AGSA Strategic Plan and Budget 2013-2016 Presentation to SCoAG 19 October 2012

1. AGSA Strategic Plan and Budget 2013-2016 Presentation to SCoAG 19 October 2012

2. Reputation promise/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

3. Content • Overview of AGSA commitments • What the plan focuses on • Strategic environmental context • Strategic risk profile • Strategic goals, objectives and performance measures • Sustainability strategy • Budget 2013 - 16

4. Overview of the AGSA’s commitments • We continue on the path established over the past few years • Our five strategic goals remain relevant and unchanged, but we are strengthening certain aspects or introducing new activities • We seek to solidify our achievements by institutionalising our best practices

5. Main focus areas in the strategic plan • Increased portion of performanceaudits • Integration of performance audit and investigations with regularity audits • Increased prioritisation of the quality of our audit reports • Exploring ways to collect debt more effectively • Institutionalisation of the project management approach within the organisation • Intensifying the learning and development initiatives through the work of our newly established L&D unit • Sustainability strategy

6. Goal 1

7. Simplicity, clarity and relevance of our messages Objective 1: To identify root causes and make recommendations

8. Simplicity, clarity and relevance of our messages Objective 2: Continued excellence of the quality of audits performed

9. Simplicity, clarity and relevance of messages – initiatives / focus • Increase the volume of performance audits to 10% of the audit work within five years - a growth strategy and plan for the medium term to 2018 will be finalised shortly • Intensify the proactive evaluation of fraud risks through assessment of process and financial statement reporting • Achieve further integration of our diverse expertise and products and the deployment of multi-skilled audit teams • Deliver a consolidated audit message • Achieve IRBA assessment results above our own targets (already above industry standard level)

10. Goal 2

11. Visibility of our leadership Objective: To develop strong stakeholder relationships to encourage clean administration

12. Visibility of our leadership– initiatives / focus • Increase the rigour of the analysis in our general reports • Ensure continuity in understanding the audit outcomes • Encourage acceptance of ownership for internal controls by the appropriate responsible officials • Intensify our visibility at all levels, widening the circle of engagements • Increase our participation in various governance forums

13. Goal 3

14. Funding • Our focus remains on providing value-for-money audits to the public sector – i.e. executing the organisation’s mandate economically, efficiently and effectively by ensuring that our services to our auditees are cost-effective, while at the same time ensuring our long-term financial sustainability. • We pay special attention to effective debt collection as this has the potential to undermine our very existence as an independent assurance provider. Our main challenge remains collecting debt from local government auditees.

15. Funding Objective: To execute the AGSA mandate economically, efficiently and effectively

16. Funding Objective: To execute the AGSA mandate economically, efficiently and effectively

17. Funding goal – initiatives / focus • Increase the efficiency and effectiveness of our audits • Analyse and understand the inefficiencies of the entire public auditing process • Enhance the outsourcing of contract audit work • Provide for minimum surplus margins

18. Goal 4

19. Strengthen our human capital Our strategic focus remains on: • further enhancing and building our high-performance culture which focuses on engagement, understanding and accountability • attracting, retaining and cultivating key talent by adopting the care and growth leadership principles • building a highly skilled workforce that is representative of the demographics of our country by enhancing and developing the skills and competency base of our employees

20. Strengthen our human capital Objective: To have a motivated, high-performing and diverse workforce

21. Strengthen our human capital- initiatives / focus • Intensify the relevant training and skills development • Create audit professionals with impeccable integrity and ethics • Develop leadership pipeline • Make active use of the total performance system to build high-performing teams and to give regular and timely feedback to employees for their continuous improvement

22. Goal 5

23. Lead by example • As a Supreme Audit Institution, we accept the responsibility to lead by example through: • consistently behaving in an ethical manner • producing quality work that demonstrates our unquestionable competence and technical ability • assuming accountability for the management of our business risks • effectively sharing information and knowledge • using all available systems, tools and expertise in an integrated manner

24. Lead by example Objective 1: To continuously adhere to standards of excellence for clean administration

25. Lead by example Objective 2: Continued improvement of the timelines of AGSA reports

26. Lead by example Objective 3: To maximise the AGSA’s contribution to transformation

27. Lead by example- initiatives / focus • Make operational excellence the standard method of work • Identify and institutionalise critical good practices • Maintain adequate information and communication technology • Optimise infrastructure • Enhance our audit software and solutions • Mature the information governance of the AGSA • Provide strong support to the BBBEE imperative with a focus on the CA Charter

28. Sustainability aspect of our operations • We acknowledge that, like any other organisation, we have an impact on the physical environment and the society in which we operate, thus we regard as important all matters that relate to our sustainability as a business. • Our considerations are also consistent with the INTOSAI recommendations which emphasise the importance of sustainability and the principles of good governance, transparency and accountability.   • For our first year in reporting on some of the sustainability aspects, we commit to establishing the baselines for the following: • Electricity use - Water use • Paper use - Paper waste generated • Business travel – vehicles - Business travel – flights • Carbon footprint • Completion of annual disclosure of interest declarations • Incidents of integrity breach by our staff

29. BUDGET 2013 - 16

31. Determination of audit tariffs Recoverable hours - Head count - Available hours - Recovery rate Tariff per hour - Salary cost - Recoverable hours - Mark-up factor

32. Financial highlights (1 of 2)

33. Financial highlights (2 of 2)

34. Net surplus as % of audit income

35. Overhead analysis

36. Other expenses analysis

37. Key overhead drivers (1 of 2)

38. Key overhead drivers (2 of 2)

39. AG Directive 2012/13

40. In terms of Sec 13 of the PAA the AG must determine the standards, scope and nature of audits after consultation with SCoAG. It is against this background that we are advising SCoAG that the current AG audit directive as published in the Government gazette No. 34783, vol 557, Pretoria, 28 November 2011 remains in force.

41. End of presentation