Committee report on the Determination of Salaries by the President; Consultation by AGSA on appointment of Deputy Auditor-General

Standing Committee on Auditor General

21 May 2021
Chairperson: Mr S Somyo (ANC)
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Meeting Summary

Video: Standing Committee on the Auditor-General

Tabled Committee Reports

The Committee adopted its report on the determination of Chapter 9 institutions’ salaries by the President. There will be no salary increases due to the economic climate.

The Auditor-General described the meticulous recruitment process she had followed to identify the best candidate for appointment as Deputy Auditor-General

Members asked for documents on the recruitment process and asked if all the candidates went through a vetting process. The Committee asked if there were candidates who were unhappy with the outcome of the recruitment process. The Committee asked how many candidates there were, how many of the candidates were women, and the number of internal and external applicants.

The Committee agreed to support the recommendation of the Auditor General that Mr Vonani Chauke be appointed as the Deputy Auditor-General.

The Auditor General updated the Committee on process of engagement with the audit firm KPMG on its possible reappointment to undertake audit work. Its contract had been terminated in 2018.

The Committee asked for a full account of the reasons KMPG was removed as one of the auditing firms and details of its turnaround strategy.

The Committee adopted its second term programmes and the minutes of previous meetings

Meeting report

The Chairperson welcomed and thanked every Member who was present. He said the Committee would consider and adopt the Committee programme which it will commit to fulfilling. The Committee would consider and adopt its minutes and the report sent by the President on determining salaries. The Auditor-General (AG) would brief the Committee on the appointment process of the Deputy AG and on the KPMG issue. KPMG currently cannot be appointed by the office of the AG, and the firm will try to convince the AG and the Committee that it has developed a new working strategy. He said that the Committee would be very busy this term because of local government elections and the plenaries that were formed. He said that the Committee’s programme must be structured in a way to allow for the AG to account to the Committee and to provide the audits in accordance with the Public Finance Management Act (PFMA) by July and to provide information on the municipal audits for 2019/20.

Committee Programme Term 2
The Secretary of the Committee said that the Members proposed that the Committee consider and adopt its strategic plan on 4 June 2021 and more Committee minutes if the need arises. The AG had proposed that a joint meeting on the Municipal Finance Management Act (MFMA) audit outcomes take place on 25 June with the Committee, the Standing Committee on Public Accounts (SCOPA) and the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA).

Mr N Singh (IFP) said that on 4 June, the National Assembly will deal with the Appropriation Bill and the budget votes. He requested that the consideration and adoption of the strategic plan be postponed until the 25 June. He said he requested this because other Committees informed the Standing Committee (SC) that they wanted to hold meetings during the constituency period. He said 4 June will be a very difficult date because of the budget votes.

Mr Z Mlenzana (ANC) agreed with Mr Singh’s comments and requested that the SCAG have a meeting before the briefing with SCOPA. He said that he was concerned with the comments made by the AG and said that the SC is not action-orientated. He said that the Secretary of the SC must advise the SC on a clear programme regarding meeting with entities or departments that are failing.

The Chairperson noted the proposals and asked if the Members agreed.

The Committee was in agreement of the proposals.

The Chairperson said that in the previous financial year the Committee had engaged on a number of security issues that the office of the AG faced. Committees must deal with issues that are related to its sector because it is receiving money from National Treasury (NT). He said that the Committee must be more focused on content and research matters. The Committee must assist the AG with its struggles like the MFMA and PFMA audits.

Committee report on the Determination of Salaries by the President
The Chairperson said that Parliament had received a letter from the President on the determination of Chapter 9 institutions salaries. He said that the letter covers the matter that the SC dealt with in the previous financial year and because of the current economic situation there will be a 0% salary increase. The Committee will consider this report and make its recommendation to the President.

Mr Singh said that he supports the proposal of the 0% increase of Chapter 9 institutions because of the economic situation.  

Mr O Mathafa (ANC) agreed with the comments of Mr Singh and supported the adoption of the report.

The report on the determination of salaries by the President was adopted.

Committee minutes
The Secretary of the Committee took the Members through the minutes of 31 July 2020, 25 November 2020, 19 February 2021, and 5 March 2021.

