The meeting had been called to discuss matters relating to the audit committee, the audit environment, the findings of AGSA ’s report of 2015/16, SAPS’ adherence to AGSA ’s recommendations and the implementation plans of SAPS. At the outset, Members expressed their frustration and disappointment that they had just been informed that the Acting National Commissioner, who was the accounting officer of SAPS, would not be present. They were also not happy that the remainder of the delegation would be late. They stressed that they had wanted to put questions to this individual and it would not assist to have others present. They decided that another meeting specifically with the Acting National Commissioner would be convened for another date. The Committee Researcher briefed the Committee on the public sector audit environment and the role of the audit committee in terms of oversight. The Committee had previously been dissatisfied with lack of specifics in the Department's statement of what it had done to address the issues raised by the Auditor General South Africa (AGSA), and had asked SAPS to speak to the identified deficiencies, and the audit committee to attend to discuss its role in mitigating repeat findings. The audit committee highlighted key risk areas that needed attention, and assisted AGSA with the audit process. Management had, at the first level, not provided full assurance. At the second level, AGSA found a slight regression in the work of the internal audit units, but an improvement in the committee itself.
When the Department arrived, the Chairperson stressed that despite the apology, the accounting officer must remember that he was accountable to Parliament and meetings should be prioritised. The audit committee agreed that it was unfortunate to note that SAPS management had not responded to the audit findings, especially since some were repeat findings. Members asked to get a sense of the participation of management in the functioning of the audit committee, a comment on the long-standing vacancy (now at last filled) for Chief Financial Officer, AGSA findings on the reliability of the financial statements., and areas where there had been stagnation or regression and wondered whether the internal audit was really addressing the issues. They asked if the audit committee took steps to ensure that SAPS management would comply with the letter from AGSA on the findings, and whether risk based auditing plans were in place. The audit committee confirmed that they did hold SAPS management to account, had gone into areas of ICT management, and that a new team was in place in the Committee. The SAPS management had now accepted audit committee recommendations on repeat findings, and essentially the audit committee had stressed that the SAPS must thoroughly understand the root causes of non-compliance. It was suggested that findings on performance information should be written into performance agreements of managers and monitored by way of proper performance evaluation. It was noted that SAPS was a large organisation and the audits covered only a sample and it might be that whilst issues were addressed at one station, others would experience similar problems. Documents around monitoring of implementation would be tabled at a meeting in the following week. Numerous questions wee asked as to how the risk based auditing plan was formulated, put in place, and whether the audit committee oversaw the submission of the financial statements. It was noted that in the last year the statements were submitted late and the reasons were explained. In all cases, Members asked what steps were being taken to ensure that, where deficiencies had been identified, they would not be repeated in subsequent years. They asked what exactly the responsibilities of the audit committee were and whether it was able to put pressure on management. Members also asked questions about the timeframes and wondered if the audit committee was receiving the necessary support from SAPS. They asked what was meant by the statement that risk management was still in its infancy, and why the strategic risk strategy was coming up for review and revision. They asked about the relationship between the audit committee and the Minister, and how often there were meetings, as well as whether current issues had been addressed. Questions were also asked about the Charter, discussed whether key performance areas should be explicitly included in contracts and how the Committee could assist. They questioned if Tetra and the ICT environment would be addressed.
Members adopted, with some technical amendments, the Committee report on the Private Security Industry Regulatory Authority.
Opening remarks on position of SAPS, and Committee Researcher's introduction
The Chairperson summarised that this meeting was arranged to discuss matters relating to the audit committee, the audit environment, the findings in the report of the Auditor-General South Africa (AGSA) on the financial report of the SA Police Services (SAPS) for 2015/16, how SAPS was adhering to and implementing the recommendations.
Ms P Molebatsi (ANC) asked who was supposed to attend the meeting.
The Chairperson said the accounting officer of the SAPS had been requested to attend. No apology or call had been received to indicate that the accounting officer would not attend.
Ms Molebatsi said it was ”unacceptable and disgusting” that the accounting officer was not present.
Mr L Ramatlakane (ANC) said the whole purpose of this meeting was so that the Members could meet face to face with the accounting officer so that the responsible person could give his assurance on matters.
Mr Z Mbhele (DA) said that in not being personally present, the accounting officer was essentially undermining the authority of the Committee.
The Chairperson said it was unacceptable that the SAPS delegation were late, and that the accounting officer was not present as the tone of the meeting was intended at that level. He repeated that no formal apology had been received.
