1. Department of Agriculture, Forestry and Fisheries Presentation to the Portfolio Committee 10 October 2011

2. 22 Agenda Welcome Reputation Promise Group Structure Auditor’s of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

3. 3 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.

4. 44 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

5. 5 Group Structure Department of Agriculture, Forestry and Fisheries Schedule 3 A National Public Entities Schedule 3 B National Government Business Enterprises Agricultural Research Council National Agricultural Marketing Council Marine Living Resource Fund Ncera Farms (Pty) Ltd Onderstepoort Biological Products Perishable Product Export Control Board

6. 6 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

7. 7 Auditor’s of DAFF and its Entities Auditor General of South Africa (AGSA) Section 4(3) Audits which the AGSA has opted not to perform PriceWaterhouseCoopers (PWC) Agricultural Research Council National Agricultural Marketing Council Marine Living Resource Fund Ncera Farms (Pty) Ltd Onderstepoort Biological Products Perishable Product Export Control Board Department of Agriculture, Forestry and Fisheries

8. 8 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

9. 9 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Research Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

10. 10 Audit Outcomes – 3 Years Opinion 10/11Opinion 09/10Opinion 08/09 DAFFUnqualified ARCUnqualified NAMCUnqualified OBP LtdQualifiedUnqualified PPECBUnqualified Ncera Farms (Pty) LtdUnqualified MLRFUnqualified

11. 11 Audit Outcomes 2011 Agricultural Research Council National Agricultural Marketing Council Marine Living Resource Fund Ncera Farms (Pty) Ltd Onderstepoort Biological Products Perishable Product Export Control Board Department of Agriculture, Forestry and Fisheries Financially Unqualified with findings on Compliance and AoPO Financially Qualified with findings on Compliance and AoPO Financially Unqualified with findings on Compliance and AoPO Financially Unqualified with findings on Compliance Financially Unqualified with no findings on Compliance and AoPO Financially Unqualified with findings on Compliance Financially Unqualified with no findings on Compliance and AoPO

12. 12 Audit Outcomes Comparison 2011 Vs 2010 Agricultural Research Council National Agricultural Marketing Council Marine Living Resource Fund Ncera Farms (Pty) Ltd Onderstepoort Biological Products Perishable Product Export Control Board Department of Agriculture, Forestry and Fisheries Unchanged Regressed Unchanged

13. 13 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Research Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

14. 14 Department of Agriculture, Forestry and Fisheries Report paragraph10/1109/10Evaluation based on prior year Reasons Irregular ExpenditureEoM UnchangedIneffective monitoring controls to improve compliance and internal controls Report on pre-determined objectives Material findings UnchangedOngoing monitoring & supervision lacking. As a result action plans were not implemented. Strategic planning & performance management Cm UnchangedAs above Annual financial statements, performance & annual report Cm UnchangedAs above Procurement and Contract Management Cm UnchangedAs above Risk managementCm UnchangedAs above

15. The Department: Way Forward OutcomeManagement Commitment required Auditors Commitment Financial Statements Formulate an action plan to address 2010/11 audit findings by 30 September 2011 to be reviewed and monitored on a monthly basis Perform monthly reconciliations of all account balances and disclosure notes to ensure credible and reliable information. Provide inputs on action plan to address 2010/11 audit findings Progress on action plan to be reviewed and reported on a quarterly basis. Quarterly reviews of procurement in the department and compliance with SCM rules and regulations Audit of Predetermined objectives Formulate an action plan to address 2010/11 audit findings by 30 September 2011. Monthly review of credibility of information Interim audit on AoPO to be performed.

16. The Department: Way Forward OutcomeManagement Commitment required Auditors Commitment Compliance Formulate an action plan to address 2010/11 audit findings by 30 September 2011 and Implement and monitor on a quarterly basis. Monitor and report on compliance with rules and regulations on all transactions on a quarterly basis Progress on action plan to be audited and reported on a quarterly basis

17. 17 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Research Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

18. 18 Agricultural Research Council Report paragraph10/1109/10Evaluatio n based on prior year Reasons Irregular ExpenditureEoM Unchange d Ineffective monitoring controls to improve compliance and internal controls Report on pre- determined objectives No significant findings Material findings ImproveOngoing monitoring & supervision was evident. Annual financial statements, performance & annual report Cm Unchange d As above Procurement and Contract Management Cm Unchange d As above

19. Agricultural Research Council- Way Forward OutcomeManagement Commitment required Auditors Commitment Compliance Formulate an action plan to address 2010/11 audit findings by 31 August 2011 and Implement and monitor on a quarterly basis. Monitor compliance on a regular basis and ensure credible and reliable information is presented. Progress on action plan to be audited and reported on a quarterly basis

20. 20 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Marketing Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

21. 21 National Agricultural Marketing Council Unqualified Audit Opinion There were no significant findings on predetermined objectives There were no material non compliance with laws and regulations applicable to the NAMC.

