INTERGRATING THE WORK OF OAG TO THE SCHEDULE OF SCOPA

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BRIEFING TO SCOPA
INTERGRATING THE WORK OF OAG TO THE SCHEDULE OF
SCOPA
National Treasury Republic of South Africa 22
March 2006
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Contents

• Purpose Mission
• Stakeholders
• Functions Powers
• Structure specific functions
• Role of Scopa
• Conclusion

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Purpose of the OAG

• ACCOUNTABILITY THROUGH TRANSPARENCY
• To achieve accountability by promoting
  transparency and effective management in respect
  of revenue, expenditure, assets and liabilities
  in SA public sector.
• Contribute to the enhancement of service delivery
  capability of govt

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OAG Mission Statement
To provide Financial Management information and
provide regulatory services to empower oversight
bodies to ensure public transparency through
accountability. To empower team members to
become the leading knowledge repository in best
practice risk management, internal audit,
financial reporting and accounting services
across the South African Public Sector. To
provide a learning environment with fair and
non-discriminatory practices, thereby becoming
the employer of choice for finance
professionals. To strive for clean audit reports
in public sector.
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Stakeholders in brief

Nat Prov Departments
Auditor- General
Local Govt SALGA
Training institutions
Standard setters Professional bodies
OAG
Parliament Its committees
Global stakeholders
Public Entities Constitutional Institutions
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STAKEHOLDERS (2)

• Central Government
• 6 depts and 7 public entities
• Financial and Admin Services
• 7 depts and 20 public entities
• Social Services
• 7 depts and 85 public entities
• Justice and Protection Services
• 5 depts and 11 public entities
• Economic Services and Infrastructure
• 9 depts and 90 public entities
• Provincial Governments
• Avg. 10 depts and on average 8 PE per Province
• Local Governments 284 municipalities

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Functions and powers of NT (1)

• Promote Governments Fiscal Policy Framework
• Coordinate Intergovernmental Financial and Fiscal
  Relations
• Manage the Budget Process
• Control the Implementation of the Annual Nation
  Budget
• Facilitate Implementation of the Division of
  Revenue Act
• Monitor Implementation of Provincial Budgets
• Promote and Enforce effective management i.r.o.
  revenue, expenditure, assets and liabilities

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Functions and powers of NT (2)

• Prescribe uniform Treasury Norms and Standards
• Enforce the PFMA and any prescribed norms
  standards (GRAP SCOA) in National Departments
• Monitor and assess implementation of PFMA in
  provincial departments and public entities

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Functions and powers of NT (3)

• Assist Departments in building capacity for
  efficient, effective and transparent financial
  management
• Investigate any system of financial management
  and internal control
• Intervene by taking appropriate steps to address
  a serious or persistent material breach of the
  PFMA
• May do anything that is necessary to fulfill its
  responsibilities

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Prescribe uniform Treasury Norms and Standards

• Issuing of Treasury Regulations
• Audit coms, internal audit and internal controls
  (CH 3 of TR)
• Revenue and expenditure management (part 4 of TR)
• Asset Management (Chapter 10 of TR)
• Management of debtors (Chapter 11 of TR)
• Money property held in trust (Chapter 14 of TR)
• Banking, cash management and investment (Chapter
  15 of TR)
• Accounting and reporting requirements (part 7 of
  TR)
• Government payroll deductions (chapter 23 of TR)
• Other
• Issuing of Treasury Instructions (Practice Notes)
• Issuing of Frameworks

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Enforce the PFMA and prescripts

• Ensure that Departments meet reporting
  requirements
• Ensure that financial statements are compiled in
  accordance with standards set for purposes of
  compiling consolidated statements
• Conduct regular surveys on compliance with PFMA
  and Treasury Regulations (appointment of CFO,
  effective internal audit units, etc)
• Follow-up on issues in audit reports regarding
  internal controls, accounting, reporting and
  asset management

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Assist in capacity building

• Issued best practice guidelines (internal
  controls)
• Prepare guidelines concerning standards for GRAP
• Facilitate knowledge sharing
• Facilitate Provide training on relevant topics
  IT systems, GRAP, IA RM function
• Training strategy for development of FM, IA RM
  staff

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Investigate any system of FM IC

• Conduct investigations regarding the
  effectiveness of internal audit functions
• Regular visits to departments to determine
  whether internal control and financial management
  systems are effective
• Commission investigations regarding revenue and
  expenditure management systems
• Request support from Auditor-General to conduct
  investigations regarding Internal Control Systems

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Interventions where PFMA is breached

• Report to Cabinet on the extent of failure by an
  institution and stating steps to rectify
• Ensure that accounting officer initiate
  disciplinary proceedings against officials
• Ensure that executive authority initiate
  appropriate disciplinary proceedings against
  accounting officers

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Structure of the OAG

• 4 Chief Directorates
• Internal Audit
• Risk Management
• National Accounts
• Accounting Services

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Functions Internal Audit

• Develop internal audit policy framework
• Assist departments with internal audit capacity
  building
• Provide support and guidance on internal audit
  practices
• Influence the state of governance through
  participating on oversight and governance
  structures
• Review and report on status of internal audit and
  audit committees in govt.

