1. Briefing to the Portfolio Committee on The Department of Agriculture, Forestry and Fisheries and its entities on the audit outcomes for the 2013/2014 financial year Presenters: Meisie Nkau and Fanie Kok
14 October 2014

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 presentation
To provide members of parliament with the necessary information/guidance on the audit outcomes for the portfolio to enable the Portfolio Committee to effectively execute their oversight function
One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations.

4. Audit outcomes of the portfolio (AGSA audits)
Stagnation in audit outcomes
Audit outcomes area
Financial statements (F)
Compliance with legislation (C)
Performance reports (P)
One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations.
Unqualified
Qualified
Adverse/disclaimer
Audits outstanding
With no findings in audit report
With findings in audit report

5. Audit outcomes for the portfolio
Number
Auditee
Movement
audit outcomes
Findings on predetermined objectives
Findings on non-compliance
Audit opinion
Predetermined objectives
Compliance with legislation
Reported information not useful
Reported information not reliable
Material misstatement or limitations in submitted AFS
Unauthorised, irregular, as well as fruitless and wasteful expenditure
Expenditure management
Audit committees
Internal audit
Strategic planning and performance management
Transfer and conditional grants
Procurement management
Departments 1
Agriculture, Forestry and Fisheries
Public entities 2
Agricultural Research Council 3
Marine Living Resources Fund 4
National Agricultural Marketing Council 5
Onderstepoort Biological Products Ltd
Public entities (Not audited by the AGSA) 6
Ncera Farms (Pty) Ltd 7
Perishable Products Export Control Board
Unqualified
Qualified
Adverse/disclaimer
Audits outstanding
With no findings in audit report
With findings in audit report

6. Audit outcomes of the portfolio
Compliance
with regulatory
requirements
Usefulness
Reliability E x i s t e n c T i M e l n s € P r e s n t a i o C o n s i t e c y M e a s u r b i l t y R e l v a n c V a l i d t y A c u r a y C o m p l e t n s
One of our strategic objectives is to lead by example, which means that we strive to be a model organisation in terms of all our operations. We are also a member of the International Organisation of Supreme Audit Institutions (INTOSAI) whose motto is "Mutual experience benefits all". In support of this, we are committing to sharing technical information, guidance and good practice material that can be used by others, particularly those in public sector organisations.
DAFF
DAFF
DAFF
DAFF
DAFF
NAMC
OBP
No matters reported
Reported in audit report

7. Audit outcomes for the portfolio
Assurance levels
First level
Senior management
Accounting officer/authority
Executive authority
Second level
Internal audit unit
Audit committee
Third level
Portfolio committee
Provides assurance
Provides some assurance
Provides limited/ no assurance
Vacancy
Not
established

8. Audit outcomes for the portfolio
Key controls
Audit areas
Financial
statements
Performance reports
Compliance
with legislation
Effective leadership 5 4 1
Human resources controls 3 2 4 1
ICT governance and controls 1 3
Audit action plans 5 3 2 1
Proper record keeping 3 2 1 4
Daily and monthly controls 3 2 1
Review and monitor compliance 3 2 1
Good
Concerning
Intervention required
Not assessed

9. Audit outcomes for the portfolio
Quality of submitted financial statements
Quality of submitted performance reports
Supply chain management
Financial Health
Human resource management
Information technology
Good
Concerning
Intervention required

10. Audit outcomes for the portfolio
Most common root causes
Slow responses by management
A root cause at auditees 4
Key officials lack appropriate competencies
A root cause at auditees 2
Lack of consequences for poor performance and transgressions
A root cause at auditees 1
Improved
Unchanged
Regressed

11. Audit outcomes for the portfolio
Status of key commitments by minister
Align the performance agreements of senior management with the departments strategic goals.
Implement a plan to identify specific areas where service delivery will take place.
Ensure linkage between the budget to the targets in the strategic plan.
Checks and balances to ensure credibility and completeness of financial and performance reports will be implemented.
Plan to support agricultural schools and encourage youngsters to study in the agricultural field.
Collaborate with the provincial MECs to ensure proper monitoring and evaluation of DoRA funds.
Strengthen the monitoring and evaluation unit within the department.
Empower the internal audit function to be fully effective and functional.
Manage deviation from the procurement process in a transparent manner.
Investigate ways to ensure that the Marine Living
Resource Fund establish their own board to enable better oversight responsibility.
Not implemented
In progress
Implemented
New

