Presentation to the Portfolio Committee 1 March 2011 SCIENCE TECHNOLOGY

2. Reputation promise/mission

3. Oversight 3 NOTE TO THE TRAINERS This picture has been taken from the NT framework for managing program performance information and illustrates so well where oversight begins. This same diagram can be utilised to demonstrate how oversight can influence the audit opinion. Starting where the department is responsible at the Strategic Planning Level. NOTE TO THE TRAINERS This picture has been taken from the NT framework for managing program performance information and illustrates so well where oversight begins. This same diagram can be utilised to demonstrate how oversight can influence the audit opinion. Starting where the department is responsible at the Strategic Planning Level.

4. Different Types of Audits Conducted Mandatory Audits Regularity Audit Report on the Annual Financial Statements Report on other and legal and regularity requirements Predetermined Objectives Compliance with Laws and Regulations Internal Control deficiencies pertaining to the above Discretionary Audits Investigations Special Audits Performance Audits

5. The different types of Audits conducted

6. Audit of Predetermined Objectives NOTE TO THE TRAINERS Auditing of predetermined objectives can be defined as an annual audit of reported actual performance against predetermined objectives. This is an integral part of the annual regularity audit, confirming the credibility of the reported performance information in the annual reports of government entities. Performance auditing can be defined as an independent evaluation of the management measures instituted by a government entity to ensure the economical procurement and efficient and effective utilisation of resources. The key evaluation concepts can further be defined as follows: Economical � to procure resources of the right quality in the right quantities at the right time and place at the lowest possible cost. Efficient � to achieve the optimal relationship between the output of goods, services or results and the resources used to produce them. Effective � to achieve policy objectives, operational goals and other intended effects. The insight gained through auditing and analysing the audit outcomes to the level of root causes is shared with stakeholders through audit reports, creating foresight in the process of strategic planning, enhancing good governance and service delivery in the country. NOTE TO THE TRAINERS Auditing of predetermined objectives can be defined as an annual audit of reported actual performance against predetermined objectives. This is an integral part of the annual regularity audit, confirming the credibility of the reported performance information in the annual reports of government entities. Performance auditing can be defined as an independent evaluation of the management measures instituted by a government entity to ensure the economical procurement and efficient and effective utilisation of resources. The key evaluation concepts can further be defined as follows: Economical � to procure resources of the right quality in the right quantities at the right time and place at the lowest possible cost. Efficient � to achieve the optimal relationship between the output of goods, services or results and the resources used to produce them. Effective � to achieve policy objectives, operational goals and other intended effects. The insight gained through auditing and analysing the audit outcomes to the level of root causes is shared with stakeholders through audit reports, creating foresight in the process of strategic planning, enhancing good governance and service delivery in the country.

7. The Regularity Audit Process

8. Format of Auditor�s report Report on the Financial Statements Report on other legal and regulatory requirements Findings on the report on predetermined objectives Findings on compliance with applicable laws and regulations Internal control deficiencies Information on other audits conducted Investigations Agreed upon procedures Performance audits

9. The Different Audit Opinions Unqualified with no other matters (Clean)CSIR-AR.pdf Unqualified with other matters Findings on Predetermined objectives Reported on non compliance Final Audit report signed DST.pdf Qualified �Except for� Adverse Disagree Disclaimer Limitation due to insufficient supporting documentation

10. 10 Science and Technology � PFMA audit outcomes 2009-10

11. Section B: Audit of predetermined objectives Required in terms of Sections 4, 20 and 28 of the Public Audit Act Findings on whether reported (actual) performance information is valid, accurate and complete. Whether a performance management process exist with proper controls to enable relevant and useful reporting on and oversight of service delivery Audit conclusion included in the management report of an entity on the usefulness (SMART) and reliability (valid/ accurate/ complete) of reported information relating to the performance of the entity against predetermined objectives

12. 12 Incomplete reported information Department of Science and Technology Reported information inconsistent African Institute of South AfricaIncomplete reported information Department of Science and Technology Reported information inconsistent African Institute of South Africa

13. 13

14. Compliance with Laws and Regulations Reporting is limited to key legislation e.g. Public Finance Management Act (PFMA), Treasury Regulations (TR) Companies Act Specific enabling legislation(if any), eg HSRC Act Material instances of non-compliance are reported per Act

15. Internal Control Deficiencies in internal control relevant to the audit of the financial statements, predetermined objectives and compliance with laws and regulations are reported under the three fundamentals of effective internal control. Leadership Financial and Performance Management Governance

16. Internal Control (cont.) Leadership Tone at the top creating an environment favourable to good financial management and service delivery Identify key controls aimed at achieving the organisation�s objectives Assessing skills / competencies of finance staff, ensuring the right staff mix and managing consultants to ensure effective skills transfer

17. Internal Control (cont.) Financial and Performance Management Monthly financial statements and quarterly performance reports, plus continuous monitoring of both Implementation of sound financial and performance management systems Proper controls over documentation to ensure that they are easily retrievable Operating basic internal controls for an efficient financial and performance management environment

18. Internal Control (cont.) Governance Adequately resourced and effective functioning of internal audit and audit committee Maintenance of effective risk management strategies, including fraud prevention plans

19. Questions?