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Functions Risk Management

• Develop uniform risk management policy framework
  
• Provide support and guidance on development of
  risk management strategies and policies
• Assist departments build capacity and attain
  operational excellence in risk management.
• Influence the state of governance through
  participating on oversight and governance
  structures
• Evaluate the state of risk management in
  government and report to various stakeholders

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Functions National Accounts

• Train stakeholders on reporting format for
  financial and non-financial information
• Consolidate governments annual financial
  information
• Manage National Revenue and RDP Funds
• Provide support and guidance on financial
  reporting
• Assist in capacity building in departments
• Support the implementation of new policies

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Functions Accounting Services

• Develop broad accounting policies
• Investigate the appropriate reporting basis for
  govt
• Prescribe the reporting frameworks annually
• Spearhead financial management reforms
• Facilitate discussions on accounting standards in
  govt
• Facilitate implementation of the GRAP standards
• Advise on the implementation of GRAP standards

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OAG Challenges

• Capacity within OAG to respond to demand
• Staff retention
• Capacity of stakeholders
• Accessibility of critical strategic
  stakeholders
• Sufficient buy-in
• Skills availability
• Information systems
• Strengthening governance oversight

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Mitigating strategies

• Recruitment
• Internship, TOPP and talent pool
• Marketing of OAG services
• Strengthen stakeholder relationships
• Continued professional development/education
• Knowledge-sharing initiatives
• Participate in the IFMS project
• Formalise OAG link to SCOPA PCs

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Governance Structures
Legislative Authority
Executive Authority
Judicial Authority

• President
• Deputy President
• Ministers

Constitutional Court

• National Assembly
• (350 400 Members)

Parliament
Cabinet
Supreme Court of Appeal
National Level
High Courts
Magistrates Courts

• National Council of Provinces
• (90 Delegates)

• Deputy Ministers

Judicial Service Commission
Executive Authority
Provincial Government
Provincial Level

• Premier
• Members of Executive Council

Executive Council
Legislative Authority
Provincial Legislature
Local Level

• 6 Metros
• 39 District Councils
• 239 Municipalities

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Role of SCOPA

• Committee should continue to fulfill its
  important role of Protector of the Public Purse
• Consider Annual Reports focusing on
• Issues raised in reports of the
  Auditor-General/External Audits
• Interrogation and evaluation of instances of
  unauthorised expenditure
• Pronounce on unauthorised expenditure timeously
• Interrogation of instances relating to Irregular
  and Fruitless and Wasteful Expenditure

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Role of SCOPA (2)

• Risk Management, Financial management, Internal
  Control (Including Internal Audit) and Personnel
  Management Systems
• Supply Chain Management (particularly large
  tenders and PPP deals)
• Disposal of significant assets and major
  financial or related losses suffered
• Corporate Governance issues within Departments
  and Entities
• Consolidated Financial Statements of Government

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Role of the Portfolio Committees

• Portfolio Committees should consider
• Annual Reports focusing on
• Technical quality of Annual Reports produced by
  Departments and Entities
• Actual performance (non financial ) against
  targets specified in Budgets and Strategic Plans
• Quality of performance information as highlighted
  by an audit of performance information
• The Economy, Efficiency and Effectiveness on
  Service Delivery
• Impact of under- or over-expenditure on Service
  Delivery

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Link Between PCs and SCOPA

• Oversight process should give a complete picture
  of entities performance
• Committees of Parliament should not work in silos
• SCOPA should bring key issues to the attention of
  Portfolio Committees
• Portfolio Committees should share info with SCOPA
• Primary linkage should run from Portfolio
  Committee to SCOPA

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Proposed interface

• Regular (Quarterly?) meeting between SCOPA and
  National Treasury
• Participate in Oversight Hearings and Supply
  Information (Reporting requirements, Accounting
  Policies, etc)
• Respond to SCOPA Resolutions of a general nature
  regarding financial management (AG
  recommendations)
• Submission of Quarterly Consolidated Internal
  Audit Reports (Including Risks Identified)

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Proposed interface (2)

• Reports on Unauthorised Expenditure
• Approval/Non approval
• Additional Funding/Available Funds
• Interaction with SCOPA regarding Consolidated
  Financial Statements
• Review prioritisation of audit issues

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THANK YOU