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1. Briefing to SCoAG on 2010 Annual Report 03 September 2010 1Page 1

2. Our 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. This is our reputation promise. 22

3. Table of contents • Objective of this document • Overview of AGSA commitments • Commitments • Simplicity, clarity and relevance of our reports • Visibility of leadership • Funding • Strengthen human resources • Lead by Example 4. Decisions for SCoAG 33

4. Objective of this document • To appraise Parliament of the AGSA’s performance for the year under review (2009-10). • To report on the outcomes of the predetermined objectives set out in the Strategic plan and budget 2009-2011 • This is an executive summary presentation of the AGSA Annual report for 2009/10 financial year 44

5. Overview of AG Commitments • The AGSA remains committed to the following goals in order to impact positively on all aspects of public sector accountability: • Ensuring simplicity, clarity and relevance of the messages contained in all our reports, including the identification of root causes and recommendations and deepening of stakeholders understanding of our audit reports • Improving the visibility of our leadership through clear communication in championing the implementation of audit recommendations • Focusing on the funding model with a view to stabilising our margins and cash flow situation • Strengthening the human resource strategy, with particular emphasis on the comprehensive trainee auditor scheme • Leading by example on matters of risk management, internal controls, transformation and quality and timeliness of our products 55

6. Simplicity , clarity and relevance of our reports • Visibility of leadership 66

7. Simplicity, clarity and relevance of our reports • Introduced root causes and recommendations in our reports to ensure understanding of our audit findings and recommendations by emphasising key messages around financial management, skills & capacity, governance effectiveness & role of leadership • Published general reports to trigger actions for migration towards clean audit administration and accountability in public sector • Introduced key control tool to influence positive audit outcomes • Intensified the implementation of the auditing of performance information for readiness in expressing opinion on or before April 2011 • Separated investigations and performance auditing functions into two distinct business units to create focus 77

8. Auditor-General led our leadership in dialogue with all constitutional and non-constitutional stakeholders to discuss key audit outcomes, root causes and recommendationsAuditor-General & his executives conducted door-to-door municipal visits to Mpumalanga, Western Cape and Gauteng (Limpopo in 2009)Instituted quarterly visits to auditees to ensure implementation of key controls • Auditor-General led our leadership in dialogue with all constitutional and non-constitutional stakeholders to discuss key audit outcomes, root causes and recommendations • Auditor-General & his executives conducted door-to-door municipal visits to Mpumalanga, Western Cape and Gauteng (Limpopo in 2009) • Instituted quarterly visits to auditees to ensure implementation of key controls 88

9. Funding 99

10. Overall financial performance improved from a deficit to a surplus. Future focus is to sustain this improvement Summary of financial highlights 1010

11. Municipal debt collection is deteriorating Summary breakdown of total debt by sphere of government in 2008-09 and 2009-10 1111

12. Strengthen Human Resources 1212

13. Overall vacancies have decreased from 724 in 2007 to 383 as a result of focused recruitment and retention initiatives AGSA vacancy per band • Achieved annual labour turnover of 6,6%; (2009: 11%) compared to industry average of 8,2% • Rolled out values & leadership & management programme • Decentralised recruitment of manager position and below • Repositioned performance management system • Offered employee wellness programme 1313

14. Lead by Example 1414

15. We achieved above industry quality assurance scores • The industry average is 75% • No “poor” performance incidents • We improved quality of audits and streamlined engagement performance policies and procedures 1515

16. Rolled out organisational wide risk management framework to cover strategic, financial and operational risks that are monitored by EXCO on a regular basisIntroduced internal controls tool to influence positive clean administration Reviewed human resource, Information and Communication Technology(ICT) and finance policies, procedures and processes to improve our administration • Rolled out organisational wide risk management framework to cover strategic, financial and operational risks that are monitored by EXCO on a regular basis • Introduced internal controls tool to influence positive clean administration • Reviewed human resource, Information and Communication Technology(ICT) and finance policies, procedures and processes to improve our administration 1616

17. Transformation Our procurement spend on small audit firms has increased from R58m to R81m with an additional R18.7m spent on BBBEE compliant firms for other goods and services Allocation criteria and weighting Allocation of audit work to private audit firms • Even though we spend R81m on small audit firms, we did not reach the 20% allocation target • Our continued focus is to improve on the allocations 1717

18. Employment equity profile: 2007 to 2010 • Overall a significant improvement from 2007 to 2010 in designated group versus non-designated group ratio • Strict monitoring of Employment equity ratio and stabilise Bands levels 1818

19. Net Surplus Appointment of AuditorsDate of Annual report hearing • Net Surplus • Appointment of Auditors • Date of Annual report hearing 1919