1. Briefing to the Portfolio Committee on Rural Development and Land Reform (DRDLR) Audit outcomes of the DRDLR portfolio 2 February 2016

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

3. 3 Purpose of the presentation To brief the portfolio committee on the audit outcomes for the DRDLR portfolio over the past 5 years where applicable on the following, Financial audit opinions for portfolio Status of the six key risk focus areas Status of drivers of internal controls The three main root causes leading to deficiencies of internal controls Implementation and progress tracking of audit recommendations

4. X Provide assurance that AFS are free from misstatements that will affect users Do not provide assurance on the appropriateness of the departmental budgets Report on usefulness and reliability of the information in the annual performance report Do not provide assurance that service delivery has been achieved. Report on material non-compliance with relevant key legislations Do not report on ALL legislations – only key selected requirements from relevant legislations are audited Identifying the key internal control deficiencies to be addressed We assess the risk of fraud, but we are not responsible for – Fraud identification Fraud prevention The scope of AGSA audits 4

5. Content 1.DRDLR Overall audit outcomes 6 2.Status on key risk focus areas7 3.Status of drivers of internal control8 4.Root causes and recommendations 9 5.Combined Assurance10 6.Status of implementation – AG 2014/15 audit finding recommendations11 7.Status of implementation - internal audit finding recommendations12 8.DRDLR budget comparison 2014/15 vs 2015/1613 9.Questions15 5

6. 1.Overall audit outcomes – DRDLR portfolio 6 Unqualified with no findings Qualified with findings Unqualified with findings Disclaimer with findings

7. 2.Status of key risk focus areas Good ConcerningIntervention required Submission of AFSSubmission of AOPO Financial health 7 Supply chain management Human resource management Information technology

8. 3.Status on drivers of internal control Good ConcerningIntervention required Leadership Financial and performance management Governance 8 Risk management, audit committee & internal audit Effective leadership, oversight responsibility, HR management, actions plans, IT governance, policies & procedures Proper record keeping, processing and recon controls, regular reporting, compliance monitoring, IT system controls

9. 4. Top three root causes and recommendations 3. Instability or vacancies in key positions 2. Key officials lack appropriate competencies 1. Slow response by management in addressing the root causes of poor audit outcomes Recommendation: Management should ensure that the root cause of the audit findings is correctly identified to address the controls weakness. The action plan drafted should be focusing on the root causes and the progress on the implementation of the action plan should be strictly monitored. All action plans and the root causes of audit finding should be communicate to all staff in order for them to implement the action plan agreed by senior management Recommendation: Management should ensure that vacancies for key management is address timeously going forward, as it will have an impact on the overall audit outcome. Recommendation: Management should ensure that staff at the regions are being assessed to ensure that their shortcoming are identified. Training should be performed to all staff on the revised policies and procedures, updates on the new legislation or changes on existing legislation. 9 2014-15 2013-14 Improved Stagnant or little progress Regressed

10. Senior management Senior management Accounting officers/ authority Accounting officers/ authority Executive authority Executive authority Required assurance levels Extensive Management’s assurance role Senior management – take immediate action to address specific recommendations and adhere to financial management and internal control systems Accounting officers/ authority – hold officials accountable on implementation of internal controls and report progress quarterly and annually Executive authority – monitor the progress of performance and enforce accountability and consequences Management assurance First level of assurance Management assurance First level of assurance Senior management Senior management Accounting officers/ authority Accounting officers/ authority 5. Combined assurance – complimentary mandate Oversight assurance Second level of assurance Oversight assurance Second level of assurance Coordinating / Monitoring institutions Coordinating / Monitoring institutions Internal audit Internal audit Audit committee Audit committee Extensive Required assurance levels Oversight’s assurance role National Treasury/ DPSA – monitor compliance with laws and regulations and enforce appropriate action Internal audit – follow up on management’s actions to address specific recommendations and conduct own audits on the key focus areas in the internal control environment and report on quarterly progress Audit committee – monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans Independent assurance Third level of assurance Independent assurance Third level of assurance Oversight (portfolio committees / councils) Oversight (portfolio committees / councils) Public accounts committee Public accounts committee National Assembly Extensive Required assurance levels Role of independent assurance Oversight (portfolio committees) – review and monitor quarterly progress on the implementation of action plans to address deficiencies Public accounts committee – exercise specific oversight on a regular basis on any report which it may deem necessary National Assembly – provide independent oversight on the reliability, accuracy and credibility of National and provincial government 10

11. 11 DRDLRFully ImplementedPartially ImplementedNot yet ImplementedTOTAL Finance19 038 CLCC3014 Corp Supp Services67013 RID/REID4419 Land Reform Dev4105 Sub- Totals3631269 Percentage - DRDLR52%45%3%100% DEEDS67013 Percentage - Deeds46%54%0%100% ALHA95014 Percentage - ALHA64%36%0%100% Grand Total5143296 Grand total percentage53%45%2%100% 6.Status of implementation 31 Oct 2015 - AG 2014/15 audit finding recommendations

12. 12 Audit Finding Status Per Branch – As at 30 September 2015 Branch Fully Implemented Not Implemented Not Applicable Risk Accepted Total Findings Replaced by Repeat Finding Office of the DG 71 2% 43 8% 00%0 1143%496% Restitution 270 9% 25 5% 46%00%2997%00% Land Redistribution and Development 193 7% 34 7% 00%0 2277%00% Land Tenure and Administration 148 5% 71 14% 00%0 2195%172% SPLUM 94 3% 3 1% 914%00%1063%384% Rural Development 116 4% 29 6% 00%0 1452%00% Deeds Registration 451 16% 38 7% 00%0 48914%19522% National Geomatics Management Services 312 11% 0 0% 0 0 31210%9811% Corporate Support Services 707 24% 237 45% 727%00%95128%36241% Financial Services 521 18% 17 3% 00%0 53816%12914% e-Cadastre 24 1% 23 4% 3953%00%863%00% TOTAL 29075205903486888 83%15%2%0%100%25% 7.Status of implementation – Internal audit findings recommendations

13. 13 8. DRDLR budget comparison 201415 vs 2015/16 This include s an analysis of budget on how much will be spent on operations (salaries, admin activities & bursaries etc ) and how much money is left for service delivery % Budget increase % Budget decrease - 6% - 2% - 3% 7% 3% - 1% 2014-151 348.8745.82 011.602 680.72 668.49 455.30 2015-161 264.3799.91 975.72 602.72 737.19 379.60 Budget Comparison R’000 000

14. 8.DRDLR Budget analysis 2015/16 – Department (cont.) Budget vs Employee Costs Economic classification DRDLR 2015/16 Budget 14

15. Questions 15