1. AGSA Strategic Plan and Budget 2014-2017 Presentation to SCoAG February 2014

2. Reputation promise / mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution 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.

3. 3  Overview of AGSA’s strategic objectives  Main focus areas in the Strategic Plan  Summary of Strategic Goals and Objectives  Strategic Risk Profile  Strategic goals, objectives and performance measures with strategic initiatives  Sustainability Strategy  Budget 2014-17 Presentation Outline

4. Summary of Strategic Goals and Objectives Improving the lives of SA citizens through executing our constitutional mandate of strengthening our country’s democracy Commitments Strategic objectives Simplicity, clarity and relevance of our messages Funding Strengthen our human capital Visibility of leadership Lead by example Make value-adding recommendations to auditees Maintain excellent quality of auditing Make certain that our messages reach all stakeholders Establish, maintain and own stakeholder relationships to encourage clean administration Execute the organisational mandate economically, efficiently and effectively Ensure sufficient funding for the achievement of the mandate while maintaining our independence Build a motivated, high-performing and diverse workforce. Create access to the relevant skills and knowledge required for our work Adhere to standards of excellence for clean administration Continually improve the timeliness of AGSA reports Maximise the AGSA’s contribution to transformation Impact Sustainable organisational practices

5. 5 Focus Areas In The Strategic Plan  Integration of our various types of audit to holistically assess shortcomings in financial management, compliance and performance.  Increased research and consultations to confirm the required growth in performance auditing and relevant topics and areas for such auditing  Continual engagement with those charged with governance in public sector to encourage clean administration

6. 6  Optimisation of the audit fees  Exploring ways to collect debt more effectively;  Intensifying the learning and development initiatives Focus Areas In The Strategic Plan

7. 7 Strategic Risk Profile Risk 1: The basis & mechanism of our mandate not always fully understood Risk & Risk 2: Failure to adequately understand &respond to priorities of our external stakeholders responsible for leadership, governance and oversight Risk 3: Inability to have access to the right people and other resources to deliver on our mandate Risk 4: Unaffordable and unrealistic audit fees Risk 5: Inability to recover debts Simplicity, clarity and relevance of our messages Visibility of leadership Strengthen human resources Lead by example Funding Strategic risks Strategic goals

8. Objective 1: Provide value-adding recommendations to stakeholders based on audit results Goal 1: Simplicity, clarity and relevance of messages Objective 2: Continued excellence of the quality of audits performed Complementing the quality of the message with the quality of the audit process

9. Objective 1: Provide value-adding recommendations to stakeholders based on audit results Goal 1: Simplicity, clarity and relevance of messages Performance measure Targets 2014-152015-162016-17 Clear communication of relevant root causes and recommendations in our reports 100% Tool  Qualitative rating by AG  Source of information: reports and presentation experience and stakeholder feedback Note: Internal products will be rated according to quality and timelines agreed with the relevant line manager.

10. Goal 1 – Main activities / initiatives  Enhance the packaging and positioning of our messages and the timing and structure of our general reports  Conduct interim audits of the annual performance plans  Continue to oversee and influence the audit process where we opted not to conduct the audits - to ensure the required quality and depth of the audits  Increase the number of audits of state-owned companies, universities and FET colleges

11. Goal 1 – Main activities / initiatives  Organic integration between regularity auditing and the specialised units for performance auditing, investigations and information systems auditing.  Increased access to specialised advice, and specifically legal expertise provided to the audit teams to deal with unique issues arising during the audit process.  Optimising the efficiency of the audit process by reviewing the existing audit practices, the structures and the resources used in audits, the use of contracted firms, as well as the scope and impact of the use of technology on the audit.

