Presentation to the Portfolio Committee 1 March 2011 SCIENCE & TECHNOLOGY

1. Presentation to the Portfolio Committee 1 March 2011 SCIENCE & TECHNOLOGY

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. Oversight Oversight Body Vote Alignment to the budget Review Strategic Planning Institution Department Public Entity Municipality Municipal Entity Reporting Budgeting Setting Targets & Resource Allocations Monitoring and reviews of reports & budgets Implementation

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 Difference between Audit of Predetermined Objectives and performance auditing Performance Information (PI) = Non-Financial Information about the Service Delivery of Government Performance Auditing • Part of Regularity Auditing • Focused on non-financial information in Annual Report • Audit criteria: • Compliance (has this happened), as part of regularity audit process • Quality of PI (as per audit criteria) • Done by audit professionals • Individual audits • Focused on a specific government policy or management process • Audit criteria are the 3E’s: • Economy • Efficiency • Effectiveness • Done by subject matter experts

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. Science and Technology – PFMA audit outcomes 2009-10 Summary of audit outcomes

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. Science and Technology– PFMA audit outcomes 2009-10 Findings on reporting of predetermined objectives 12

13. Science and Technology– PFMA audit outcomes 2009-10 An extract from the audit reports of the Department of Science and Technology and Africa Institute of South Africa on - Incomplete and inconsistent reporting on targets • The actual achievements with regard to 56% of the planned/approved indicators and targets specified in the sub programme were not completely reported in the annual report. • The entity has not reported on its performance against predetermined objectives which is consistent with the approved strategic plan.

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?