Increasing and Demonstrating value and of Internal Audit

1. Increasing and Demonstrating value and of Internal Audit NATIONAL TREASURY - SOUTH AFRICA Presenter: Pulane Mkhize| 01 November 2018

2. OVERVIEW Introduction Focus areas • Positioning Internal Audit Activity (IAA) • Oversight and Support • Funding • Quality Management

3. INTRODUCTION Four focus areas selected for this presentation Positioning IAA • Key to increasing the value of Internal Audit • Adequate positioning ensures and protects independence Oversight and Support • Oversight committees are powerful mechanisms used to ensure accountability in South African government Funding • Research has shown that the amount of funding and resources committed to an area directly affect the value, quality, and services related to the area Quality Management • Quality management is essential to create superior quality products which not only meet but also exceed customer satisfaction

4. POSITIONING IAA Internal Auditing is a formal part of financial management process in the South African public sector Strategically positioned within Governance and Control Framework Compulsory through legislation for every entity • Public Finance Management Act • Municipal Finance Management Act Supplemented and enhanced by • Treasury Regulations • Internal Audit Framework- Second Edition 2009 • Circulars – Circular 65 Covers critical elements 4

5. POSITIONING IAA Organizational Independence • IAA is positioned within the office of the Accounting Officer (AO) • IAA is controlled by Chief Audit Executive (CAE) Appointment of Chief Audit Executive • Senior and Budget Management level • Administrative and Functional reporting to AO and Audit Committee (AC) • AC concurs in the appointment and removal Reporting Responsibility • CAE reports at every AC meeting • AC evaluates the performance of the CAE and IAA Authority • IAA conducts and reports its work without interference • Facts are reported as discovered 5

6. OVERSIGHT AND SUPPORT Audit Committees established by legislation for oversight • National and Provincial institutions appointed in consultation with Ministers and Member of Executive Council • Local Government appointed by Council Key responsibilities on IAA • Protects the independence • Ensures its effectiveness • Review the performance Reports to Parliament, Legislatures and Council Oversight reports made public with annual reports Ensure IAA findings and recommendations are acted upon

7. FUNDING AO ensures that IAA has a budget Budgets controlled by the CAE IAA in-year monitoring reports are presented to AC IAA’s budget covers the following items • Infrastructure including accommodation • Personnel expenditure • Computer equipment and software • Professional Membership IAA budget is evaluated by AC IAA budget is a reportable item

8. QUALITY MANAGEMENT Quality related reviews performed as follows: AC reviews • Strategic and Operational plans of IAA • Performance of IAA against the plan • Quality Assurance and Improvement Program National/Provincial Treasury reviews • Compliance with the IIA standards and Code of Ethics • Adequacy of IAA Charters • Readiness to undergo External Quality Review Auditor General reviews • Compliance with applicable laws, regulations and applicable frameworks

9. THANK YOU

10. RSA GOVERNANCE AND CONTROL FRAMEWORK Governance and Control 10