1. Presentation for APP review to Portfolio Committee 14 April 2015

2. Reputation promise/mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. 2

3. Topics to discuss 1. Background2. Roles and responsibilities3. Definitions4. Audit process 5. Audit Outcomes 3

4. Background 4

5. Annual Performance Plan 2015-16 During the PFMA 2013-14 audit cycle, as part of the interim audits, the 2013-14 APPs and draft 2014-15 APPs for national departments and provincial sector departments of Health and Education were audited to provide auditees the opportunity to consider the impact of audit findings on the draft APPs for the following year. The interim audit of the 2014-15 APPs includes interim review of the draft 2015-16 APPs is for ALL national departments and nine provincial and sector departments. Proactive auditing by the AGSA 5

6. Roles and responsibilities 6

7. FMPPI (chapter 5): Effective management of performance information requires a clear understanding of different responsibilities as well as the structures and systems involved in managing performance Roles and responsibilities : Ministers/MECsAccounting officer or head of an institution (assisted by chief information officer) Line managersOther officials To ensure that institutions under their control set up appropriate performance information systems Accountable for establishing and maintaining the systems to manage performance information Accountable for establishing and maintaining the performance information processes and systems within their areas of responsibility Responsible for capturing, collating and checking performance data relating to their activities 7

8. The functions of internal audit relevant to performance information and management should typically include the following:  Monitoring of internal controls relating to performance information processes  Examination of the usefulness and reliability of performance information  Review of critical performance management activities  Review of compliance with laws and regulations relevant to performance planning, management and reporting  Risk management Also refer to Treasury Regulations (TR) 3.2.11 - 3.2.12 (applicable to departments) and TR 27.2.10 -27.2.11 (applicable to public entities) for the responsibilities of the internal audit function The functions of internal audit relevant to performance information and management should typically include the following:  Monitoring of internal controls relating to performance information processes  Examination of the usefulness and reliability of performance information  Review of critical performance management activities  Review of compliance with laws and regulations relevant to performance planning, management and reporting  Risk management Also refer to Treasury Regulations (TR) 3.2.11 - 3.2.12 (applicable to departments) and TR 27.2.10 -27.2.11 (applicable to public entities) for the responsibilities of the internal audit function Role of internal audit 8

9. Definitions 9

10. Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual performance report It is an integral part of the annual regularity audit process, confirming – compliance with related laws and regulations usefulness of performance information reliability of performance reporting It is an integral part of the annual regularity audit process, confirming – compliance with related laws and regulations usefulness of performance information reliability of performance reporting Audit of predetermined objectives defined 10

11. Appropriate Avoid unintended consequences and encourage service delivery improvements Appropriate Avoid unintended consequences and encourage service delivery improvements Reliable Must be accurate enough for its intended use and respond to changes Reliable Must be accurate enough for its intended use and respond to changes Relevant Must relate logically and directly to an aspect of the institution's mandate Relevant Must relate logically and directly to an aspect of the institution's mandate Well defined Clear, unambiguous definition so that data will be collected consistently and will be easy to understand and use Well defined Clear, unambiguous definition so that data will be collected consistently and will be easy to understand and use Verifiable Possible to validate the processes and systems Verifiable Possible to validate the processes and systems Cost-effective Usefulness of the indicator must justify the cost of collecting the data Cost-effective Usefulness of the indicator must justify the cost of collecting the data Good performance indicators should be: 11

12. SMART performance targets S M A R T Nature and required level of performance can be clearly identified Required performance can be measured Realistic given existing capacity Required performance is linked to achievement of goal Time period/deadline for delivery is specified PECIFIC EASURABLE ELEVANT CHIEVABLE IME BOUND 12

13. Audit process 13

14. Validity Accuracy Completeness Main criteria Sub-criteriaSub-criteria Applicable to performance management and reporting Presentation Measurability Relevance Consistency Compliance with regulatory requirements UsefulnessUsefulness ReliabilityReliability Audit criteria 14

15. Understand and test the design and implementation of the performance management systems, processes and relevant controls Understand and test the design and implementation of the performance management systems, processes and relevant controls 11 Test the measurability, relevance, presentation and consistency of planned performance information 22 Audit approach 15

16. Audit outcomes 16

17. Programmes selected for review Not all programmes were reviewed, therefore our findings are limited to the selected programmes but management is encouraged to take our inputs and also apply them to all other indicators. The following programmes from the 2015-16 draft APP were selected for review. 17

18. Programmes selected for review Programme 3- Arts and Culture Promotion and Development Programme 4- Heritage Preservation and Promotion 18

19. From the selected programmes in the APP, there were two major findings on the performance indicators and targets that were identified and reported to management. There were 7 performance indicators that were identified to be not well defined and verifiable by the auditors. There were 3 targets that were identified not to have been specific by the auditors. On these two findings, management agreed with the auditors and either made the necessary changes or provided further clarity See the attached annexure From the selected programmes in the APP, there were two major findings on the performance indicators and targets that were identified and reported to management. There were 7 performance indicators that were identified to be not well defined and verifiable by the auditors. There were 3 targets that were identified not to have been specific by the auditors. On these two findings, management agreed with the auditors and either made the necessary changes or provided further clarity See the attached annexure Overview of the outcome of the review and how management responded to the findings 19

20. THANK YOU 20