to the Revenue Fund
There is no reporting on predetermined objectives in Autopax Passenger Services (Pty) LTD as this is included in PRASA 16 16

17. Department of Transport and entities
Findings on reporting of predetermined objectives
Category of finding
Department
Public entities
Non-compliance with regulatory requirements
100% 0%
40%
63%
Reported information not useful
50%
27%
Reported information not reliable
30%
18%
Information not submitted for audit by 31 May 2010
Total number of audits reported on 1 10
11 **
Findings for are available on the AS: MIS
findings to be extracted for the provincial General Report
**The Urban Transport Fund was included in the analysis for This entity ceased to exist effective 31 March 2009
There is no reporting on predetermined objectives in Autopax Passenger Services (Pty) LTD as this is included in PRASA 17 17

18. Top categories of prohibited actions/non-adherence
Department of Transport and Entities
Findings on compliance with laws and regulations
Top categories of prohibited actions/non-adherence
Number
Percentage
Department
SCM issues that resulted in irregular expenditure 0%
Payments not done within 30 days
HR Management
General/ fiduciary and reporting responsibilities of accounting officers and internal audit not operating effectively throughout the year
Public entities * 2
18%
General/ fiduciary and reporting responsibilities 6
54%
Internal audit 3
27%
Audit committee and strategic/ corporate plans 4
36%
This data to be drawn from ‘compliance workbooks’ completed by ABUs
Limited to non-compliance issues included in audit reports
*Analysis includes Autopax Passenger Services (Pty) LTD 18 18

19. Top 5 findings on procurement and contract management
Transport and entities
Findings on procurement and contract management
Top 5 findings on procurement and contract management
Number
Percentage
Public entities *
3 price quotations not invited - reasons not recorded and approved 4
36%
The fraud prevention plan did not include specific measures for preventing and detecting fraud in the procurement process. 5
45%
R with no competitive bidding - reasons not recorded and approved 2
18%
A list of prospective suppliers from whom to invite price quotations was not in place.
SCM policies and procedures were not in place for the acquisition of goods and services.
*Analysis includes Autopax Passenger Services (Pty) LTD
This data to be drawn from ‘Procurement and contract management workbooks’ completed by ABUs. 19 19

20. Schedule 3 and other entities
Department of Transport and Entities audit outcomes Audits not conducted by the Auditor-General of South Africa
Summary of audit outcomes
Audit outcomes
Schedule 2 entities
Schedule 3 and other entities
Opinion on financial statements:
Disclaimer
Adverse
Qualified
Financially unqualified with findings on predetermined objectives and/or compliance with laws and regulations
Financially unqualified with no findings on predetermined objectives or compliance with laws and regulations 2
Total number of audits reported on
Entities with findings arising from AGSA other legal reporting responsibilities:
Predetermined objectives
Compliance with laws and regulations
Sources and guidance for this slide are as for corresponding slide for audits conducted by the AGSA

21. Type of audit conclusion Schedule 3 and other entities
Department of Transport and Entities Audits not conducted by the Auditor-General of South Africa
Report on predetermined objectives - Indication of audit conclusions
General
■ Phase-in approach by the AGSA since together with National Treasury
■ Stakeholder engagements to clarify approach and essence of auditing of predetermined objectives have taken place and will continue throughout
■ In entities will need to take decisive action to address the areas requiring improvement in order to position themselves for a positive audit outcome on predetermined objectives
Type of audit conclusion
Schedule 2 entities
Schedule 3 and other entities
Disclaimer
Adverse
Qualified
Unqualified 2
Total number of audits reported on
Sources and guidance for this slide are as for corresponding slide for audits conducted by the AGSA 21 21