The South African Experience

1
The South African Experience
Coping with Challenges

• Presented by the Office of the Auditor-GeneralRep
  ublic of South Africa

2
South African Context
Mandate of the Auditor-General

• National Departments and their related entities
• Provincial Departments and their related entities
  (health and education predominately delivered at
  this level)
• Municipalities

3
Setting an Auditing Framework

• Standard setting
• Determined by the Auditor-General
• In line with INTOSAI and now also IFAC
• This has involved extensive participation in the
  national and international arena eg. Auditing
  statements public sector perspectives

4
Setting an Auditing Framework

• Technical Advancement
• Audit approach aligned with recognised practice
• Development of internal technical guidelines and
  support

5
Setting an Auditing Framework

• Technical Advancement (cont)
• electronic working papers
• training including SAICA and ACCA

6
Setting an Auditing Framework

• Quality Assessment
• Business Unit Level
• Central Quality Reviews
• External Practice Review

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Consistency of audit findings

• Guidance on Audit Reporting has been issued to
  the staff
• Agreeing on where audit findings should be
  disclosed e.g. Management letter, emphasis of
  matter
• Audit reports included in the annual reports of
  entities
• General Report on Audit Outcomes

9
Health and Education Sectors

• Predominately under the domain of Provincial
  Government
• Representing 69 of the total Provincial
  expenditure

10
Reporting on audit opinions on the education
sector
Province
Expenditure
Budget
(Over)/Under-spending
2001-02audit opinion
2000-01audit opinion
R million
R million
R million
Eastern Cape
7 865,6
8 118,9
253,3
Q
Q
Free State
3 173,9
3 382,2
208,3
U
U
Gauteng
7 268,5
7 507,0
238,5
Q
Q
KwaZulu-Natal
9 270,7
9 346,6
75,9
Q
Q
Limpopo
6 330,7
6 340,9
10,2
Q
Q
Mpumalanga
3 330,9
3 346,9
16,0
U
Q
Northern Cape
1 021,8
1 028,4
6,6
Q
Q
North West
3 972,1
4 029,5
57,4
Q
Q
Western Cape
4 273,2
4 339,2
66,0
Q
U
TOTAL
46 507,4
47 439,6
932,2
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Reporting on audit opinions on the health sector
Province
Expenditure
Budget
(Over)/Under-spending
2001-02audit opinion
2000-01audit opinion
R million
R million
R million
Eastern Cape
4 221,4
3 892,5
(328,9)
Q
Q
Free State
2 039,7
1 970,5
U
Q
(69,2)
Gauteng
6 837,6
6 771,4
Q
Q
(66,2)
KwaZulu-Natal
7 033,0
6 743,7
Q
Q
(289,3)
Limpopo
2 663,5
2 718,9
Q
Q
55,4
Mpumalanga
1 456,6
1 542,3
U
Q
85,7
Northern Cape
517,4
509,0
Q
Q
(8,4)
North West
1 669,0
1 734,8
Q
Q
35,8
Western Cape
3 581,0
3 578,8
U
U
(2,2)
TOTAL
30 049,2
29 461,9
(587,3)
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Performance Audits of a Transversal nature

• Transversal Report was conducted in the education
  sphere some of the primary findings
• The proportion of personnel expenditure to total
  budget was in a number of provinces in excess of
  the national norm set by the Minister
• Educators were found who were beyond retirement
  age which was in contravention of the regulations

13
Performance Audits of a Transversal nature

• Transversal Report was conducted in the education
  sphere some of the primary findings
• Although a shortage of mathematics and physics
  educators were identified. The colleges who train
  educators were not factoring this into their
  policies and procedures

14
Performance Audits of a Transversal nature

• Transversal Report was conducted in the education
  sphere some of the primary findings
• The issue of loss time for educators through
  absenteeism was found throughout
• 42 of educators were found to be underqualified
  (against national standards)

15
Current Initiatives

• There are numerous current initiatives to further
  enhance and improve our process and products.
• This includes
• Compliance

16
Current Initiatives

• Financial management/corporate governance
• Auditing of performance management information

17
Current Initiatives

• Audit Focus Areas these are
• Capacity
• Control environment
• Procurement

18
Current Initiatives

• Audit Focus Areas cont
• Human Resource Management
• Asset Management
• Delivery of Basic services

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Current Issues cont. Sectorial Reporting
Cabinet Portfolio A
A3
A2
FINANCIALS OF A
Private Sector
A1
PUBLIC SECTOR
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Current Initiatives

• Centralised audit outcomes information
• Auditing transversal audit outcomes
• Auditing of performance management information

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Challenges Faced

• Lack of operating framework at provincial level
• Need for improvement in communication channels
  between national, provincial and local
  government. This is in respect of auditees as
  well as auditors

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Challenges Faced (continued)

• Overall Governance Framework is not adequate at
  the entities therefore it is difficult to audit
  the real issues, for example
• service delivery
• corporate governance

23
Challenges Faced (continued)

• Often purpose of auditors is to provide an
  opinion on annual financial statements,
  therefore, may not see the bigger picture
• Issues may be important transversally may not
  warrant disclosure in individual audit reports
• More involvement of public account committees

24
Vision for the future

• Sectorial reports on the delivery of services and
  financial management in key sectors such as
  health and education
• Indication on whether the situation is improving
  or not against a pre-set criteria

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THANK YOU