ATC190226: Report of the Standing Committee on the Auditor-General on its activities undertaken during the Fifth Parliament (May 2014 – March 2019), Dated 26 February 2019

Standing Committee on Auditor General


The following report replaces the report of the Standing Committee on the Auditor-General which was published page 2 in ATC No 48 - 2019 dated 17 April 2019.



  1. Report of the Standing Committee on the Auditor-General on its activities undertaken during the Fifth Parliament (May 2014 – March 2019), Dated 26 February 2019


1.         Introduction

1.1        This report serves as a summary of the work done by the Standing Committee on the Auditor-General (SCOAG) of the Fifth Parliament. The report comprises four parts:

Part A, the establishment of the SCOAG and its method of work

Part B, entities reporting to the SCOAG;

Part C, summary of SCOAG’s performance during the Fifth Parliament; and

Part D, challenges and recommendations to the Sixth Parliament.


1.2        This report should also be read with the various reports SCOAG has published during the Fifth Parliament.


Part A


Establishment of the Standing Committee on the Auditor-General


2.         Background

2.1        Section 10(3) of the Public Audit Act 25 of 2004 (the Act) requires that the National Assembly provides for a mechanism to maintain oversight of the Auditor-General in terms of section 55(2)(b)(ii) of the Constitution. Accordingly, the Rules of the National Assembly provide for the establishment of the SCOAG. The SCOAG is charged with assisting and protecting the AGSA in order for the latter to maintain its independence, impartiality, dignity and effectiveness.


2.2        In addition to the above, SCOAG like all other parliamentary committees, is mandated to process and pass legislation, and facilitate public participation in Parliament relating to issues of oversight and legislation.


2.3        Per section 10 of the Act, SCOAG must:

                        -           annually consider the Auditor-General of South Africa’s (AGSA) report on its activities and performance including:

  • the standards to be applied to audits as determined in terms of section 13(1);
  • the categories of services provided in terms of section 5(1)(a)
  • the institutions and accounting entities to which such services have been provided; and
  • any instances of co-operation in terms of section 5(2)(a)
  • annually consider a report on:
  • the overall control of the AGSA’s administration in terms of section 30(2); and
  • the annual report, financial statements and the audit report on those statements in terms of section 41(5).




3.         Membership

3.1        The Fifth Parliament held its first sitting on Wednesday, 21 May 2014. The Committee met on 24 June 2014 to elect its Chairperson. The Committee comprised the following members from various political parties:

African National Congress

Ms R Adams, MP (appointed 22 May 2017)

Ms P Bhengu-Kombe, MP

Ms SP Boshielo (discharged 4 May 2016)

Ms ZS Dlamini-Dubazana, MP

Ms NP Khunou, MP

Mr J Masangwanyi, MP (discharged 2017)

*Mr T Mpanza, MP (alternate appointed 22 May 2017)

Mr MLD Ntombela, MP

Mr VG Smith, MP


Democratic Alliance

Mr AR Mcloughlin, MP

Mr B Topham, MP (discharged 12 October 2018)

Mr M Shackleton, MP (appointed 12 October 2018)


Economic Freedom Fighters

Ms V Mente, MP

Mr TE Mulaudzi, MP

Inkatha Freedom Party

Mr Narend Singh, MP


Congress of the People

Ms D Carter, MP


3.2        Mr V Smith, MP was elected to the chair SCOAG on 24 June 2014. He vacated the position on 9 October 2018 when Ms N Khunou was elected to act in the position.


4.         Method of work

4.1        In light of its mandate, SCOAG restricted its meetings to only those to consider and report on the AGSA’s draft budget and strategic plans, integrated annual reports and any other matter that may require information to be shared with it e.g. the threats to the AGSA’s audit teams, and the termination of the AGSA’s contracts with audit firms that performed audits on the AGSA’s behalf.


4.2        In 2017/18 the Committee sought the National Assembly’s permission to amend the Act, through the Public Audit Amendment Bill, which aims to re-inforce the AGSA’s powers specifically to strengthen consequence management.


5.         Strategic Plan

5.1        The Committee held its strategic planning workshop on 9 June 2017 at which it was agreed to pursue the following strategic objectives:

  • to ensure clear and comprehensive legislation by amending the Act;
  • to strengthen SCOAG’s capacity to deliver quality outcomes;
  • to strive for value for money in any public spending through encouraging the AGSA to initiate the implementation of performance audits;
  • to learn best practices from countries with best systems of auditing, in particular in the area of performance audits; and
  • to forge working relations with other oversight mechanisms in other spheres of government which share areas of expertise and interest with the SCOAG.


