1. The Auditor-General Budget and Strategic Plan 2009-2012 7 October 2008

2. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 2 AG Vision To be recognised by our stakeholders as a relevant Supreme Audit Institution that enhances public sector accountability AG’S Strategic Vision and Values Values oWe value, respect and recognise our people oOur accountability is clear and personal oWe are performance driven oWe value and own our reputation and independence oWe work effectively in teams oWe are proud to be South African

3. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 3  Regularity audits  Performance auditing  Funding model Vacancies Debtor collection Trainee accountant scheme  Leadership  Governance  Reputation Key Strategic focus areas

4. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 4 Achievement of unqualified reports oImproving relevance of reporting Root causes analysis Timeliness - The timeliness measure will be increased by 5% year-on-year starting from a baseline of 80% and 60% for PFMA and MFMA respectively oIncreased visibility of AG leadership To engage the auditee leadership on the audit focus, process and outcomes Regularity audits

5. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 5  The standard of our quality will be measured using the International Regulatory Body of Auditors (IRBA) quality assessment tool  Targeting 75% of our audit reports to rated by IRBA to be of excellent quality by 2009 / 10 and then increase the quality rating by 1% annually Regularity audits

6. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 6 Performance auditing  Performance auditing focuses on evaluating whether auditees have utilised resources economically, efficiently and effectively.  Key sectors for transversal performance auditing are: Education Consultants Public enterprises Initiatives  Centralised management of performance auditing  Research on transversal performance audit themes  Transversal audit of provincial & municipal infrastructure  International peer review

7. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 7 Auditing of performance information  The AoPI is carried out in terms sections 20(2)(c) and 28(1)( c) of the PAA  The AG adopted a phased-in approach for compliance with relevant sections until such time that performance management and reporting framework have been legislated and the audit environment is mature  Over and above a financial audit opinion, audit of performance information focuses on the these areas: Root cause analysis which will lead to a separate opinion on internal controls Auditing of information which should lead to a separate opinion on performance information An opinion on whether an auditee complies with laws and regulations  Track compliance of AoPI milestones in the audit process to ensure that there is 100% compliance with pre-determined audit-coverage milestones as defined in the annual AoPI plan

8. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 8 Assumptions  Remove capping on tariff model  Apply mark-up factor of 2.2 on direct cost  No limit on the top of the band  Tarriffs are calculated on the same principles as SAICA rates  Increase the allowable surplus to 6% Funding model

9. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 9 Debt collection Ring fencing of certain debtors ensures that long outstanding debts do not affect collection of debt. These debts are dealt with separately without being written off. E-billing tool to assist in speeding up billing and collection from auditees Debtors to comply with the following payment terms: Max. 90 days for Local Govt Max. 30 days for National & Provincial Govt. AG to comply with creditor payment terms for 80% of our creditors (baseline) and increasing the number by 5% annually Funding model initiatives

10. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 10 Reposition the Trainee accountants scheme oReduce the number of trainees so as to improve the supervisory structures that are required and thus increase the current pass rate to be above the national average oSplit the AG entry-level into two groups Trainees - people who want to qualify as professionals and have the ability to do so Clerks - people who may not be interested in qualifying or do not have the ability to do so oImprove retention of trainees who completed their training contracts by 10% annually Corporate Social Investment oAdoption of 15 high schools oContinued participation in the Thuthuka schools project oAG to form partnerships with The Dept of Finance in the regions to sponsor undergraduate bursaries oAG office to sponsor post graduate bursaries oAG to sponsor TA contracts to serve articles Initiatives to address vacancies

11. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 11 As of the end of August 2008 we had 528 new vacancies of which 110 are Assistant Managers and 120 are Audit Managers Increase retention of Assistant and Audit Managers by 20% and 25% in 2009/10 from a baseline of 15% and 29% respectively. After that an annual increase of 5% Secondment of Audit Managers from Deloitte/India On-line recruitment tool to source talent – online application and response tracking Filling of vacancies through promotions and offering incentives for candidates relocating to outlying provinces More targeted recruitment for candidates with other professional qualifications (RGA, ACCA, CISA and CIMA) Leveraging acting appointment before permanent vacancies Marketing and branding strategies at tertiary institutions and the media Building relationships with university academics and Industry Associations (SAGRA, AWCA,ABASA) to facilitate the sourcing of candidates Incentives for employees for referrals Utilising specific search engines for recruitment More streamlined recruitment process with adequate resourcing Initiatives to address vacancies

12. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 12 Leadership effectiveness Effective leadership is the only way to elevate and sustain organisational performance to a level of excellence Initiatives  The AG roles and responsibilities framework to enhance the level of accountability has been developed and agreed.  The competency framework for critical competencies has been designed and approved – to be utilised for recruitment and developmental purposes as part of AG leadership development initiatives  Rollout of our desired values and behaviors  Leadership programme covers: Communicating Leader training Executive coaching for CEs and BEs Leadership programme for managers  Repositioning Performance management system  Culture index will be increased to 25% (2013-14) with a baseline of 14% that was taken in 2006

13. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 13 Governance & risk management  Section 43 of the PAA requires that the DAG establish and maintain a system of risk management & quality control  Initiatives Reengineering of prioritised ICT, Human resources and Finance processes to be at level 4 of the Capability Maturity Level by 2011-12 Development of enterprise-wide risk management framework. Implementation of balanced scorecard tool for data integrity & quality Encrypted notebooks to mitigate security risk to all information Revamping of CSA tool for robust internal control This will ensure that the AG Leads by example in the Public sector Achieves and maintains unqualified audit reports

14. A High Level Overview of the Budget and Strategic Plan of the Auditor General April 2009 – March 2012 Page 14 Reputation The identified key reputation strategic areas will have the following impact:  Stakeholders understand the role and relevant contribution of AG  Unqualified audit reports  Audit reports are simple and relevant  Reports are easy to read and are understandable  Effective implementation of audit recommendations  The AG is adequately professionalised through the Trainee Accountant Scheme  Meaningful contribution of audit professionals to the public sector  AG is independent and financially sustainable  All sources of risk are identified and mitigated Measurement will be % improvement on the overall reputation index. The reputation index target in in five years is 25% (2013-14) with a baseline of 19% that was determined in 2006