12. Oversight model OVERSIGHT:
Parliament, provincial legislature or municipal council
Identify desired impacts
Assess and adjust Specify performance
indicators
Monitor and take Set targets
corrective action and allocate
resources
Policy development
Strategic Planning
Accountability
INSTITUTION
National department
Provincial department
Municipality
Public entity
Municipal entity
Operational planning and budgeting
AGSA advises the committee members on the Interim work done the Annual Performance Plan.
Budgeting process including the Medium Term Budgeting Framework.
Quarterly reporting done throughout during implementation on both performance and budget.
End year reporting includes budget review processes to determine whether money spent is in line with Targets achieved.
End-year reporting
Implementation and in-year reporting

13. Oversight component - Portfolio committee mandate
Role of Portfolio Committees (Rule 201)
consider, amend, approve or reject legislation (bills in its portfolio)
1. Legislation
consider and approve budgets and monitor expenditure of the Departments and entities reporting to them
2. Budgets
consider progress reports (monitoring) from line-function departments, and provincial and local government authorities and entities on their respective mandates
3. Mandates
ensure that all appropriate executive organs of state in its portfolio are held accountable for their actions (oversight); and
4. Accountability
conduct oversight over the executive authority and consult/liaise with any other executive organ of state and make recommendations
5. Oversight

14. Are the targets realistic (can it be done)
Considerations for Portfolio Committees when dealing with performance monitoring
Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan
Does the entity have adequate resources (human and financial) available to achieve predetermined objectives
Are the targets realistic (can it be done)
How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.)
The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP
The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports)
The Portfolio committee should approve and track changes to strategic plans and annual performance reports

15. Support oversight – complimentary mandate
Senior
management
Accounting
officers/
authority
Executive
Required assurance levels
Extensive
Management’s assurance role
Senior management – take immediate action to address specific recommendations and adhere to financial management and internal control systems
Accounting officers/ authority – hold officials accountable on implementation of internal controls and report progress quarterly and annually
Executive authority – monitor the progress of performance and enforce accountability and consequences
Management assurance
First level of assurance
Oversight assurance
Second level of assurance
Coordinating /
Monitoring
institutions
Internal
audit
Audit
committee
Extensive
Required assurance levels
Oversight’s assurance role
National Treasury/ DPSA – monitor compliance with laws and regulations and enforce appropriate action
Internal audit – follow up on management’s actions to address specific recommendations and conduct own audits on the key focus areas in the internal control environment and report on quarterly progress
Audit committee – monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans
Independent assurance
Third level of assurance
Oversight
(portfolio
committees /
councils)
Public
accounts
committee
National Assembly
Extensive
Required assurance levels
Role of independent assurance
Oversight (portfolio committees) – review and monitor quarterly progress on the implementation of action plans to address deficiencies
Public accounts committee – exercise specific oversight on a regular basis on any report which it may deem necessary
National Assembly – provide independent oversight on the reliability, accuracy and credibility of National and provincial government

16. How does clean administration improve service delivery
Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY
Robust financial performance management systems
Oversight and accounta-bility of all
Independent and relevant reporting by the AG
Commit-ment and ethical behaviour
Robust financial and performance management systems
Transparent and stable reporting systems
Budgeting and planning processes
Focussed information management platforms
Strong internal audit capabilities
Oversight and accountability
Reporting to enable effective oversight
Applying consequences for transgressions and poor performance
Commitment and ethical behaviour by all
Visible commitment by all players in the public service
Demonstrated impeccable ethical behaviour and professionalism
Auditor General
Independent and relevant reporting by the AG
Value-adding input expressed by the AG

17. Accountability and remedies to address transgressions and poor performance
A common reaction to the general reports relates to the questions posed by many, including key role players in government, about the need for accountability and consequences and how these can be enforced. Legislation provides the answer to this question as it clearly defines accountability and the remedies.
Details are available on pages 44 to 65 of our booklet:
In Brief: The Auditor-General of South Africa

18. Accountability and remedies to address transgressions and poor performance
This AGSA booklet highlights the legislation that enables remedies to be applied where national and provincial departments are guilty of transgressions and poor performance. It addresses the following typical matters reported in the general
reports:
Failure to comply with legislated obligations and responsibilities
Unauthorised, irregular and fruitless and wasteful expenditure
Possible fraud and corruption
Poor work performance – officials and suppliers
Other non-compliance with legislation

19. Questions