Part B


Entities reporting to the SCOAG

As stated above, the Committee was established to maintain oversight of the AGSA.



5.1        Establishment of AGSA

5.1.1     The AGSA is established in terms of Chapter 9 of the Constitution, and is a state institution supporting constitutional democracy. The Constitution guarantees the AGSA’s independence, and requires that the office operates in an impartial manner, and performs its functions without fear, favour or prejudice.


5.2        Functions

5.2.1     The AGSA must

-           audit and report on the accounts, financial statements and financial management of the following entities as mentioned in section 4(1) of the Act:

  • all national and provincial state departments and administrations;
  • all constitutional institutions;
  • the administration of Parliament and of each provincial legislature;
  • all municipalities;
  • all municipal entities; and
  • any other institution or accounting entity required by other national or by provincial legislation to be audited by the Auditor-General.
  • audit and report on the consolidated financial statements of:
  • the national government as required by section 8 of the Public Finance Management Act No 1 of 1999 (PFMA)
  • all provincial governments as required by section 19 of the PFMA; and
  • a parent municipality and all municipal entities under its sole or effective control as required by section 122(2) of the Municipal Finance Management Act No 56 of 2003 (MFMA).


5.2.3     In addition, the AGSA may audit and report on the accounts, financial statements of

(a) any public entity listed in the PFMA; and

(b) any other institution not mentioned in section 4(1) of the Act and which is (i) funded from the National Revenue Fund or a Provincial Revenue Fund or by a municipality; or (ii) authorised in terms of any legislation to receive money for a public purpose.


5.2.4     The AGSA’s other functions are:

-           that it may, at a fee, and without compromising its role as an independent auditor provides:

  • audit related services to an auditee referred to in section 4(1) or (3) of the Act or other body, which is commonly performed by a supreme audit institution on condition that no services may be provided in respect of any matter that may subsequently have to be audited by the Auditor-General; such service will not directly result in the formulation of policy; and there must be full and proper disclosure of such services in terms of section 10(l)(b) of the Act;
  • advice and support to a legislature or any of its committees outside the scope of the Auditor-General’s normal audit and reporting functions;
  • comments in a report on any responses by an auditee to reported audit findings, or responses by an auditee to a report of any legislature arising from its review of an audit report; or
  • carry out an appropriate investigation or special audit of any institution referred to in section 4(1) or (3) of the Act, if the Auditor-General considers it to be in the public interest or upon the receipt of a complaint or request.

5.2.5     The AGSA may also:

-           co-operate with persons, institutions and associations, nationally and internationally;

-           appoint advisory and other structures outside the administration of the Auditor-General to provide specialised advice to the Auditor-General; and

-           do any other thing necessary to fulfil the role of the Auditor-General effectively.


5.2.6     The Act also provides that the AGSA may, in the public interest, report on any matter within the functions of the Auditor-General and submit such a report to the relevant legislature and to any other organ of state with a direct interest in the matter.




Part C

Summary of SCOAG’s performance during the Fifth Parliament


6.         Overview

6.1        From the beginning of its term, SCOAG was seized protecting the AGSA’s integrity by ensuring that its findings were implemented and given the necessary attention by the executive and accounting authorities alike. Concerns around the lack of consequences for financial misconduct and non-adherence to the PFMA and MFMA—which have resulted in public funds amounting to billions being wasted, date back many years.


6.2        In the first four years of the term, SCOAG focussed on those matters, it is legally required to consider i.e. the AGSA’s integrated annual reports, and draft budgets and strategic plans. The Committee, however, never lost sight of the fact that the AGSA needed to be strengthened to ensure that its important work had the necessary impact.


6.3        In 2017/18 it was seized with the amendments to the Act. In that process, SCOAG engaged extensively with the AGSA and National Treasury, and received public comment from a wide range of interested parties and members of the public. The amendments to the legislation did not introduce changes to the role and functions of the AGSA. Instead, they aim to address long-standing concerns around the failure of the relevant authorities to implement the AGSA’s findings specifically in relation to unauthorised and irregular expenditure. The amendments were enacted on 18 November 2018, but at the time of reporting the commencement date had not yet been announced. The amendments are aimed, in the main, at:

-     providing more certainty regarding the discretion of the AG with regard to certain audits;

  • authorising the AG to undertake performance audits and to provide audit-related services to an international association, body, institution or organisation;
  • providing for the AG to refer suspected material irregularities arising from an audit performed under the Act to a relevant public body for investigation;
  • empowering the AG to take appropriate remedial action;
  • providing for the AG to issue a certificate of debt where the accounting officer or accounting authority failed to recover losses from a responsible person and to instruct the relevant executive authority to collect the debt; and
  • providing for the defraying of certain excess audit fees as a direct charge against the National Revenue Fund.