12. Objective 2: Continued excellence of the quality of audits performed Goal 1: Simplicity, clarity and relevance of messages Performance measureTargets 2014-152015-162016-17 Adherence to all quality standards Audit engagements 87% (C1, C2 and C3 rating) 90% (C1, C2 and C3 rating) ToolQuality control assessment committee review Adherence to all quality standards Corporate reports 100% Tool  Qualitative rating by AG

13. Goal 1 – Main activities / initiatives  Constantly raise and maintain awareness of the importance of the quality of audits.  Continue with proactive pre-issuance reviews on selected engagements.  Perform independent post-issuance reviews (incl. those performed by contracted firms for adherence to the International Standards on Auditing.  Implement and monitor policies and procedures in respect of all elements of ISQC1.  Continuously benchmark our audit practices internationally and obtain assurance from independent external bodies.

14. Objective: Develop stakeholder relationships to encourage clean administration Goal 2: Visibility of leadership Performance measureTargets 2014-152015-162016-17 High-quality, value-adding external stakeholder interactions conducted and escalated, where necessary 100% Tool  Qualitative rating by AG  Source of information: Stakeholder feedback

15. Goal 2 – Main activities / initiatives  Optimise the return on investment of our interactions with stakeholders by concentrating on the impact of our engagements.  Pursue high-quality interactions – create, own, manage and sustain relationships.  Re-evaluate and tailor our engagements to focus on those stakeholders that display willingness to improve.  Implement detailed tracking to determine the amount of time and other costs spent on the different areas of stakeholder engagements.

16.  Significantly improve visibility to internal stakeholders to create room for strategic discussion. Ensure that the brand promise is also part of the staff’s experience.  Seek balance between visibility, quality of our product and growing the skills of our staff.  Intensify the use of social media platforms to engage directly with the public.  Contribute to capacity building globally and on the African continent.  Encourage the private firms that conduct audits on our behalf to align with our visibility programmes. Goal 2 – Main activities / initiatives

17. Objective: Execute the AGSA’s mandate economically, efficiently and effectively Goal 3: Funding Performance measure Targets 2014-152015-162016-17 Net surplus (%)1%2% ToolAnalysis of income statement Performance measure Targets 2014-152015-162016-17 Creditors’ days45 days ToolAnalysis of creditors’ ageing report

18. Goal 3: Funding Performance measureTargets 2014-152015-162016-17 % debt collected – all national business units 98% -100% 1% debt collected from the NT – Finance BU 100% % debt collected – all provincial business units 96% - 98% ToolAnalysis of the debtors’ ageing report

19. Goal 3 – Main activities / initiatives  Review of our funding strategy  Pursue further maturity of our finance systems and implement conscious cost-cutting programmes / austerity plans  Closely track all strategic initiatives to enable faster decisions and direct resources appropriately.  Continue to negotiate direct appropriation of municipal audit fees from the National Treasury.  Engage key government stakeholder to influence the debt payment by auditees

20. Objective: To achieve a motivated, high-performing and diverse workforce Performance measure Targets 2014-152015-162016-17 Occupancy level (%)90% ToolStaff occupancy rate report from the ERP system Performance measure Targets 2014-152015-162016-17 Maximum staff turnover (%) 12% ToolStaff turnover report from the ERP system (the targets exclude TAs and short-term contract (STC) employees) Goal 4: Strengthen our human capital

21. Performance measure Targets 2014-152015-162016-17 Culture index3.753.773.79 Leadership index3.743.763.78 Staff engagement index4.054.074.09 ToolAnnual survey and focus groups interviews. The target is expressed on a 5-point scale Note: This targets are only applicable at organisational level. BUs will be measured on implementation of people plans as approved by relevant CEs Objective: To achieve a motivated, high-performing and diverse workforce

22. Goal 4 – Main activities / initiatives  3-pronged strategy: Development of leadership competence, talent management and creation of an environment for a high-performing and ethical workforce.  Talent management  improving the talent-sourcing mechanism  developing and monitoring talent in the AGSA  monitoring occupancy levels and reducing staff turnover rates throughout the business units  implementing a total reward strategy.

