1. EPIP AUDIT INTERVENTION PLAN
2018/2019

2. OUTLINE OF THE PRESENTATION
EPIP Summary of Findings
Audit Intervention: Current Projects
Audit intervention: New Projects (Future)

3. EPIP summary audit Findings for 2017/2018
Non-disclosures in the Departmental Financials
Project bank balances at the end of the financial year not recorded as pre-payments
Irregular expenditure at the project level not disclosed in DEA’s financials
Interest earned in projects not disclosed as additional revenue to DEA
Unrelated costs such as marketing and others incurred at project level are included in infrastructure cost in the Department’s books
Operational findings
No PPE or WIP is disclosed in the project financials
SCM processes not followed at project level
No evidence that Service Providers/Suppliers were rotated on appointment

4. Audit Intervention measures on Old Contracts Issued before 31/03/18
Disclosure findings
Monthly report to finance to be improved to include project bank balances
The project audit templates to be reviewed to ensure that PPE and/or WIP, Bank Balances, Interest earned, fruitless, wasteful and irregular expenditure are disclosed for further disclosure in the Departmental financials
The above to be included in the consolidated AFS by the Principal auditor
Training of Implementer Accountants and Panel of Auditors
Operational Findings
Procurement planning and reporting templates to be developed and complied to
Implementers will be required to develop procurement plans and monthly reports
Officials and Implementers to be trained on SCM
Conduct quarterly thorough admin inspections to ensure compliance
Quarterly procurement reports to be submitted and signed off by the Directors
EPIP will ensure that each Implementer advertises locally for establishment of panels and that service providers are rotated
Deviations to be approved with proof of having tested the market
No payment shall be processed by the PPM’s without the prerequisite proof of SCM having been followed based on source documents

5. Mid-term Audit: Proposed Approach
Option 1
Appoint auditors from the panel as internal auditors rather than external auditors to ensure compliance
AG comes as an external auditor
Option 2
Two pronged approach to the appointment of auditors
Appointment of auditing firms from the panel in the form of accountants to ensure compliance
Appointment of auditing firms from the panel as external auditors

6. AUDIT INTERVENTION ACTION PLAN
Task
Responsibility
Time Frames
SCM Workshop with EPIP officials
SCM, Risk Management, Internal Audit
Conducted on 24 October 2018
Audit Process and Templates Workshop and Training
CFO, Advisors, Epip, Central Finance, Deloitte, Panel Of Auditors, Implementers And And Their Accountants
Conducted on 25 October 2018
Preparation and Auditing (Mid-Term)
Auditors and Deloitte, EPIP and Central Finance
November 2018
Submission for consolidation
Deloitte
November 2014
Submission to Finance

7. Audit Intervention measures for contracts entered after 31/03/2018: New Projects
Panel of service providers for different categories (construction, project management, built environment professionals and training) were established following Treasury Regulation 16 A (SCM)
Service providers to be appointed using quote system as independent contractors (not Implementing Agents)
Specifications per project will be developed so as to source quotations
Infrastructure projects will be designed and supervised by Built Environment Professional Consultants
Construction will be done by CIDB accredited contractors and they will be paid separately so that Management Fees can be separate from construction costs
Accredited Training and Environmental Protection Service providers shall be appointed through the quote system from the panel
Participants to paid through Postbank
Industry contracts such as JBCC, GCC and PROCSA will be used to avoid ambiguity on the relationship between DEA and the Service Providers
No advance payments will be made as DEA will only pay for actual work done by the Service Providers.

8. Audit Intervention measures for contracts entered after 31/03/2018 New Projects
There will be no need for opening of project dedicated accounts, procurement guides, project financial statements and audits at the project level.
Value for Money (VFM) or Performance audits to be conducted to confirm that project objectives were met as per agreed cost, quality and quantity.
There will be a direct relationship between money transferred and WIP as the Department will only pay for actual work done.
Need to reclassify the budget from Transfers to Goods and Services (Capital and Current) for payment of Service Providers.
Wages or Beneficiaries stipends payable through Post Bank to remain as Transfers
Infrastructure projects to be included in DEA’s books and be transferred following section 42 b process.

9. SCM Process – New Projects
Advertisement for panels
Establishment of a Bid Spec & Evaluation Committees
Development of ToR/ Spec for each project
Briefing Session for Providers
Approval by the DDG
Appointment of Bid Spec & Evaluation Committees
ENLISTMENT & USE OF PANELS
IMPLEMENTATION
Source Quotations & Proposals
Evaluation
Evaluation
Presentation to the DAC
Presentation to the DAC
Approval by the DG (Quantum)
Enlistment and Publishing on Govt Gazette (E- Tender)
Publication / Gazetting

10. RECOMMENDATION
Note the two approaches (Current Projects & New Projects)
Consider the new approach including budget reclassification to make accounting easy.