6.4        While most of work the SCOAG’s undertook related to the above, other matters were also considered. SCOAG for instance also had engagements with the AGSA in November 2017 when it terminated its contracts with Nkonki Inc and KPMG who had until that time performed audits on the AGSA’s behalf. The allegations against the auditing firms, which had for many years performed audits on behalf of the AGSA are of grave concern, especially because of the reputational damage they could have caused to the AGSA. SCOAG must applaud the AGSA for its speedy action when the allegations came to light which ensured that the AGSA’s integrity was not called into questions as a result of its contracted auditors’ conduct. The Committee is pleased that the AG has announced that efforts to build internal capacity remains firmly on its agenda to manage reliance on external firms. These include using its discretion when it comes to the auditing of public institutions that present limited financial risk.


6.5        When it was brought to the Committee’s attention that the AGSA audit teams were being threatened in various ways, the Committee engaged the departments of Police and Cooperative Governance and Traditional Affairs to request that the concerns be responded to with the necessary urgency. The Committee has also pronounced itself strongly against the frivolous court challenges aimed at nothing more than avoiding action against parties who have been implicated in financial mismanagement.



7.         Overview of number of specific activities

7.1        Key statistics









Meetings held








Legislation processed





Oversight trips undertaken


Study tours undertaken


International agreements processed


Statutory appointments made


Interventions considered


Petitions considered



7.2        Legislation

In late 2017, the SCOAG commenced with a process to amend the Act in order to strengthen the AGSA. The Public Audit Amendment Bill was unanimously supported by both the NA and the NCOP in 2018. The amendments were enacted on 18 November 2018, but the commencement date is still to be announced.


Name of Legislation



Completed/Not Completed


Public Audit Amendment Bill

Section 75

To amend the Public Audit Act 25 of 2004 so as to:

  • insert new definitions;
  • provide more certainty regarding the discretion of the AG with regard to certain audits;
  • authorise the AG to undertake performance audits and to provide audit-related services to an international association, body, institution or organisation;
  • provide for the AG to refer suspected material irregularities arising from an audit performed under the Act to a relevant public body for investigation;
  • empower the AG to take appropriate remedial action;
  • provide for the AG to issue a certificate of debt where the accounting officer or accounting authority failed to recover losses from a responsible person and to instruct the relevant executive authority to collect the debt;
  • provide for the establishment, powers and functions of a remuneration committee;
  • provide for consultation between the Independent Commission for the Remuneration of Public Office-bearers and the remuneration committee;
  • provide for additional reporting requirements;
  • provide for the defraying of certain excess audit fees as a direct charge against the National Revenue Fund;
  • revision the provisions relating to the appointment of an audit committee for the AG;
  • provide that the AG makes regulations on specific issues; and substitute certain expressions.




7.3        Statutory appointments

7.3.1     Although no statutory appointments were made in the period under review, the SCOAG was consulted, as a matter of courtesy, on the re-appointment of the Deputy Auditor-General.


7.3.2     Section 31 of the Act provides for the appointment of the Deputy Auditor-General (DAG). Section 31(1) requires that the Auditor-General consults the SCOAG when he or she appoints the DAG. The current DAG, Ms T Ratsela’s first term in the position comes to an end on 31 March 2019.

7.3.3     Section 31(2) provides that the person appointed as DAG may serve up to five years, and that he or she may be appointed for a second term not exceeding five years. The Act does not require the Auditor-General to consult the Committee in the event that he or she decides to re-appoint the incumbent.


7.3.4     On 26 February 2019, the Auditor-General informed the Committee that he intends to re-appoint Ms Rantsela and sought the Committee’s advice with regard to the period for which she should be appointed. It was agreed that the re-appointment would be for another five-year period ending on 31 March 2024.


8.         Other matters referred by the Speaker

Date of referral

Expected report date

Content of referral

Status of Report

6 June 2018

28 September 2018

Report of the High Level Panel on the Assessment of Key Legislation and Acceleration of Fundamental Change (High Level Panel Report) was referred to several committees including the SCoAG, in order for them to consider the findings and recommendations relevant to their mandates.

