Audit Committee for Office of the Auditor-General: discussion

Meeting report

The Audit Committee for the Office of the Auditor-General reported informally to the Standing Committee on the Auditor-General (SCOAG) about their interaction with the AG Office. Mr Thembekile Kimi Makwetu (Deputy Auditor-General), accompanied by Mr Adiel Kamedien, Senior Manager, Corporate Secretariat, represented the Office of the Auditor-General.
 
Mr Peter Moyo (Chairperson: Audit Committee) said that it was the Audit Committee’s duty to raise issues of concern about the financial administration of the Office of the Auditor-General. He reported that the Office was performing on par. There had been several improvements within the Office of the Auditor-General and the burning issues that needed addressing had been finalised.

One of the biggest challenges that the AG Office faced was with their Finance division, but plans had been set in place to address this problem. Mr Moyo stated that in order for the AG Office to be more successful, it needed to look at the quality of skills within the Office. To attract top class chartered accountants, the AG Office needed to be a place where young chartered accountants could see a future for themselves.

On issues pertaining to the Annual Report of the AG, Mr Moyo noted that the Audit Committee had looked at plans from the external and internal auditors and he said that the AG might receive an unqualified report. However, this was still an ongoing process and the Audit Committee was waiting on these auditors to complete their work.

Mr R Biesman-Simons (Audit Committee Member) said that the AG Office had had to deal with a very sensitive issue regarding one of its senior executives being suspended. This had a major impact on the financial situation at the AG. A Professor Boyd had been appointed to look at these problems. He noted that it was not good for the AG Office to have an unqualified report.

Prof K Barac (Audit Committee Member) commented that the received information from the AG Office was that the Auditor-General was satisfied with the current processes and that assurances were given that the work completed went through a process of quality assurance. Major improvements had been made on the quality of work completed.

About human capital management at the AG Office, Prof Barac stated that the AG Office had instituted an investigation into how best to address under-performing staff and that policies and procedures would be put in place to address this.

Mr Moyo added that it was imperative to consider the relevance and importance of the Office of the Auditor-General. It had an important oversight role and therefore any compromise on the integrity of the Office was not welcome.

Mr Makwetu (Deputy Auditor-General) explained that the AG Office had secured the services of the acting CFO to assume the position on a permanent basis. The CFO would assume the position on 1 May 2008. There had been an accelerated process in filling vacancies such as senior finance manager as well as senior accounts manager positions.

Mr G Woods (NADECO) said that the Standing Committee on the Auditor-General was sometimes in the dark on issues pertaining to the AG Office and that the issues on the table, relevant as they were had no bearing on the real matter up for discussion, mainly the relationship between the Committee on the Auditor-General and the Audit Committee. He said that regular meetings between the Audit Committee, AG Office and the Committee on the Auditor-General (SCOAG) needed to be conducted so that each entity could be aware of what was happening.

Mr M Stephens (DA) supported this idea and stated that regular meetings were important and that perhaps a quarterly meeting might be the answer. He added that the issues raised were specific matters.

Ms B Hogan (ANC) said that the Audit Committee might communicate to the AG Office as well other entities within this cluster on oversight. It would be useful to meet regularly if the situation called for a meeting or some form of informal briefing. The Standing Committee on the Auditor-General need to write an annual performance report which had to be adopted by Parliament. These informal meetings might help the Committee in writing its report, as the Committee did not want to intervene on the oversight role that the Audit Committee played. She proposed that these meetings be held on significant dates during the AG cycle.

Mr Moyo replied that the Audit Committee did not see this as being interventionist as both the Audit Committee and the Committee on the Auditor-General ultimately reported to Parliament. He believed that a maximum of two meetings a year would be enough to cover all relevant and significant issues as they arose.

Mr Biesman-Simons added that two to three meetings a year would be enough as the Audit Committee did not want to waste the Committee’s time as problems with reporting mechanisms and processes might arise.

Mr Woods asked whether the Audit Committee found it peculiar that they did not have to report to any board on their function and business.

Mr Moyo replied that the Audit Committee did not find it peculiar and that their role was to fulfill directives as given to them by government. He said that the line of communication between the Audit Committee and the AG Office was open. The Auditor-General served as the Board and this situation was quite interesting as oversight was usually reported to a board rather then to executives.

The Chairperson suggested that the Auditor-General be present at the next meeting as he would be in the best position to answer some of the relevant questions and that the interaction between the Audit Committee and the Committee was purely based on their oversight function.

On the issue of external auditors, Ms Hogan said that SCOAG played a key role in the appointment of external auditors. Legislation provided the judicial framework for SCOAG being responsible for the appointment of external auditors, but that this seemed to be complicated and thus it needed to be addressed. She added that a detailed document was needed on the internal and external auditors being used at the AG Office.

Mr Moyo replied that the Audit Committee was comfortable with the oversight role that SCOAG played in relation to external auditors.

Prof Barac added that the AG Office did have policies and procedures in place, as the Audit Committee needs to evaluate the criteria used.

Mr Woods said that the existing Act needed to be amended, as there seemed to be problems. He said that external opinions were vital to formalise the challenges facing the AG office. He indicated that there needed to be a board in place that would oversee the AG Office.

Ms Hogan replied that the AG Office was an independent body, protected by the Constitution, and any changes to this might bring on constitutional issues. If such a body should be brought into existence, this would create a whole host of other problems relating to responsibility, oversight and corporate governance and the possible undermining and integrity of the AG Office.

Mr Moyo said that they did have an advisory body, but it had since fallen away. He stressed the importance of the Office of the Auditor-General being an independent entity that should be protected from influence by powerful individuals, political parties or members.

The Chair concluded the meeting.