23. Goal 4 – Main activities / initiatives  Leadership competence and performance – augmenting the capacity and performance of our leaders through:  Providing executive coaching and mentoring  Ongoing competency assessment and development of the AGSA leadership  Developing and strengthening the leadership pipeline for succession planning  Enhancing the level of team effectiveness  Participating in executive development programmes  Best practice knowledge sharing with other SAIs

24. Goal 4 – Main activities / initiatives  Learning and development - enhancing and developing the skills and competency base of our employees through:  Maintaining an effective TA scheme  Further strengthening our pipeline through providing external bursaries and partnering with stakeholders in the auditing industry.  Growing qualified audit professionals belonging to various professional bodies as part of the desired professional qualifications profile  Enhancing the learning and skills development interventions for continuous growth of our employees

25. Objective: Adhere to standards of excellence Goal 5: Leading by example Performance measure Targets 2014-152015-162016-17 Unmodified audit opinion on the AGSA Unmodified audit opinion ToolExternal audit report Performance measure Targets 2014-152015-162016-17 B-BBEE level222 ToolIndependent review conducted by an external agency Levels defined through the accepted country-wide system Objective: Maximise our contribution to transformation

26. Performance measure Targets 2014-152015-162016-17 Timeliness of reports PFMA reports 90% within 2 months where annual financial statements are received as per the legislated deadlines MFMA reports 90% within 3 months where annual financial statements are received on time and f4months where statements are not received on time Tool  Measure pertains to all annual financial statements received and required to be completed within the financial year Goal 5: Leading by example Objective: Continually improve timeliness of our reports

27. Performance measure Targets 2014-152015-162016-17 Timeliness of reports Performance audit reports 95% (deadlines as agreed with AG/DAG) Corporate reports 100% Tool  Corporate reports as legislated Goal 5: Leading by example Objective: continually improve timeliness of our reports

28. Goal 5 – Main activities/initiatives Optimising our business processes and information technology  Improve connectivity to enable better resource mobility and timely access to information.  Step up the ability to process growing data volumes at improved speeds  Minimise the organisation’s dependence on paper records allowing faster access to and an in-depth analysis of data.  Enhance information-sharing.

29. Goal 5 – Main activities/initiatives  Continue to position IT as an important part of strengthening our internal controls.  Streamline our business processes even more to ensure minimal disruptions to business  Gradually implement new audit software - to gain efficiencies, facilitate better interaction between the teams, improve remote access and enhance user experience.  Automate the CWC process to minimise the time of processing the allocation of outsourced work

30. Sustainability – Main activities/initiatives  Optimise and integrate our reporting procedures and process  Improve our information systems to enhance integrity and quality of our sustainability reporting information  Continuously assess our carbon footprint  Monitor and evaluate environmental sustainability initiatives. Note: our organisational strategy has embedded various aspects of economic, cultural and social sustainability in the five strategic goals, here the focus is on the environmental aspect of our sustainability.

31. BUDGET 2014 - 15

32. Budget overview Actual 2012-13 Budget 2013-14 Budget 2014-15 Surplus/(deficit )%0.83%1.01%1.08% Total overheads as % of total audit income 30.81%32.96%33.96% Gross Profit %30.21%32.33%33.28% CWC income %27.71%23.47%22.77%

33. Income statement overview Budget 2013-14 Budget 2014-15 Movement Rmil % Audit income 2,514 2,7078% - Own hours 1,810 1,9729% - Contract work 590 6164% - S&T 114 1194% Direct expenditure 1,701 1,8066% Recoverable staff cost 997 1,0717% Contract work 590 6164% S&T 114 1194% Gross profit 813 90111% Other income 41 4816% Contribution to Overheads 854 948 Overhead expenditure 829 91911% Surplus/(deficit) 25.34 29.3416%

34. Capital expenditure Budget 2013/14 Rmil Budget 2014/15 Rmil Computer equipment3743 Office equipment24 Furniture & Fittings1511 Leasehold improvements1120 Motor vehicles12 Capital Purchases6680