Ms Nicolette van Zyl-Gous, Committee Researcher, gave a presentation on the public sector audit environment and the role of the audit committee, specifically in terms of oversight. The Committee had been dissatisfied with the lack of specifics in the Department’s statement of the corrective measures it had taken to address issues raised by AGSA SA. There were no specific time-frames and no person being named as responsible for the implementation of the corrective measures. The Committee decided to apply a two-pronged approach. Firstly, it asked that SAPS address the identified deficiencies in the action plan, which would be the Department’s presentation. Secondly, the Committee also called the audit committee to the meeting to discuss the role of the audit committee in mitigating the risk of repeat findings from AGSA SA.
She noted that the audit committee oversaw the findings of SAPS’ internal audit component, highlighting key risk areas that needed attention. It also assisted AGSA with the audit process. There were some deficiencies in the first level of assurance, at the level of management. AGSA found that senior management provided some, but not 100% assurance. The second level was the internal audit units in the Department and the audit committee. AGSA found there had been a slight regression in terms of the assurance given by the internal audit units, but that there had been an improvement in the audit committee, insofar as their assurances were concerned. The audit committee's role was governed by the National Treasury regulations and the Public Finance Management Act (PFMA), and the King III report on governance provided best practice guidelines. The audit committee was appointed by the accounting officer in consultation with the Minister.
Audit recommendations: SA Police Service & Audit Committee report on compliance with Auditor-General recommendations
At this point, Lt Gen Stefan Schutte, Deputy National Commissioner: Asset and Legal Management, SAPS, arrived with the delegation. He apologised for arriving late and said the Acting National Commissioner had appointments scheduled with the National Management Forum and the Joint Standing Committee on Intelligence for the day, and therefore wished to tender an apology.
The Chairperson noted that government departments were accountable to Parliament. In terms of the PFMA, the accounting officer was the accountable person and no exceptions could be made when he was requested to present to this Committee.
Mr Ramatlakane added that the Committee recognised that he was busy, but it was a question of prioritising. The Committee could not ask questions to the delegation when the questions were actually aimed at the accounting officer himself. For this reason, he suggested that the part of the meeting dealing with the SAPS matters should be postponed until the Acting National Commissioner was present.
Mr Mbhele said better prior communication could have avoided this.
Mr P Groenewald (FF+) suggested the meeting be postponed because there would be no value in going through the matters in the absence of the Commissioner. He wanted answers from the Commissioner himself.
The Chairperson noted that the meeting with the Acting National Commissioner would be reconvened on an agreed upon date.
Mr Schutte said he had received word that the Commissioner was in meetings regarding the ‘Fees must Fall’ campaign and the National Management Forum.
Ms Besky Ngunjiri, Chairperson: SAPS Audit Committee, said it was unfortunate that SAPS management had not responded to the audit findings, especially since some were repeat findings. As an independent outfit, the audit committee wanted to see these weaknesses being remediated. She was confident, given the Committee’s spotlight on the matter, that there would be progress to a clean audit report.
The Chairperson wanted a sense of the participation of SAPS management in the functioning of the audit committee. He pointed out that there had been a vacant position for Chief Financial Officer for over a year. This had now been filled but AGSA had still made findings on the reliability of the financial statements. He asked what the audit committee's views were on this? In relation to the internal audit, he said there were some areas noted as being stagnant and there had been more findings than the previous years, so he questioned if the internal audit was really addressing the issues.
Mr Mbhele asked what the background and qualifications of the audit committee members were, and what links there were between the audit committee and senior management? He asked if there was a standing agenda item on the SAPS schedule? Given the adverse findings in AGSA ’s report, he asked what steps had been taken to ensure compliance.
Mr Ramatlakane asked if the audit committee took steps to ensure compliance with the engagement letter from AGSA, whether a risk based auditing plan was in place before an audit took place and how the findings of AGSA were implemented.
Ms Ngunjiri said she had 18 years of experience as an auditor in the private sector and was a qualified internal auditor, an American qualification. She had 13 years of experience as a public sector audit committee member.
Mr Trevor Boltman, SAPS Audit Committee member, said he was a certified auditor, which was an international qualification and that he had 25 years of experience.
Mr Wally Van Heerden, SAPS Audit Committee member, said he had worked for 40 years for AGSA SA and was a registered government auditor.
Mr Motsamai Karedi, SAPS Audit Committee member, described that he had 30 years of experience in accounting and auditing.
Mr Moloto Mokwele, Chairperson of the SAPS Risk Management Committee, described that he had nine years of experience in internal audit.
Speaking to feedback, Ms Ngunjiri said the audit committee held SAPS management to account and recently had gone into the area of ICT management. She said the audit committee had some voice and Lt Gen Schutte represented SAPS on the audit committee. Recently there had been a rotation in the members of the audit committee, so a new team was in place. A new CFO was in place in SAPS and the audit committee did get an audience with SAPS.
