SAPS Audit Committee

1. SAPS Audit Committee 26 October 2016

2. Introduction During the 2015/16 Annual Report hearings the Committee was unsatisfied with the non-specific corrective measures presented by the SAPS to address the issues raised by the AGSA. In line with the combined assurance model which seeks to combine internal and external oversight processes, the Committee decided to apply a two-pronged approach to its oversight mandate. The Public Sector Audit Committee Forum (PSACF) states that “public sector auditing is essential in that it provides legislative and oversight bodies (e.g. Parliamentary Committees), those charged with governance (Management and Executive Authority) and the general public with information and independent and objective assessments concerning the stewardship and performance of government policies, programmes or operations.” In essence, the Audit Committee oversees the findings of the SAPS’s Internal Audit Component, and highlights areas of risk that require attention. In addition, the Audit Committee assists the AGSA with the audit process.

3. Improvement in assurance provided by key role players 2015-16 PFMA Second level of assurance Internal independent assurance and oversight Provides assurance Provides some assurance Provides limited /no assurance Not established First level of assurance Management/leadership Third level of assurance External independent assurance and oversight Accounting officers/ authorities Audit committees Executive authoritie Internal audit units Senior management Portfolio committee Improved Stagnant or little progress Regressed

4. The Role of Audit Committees in the public sector • Regulatory Framework • Public Finance Management Act, 1999 (Act No 1 of 1999)(PFMA); • Treasury Regulations of 2005 guides processes related to Internal Control; and • The King III Report on Governance. • Audit Committees must consist of at least three persons, of which (amongst others): • At least one must be from outside the public service and the majority may not be in the employ of the Department. • The Chairperson must be independent (not political office bearer) – also apply to members. • Majority of persons must be financially literate. • The Audit Committee is appointed by the accounting officer in consultation with the Minister. • Duties of the Audit Committee.

5. Audit process Audit Committees oversee both internal and external audit processes. Internal Audit Process (SAPSInternal Audit Component) • Review and approve the Internal Audit Charter. • Review and approve a risk-based Annual Audit Plan before the start of the financial year. • Assess the resourcing of the Internal Audit Component, in terms of budget, expertise and staffing levels. • Encourage cooperation between the Internal Audit Component and the AGSA. • Ensure that the methodology applied by the Internal Audit Component is adequate to allow for the effective and efficient performance of the internal audit. • Monitor the implementation of recommendations made by the Internal Audit Component and the AGSA. • External Audit Process (AGSA) • Ensure the compliance of the Accounting Officer to the Engagement Letter of the AGSA. • Available to the AGSA to provide information on the business and risks that will be considered in the development of the Audit Strategy. • Understanding the Audit Strategy and scope of the work of the AGSA. • Meet with the Office of the AGSA during the planning phase of the audit to address any areas of concern. • Review the financial statements and performance report of the SAPS before it was submitted to the AGSA for audit. Follow-ups are conducted on AGSA findings and how actions steps are implemented and monitored. • The Internal Audit Component identified several control weaknesses in 2015/16 – the Audit Committee should indicate what steps were taken to address the control weaknesses that were identified. • Slow implementation of internal audit recommendations or agreed upon corrective actions which increases the number of repeat findings. • Delays in consequence management in respect of members who disregard the approved policies and procedures.

6. SAPS Audit Environment • SAPS Audit Committee • SAPS Audit Committee comprises of five (5) external members, most of which are long-serving (since 2010). • Complied with legislative requirements • AGSA noted an improvement in terms of second level assurance • SAPS Internal Audit • The objective of the Internal Audit Component of SAPS is to provide an independent and objective assurance and consulting activities on the adequacy and effectiveness of governance, risk management and control processes of the SAPS. • Enterprise Risk Management (ERM) • SAPS has a separate Enterprise Risk Management Committee (ERMC), which is chaired by an independent chairman who is an ex officio of the Audit Committee.

7. Key issues for consideration The Public Service Audit Committee Forum (PSACF) noted the following general challenges facing public service audit committees: • Due to the legislative and regulatory requirements, it is important that the Terms of Reference of the Audit Committee in terms of the Department must be clear. It should define the expectations of the Audit Committee. • Accountability, role clarity and reporting lines should be clear – • Audit Committees report directly to the Accounting Officer; • There are no direct reporting lines to management – management report to the Audit Committee; • The Audit Committee’s role and level in the organisation is that of an independent oversight body; • Audit committees should provide feedback to the relevant governing body after each audit committee meeting; • Audit committees should meet with the Minister at least annually to discuss governance matters. • Independence of the audit committee may be compromised and measures should be put in place to assess the independence of audit committee members prior to appointment. • Requirements of the legislative environment for public sector audit committees makes the composition of audit committees an essential consideration - knowledge, skills and experience. • Adequate dedication and commitment on the part of members and proper preparation for meetings and attendance of and participation in meetings are not receiving sufficient attention. • Lack of support from Management - The audit committee’s evaluation and oversight should be designed in a manner that ensures that management fulfils its responsibility (challenge with SAPS Management).

8. Thank you | Enkosi| Ngiyabonga| Dankie QUESTIONS OF CLARITY WELCOME Committee Researcher: Nicolette van Zyl-Gous nvanzyl-gous@parliament.gov.za