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DEPARTMENT OF DEFENCE PRESENTATION TO THE PORTFOLIO COMMITTEE FOR DEFENCE 27 OCTOBER 2010

DEPARTMENT OF DEFENCE PRESENTATION TO THE PORTFOLIO COMMITTEE FOR DEFENCE 27 OCTOBER 2010. FINANCIAL PERFORMANCE AND AUDIT REPORT For the year ended 31 March 2010. Index. Expenditure by Programme Report of the Auditor-General and corrective actions taken Special Defence Account

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DEPARTMENT OF DEFENCE PRESENTATION TO THE PORTFOLIO COMMITTEE FOR DEFENCE 27 OCTOBER 2010

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  1. DEPARTMENT OF DEFENCEPRESENTATION TO THE PORTFOLIO COMMITTEE FOR DEFENCE27 OCTOBER 2010 FINANCIAL PERFORMANCE AND AUDIT REPORT For the year ended 31 March 2010

  2. Index • Expenditure by Programme • Report of the Auditor-General and corrective actions taken • Special Defence Account • National Defence Fund

  3. Expenditure by Programme

  4. Economic Classification

  5. DEPARTMENT OF DEFENCE:ACTUAL EXPENDITURE FY 2009/10

  6. PROGRAMME 1: ADMINISTRATION:ACTUAL EXPENDITURE FY 2009/10

  7. PROGRAMME 2: LANDWARD DEFENCE:ACTUAL EXPENDITURE FY 2009/10

  8. PROGRAMME 3: AIR DEFENCE :ACTUAL EXPENDITURE FY 2009/10

  9. PROGRAMME 4: MARITIME DEFENCE:ACTUAL EXPENDITURE FY 2009/10

  10. PROGRAMME 5: MILITARY HEALTH SUPPORT:ACTUAL EXPENDITURE FY 2009/10

  11. PROGRAMME 6: DEFENCE INTELLIGENCE:ACTUAL EXPENDITURE FY 2009/10

  12. PROGRAMME 7: GENERAL SUPPORT:ACTUAL EXPENDITURE FY 2009/10

  13. PROGRAMME 8: FORCE EMPLOYMENT:ACTUAL EXPENDITURE FY 2009/10

  14. Report of the Auditor-General Other Auditing Matters Report on other legal and regulatory requirements • Predetermined objectives : Reliability of reported performance objectives using the assessment criteria of testing Validity, Accuracy and Completeness • AG finding was that these could not be validated due to lack of sufficient audit evidence • Compliance with laws and regulations : Non adherence to Defence Act (Section 55) and Public Service Act (Section 2) regarding the changes to conditions of service (remuneration) of uniformed members matters and performance awards. • Compliance with laws and regulations : Non adherence to the Public Finance Management Act requirements for the full operational internal audit function and an approved fraud prevention plan

  15. Report of the Auditor-General Other Auditing Matters • Internal Control issues : noting that the issues have been largely dealt post year-end; • Leadership; Close involvement in the management of the audit issues; • Financial and Performance management; Largely reviews and ensuring understanding of the key controls at the operational levels; • Governance; Internal Audit and Fraud Prevention plan • Most of these are dealt with in the Accounting Officer’s report relating to the financial Statement (pages 143 to 175)

  16. Internal Control and Governance • Currently Operation Clean Audit project has assisted in developing improved and documented systems, policy changes (or new policies) and processes in all areas identified; • Training at all levels particularly at the operational levels is undertaken; • A sustainability plan has been developed to ensure the sustenance of the issues • The Accountability Management Committee (AMC), Risk Management Committee and the Audit Committee are the Governance structures ceased with close monitoring of these

  17. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  18. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  19. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  20. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  21. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  22. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  23. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  24. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  25. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  26. AG findings and corrective action LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  27. AG findings and corrective actionEmphasis of Matter Items LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  28. AG findings and corrective action Other Matters Items LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  29. Findings: Special Defence AccountEmphasis of Matter Items LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  30. Findings: Special Defence AccountEmphasis of Matter Items LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  31. Findings: Special Defence AccountOther Matter Items LEGEND - OM: Other Matter EOM: Emphasis of Matter Q: Qualification

  32. Special Defence Account • Total Revenue for 2009/10 of R11,6bn (R8,2bn in 2008/09); • Mainly comprised of transfer from DoD R8,6bn (R,1bn 2008/09) • Other Revenue of R3,025 including recognised recovery expected in respect of the A400 (Capital and interest) of R3bn, R48,8m fines and R16,5m in Sales of equipment; • Net of R149,9m revenue payable to the National Revenue Fund • Total expenditure of R5,6bn (R10bn in 2008/09) • Total Assets amounted to R8,5bn (R2,9bn in 2008/09); • Mainly comprised of Receivables of nearly R3,1bn and Cash and cash equivalents of R5,2bn; • Represented net Capital Reserve of nearly R8,2bn against; • Commitments for future expenditure already approved of nearly R16bn (R15,1bn in 2008/09).

  33. National Defence Force Fund • No significant matters occurred in terms of the NDFF during the year under review: • Assets largely held in cash investments (grew from R10.6 m to R11.4m from 2008/09); • Performance is affected by the fluctuations in interest rates (dropped from R1.085m in 2008/09 to R0.782m in 2009/10); • Surplus for the period therefore fell from R1.063 to R0.747m; • Administration expenses increased from R23k to nearly R35k

  34. Thank you

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