Briefing to SCOAG 9 September 2011

1. Briefing to SCOAG 9 September 2011

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

3. Table of contents • Objectives of this document • Overview of AGSA commitments • Report on AGSA’s achievements on the 5 organisational commitments: • Simplicity, clarity and relevance of messages • Visibility of leadership • Strengthen human resources • Lead by example • Funding • Conclusion • Decisions for SCOAG

4. Objectives of this document(an Executive Summary of the AGSA Annual Report 2010-11) • To report on the outcomes of the predetermined objectives set out in the AGSA Strategic Plan and Budget 2010-2013 • To appraise Parliament of the AGSA’s financial performance for the year under review

5. Overview of AGSA commitments The AGSA remains committed to the following goals with a view to impact positively on public sector accountability: • Communicate root causes and recommendations in simple, clear and relevant language, thus deepen stakeholder understanding of our reports • Encourage championing of the implementation of the audit recommendations through our intensive leadership’svisibility programme to auditees, oversight authorities and our staff • Strengthen our human resources: by creating a high-performance culture, motivated staff and developing competent leaders in the organisation • Lead by example by delivering audit products of a consistently high standard and timeliness, and addressing our own internal controls and organisational transformation • Ensuring our financial sustainability

6. Simplicity, clarity and relevance

7. Simplicity, clarity and relevance

8. Simplicity, clarity and relevance

9. Visibility of leadership • AGSA’s main achievements • Sharing the audit outcomes of both PFMA and MFMA through the annual AG roadshows with both the executive and legislative arms of government, as well as structures such as APAC, the SALGA, Speakers’ Forum, etc • Recognition of AGSA’s leading role in the international community through the hosting of INCOSAI • The AGSA was awarded the prestigious Jörg Kandutsch Award during XXth INCOSAI in recognition of its exceptional implementation of INTOSAI goals within the member’s regional working group and globally.

10. Visibility of leadership

11. Visibility of leadership

12. Visibility of leadership Note: The figure that refers to the training of provincial Public Accounts Committee (PAC) members, also includes a large portion of Portfolio Committee (PC) members given their dual membership of the PAC/PC. There were also a number of members of Municipal Public Accounts Committees (MPACs) present at the PAC training. Therefore, the training covered PAC members of all three legislative spheres.

13. Visibility of leadership • The AG’s roadshows with staff in each province and per portfolio at head office affords employees an opportunity to engage one-on-one with the AGSA top leadership which enhances their understanding of the AGSA’s strategic objectives and outcomes of its audit reports. • Our continued strategic relationships with professional bodies like IRBA and SAICA affords us an opportunity to influence the developments in the auditing and accounting profession and standards as to address the needs for auditing frameworks in the public sector. • As one of the most active SAIs within INTOSAI, the AGSA participates in several task teams, working groups and committees, each established in terms of INTOSAI’s strategic plan • This year marks the Centenary of AGSA

14. Strengthen our human resources AGSA’s Main Achievements • Achieved significant progress in streamlining the executive performance management, through improvement of performance contracting and reviewing processes at executive leadership level • Reached 89% occupancy level against a target of 80% by establishing a Recruitment Centre of Excellence to deal with skills scarcity, trainee auditor retention strategy and comprehensive salary benchmarking. • Increased by 73% the number of audit professionals who passed final qualifying examinations and completed their practical experience through our bursary schemes, learnerships (trainee auditor scheme) study support and training.

15. Strengthen human resources

16. Strengthen human resources Professional membership employees profile 2007 to 2011

17. Strengthen human resources • The AGSA leadership were encouraged to continue adapting their skills to meet the evolving requirements and ensure an appropriate leadership culture.  • Executive pipeline continued to be built to ensure business continuity at the AGSA. Our improved position allows us to meet long- and short-term leadership needs at all levels.

18. Lead by example AGSA’s Main achievements • The AGSA completed its work within the legislated deadlines for both the PFMA and MFMA audit cycles, consistently exceeding our internal targets, whilst taking care not to achieve timely submission at the expense of our people and internal quality processes. • AGSA is a certified level 3 contributor to BBBEE • The organisation achieved a clean audit report. • In a first of its kind review the AGSA as a SAI subjected itself to a firm (office)-level review by a private sector regulator namely, the Independent Regulatory Board for Auditors.

19. Lead by example AGSA’s Main achievements (international level) • Successful hosting of XXthINCOSAI enabled the AGSA to position itself within the global INTOSAI community and in Africa as a SAI that vigorously implements its constitutional mandate. • AGSA’s credit contributed substantially to developing guidelines through INTOSAI that form part of the ISSAIs, public sector specific application guidance on performance audits and the auditing of financial statements, internal control and legislative compliance.

20. Lead by example Employment equity profile: 2007 to 2011 • A steady improvement from 2007 in designated versus non-designated groups ratio • Stabilisation of the appropriate ratio at all employment bands • Organisational policies were reviewed with emphasis on fairness and equality

21. Lead by example Quality assurance – 77% vs 75% industry average • Reviewed engagement performance policies, procedures and working papers • Industry average - 75% • AGSA achieved 77% vs target of 86% due to • New clarified ISAs • Newly revised audit methodology & working papers • Audit teams ability to audit full GRAP accounting framework implementation • Audit teams unfamiliar with audit of predetermined objectives • IRBA firm level review on compliance to ISQC1 yielded good results.

22. Lead by example We completed our work for both the PFMA and MFMA audit cycleswithin the legislated deadlines

23. Lead by example Corporate social investment (CSI) is an integral part of ourcontribution towards transformation of our country. • We visited a total of 107 schools in all nine provinces during 2010-11. • The total planned allocation to audit firms increased by 7% (2010: R508m) • We allocated 57% (R310m) of actual spending to small & medium size firms

24. Funding AGSA’s Main Achievements • The actual net surplus achieved for the year was R133 million (or 7.2% of revenue) against a budget of R68.6 million (or 3.7% of budgeted revenue). • Actual audit income was R1.850 billion (2009-10: R1.645 billion) against a budgeted audit income of R1.836 billion. • Free cash flow was R119 million on 31/03/2011 (R58 million on 31/03/2010).

25. Funding R133m Financial highlights - Income statement R99m -R8m -R16m

26. Funding Revenue breakdown

27. Funding

28. Funding Local Government debtors per Province (Total – R167 022 000) Local Government ill-liquid debtors per Province (Total – R36 838 000)

29. Funding AGEING OF TOTAL DEBT (includes accruals) Notes: N1 – Other debtor types include unlisted public entities, staff debtors, municipal entities, utility agency corporations. N2 – The 45,8million is included in the Total Debt figure of R390,9million

30. Conclusion • AGSA continued to be a model organisation both locally and on an international level • We continued to manage the organisation economically, efficiently and effectively ensuring its financial viability • We increased our efforts in engaging our stakeholders to encourage clean administration • We remained focused on contributing to continuous transformation of our country • Most importantly, we believe that with all our professional activities we have contributed to the well being of the citizens of South Africa

31. Decisions for SCoAG • Net surplus: (section 38(4) of Public Audit Act 2004) • Confirm appointment of external auditors (section 39(1) of Public Audit Act 2004)

32. Thank you