1. Page 1 APAC ANNUAL TRAINING WORKSHOP 2011 The use of performance audit reports from AGSA 2 – 3 August 2011

2. 2 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.

3. 3 Auditor-General of South Africa The AGSA celebrates its centenary year in 2011 25 years since the first Performance Audit was conducted by the Auditor-General Legal mandate to conduct Performance Audits established in 1975 First separate Performance Audit report was tabled in 1988

4. 4 What is a Performance Audit An independent auditing process to evaluate the measures instituted by management to ensure that allocated resources are procured economically and utilised efficiently and effectively and, if necessary, to report thereon.

5. 5 What is a Performance Audit (continue…) Economy - acquisition of resources in the right quantity, of the right quality, at the right time and place at the lowest possible cost Efficiency - optimal relationship between the output of goods, services or other results and the resources used to produce them Effectiveness - performance in relation to achievement of the policy objectives, operational goals and other intended effects of the audited entity

6. 6 Why conduct Performance Audits Performance auditing encourages learning and change within the public sector by providing new information and drawing attention to various challenges. It contributes to improvement and reform in public administration, providing the government with recommendations based on independent analysis. Thus, it adds value to the traditional functions of SAIs. Performance auditing plays an important role in keeping the legislative well informed about governmental actions and the outcome of its own decisions. It increases public transparency and accountability, providing objective and reliable information on how public service perform.

7. 7 Users and characteristics of Performance Audit reports  Management report UsersCharacteristics Accounting officer/authorities Senior officials at the audited institution Confidential document between the AG and the auditee Sufficient detail to enable the auditee to follow up on the shortcomings reported in the management report for example would include reference to personnel details such as PERSAL numbers and details of default contactors

8. 8 Users and characteristics of Performance Audit reports (continued…)  Final Performance Audit report UsersCharacteristics Relevant legislatures PAC Public An abbreviated version of the management report Provides a balanced perspective to audit findings as it also includes comments from the accounting officer on the audit findings Becomes a public document after tabling in the relevant legislature Final report will focus on the more important aspects from the management report

9. 9  Example of a finding in a final performance audit report to a provincial Legislature

10. 10 Users and characteristics of Performance Audit reports (continued…)  Final Performance Audit report on a transversal audit theme UsersCharacteristics Parliament PAC Relevant national portfolio committees Public Provide Parliament with findings reflecting the trends and transversal shortcomings across departments and/or provinces where a transversal performance audit was conducted. Report will not focus on individual findings per auditee unless it has a wider impact. Focus on areas where Parliament can take corrective action.

11. 11  Example of a finding in a final performance audit report to Parliament

12. 12 Utilisation of recently tabled Performance Audit reports ReportUtilisation Rehabilitation of abandoned mines at the Department of Minerals and Energy Resolution by SCOPA and Portfolio Committee Projects that are funded by the National Development Agency Resolution by SCOPA Forensic Chemistry Laboratories at the national department of Health Not considered Status of climate change initiatives in SANot considered

13. 13 Performance Audit reports to be published Infrastructure delivery process at the provincial departments of Education and Health Use of consultants by National and provincial departments Early Childhood Development by provincial departments of Education Adult Basic Education and Training at provincial departments of Education

14. 14 Performance Audit of Infrastructure Areas that require urgent corrective action by government: 1.The process of needs determination and planning was found not to be effective giving rise to unused and underutilisation of completed infrastructure. 2.A robust procurement system was not consistently applied thus compromising the transparency, accountability and economy with which decisions/commitments were made; and 3.Project management was not effective resulting in projects that were not completed on time and at the required level of quality and cost.

15. 15 Performance Audit of Infrastructure (continued…) Knowledge and insights obtained during the completion of the performance audit have been integrated into the annual regularity audits. In addition to following up on corrective actions taken by auditees, future regularity audit coverage will include auditing the acquisition (supply chain management), project management and maintenance of material government projects across all sectors.

16. 16 Case Study

17. 17 Case study A performance audit at the National Lotteries Board was conducted in 2007.

18. 18 Case study Discussion of the performance audit of grant management at the National Lotteries Board Key findings: No policies and procedures to address the repeated under-allocation of funds. In total 31% (R2 billion) of the funds available for distribution was not distributed. Staff compliment not sufficient to address the high volume of applications. Long delays and slow turnaround times have a direct impact on beneficiaries and a backlog of up to 66% existed. No regular feedback to beneficiaries with regard to their applications and payments. Inadequate document management process. Systems and measures did not function effectively to identify and consider previous funding and beneficiaries obtained funding from more than one source.

19. 19 Discussion and feedback questions Formulate possible questions to the accounting officer. Formulate possible resolutions to implement corrective actions. Compile a list of requirements for the report to facilitate discussion in public accounts committees.