1. AUDIT COMMITTEES’ PERSPECTIVE ON PERFORMANCE MANAGEMENT AND INSIGHTS INTO THEIR OVERSIGHT ROLE

2. Page 2 AGENDA 1. WHY PERFORMANCE MANAGEMENT 2. PLANNING, BUDGETING & REPORTING 3. KEY PERFORMANCE MANAGEMENT CONCEPTS 4. REPORTING 5. AGSA REQUIREMENTS 6. WHAT IS EXPECTED OF THE AUDIT COMMITTEES 7. CONCLUSION 5 th Annual Audit Committee Conference

3. Page 3 PERFORMANCE INFORMATION - CONTEXT “Performance information indicates how well an institution is meeting its aims and objectives, and which policies and processes are working. Making the best use of available data and knowledge is crucial for improving the execution of government mandate. Performance information is key to effective management, planning, budgeting, implementation, monitoring and reporting.” National Treasury: Framework for Managing Programme Performance Information 5 th Annual Audit Committee Conference

4. Page 4 WHY PERFORMANCE MANAGEMENT ► Government policy – being accountable to the people ► Pure financial results not always appropriate measure or inadequate ► Yardstick to measure performance of public institutions ► Measure value for money – efficient allocation of resources ► Hold public institutions accountable ► Drive results-based management approaches 5 th Annual Audit Committee Conference

5. Page 5 RELATIONSHIP BETWEEN KEY INFORMATION CONCEPTS IMPACTSOUTCOMES OUTPUTSACTIVITIES INPUTS 5 th Annual Audit Committee Conference Delivery Goals to be achieved Actions taken Improvement expected to be made Resources ► Planning, Budgeting & ► Implementation

6. Page 6 PLANNING, BUDGETING & REPORTING CYCLE 5 th Annual Audit Committee Conference OVERSIGHT POLICY DEVELOPMENT STRATEGIC PLANNING INSTITUTION “SOE” PLANNING & BUDGETING YEAR-END REPORTING IMPLEMENTATION & CURRENT YEAR REPORTING ► Specify performance indicators ► Set targets & ► Allocate resources ► Monitor and take ► corrective action

7. Page 7 SELECT PERFORMANCE TARGETS “SMART”LY 5 th Annual Audit Committee Conference S Specific and clear description and identification of the performance area Level of performance clearly spelt out M Required performance must be measurable A Target must be realistic and achievable give the existing capacity Is the target achievable within the constraints of resources available R Relevant. The required performance is linked to the achievement of a goal T Time-bound. The time period or deadline for delivery is specified

8. Page 8 STEPS IN DEVELOPING PERFORMANCE INDICATORS 5 th Annual Audit Committee Conference What needs to be achieved Eg. Eradicate bucket system Step 1 Specify what needs to be achieved What needs to be done to achieve desired outcomes and impacts Activities required to produce these outputs Step 2 Specify outputs, activities and inputs Indicators must be simple, easy to understand Data for chosen indicators should be readily available Number of indicators should be manageable Step 3 Select key indicators Balance between realistic, achievable and challenging Step 4 Set realistic performance targets Performance information to be consolidated and reported back into planning, budgeting and implementation processes Step 5 Determine process and format for reporting performance Regular monitoring and reporting against expenditure plans and targets Step 6 Establish processes and mechanisms to facilitate corrective action

9. Page 9 REPORTING 5 th Annual Audit Committee Conference Accountability CycleDocumentInformation Strategic planningStrategic Plans  Outputs  Performance Indicators Planning & Budgeting  Operational Plans  Budgets  Performance Agreements  Set Performance Targets  Allocate Resources  Allocate Responsibilities Implementation and reporting during the year  Monthly Budget vs Actual Reports  Quarterly Performance Reports Report Progress with Implementation of Plans & Budgets Year end ReportingAnnual ReportReport on Performance vs Plans and Budgets Audit  Audit report  Management letter Audit findings

10. Page 10 WHAT THE AGSA IS LOOKING FOR ► Usefulness and reliability of reported performance information as presented in the annual performance report ► Is performance information presented in accordance with National Treasury reporting principles – compliance with regulatory requirements ► Is the reported performance information consistent with planned performance ► Are performance indicators and targets well defined, verifiable, specific, measurable, time-bound and relevant, as required by the National Treasury Framework for Managing Programme Performance Information ► Is the reported performance information valid, accurate and complete ► Portfolio of evidence 5 th Annual Audit Committee Conference

11. Page 11 WHAT IS EXPECTED OF THE AUDIT COMMITTEE ► Thorough understanding of Performance Management processes and how they work ► Ownership of copy of approved Performance Management Plan/ Pre- determined Objectives ► Quarterly interrogation of performance management report ► Monitoring of management plan of action for progress re Performance Management ► Hold management accountable for the follow up on prior year AG findings 5 th Annual Audit Committee Conference

12. Page 12 IN SUMMARY ► Performance management now topical due to pressure to deliver services to the public ► AGSA now focussing on Performance Management ► Trend expected to continue for some time ► Responsibility of Audit Committees to play oversight role 5 th Annual Audit Committee Conference

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