1. Portfolio Committee on Public Service and Administration and Performance Monitoring and evaluation Review of 2015/16 Annual performance plans Presenters: Carl Wessels – Senior Manager AGSA Trudie Botha – Senior Manager AGSA

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. Background 2. Legislative requirements and framework for performance management and reporting 3. Audit process4. Roles and responsibilities5. Interim review of 2015/16 Annual Performance Plans6. Oversight responsibility of Portfolio Committee 3

4. Background 4

5. Annual mandatory audits Financial statements Report on predetermined objectives Compliance with laws and regulations Discretionary audits Performance audits, e.g. infrastructure Audits performed by the AGSA 5

6. Clean administration – from annual audits Unqualified financial statements No findings on predetermined objectives No findings on compliance with laws and regulations 6

7. 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 7

8. An audit report must reflect an opinion or conclusion on the performance of the auditee against predetermined objectives Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA) require that: Applicable to all spheres of government Auditing requirements 8

9. Legislative requirements and framework for performance management and reporting 9

10. Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) Treasury Regulations issued in terms of the PFMA, 2002 National Treasury Framework for managing programme performance information (issued by the National Treasury in May 2007) This represents the performance management and reporting framework against which the performance information should be managed and reported. The principles and requirements set out in the framework are used as a basis for the audit. This represents the performance management and reporting framework against which the performance information should be managed and reported. The principles and requirements set out in the framework are used as a basis for the audit. Guidelines, instruction notes issued by National Treasury National Treasury Framework for strategic plans and annual performance plans (issued by the National Treasury in August 2010) National Treasury Framework for strategic plans and annual performance plans (issued by the National Treasury in August 2010) Legislative requirements and framework 10

11. Performance planning, budgeting and reporting cycle 11

12. Chapter 5: Strategic planning requirements for departments, trading entities and constitutional institutions Chapter 29: Corporate planning requirements for schedule 2, 3B and 3D public entities Chapter 30: Strategic planning requirements for schedule 3A and 3C public entities Public Service Regulations, part III B.1(a), (g): Only applicable to departments Chapter 5: Strategic planning requirements for departments, trading entities and constitutional institutions Chapter 29: Corporate planning requirements for schedule 2, 3B and 3D public entities Chapter 30: Strategic planning requirements for schedule 3A and 3C public entities Public Service Regulations, part III B.1(a), (g): Only applicable to departments Treasury Regulations issued in terms of the PFMA Treasury Regulations issued in terms of the PFMA Strategic planning and budgeting requirements 12

13. Section 40(3)(a): Applicable to departments, constitutional institutions and trading entities. Section 55(2)(a): Applicable to public entities. Section 40(3)(a): Applicable to departments, constitutional institutions and trading entities. Section 55(2)(a): Applicable to public entities. PFMAPFMA Chapter 18: Reporting requirements for departments, trading entities and constitutional institutions Chapter 28: Reporting requirements for all public entities PSR, part III B.1(f)(i)-(iii) & J.1, J.3: Monitoring and management of performance information for departments Chapter 18: Reporting requirements for departments, trading entities and constitutional institutions Chapter 28: Reporting requirements for all public entities PSR, part III B.1(f)(i)-(iii) & J.1, J.3: Monitoring and management of performance information for departments Treasury Regulations issued in terms of the PFMA Reporting requirements 13

14. Annual performance report submission All departments, constitutional institutions, trading entities and public entities must submit the annual performance report for audit purposes with the annual financial statements (by 31 May) to enable the auditors to perform the necessary final audit procedures. 14

15. Key performance accountability documents 1. Strategic/Corpora te plan 2. Annual performance plan (APP) 3. Budget 4. Quarterly performance reports 5. Performance agreements 6. Annual performance report Consistent structures to facilitate understanding and accountability Enable linkage between plans and actual performance Consistent structures to facilitate understanding and accountability Enable linkage between plans and actual performance 15

16. 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: 16

17. SMART performance targets SS MM AA RR TT 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 17

18. Audit process 18

19.  Completed phased audit approach  Audit to the extent necessary to express an audit conclusion  Audit conclusion in the management report for all departments, constitutional institutions, trading entities and public entities  Audit reports contain material audit findings – not audit opinions  Completed phased audit approach  Audit to the extent necessary to express an audit conclusion  Audit conclusion in the management report for all departments, constitutional institutions, trading entities and public entities  Audit reports contain material audit findings – not audit opinions  Phased-in approach  Factual audit findings reported in both management and audit reports  No audit opinion in audit reports  Interaction with stakeholders (NT, Presidency, DPSA) to determine and test audit approach  Inputs to drafting of NT frameworks (FMPPI)  Phased-in approach  Factual audit findings reported in both management and audit reports  No audit opinion in audit reports  Interaction with stakeholders (NT, Presidency, DPSA) to determine and test audit approach  Inputs to drafting of NT frameworks (FMPPI) 2004-05 to 2008-092009-10 to 2014-15 AGSA strategy 19

