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AGSA Strategic Plan and Budget SCoAG Presentation

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Presentation on theme: "AGSA Strategic Plan and Budget SCoAG Presentation"— Presentation transcript:

1 AGSA Strategic Plan and Budget 2011-2014 SCoAG Presentation
October 2010 (v1)

2 This is our reputation promise
Mission The Auditor-General 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. This is our reputation promise

3 Table of contents Strategic plan and budget 2011-2014 Audit tariffs
Overview of AGSA Commitments Organisational Environment Overview of each goal Simplicity, Clarity and Relevance of our reports Visibility of our Leadership Funding Strengthen Human Resources Lead by Example Detailed Budget Conclusion and SCoAG interventions Audit tariffs Audit directive

4 Overview of AGSA Commitments
We are committed to discharge our mandate in such a way that it provides value and benefits to the citizens of our country and to lead by example through being a model organisation The AGSA remains committed to the following goals in order to impact positively on all aspects of public sector accountability: Ensuring simplicity, clarity and relevance of the messages contained in all our reports, including the identification of root causes and recommendations and deepening of stakeholders understanding of our audit reports Improving the visibility of our leadership through clear communication in championing the implementation of audit recommendations Focusing on the funding model with a view to stabilising our margins and cash flow situation Strengthening the human resource strategy, with particular emphasis on the comprehensive trainee auditor scheme Leading by example on matters of risk management, internal controls, transformation and quality and timeliness of our products

5 Organisational environment
Our current reputation and image continues to be strengthened by an unwavering commitment to encouraging clean administration in the public sector Our risk management framework ensure that we keep the following identified risks under control Potential loss of stakeholder confidence in the AGSA that is mitigated mainly through our effective communication of audit messages Shortage of appropriate skills that is being addressed through our Trainee Auditor scheme and our vigorous recruitment drive Inability to collect from debtors is a risk that we continue to manage through more effective debt collection efforts that include the internal and external escalation of specific areas such as municipal debt

6 Simplicity, clarity and relevance of our reports
Objective: Identify root causes and make recommendations Initiatives Understanding new government and public sector development Technical development Enhancing auditing capacity Provide new intake with appropriate technical training Continually assessing the quality of engagements Conducting cost effective stakeholder surveys Encouraging clean audit administration through both audit processes and stakeholder interactions Focusing on key control programme Manage risk associated with changes in municipal administration in 2011

7 Simplicity, clarity and relevance of our reports
Objective: Identify root causes and make recommendations Performance measure Target Target Target Quality of messages in all reports 3 Tool Qualitative top-down rating by immediate supervisor on all reports delivered (audit reports, management reports, general reports, annual report, strategic plan and budget). Our targets are based on a 4-point rating scale (1 – 4). Source of information: Actual reports, roadshow and presentation experience page 7

8 Visibility of our leadership
Objective: Develop stakeholder relationships so as to encourage clean administration Initiatives Stakeholder interaction programmes, which are monitored and assessed at business unit level every quarter Enhancement and timeous updating of the Audit Stakeholder Management Information System (AS:MIS) Extending stakeholders’ capacity to optimally utilise our reports Cost-effective stakeholder surveys Auditor-General of South Africa 2011 Centenary

9 Visibility of our leadership
Objective: Develop stakeholder relationships so as to encourage clean administration Performance measure Target Target Target High-quality, value-adding stakeholder interactions are conducted and escalated, where necessary 3 Tool Qualitative top-down rating by immediate supervisor. Our targets are based on a 4-point rating scale (1 – 4). Source of information: Quarterly stakeholder MIS and interactions, roadshow and presentation experience page 9

10 Funding Containing the cost of audit
Implementing interventions to collect debt and improve cash flow Controlling our overheads Continuing ongoing assessment of the funding model Continually reviewing our cost structure Considering funding alternatives for discretionary audits Generating sufficient surplus for reinvestment in the business

11 Funding Objective: Execute the AGSA mandate economically, efficiently & effectively Performance measure Target % Net surplus 4% Tool Analysis of the income statement page 11

12 Funding Objective: Execute the AGSA mandate economically, efficiently & effectively Performance measure Target Target Target Creditors days 45 days from voucher date Tool Analysis of the creditors ageing report page 12

13 Funding Objective: Execute the AGSA mandate economically, efficiently & effectively Performance measure Target Target Target % debt collected within 30 days (National depts, Gauteng & W. Cape) 75% - 80% % debt collected within 30 days (Limpopo & KwaZulu-Natal) 65% - 70% % debt collected within 30 days (N.West, Free State, N.Cape, E. Cape and Mpumalanga) 55% - 60% Tool Analysis of the debtors ageing report page 13

14 Strengthen human resources
Objective: Have a motivated, high-performing and diverse workforce Initiatives Executive and leadership development through coaching and mentoring Leadership pipeline and succession planning for the AGSA Continuous review of AGSA structure Effective teams and Employees engagement Repositioning of the TA scheme Continue to grow the number of qualified professionals Introducing 360 degree evaluation Entrenching our competency framework Performance management Value Rollout Deepening public sector insights and knowledge

15 Strengthen human resources
Objective: Have a motivated, high-performing and diverse workforce Performance measure Target Culture index Industry norm (3.2) Industry norm (3.2) Leadership Index Employee engagement index Tool Survey and Focus group interviews and other assessments page 15

