Office of the Auditor-General of South Africa on AGSA Mandate, the Audit Process, Various Types of Audits

Basic Education

10 May 2010
Chairperson: Ms F Chohan (ANC)
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Meeting Summary

The Auditor-General South Africa briefed the Committee on the Auditor-General South Africa’s mandate. As the Supreme Audit Institution of South Africa, it existed to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector, thereby building public confidence. The Auditor-General highlighted the institution’s independence as vital in order to carry out its duties credibly and impartially. The Auditor-General then briefed Members on the audit process, the various types of audits, the necessity for internal control, the focus areas of the Auditor-General, the necessity for audits, and the role of audits in ensuring that governmental departments did their work, and on the different terminology and meanings of audit findings such as the difference between a qualified and an unqualified report. The Auditor-General also briefed the Committee on performance auditing, highlighting areas of focus and invited suggestions from Members on what other questions the organisation should include in the performance audit.

Members asked how many departments had the capacity to perform their own audits. They sought clarification on the lack of skills in auditing and what the Auditor-General was doing to help alleviate these problems. They asked what the Auditor-General would do to assist municipalities with small complements of staff which always received qualified reports as a result of failing to apportion duties appropriately. They asked about service providers who received payment for a job before completion and whether the Auditor-General punished transgressors. They asked whether audit reports on 2009/2010 on the Department of Basic Education would be available this year and whether departments that received qualified reports would be punished. They asked further whether there were problems from the division of Education into Higher Education and Training and Basic Education, who had the right to conduct audits, whether internal department audits were accepted under the Auditor-General’s regulations, and whether performance audits would continue on an annual basis.

 

Meeting report

Briefing by the Office of the Auditor-General of South Africa (AGSA) on AGSA mandate, the audit process, and various types of audits
Mr Jan van Schalkwyk, Corporate Executive, Auditor-General South Africa AGSA briefed the Committee on the AGSA’s mandate and stated that as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector, thereby building public confidence.

The AGSA highlighted the different types of mandatory audits it carried out when auditing a department. These included a regularity audit to ensure that there were no financial improprieties within a department before proceeding to more detailed auditing. The AGSA also presented its practices on investigations and special audits (for special case departments).


The AGSA highlighted its independence as vital in order to carry out its duties credibly and impartially. The AGSA also presented the structure of the auditing standards and the international standards by which these were judged. The AGSA then briefed Members on the different terminology and meanings of audit findings such as the difference between a qualified and an unqualified report.

Finally the AGSA highlighted its responsibilities, which included disclosing non-compliance with laws and regulations and reporting on performance information.

Preliminary findings on the infrastructure audit and planned performance audits on the Department
AGSA briefed the Department on its planned performance audits on the Department of Basic Education. The audits were to cover various areas of the Department to ensure that the Department was running at optimum efficiency. The main focus of the audits would be on Early Childhood Development (ECD) and the No Fees Schools Programme (NSFP). The audit would assess the successes and failures of these two respective programmes and recommend alterations where necessary.

A further explanation was postponed until the next meeting of the Committee.

Discussion
Ms F Mushwana (ANC) asked why unqualified reports were not noted or reported on more prominently.

Mr Van Schalkwyk replied that they were not more prominent due to the AGSA’s focus on exposing irregularities rather than praising good practices.

Mr Z Makhubele (ANC) asked how many departments had the capacity to generate their own financial audits. He sought clarification on the lack of skills in the area of auditing and what the organisation was doing to help alleviate these problems. He asked what the AGSA would do to assist municipalities with small complements of staff which always received qualified reports as a result of failing to spread out duties aptly.

Mr Van Schalkwyk said that skills development in the area of auditing was still a major issue and one that would be addressed through focusing potential auditors on key areas and through learnerships. He said that internal audits were hard to implement in many departments due to the problem of confirming veracity. He said that the AGSA was working hard in assisting departments without the internal audit capacity to improve. He said that the company was in the process of dealing with the remaining outstanding issues at a municipal level but that most of the financial management problems they faced had been dealt with.

Mr N Kganyago (UDM) asked about service providers who received payment for a job before completion and asked whether the AGSA did anything to punish transgressors.

Mr Van Schalkwyk said that the main task of the AGSA was merely to surface issues arising out of bad financial management but that the legislative branch and justice authorities had the prerogative to prosecute those who they found to be guilty of improper management.

Mr J Lorimer (DA) asked whether audit reports on 2009/2010 on the Department would be available this year at any time.

Mr Van Schalkwyk said that the reports for that period would be released in July of this year.

Ms M Kubayi (ANC) asked whether departments that received qualified reports would be punished.

Mr Van Schalkwyk reiterated that it was not under the organisations mandate to carry out punitive measures.

The Chairperson asked whether there were problems which arose from the division of Education into Higher Education and Training and basic Education.

Mr Van Schalkwyk replied that there was huge financial risk involved in splitting a department which had been receiving unqualified reports for a prolonged period of time. The biggest problem was in monitoring the split so that no improprieties were allowed to go unnoticed or undetected. He said that it was important that smaller things not be lost sight of.

Ms Mushwana asked who had the right to conduct audits and whether internal audits were sufficient substitutes for departments.

Mr Van Schalkwyk said that ultimately AGSA had the duty of conducting audits and every other audit including internal departmental audits had to go through AGSA for approval.

The Chairperson asked whether there was a timeline to the completion of performance audits on the Department.

Mr Pretorius said that the audits would be complete and accessible by July 2010.

Mr Makhubele asked how they could be sure that services provided to certain constituencies were satisfactory through the findings of the audits.

Mr Pretorius said that AGS A would compare the situation on the ground to the perfect situation they envisaged for different areas and thus judge quality of delivery.

Mr Lorimer asked whether performance audits would continue on an annual basis.

Mr Pretorius said that due to staffing shortages at AGSA it was likely to continue only for two years and then cease for a period of time.

Consideration of Draft Reports: Committee Annual Report 2009, visit of Schools-of-Skills; and preparations for public hearings

The above items were postponed.

The meeting was adjourned.


 

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