Auditor-General SA Budget & Strategic plan to 2015: Auditor-General briefing

Meeting report

Auditor-General South Africa (AGSA) Budget & Strategic plan 2012 to 2015: Auditor-General briefing
Mr Terence Nombembe, Auditor-General, had been unable to attend the previous meeting in which Auditor-General South Africa (AGSA) strategic overview and budget, for 2012-2015 was presented. This meeting presented him with the opportunity to brief the Committee further.

Mr Nombembe said that sufficient time had been spent on the AGSA Budget and Strategic Plan 2012-2015 in the previous week, and that it was a true reflection of what the Office of the Auditor-General wanted to focus upon and emphasise in the future. A major focus would lie on the increase in performance audits, and in fact this was already being done. Specialised roles such as information system audit and investigative capacity would be integrated in the work done during the audit exercise. This would give AGSA a much more robust way of interrogating issues during the audits of government entities, and a better analysis of the risks that government faced in specific areas.

Mr Nombembe said that AGSA was also looking at sustainability, and was at the preliminary stages of deciding how best to preserve the audit environment holistically. AGSA did face challenges, and was looking at ways of increasing the payment of auditing fees owing to the AGSA by the auditees. There was a need for increased engagement with the departments.

Mr Nombembe pointed out that the budget and strategic plan were meant to achieve the priority of clean audits in South Africa. AGSA sought to encourage the executive to take accountability and ownership of good internal controls in Government. AGSA aimed to stay within its budget, and at the same time maintain quality assurance in its audit work.

The Chairperson said that the role of the AGSA went deeper than merely performing audits on public entities and reporting on outcomes. Throughout the whole system of government, the promotion of principles of good governance, transparency and accountability lay at the core of a vibrant modern democracy. The State should maximise the benefits that AGSA offered.

Discussion
Mr N Singh (IFP) applauded AGSA on the move from regularity audits to performance audits. He also commented that AGSA’s performance, on the Competitive Index Report that compared 144 countries, was listed as number 1. He congratulated AGSA on this excellent result and agreed that there was a need for government to build on this performance.

Mr Nombembe noted that AGSA was in the habit of consulting extensively with the portfolio committees in Parliament, as well as the Executive, in relation to scenario planning and risk planning in areas that AGSA had identified as requiring priority.
 
Mr Singh said that his impression was that people in the municipalities did not fully appreciate the role of audits, since they failed to comply with the basics. There was a need to indicate how many performance audits would be conducted at the beginning of the next cycle, and the areas to be considered, as a way of creating public awareness.

Mr Singh wanted to know the extent to which municipalities were not meeting their financial obligations towards AGSA. If it turned out that this was serious, then he felt that Government would have to intervene, and perhaps “top-slice” their budgets, to assist the municipalities to pay the audit fees, so that service delivery would not compromised.

Mr Singh wanted to know the role of the AGSA in communicating to the public. At the end of the day, it was the public, rather than the Committees, who needed to know of the results of the audits.  He noted that some municipalities had received clean financial audits, although their performance was “atrocious”. There was a need to inform the public of AGSA’s focused role in the audit exercise.

Mr Nombembe said that the topic of good governance was always emphasised at the road shows conducted by AGSA, and at the same time these road shows were creating public awareness. Issues such as the lack of checks and balances had also been discussed at such road shows.

The Chairperson asked whether it was possible to get a clean audit report and yet fail dismally on performance, which translated to service delivery.

Mr Nombembe confirmed that this was possible, since the audit reports currently were basically about transparency of financial dealings. He gave an example that even if an entity returned all the money received by it from the National Treasury, without performing any service delivery, such entity could get a clean financial report if the books were correct, despite having not performed in terms of service delivery.

A DA Member was concerned that many government departments did know how to utilise their budgets effectively. He asked whether the doubling of the A-G’s budget would help in achieving more performance audits. He added that entities that achieved clean audits seemed to expect praise, yet clean audits should be the benchmark for all entities.

Mr J Steenhuizen (DA) said that there was a need for a national summit on consequences for municipalities who received adverse audit reports.  He felt that at the moment insufficient consequences attached to their failures, and noted that some municipalities had not even submitted financial reports for three consecutive years.

Mr Nombembe said that AGSA had done enough to bring this to the attention of the other players who had oversight, should pick up on the matters, and then take action. AGSA had a focused role and could not take any punitive action.

The Chairperson noted that, since there was not a quorum, the minutes and various reports would have to stand over for adoption at the meeting on 9 October 2012.

The meeting was adjourned.