16 Lead by example Objective: Continual improvement of the quality of AGSA reports Performance measure Target Target Target % adherence to all quality standards Audit reports 86% (C2 and C3 rating) 87% (C2 and C3 rating) 87% (C2 and C3 rating) Tool Quality control assessment Non-audit deliverables 3 Qualitative top-down rating by immediate supervisor. Our targets are based on a 4-point rating scale (1 – 4). Source of information: Non-audit deliverables page 16

17 Lead by example Objective: Timeliness of all our reports
Performance measure Target Target Target % compliance with statutory and legislative deadlines Strategic plan and budget, annual report, general reports 100% Performance audits, investigations 95% Regularity audits 90% Tool Project Tracking Tool page 17

18 Lead by example Objective: Adhere to standards of excellence for clean administration Performance measure Target Target Target Achieve AGSA clean audit report Clean audit report Tool External audit report Initiatives Align our organisation with the king III guidelines on risk management Modernisation of our environment, including our technology and process Ongoing implementation of the Go –Green programme page 18

19 Lead by example Objective: Maximise the AGSA’s contribution to transformation Performance measure Target Achieve identified BBBEE rating plan 4 Tool Independent review conducted by external agency Initiatives Engagement sessions with all relevant stakeholders on AGSA BBBEE strategy CSI plan focusing on rural schools programme Implementation of a high –level 3 year plan on enterprise development Implementation of the BBBEE plan Focus on preferential procurement, employment, management control and skills development page 19

20 Detailed Budget 2011/12

21 Table of Contents Budget assumptions Projected income statement
Financial highlights Net surplus as % of audit income Overhead analysis

22 1. Budget assumptions Tariffs are determined by applying a mark up factor of 1.9 (average) to direct salary costs Budgeted for anticipated headcount rather than predefined vacancy percentage Available hours per annum are 2042 per head Tariff increases impacted by market related salary increase of 8.5% Recovery rate percentage reduced from an average of 66,6% to 63.7% (year on year)

23 2. Projected income statement
Actual Forecast Budget 31 March 2010 31 March 2011 31 March 2012 31 March 2013 31 March 2014 Rm AUDIT INCOME 1,644.6 1,919.5 2,087.6 2,301.2 2,496.9 Own hours 1,086.2 1,307.7 1,457.7 1,586.8 1,721.7 S&T recoverable 60.5 92.5 116.9 127.3 138.2 Contract work 497.9 519.3 513.0 587.1 637.0 DIRECT AUDIT EXPENDITURE 1,155.1 1,281.4 1,399.7 1,549.6 1,681.3 CW % of audit income excl S&T 32% 28% 26% 27% Gross profit 489.5 638.1 687.9 751.6 815.6 Own hrs gross profit 495.0 638.8 815.5 Gross margin % of audit income 30% 33% Other income 62.0 47.1 43.0 47.4 51.5 Contribution to overheads 551.5 685.2 730.9 799.0 867.1 Overhead expenses 419.6 572.2 611.4 664.3 721.8 Overhead as % of audit income 29% Depreciation 26.3 38.0 41.0 42.2 43.3 Net surplus before special events 105.6 75.0 78.5 102.0 Net surplus as % of audit income 6% 4% Special events 6.5 36.6 - Net surplus after special events 99.1 38.4

24 3. Financial highlights (1 of 2)
Budget 2011 R’000 Budget 2012 Revenue 1,835,522 2,087,635 Direct audit cost (1,204,604) (1,399,690) Gross Profit 630,918 687,945 Other Income 21,919 43,024 Expenses (583,674) (652,495) Net surplus for the year 69,163 78,474

25 Financial highlights (2 of 2)
Budget 2011 R'000 Budget 2012 Own hours revenue 1,368,010 1,574,633 Contract work revenue 467,512 513,002 Total revenue 1,835,522 2,087,635 Less direct cost (1,204,604) (1,399,690) Gross profit 630,918 687,945 Gross profit % on own hours revenue 46.1% 43.7% Gross profit % on total revenue 34% 33%

26 4. Net surplus as % of audit income
Budget 2011 Budget 2012 Forecast 2013 Forecast 2014 Net surplus R69 million R78 million R93 million R102 million Net surplus as % of audit income 4%

27 5. Overhead analysis Budget Operating costs 2011 R’000 2012 Movement %
Staff remuneration - support 211,201 198,825 (12,376) (6%) Other personnel costs 44,678 69,098 24,420 55% Contract work irrecoverable 27,036 28,097 1,061 4% Accommodation 58,954 61,707 2,753 5% Liaison 21,536 34,219 12,683 59% Professional assistance 72,647 85,898 13,251 18% Technological services 38,213 38,684 471 1% Auxiliary services 18,754 21,257 2,503 13% Other 51,876 73,661 21,785 38% Total 544,895 611,446 66,551 12%

28 Conclusion and Proposed SCoAG interventions

29 Conclusion and Proposed SCoAG interventions
This strategic plan and budget outlines the AGSA leadership’s commitment to realising our mission and vision We are confident that we will achieve the set targets We request SCoAG’s intervention in the following areas Encouraging robust leadership monitoring and oversight at auditees to address audit findings Engaging political stakeholders to assist us in the collection of outstanding fees

30 (outlined in detail in the strategic plan and budget document)
Audit Tariffs (outlined in detail in the strategic plan and budget document)

31 Audit Directive (is included in this submission)


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