22. OutcomeManagement Commitment required Auditors Commitment Unqualified Audit Opinion Compliance with laws and regulations Formulate an action plan maintain positive audit outcome for both financial, compliance and AoPO related matters Implement and monitor on a quarterly basis. Progress on action plan to be reported on a quarterly basis NAMC - Way Forward

23. 23 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Marketing Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

24. 24 Onderstepoort Biological Products Ltd Report paragraph10/1109/10Evaluatio n based on prior year Reasons Inventory ( Work in Progress) Qualificatio n UnqualifiedRegressio n Inadequate Record Keeping Inadequate Systems Lack of monitoring controls Property Plant and Equipment (Assets under R 5000) Qualificatio n UnqualifiedRegressio n Inadequate Record Keeping Inadequate Systems Ineffective monitoring controls Irregular Expenditure and Fruitless and Wasteful Expenditure EoMNoneRegressio n Ineffective monitoring controls to improve compliance and internal controls Annual financial statements, performance & annual report Cm Regressio n As above

25. Report paragraph10/1109/10Evaluatio n based on prior year Reasons Strategic Planning and Performance Management Cm Regressio n Ineffective monitoring controls to improve compliance with laws and regulations and internal controls Report on pre- determined objectives Material findings No significant findings Regressio n As Above Annual financial statements, performance & annual report Cm Regressio n As above Asset ManagementCm Regressio n As Above Procurement and Contract Management Cm Regressio n As above Onderstepoort Biological Products Ltd

26. Onderstepoort Biological Products Ltd- Way Forward OutcomeManagement Commitment required Auditors Commitment Financial Statements Formulate an action plan to address 2010/11 audit findings by 30 September 2011 to be reviewed and monitored on a monthly basis Perform monthly reconciliations and review and monitor credibility and reliability of financial and performance information presented. Monitor and report quarterly on compliance with rules and regulations. Prioritise appointment of key personnel and internal audit to ensure stability in the organisation. Ensure sustainability of structures in the OBP. Provide inputs on action plan to address 2010/11 audit findings Progress on action plan to be audited and reported on a quarterly basis Compliance Provide inputs on action plan to address 2010/11 audit findings Audit of Predetermined objectives Interim audit on AoPO to be performed.

27. 27 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Marketing Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

28. 28 Ncera Farms (Pty) Ltd Report paragraph10/1109/10Evaluation based on prior year Reasons Report on pre-determined objectives Material findings UnchangedAppropriate Key Controls and systems were not implemented to address reporting on predetermined objectives. Risk management- Internal Audit Function and Risk Management Strategy and Audit Committee Cm UnchangedAppropriate Key Controls and Systems were not implemented.

29. OutcomeManagement Commitment required Unqualified Audit Opinion Compliance with laws and regulations Formulate an action plan to maintain positive audit outcome Formulate an action plan to address non compliance with laws and regulations Implement and monitor on a quarterly basis. Ncera Farms (Pty) Ltd - Way Forward

30. 30 Audit Outcomes Summary- 3 Years Summary 2011 vs 2010 Detailed Audit Outcomes Per Entity –Department of Agriculture, Forestry and Fisheries –Agricultural Research Council –National Agricultural Marketing Council –Onderstepoort Biological Products Ltd –Ncera Farms (Pty) Ltd –PPECB

31. 31 PPECB Financial Unqualified No Findings on Predetermined Objectives No Findings on Compliance with Laws and Regulations

32. OutcomeManagement Commitment required Unqualified Audit Opinion Compliance with laws and regulations Formulate an action plan maintain positive audit outcome Implement and monitor on a quarterly basis. PPECB - Way Forward

33. 33 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

34. 34 Key Controls Documents Department of Agriculture, Forestry and Fisheries OBP Ltd Agricultural Research Council National Agricultural Marketing Council Marine Living Resource Fund Perishable Product Export Control Board Ncera Farms (Pty) Ltd

35. 35 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

36. 36 Concerns DAFF –AoPO –Filling of Vacant Posts –Internal Audit Capacity –Improving the efficiency and effectiveness of internal audit –Compliance with laws and regulations (Supply Chain) Onderstepoort Biological Products Ltd –Record Keeping –AoPO –Filling of Vacant Posts, CEO and CFO –Establishment/Capacitating an internal audit unit –Compliance with laws and regulations (Supply Chain)

37. 37 Concerns-Contd Ncera Farms (Pty) Ltd –AoPO –Filling of Vacant Posts, CEO and CFO –Formation of Internal Audit and audit committee ARC –Compliance with laws and regulations (Supply Chain)

38. 38 Agenda Welcome Reputation Promise Group Structure Auditors of DAFF & its Entities Audit Outcomes Feedback on Key Controls Concerns Initiatives from AGSA to drive audit outcomes

39. 39 Initiatives from AGSA to drive audit outcomes Quarterly Key Control Dashboard Review AoPO workshops have been conducted for the following entities –DAFF –OBP Ltd –Agricultural Research Council High Level Overview of DAFF Strategic Plan performed in March/April 2011 Regular interactions with officials for all entities

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