20. 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 20

21. 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 and reported performance information 22 Conclude on the usefulness of the reported performance information for selected programmes or objectives 33 Conclude on the reliability of the reported performance for selected programmes or objectives Conclude on the reliability of the reported performance for selected programmes or objectives 55 Test the reported performance information against relevant source documentation to verify the validity, accuracy and completeness of reported performance information Test the reported performance information against relevant source documentation to verify the validity, accuracy and completeness of reported performance information 44 Audit approach 21

22. An audit conclusion will be expressed for ALL departments, constitutional institutions, trading entities and public entities in the management report, on the – USEFULNESS of reported performance for selected programmes or objectives RELIABILITY of the reported performance for selected programmes or objectives Audit reporting – Management report 22

23. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Usefulness of information Material audit findings focusing on presentation, consistency, relevance and measurability of reported performance information for selected programmes or objectives Usefulness of information Material audit findings focusing on presentation, consistency, relevance and measurability of reported performance information for selected programmes or objectives Predetermined objectives Compliance with laws and regulations Compliance findings relevant to the performance management and reporting Audit reporting – Auditor’s report 23

24. Roles and responsibilities 24

25. 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/MECs Accounting 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 25

26. Understanding and monitoring of the accounting officer’s mandate are key to improving internal control environment Role of accounting officer Robust financial and performance management systems Effective, efficient and transparent systems for financial and risk management internal controls (under control of audit committee) procurement and evaluation Effective, efficient and transparent systems for financial and risk management internal controls (under control of audit committee) procurement and evaluation Effective, efficient, economical and transparent use of resources Prevention of unauthorised, irregular and fruitless and wasteful expenditure and, if discovered, reporting to treasury Efficient and economic management of available working capital Effective, efficient, economical and transparent use of resources Prevention of unauthorised, irregular and fruitless and wasteful expenditure and, if discovered, reporting to treasury Efficient and economic management of available working capital Oversight and accountability Manage and safeguard assets and liabilities Take appropriate disciplinary steps against any official contravening the PFMA Manage and safeguard assets and liabilities Take appropriate disciplinary steps against any official contravening the PFMA Commitment and ethical behaviour Chapter 5 of the Public Finance Management Act, 1999 The role of the accounting officer is critical to ensure: timely, credible information + accountability + transparency + service delivery

27. 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 27

28. Senior management Senior management Accounting officers/ authority Accounting officers/ authority Executive authority Executive authority 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 Management assurance First level of assurance Senior management Senior management Accounting officers/ authority Accounting officers/ authority Support oversight – complimentary mandate Oversight assurance Second level of assurance Oversight assurance Second level of assurance Coordinating / Monitoring institutions Coordinating / Monitoring institutions Internal audit Internal audit Audit committee 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 Independent assurance Third level of assurance Oversight (portfolio committees / councils) Oversight (portfolio committees / councils) Public accounts committee 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

29. Interim review of 2015/16 Annual Performance Plans 29

30. AGSA review of 2015/16 Annual Performance Plan UsefulnessPresentationAs required by FMPPIConsistency APP objectives, indicators & targets = Strategic plan objectives, indicators & targets Key performance indicators Well defined Verifiable Targets Specific Measurable Time bound

31. 31 Entity reviewedSignificant findings identified Department of Public Service and Administration No significant findings identified on usefulness National School of GovernmentNo significant findings identified on usefulness Public Service CommissionNo significant findings identified on usefulness Department of Performance Monitoring and Evaluation No significant findings identified on usefulness National Youth Development AgencyNo significant findings identified on usefulness Findings from the AGSA review of 2015/16 Annual Performance Plan

32. 32 Oversight responsibility of Portfolio Committee 32

33. 33 Identify desired impacts Assess and adjustSpecify performance indicators Monitor and take Set targets corrective action and allocate resources End-year reporting Strategic Planning Implementation and in-year reporting Operational planning and budgeting Policy development INSTITUTION National department Provincial department Municipality Public entity Municipal entity INSTITUTION National department Provincial department Municipality Public entity Municipal entity OVERSIGHT: Parliament, provincial legislature or municipal council OVERSIGHT: Parliament, provincial legislature or municipal council Oversight model Accountability

34. 34 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 Role of Portfolio Committees (Rule 201) Oversight component - Portfolio committee mandate

35. Considerations for Portfolio Committees when dealing with performance monitoring APP aligns with NDP Adequate resources (human and financial) available to achieve APPs? Are the targets realistic ? S M A R T Ask ‘how’ the entities will achieve the APPs e.g. Performance contracts/ monitoring Portfolio Committee should review quarterly progress against the APP targets Portfolio Committee should review the annual achievement against APP targets Portfolio Committee should track any changes to the APP

36. Robust financial and performance management systems Oversight and accountability Commitment and ethical behaviour by all Competent and value-adding Auditor General Transparent and stable reporting systems Budgeting and planning processes Focussed information management platforms Strong internal audit capabilities Reporting to enable effective oversight Applying consequences for transgressions and poor performance Visible commitment by all players in the public service Demonstrated impeccable ethical behaviour and professionalism Independent and relevant reporting by the AG Value-adding input expressed by the AG Professionalism Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY AGSA’S aspirations for the Public Service 36

37. Questions 37