THE ROLE OF THE AUDITOR-GENERAL

1. THE ROLE OF THE AUDITOR-GENERAL RP MOSAKA Business Executive: Parliamentary Services OFFICE OF THE AUDITOR-GENERAL

2. 1. INTRODUCTION • AG plays a fundamental role in the accountability framework that supports constitutional democracy in line with the spirit of s181 of the Constitution (a) Comments on the reasonableness and fairness of the accountability information

3. INTRODUCTION (CONTINUED) (b) Ascertains whether public money expended has been applied to the purpose for which it was granted by the legislature (c) Assists Parliamentary Committee by providing validated information to work with • Greater part of the work of the Committee therefore normally focus on the issues raised in the reports of the AG

4. Role of AG Legislature Accountability Relationship Reports Public Auditor General Executive Examines

5. 2. CONSTITUTIONAL MANDATE OF THE AUDITOR-GENERAL • AG’s mandate derived from the Constitution • Mandate is to audit and report on financial statements and financial management of (a) all national and provincial state departments (b) all municipalities and public entities

6. CONSTITUTIONAL MANDATE OF THE AUDITOR-GENERAL (CONTINUED) • AG must submit audit reports to any legislature that has a direct interest in the audit • AG has the additional powers and functions prescribed by national legislation • Must report to Parliament in cases where the National Treasury has stopped transfer of funds to an organ of state

7. 3. WHAT ABOUT OTHER LEGISLATION? • Public Audit Act • Provides more detail on the AG’s auditing and reporting powers and obligations • Also provides for additional functions and powers, for example, permits the AG to undertake performance audits

8. WHAT ABOUT OTHER LEGISLATION? (CONTINUED) • Also permits the AG to report on any other matter which in his or her opinion should in the public interest be brought to the notice of the legislature concerned • Creates an Office of the AG and sets out its structure

9. WHAT ABOUT OTHER LEGISLATION? (CONTINUED) • New act enhances the mandate of the AG, for example by: (a) ensuring full alignment with the Constitution, the PFMA and the Municipal Finance Management Act; (b) clarifying and enhancing the mandate of the Auditor-General with respect to the auditing of publicly funded entities;

10. WHAT ABOUT OTHER LEGISLATION? (CONTINUED) • (c) providing the AG with certain enhanced powers of investigation under special circumstances; and (d) enhancing the AG’s own performance, governance and accountability arrangements

11. WHAT ABOUT OTHER LEGISLATION? (CONTINUED) • Office is overseen by a parliamentary oversight mechanism • Oversight mechanism annually appoints a reputable private audit firm as the external auditor of the Office

12. WHAT ABOUT OTHER LEGISLATION? (CONTINUED) • A Deputy AG (CEO) (a) Is the accounting officer for the OAG (b) Assisted by six Corporate Executives (c) As well as Business Executives - national, provincial and municipal spheres • Due to the number of audits the AG from time to time contracts the services of private auditors who work under the supervision of staff of the AG

13. 4. SPECIAL AUDITS AND OTHER FUNCTIONS • AG may report on or investigate matters in the public interest, or in response to complaints • Constitutional independence precludes Parliament or a legislature from directing the audit mandate

14. SPECIAL AUDITS AND OTHERFUNCTIONS (CONTINUED) • Areas of concern or focus of a legislature will, however, always be taken seriously in the AG’s audit planning • Normally the legislature communicate requests to the AG in the form of a formal resolution

15. 5. WHAT IS EXCLUDED FROM THE MANDATE? • Sometimes the public’s expectations are not supported by the AG’s mandate • AG is not a prosecuting agency • AG is not a standard setting body for the public sector • AG is not a judicial body or authority that can sanction officials

16. 6. OTHER LEGISLATION • The AG’s mandate is also influenced by the Public Finance Management Act, the Municipal Finance Management Act, and other legislation

17. 7. Flow of AG Reports Auditee 3 1 PARLIAMENT / LEGISLATURE 2 Executive Authority Auditor-General 4 5 Referred by the Presiding Officers in terms of Rules of Legislature SCOPA SCoF/other committees

18. 8. DIFFERENCE BETWEEN THE AUDITOR-GENERAL AND PRIVATE AUDITORS • Private auditors conduct audits on behalf of the shareholders of a company to provide them with assurance regarding the financial statements that directors of a company had prepared

19. DIFFERENCE BETWEEN THE AUDITOR-GENERAL AND PRIVATE AUDITORS (CONTINUED) • AG provides members of legislators, as the shareholder representatives of the public, with independent and forthright public sector audit reports

20. DIFFERENCE BETWEEN THE AUDITOR-GENERAL AND PRIVATE AUDITORS (CONTINUED) • Thus provides assurance to the legislature that accountable entities have achieved their financial objectives and managed their financial affairs according to sound financial principles and in accordance with the legal framework

21. DIFFERENCE BETWEEN THE AUDITOR-GENERAL AND PRIVATE AUDITORS (CONTINUED) • AG often contain more information than found in reports of a private sector company • Reader therefore often finds matters brought to his or her attention in an “emphasis of matter” - matters which should be noted

22. DIFFERENCE BETWEEN THE AUDITOR-GENERAL AND PRIVATE AUDITORS (CONTINUED) • AG also produces general and special reports of transversal nature - provides findings on trends in government with respect to financial management and performance related issues

23. 9. WHAT STANDARDS APPLY TO THE AUDITOR-GENERAL? • AG audits mainly in terms of the South African Auditing Standards (adapted where required) • Management reviews and the quality assurance process continuously monitors the quality of the office’s audits with its adherence to applicable standards

24. WHAT STANDARDS APPLY TO THE AUDITOR-GENERAL? (CONTINUED) • Continuous improvement of the office’s quality assurance measures and processes was once again confirmed by the results in the practice review report of PAAB: (a) for the second consecutive year, the standard of audit documentation and evidence of the office’s audits had improved significantly

25. 10. AG’s COMMITMENT TO PARLIAMENT • AG plays a fundamental role in the accountability framework that supports constitutional democracy in line with the spirit of s181 of the Constitution: • Comments on the reasonableness and fairness of the accountability information • Ascertains whether public money expended has been applied to the purpose for which it was granted by the legislature