Mr Van Heerden said the Department now accepted the audit committee recommendations on repeat findings, which called upon SAPS to thoroughly understand the root causes of non-compliance, like lack of training or skills or the incorrect application of Treasury and PFMA regulations.
In regard to the attendance of the accounting officer, he said the accounting officer was always present at meetings, which made it easier for resolutions to be adopted.
He said that most of the findings on performance information were in regard to the daily activities of managers, thus this should be written into the performance agreements of managers and should be monitored by way of proper performance evaluation.
Mr Boltman spoke to engagement with the management letter and confirmed that the audit committee did engage with AGSA, and had advised management to develop an action plan to address issues raised in that letter. On the question of why there were repeat findings, he said SAPS was a big organisation and AGSA audited only a sample. While SAPS were implementing corrective measures at one police station, another might be audited and the same findings made. The audit committee was trying to speed up the implementation process and ensure that the internal audit was more robust.
Mr Mokwele said a decision had been taken that there should be a comprehensive implementation plan that addressed all findings raised by both external and internal auditors. He added that SAPS did follow a risk based planning in their approach to audits.
Ms Ngunjiri said a combined assurance process had been implemented to bring all assurance providers to the fore, to understand the root causes behind non-compliance, and to stop repeat findings. A document around the monitoring of implementation would be tabled at a meeting in the following week. The audit committee did continue to track all matters and the internal audit did do a follow up of its work.
The Chairperson asked if the financial statements had been submitted to the audit committee for review. He also asked what measures the audit committee would take to ensure that these problems did not recur and what process was followed internally to evaluate the financial statements.
Mr Ramatlakane asked why there was no implementation by SAPS of the audit committee recommendations, particularly in view of the fact that the accounting officer was present at all meetings. He acknowledged that SAPS was a big organisation, but the main problem was the repeat findings.
Mr Mbhele agreed and asked what the audit committee was doing in relation to the repeat findings, to ensure cooperation between the internal audit and AGSA. He asked if the audit committee was satisfied with the human resource capacity of the internal audit unit?
The Chairperson noted that the AGSA report had said there had been ineffective monitoring of the implementation of the action plan. He questioned that surely this was also part of the responsibility of the audit committee? The action plans were clearly not effective. He asked what the monitoring plans were of the audit committee, to put pressure and to ensure effective implementation.
Ms Ngunjiri said the audit committee was an oversight committee and was independent, and the audit committee merely put forward resolutions. The audit committee called for action. However, it could only see it that call had been heeded and the implementation had happened at the following meeting. In addition, some of the repeat findings came from internal audit processes, which had already identified them. The audit committee was trying to identify the root causes of these findings. She confirmed that internal audit capacity could do with more resources. A study had been done as to how much more was needed.
Mr Van Heerden said it not always the case that an accounting officer attended all meetings, but in this particular case, he had attended all meetings. He spoke to the material misstatements and said that in this year, the audit committee had been particularly pressed for time, the timelines had been very tight and matters had to be cleared up between the Department and AGSA , specifically on immovable assets, lease commitments and contingent liabilities.
He confirmed that the process did allow the internal audit unit to review the financial statements before they were submitted to the audit committee. Internal audit therefore needed to improve their skills to provide assurance.
The Chairperson asked if the audit committee would take additional measures to ensure that statements reaching AGSA were correct.
Mr Van Heerden said there was a compliance checklist and this needed to be extended and complied with on time.
Mr Ramatlakane asked what was meant by ‘timelines were shortened’. He asked if there was not compliance with PFMA time-frames?
Ms Ngunjiri said the detailed resolutions of the audit committee would be sent on 1 November, when there would be an audit committee meeting in which the resolutions would be discussed. She said interventions had happened a bit late, only after May, to ensure that AGSA ’s risk requirements were met. She said she was merely talking about the execution of the audits and that it was not as quick as AGSA would have wanted it to be. This would be corrected in the coming year.
Lt Gen Schutte spoke to the repeat findings. He said that these related to the performance information on Programmes 1 and 2. The findings on the annual financial statements were a first time occurrence so there could not have been previous action plans for these.
Mr Van Heerden said timelines were clear and strict. However, for this year’s procedure there had been challenges in the form of disagreements between AGSA and SAPS, with the result that the audit committee had even consulted with National Treasury. There had been consequent delays in completing the financial statements for audit. The audit committee had been aware of and nervous about the timelines for completion of the financial statements. In future, more rigorous pressure would be applied to SAPS management.