Mr Singh said that he did not see the Committee’s recommendations and only noted the deliberations of the meeting.

The Chairperson said that the recommendations were with the deliberation items. He said that going forward the recommendations of the meeting must be a separate item from the deliberations.

The Committee minutes were adopted with the suggested amendment.

Auditor-General (AG) on the appointment of the Deputy-Auditor General (DAG)
The Chairperson said that the AG had assured the Committee that the selection process for the DAG was done correctly. He asked the AG also to provide the Committee with an update on the KPMG matter.

Ms Tsakani Maluleke, Auditor-General, said that she would consult with the Committee on the appointment of the DAD in line with the Public Audit Act (PAA). The office of the AG made sure that the process was fair and would lead to a decision that the AG can defend. She said that recruitment process started on 21 December 2020 and was consistent with the recruitment policies of the AG. The first step in the process was an internal advert of the vacancy and the AG recruited the service the Landelani Recruitment Group (LRG) to assist the AG. The LRG received and processed all the responses from the internal advert for the vacancy and ran a head hunting effort to target a candidate. The candidate required ten years executive experience in the audit space and a blend of public and private sector experience. The candidate had to be a registered Chartered Accountant (CA) because the AG wanted to maintain the professionalisation of the office. The office wanted the DAG to be a CA so that the candidate can be the AG in the future. The AG looked for a courageous and motivational leader who could motivate staff and compliment the mandate and expectancy of the work that the office of the AG does for Parliament and the public. The AG also looked for a candidate who could work with a broad number of stakeholders both internal and external. The advertisement looked in particular for a South African citizen who would embrace and do the work for the public.

The office identified a total of 11 candidates for the interview process which consisted of two rounds of interviews. She said that the two rounds of interviews were conducted with different panels and she was the only person in both panels. She invited panel members who know the structure of the AG’s office and would help her make the correct appointment. The first panel consisted of a registered CA and Mr Brian Ethan who is a senior official in the auditing space. The second panel consisted of the former AG and Ms Thandi, a registered CA who has many years of experience. The first panel interviewed all 11 candidates and the second panel interviewed the three shortlisted candidates. She said after looking at the interview outcomes, the leadership competency evaluation ran by an external firm of psychometrics and the verification outcomes, one preferred candidate emerged. She asked the Committees’ support on appointing the preferred candidate Mr Vonani Chauke as the DAG. He is a registered CA, auditor, with 23 years of experience in auditing and is currently serving as a partner at a big firm. She said that during Mr Chauke’s term at SNG one of his mandates was to provide services to the office of the AG. The AG outsources internal audits and this allowed Mr Chauke to learn about the structure of the AG’s office. She confirmed that Mr Chauke knows the work and what has to be done and during his years in the profession he had served in many aspects of it.

The Chairperson asked the AG if the Committee can be provided with written documents of the recruitment process. He asked the AG if all the candidates went through the vetting process.

Mr Mlenzana asked the AG if there were any disputes by candidates who were unhappy with the recruitment process and if ‘‘yes’’ did the AG manage to resolve the disputes. He said that the Committee would not endorse the appointment if there were issues with the recruitment process.

Mr Singh asked the AG how many applicants there were both internally and externally. He said that the Committee is proud that Ms Maluleke is the first women who is the AG and asked if there women in the running of the recruitment process. He requested that the AG provide the Committee with the preferred candidate’s CV and asked if a background check was conducted on the candidate. He then asked if the AG communicated with the candidate on the appointment. Will the candidate accept the offer and if he does not what is the AG’s back-up plan.  

AG’s responses
Ms Maluleke replied to the Chairperson’s questioned on the written documents that she does have the write-ups and will forward these to the SC’s Secretary. The write-ups include every detail of the process like all the candidates that applied for the vacancy and their CVs. She then replied to the question on the vetting process. The AG’s office did conduct background checks on the candidates such as criminal and credit checks. She said that the office did not conduct a background check in relation to the State Security Agency (SSA). This will only be done when the DAG is to be appointed. She said that no irregularities occurred when the office did background checks on the candidates.

She replied to Mr Mlenzana’s question on the unsuccessful candidates, that all the candidates were happy with the process. The office communicated the outcome to all the candidates and she communicated with Mr Chauke that she would inform and ask the support of the Committee for his appointment.

She said she is convinced that the candidate will accept the offer and is ready to do the work of the DAG. Of the 11 candidates, four were internal candidates and 7seven external. She said that all the internal candidates were women and one of the internal candidates was in among the three shortlisted candidates. She said that all the internal candidates did well and she gave them the opportunity to further their role in the office. Three of the women took the opportunity. She said that she gave them the opportunity because they applied for the DAG’s role which shows they have ambition. The three internal candidates will have different roles in the office from 31 July 2021 which will challenge the candidates.

The Chairperson asked if the AG have looked into the work that Mr Chauke has done with other government institutions.

The AG replied that there is a court case, but this involved Deloitte Consulting and not the executive where Mr Chauke served. Deloitte have since terminated the relationship with the officials who were involved in the Deloitte Consulting issue. She said that she can confirm that Mr Chauke was not involved in any irregularities regarding the issue.

The Chairperson appreciated that the AG consulted with Committee to verify the recruitment process before the AG appoints the DAG. He then asked the AG what date she required the Committee to deliberate and give its recommendation on the appointment of the candidate.

The AG replied that she will recommend that the Committee handle the matter with urgency. She said the matter is urgent as the meeting was in the public domain and because the candidate needs to serve his notice period at his current institution.

Mr Singh suggested because the matter is urgent that the Committee can support the appointment of the DAG. He said that the Committee will receive all the documents on the recruitment process and the Committee can reverse its decision, if there are any irregularities from the SSA vetting process.   

Mr Mlenzana agreed with Mr Singh and said that to not delay the office of the AG the Committee must support the appointment pending the documents it received.

Mr Mathafa supported the comments of the Members and said that the recruitment process was so extensive that the AG employed external services to assist.

The Chairperson said that the recruitment process was very elaborate and the Committee is confident that there will be no shortcomings in the documents provided by the AG. The only outstanding matter of the appointment is the vetting process done by the SSA. Therefore the Committee will support the appointment of the DAG.

The Committee agreed with supporting the decision on appointing the DAG.

The AG thanked the Committee for its support because it is helpful in addressing key institutional matters.

The KPMG issue
The AG said that she received a letter from the Chief Executive Officer (CEO) of KPMG. It requested that the AG start on a process to normalise the relationship between the office of the AG and KPMG. In 2018, the office terminated the audit work of KPMG because of [problems with] its work done on audits and SA Revenue Services (SARS) issues. The AG was concerned about the internal assessment of KPMG International and the lack of key practice management principles in the firm. The office of the AG engaged with the Committee and SCOPA on the issue and on the decision to terminate the audit work of KPMG. She said that the office is engaging with the Independent Regulatory Board of Auditing (IRBA) on the assessments it conducted on KPMG. There is a limitation in the information that IRBA can provide the AG however it will still be helpful for the AG to make a decision. The office will take into account the information provided by the South African Institute of Chartered Accountants (SAICA) on the investigation into KPMG. She said that the office will take into account the journey that KPMG have taken to make a turnaround. KPMG have been public regarding the issues it faced and diligent in the strategy it has taken in the transparency reports it submitted. The office of the AG will take into account all the reports and continue to engage with KPMG. She said that in the next step of the process KPMG will engage with the executive board of the AG on the actions it implemented. She said that once the engagement has taken place and the office has compiled all the necessary documents and the findings of SAICA’s reports, the AG will brief the Committee. She indicated that she wanted the office and the Committee to deliberate on the matter. The AG is committed to present the report on the KPMG at the next engagement with the Committee.

The Chairperson indicated that based on the detail the AG provided and because it is a matter of national interest, the AG should begin with the process.

Mr Singh indicated that the transgressions of KPMG are a serious matter because it does auditing for the office of the AG and other government institutions. He said the Committee will note the application made by KPMG and must be provided with a full account for the reasons it was removed as one of the auditing firms and its turnaround strategy. The Committee needs to engage with other stakeholders before it can decide to reappoint KPMG.

The Chairperson thanked everyone who was present and said he acknowledged that the Members had a busy week. He thanked the AG for the briefing and said that the Committee will correspond its findings on the documents it received.

The meeting was adjourned.         


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