Mr Ramatlakane said audit queries were a management function and the response to queries were also SAPS management functions.
Mr R Mavunda (ANC) asked Mr Van Heerden what issues caused the delays.
Mr Van Heerden said the audit committee only coordinated the process, but it had been aware of some delays occasioned by the debate with AGSA. Some of the reasons related to interpretations around policy requirements and certain legal interpretations of outside Counsel on contracts were sought. In addition there were disagreements on interpretations of irregular expenditure, which also had to be cleared with National Treasury. These all culminated in the last two or three weeks.
Ms Ngunjiri said that the audit committee was happy with the process followed for financial management but she declined to respond on whether she was happy with the people involved in financial management.
Ms Molebatsi asked if the audit committee received the necessary support from SAPS.
The Chairperson said it was reported that the risk management process was still in its infancy, and yet the strategic risk strategy would be revised in 2017/18. She asked what were the problems with the current strategy?
Mr Maake said the same issues had been identified and some would need three years to resolve. Was this stated in the time- frames?
Mr Mbhele asked what the relationship with the Minister was and how often the officials met to discuss governance matters.
Mr Ramatlakane asked if the audit committee reviewed the internal Charter, how accessible it was to SAPS staff, and how communication around the Charter took place. He asked what method was used for follow up of the implementation of AGSA’s findings?
Ms Ngunjiri said they were getting support. The term ‘infancy’ was used to describe the maturity level. She added that all the charters were reviewed. The communication on the Charters provided an opportunity for the audit committee to engage with the communication portals of SAPS.
She also said that the audit committee had attempted several times to speak with the Minister and the former minister. There was nothing in the findings that required a quick escalation. In order to treat the root cause of the findings, an honest assessment would be needed and that required that there would be an environment that allowed people to learn and develop a habit over time, not to do something just to appease AGSA .
Mr Mokwele added that the audit committee was still at an early stage of getting people to understand what risk management was all about.
Mr Van Heerden said the internal audit Charter as well the audit committee Charter were reviewed annually and were approved at the audit committee.
Mr Mokwele noted that the current strategy around risk was under review not because there was anything wrong with it; this was part of an annual process.
Ms Ngunjiri said there was a combined assurance approach to the AGSA findings. The audit committee was looking at how issues raised would be addressed, and if management said that it had now been fixed, then one would review to confirm that this was in fact so. There was an attempt to ensure that not too many bodies would attend to the same reviews.
She said the audit committee had not met with the Minister but was still and would continue to make efforts to do so.
Ms Molebatsi asked what was meant by ‘there was no need to elevate the findings’.
Mr Ramatlakane said there was a suggestion made a by an audit committee member that key performance areas should be made explicit for managers that dealt with a certain area, and that performance agreements should be amended accordingly to include this. He asked whether this statement was made, for the first time, at this meeting, or whether it had already been suggested during engagements with the SAPS accounting officer. He asked also if the detailed performance as set out in the performance contract was in fact happening? He asked what two or three matters the Committee could assist with, when the audit committee engaged with SAPS management.
Mr Mbhele asked Ms Ngunjiri if, given her experience, she had noted any qualitative improvements in engagements with senior management, between the previous and current management.
The Chairperson said the Tetra project and the ICT environment were huge risks. He asked whether the risk and audit committees would also focus on the ICT and Tetra environment, because the affected the SAPS's ability to perform, and in general, what would their focus be when evaluating the risk environment.
Ms Ngunjiri said her reply was to a specific question and there was no urgency around the escalation, but the audit committee had wanted to escalate some findings to the Minister, and were still searching for ways to engage with the Minister to share the audit report. She requested the assistance of the Committee in emphasising the authority of the audit committee, and in emphasising the importance of SAPS management supporting the audit committee explicitly. She would not like to answer the question about any differences in approach between the previous National Commissioner, and the current acting National Commissioner. She agreed that specific tasks and responsibilities should ideally be included in the performance management agreement of individuals and then there had to be monitoring and feedback to the audit committee.
She also confirmed that the audit committee was looking into the specific risks of the ICT environment, and that Tetra would become part of the risk register for consideration by the audit committee.
Mr Mokwele said the risk committee did look at emerging risks and any new issues, including ICT.
Mr Ramatlakane wanted to express appreciation to the audit committee for this good and frank engagement.
Committee draft report on Private Security Industry Regulatory Authority (PSIRA)
A redrafted version of the PSIRA report was tabled for consideration and adoption.
Members proposed some technical amendments as they went through the report.
The Report was adopted with the necessary amendments.
The meeting was adjourned.
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