Adopted on 13 September 2018

Part D

Challenges & Recommendations to the Sixth Parliament




9.1        Interference in the AGSA’s work

9.1.1     Over the last three financial years, the AGSA has reported its growing concern about the sudden increase in the number of auditees who resisted and contested the audit outcomes. In 2015/16, those contestations were resolved without seeking recourse from the courts. In 2017/18 the contestations resulted in delays in the conclusion of audits and an unnecessary increase in the cost of audits – these costs were borne by both the AGSA and auditees. Although most of the reported contestations were resolved, five stand out because the contestations in relation to their performance resulted in court action which made it impossible for the AGSA to submit their audits to Parliament for tabling.


9.1.2     In spite of the above, in its report to the National Assembly, the SCOAG raised some serious concerns about the manner in which some auditees now responded to the AGSA’s reports and findings. Of particular concern was the impact these challenges had on perceptions regarding the AGSA’s constitutionally guaranteed independence, as well as on its finances.


9.1.3     Concerns about auditees’ non-implementation of the AGSA’s recommendations and remedial action date back to the Fourth Parliament. Of most concern was that those who received qualified audit outcomes, year-on-year failed to address the root causes of their non-compliance and therefore received consecutive qualified reports. The Auditor-General also raised this lack of consequence management and disregard for AGSA recommendations with the SCOAG. The AGSA’s was forced to devise and implement strategies in an attempt to address this resistance. These included engagements with executive authorities in all three spheres of government, and the introduction of quarterly audit reviews which are submitted to auditees. These yielded little result and attempts to undermine the AGSA continued.


9.1.4     Towards the end of 2017, attempts to undermine the AGSA took a more sinister turn. Audit teams working in as the eThekwini, Msunduzi, Emfuleni, Tshwane, Madibeng and Moretele municipalities reported that they suffered various forms of intimidation, including threats to their safety. It is alleged that in one case, an auditor was shot. Charges were laid with the South African Police Service, and the AGSA had no choice but to withdraw its audit teams from those municipalities until the situation had stabilised. SCOAG had an engagement with the ASGA, SAPS and the Department of Co-operative Government and Traditional Affairs (COGTA) on the matter, and it was resolved that COGTA would develop an intervention plan aimed at ensuring that the AGSA was able to execute its constitutional mandate without interference. SAPS committed to work with the AGSA to develop security measures that would protect its auditors without infringing on their ability to perform audits. SCOAG is happy to report that since that engagement no further accounts of such incidents have been brought to our attention. The Sixth Parliament should ensure that COGTA and SAPS were able to deliver on their commitments they made in this regard.


9.2        Implementation of the amendments to the Act

9.2.1     At the time of reporting the President had not yet announced the commencement date of the Public Audit Amendment Act of 2018. Once announced, the AGSA must, within 3 months submit the regulations in terms of the Act to the Speaker for tabling in the National Assembly. As indicated in the legislation, the AGSA has consulted the SCOAG on the regulations SCOAG is satisfied that the regulations support the implementation of the Amendment Act.


9.2.2     The Committee welcomes the phased in approach the AGSA will follow as far as the implementation of the new provisions. SCOAG encourages the Sixth Parliament to fully support the AGSA as it embarks on various roadshows and workshops to familiarise accounting officers, municipal managers, the Special Investigating Unit, the National Prosecuting Authority, and parliamentary committees with the amendments and the new processes they introduce. SCOAG proposes that the Sixth Parliament monitors the implementation closely, and that the AGSA be requested to on a quarterly basis report on progress and challenges in this regard. As in the past, the AGSA should inform the SCOAG of any resistance it may experience.


9.2.3     SCOAG has no doubt that the amendments to the Act are a positive development that will reinforce the AGSA’s status as the Supreme Audit Institution and will support the AGSA in its commitment to identify and address financial mismanagement. In light of the increased resistance to the AGSA referred to above, SCOAG is also acutely aware that such threats may increase now that real action against accounting officers who fail to adhere to the PFMA and MFMA is a certainty. Given the AGSA’s status, such interference could be considered a crime against the state. Any attempts to interfere in the AGSA’s work through threats or frivolous legal challenges must be responded to with the necessary urgency, and definitively.


9.2.4     SCOAG urges that all oversight committees of the Sixth Parliament familiarise themselves with the amendments in order to ensure that they, during their oversight activities, closely monitor adherence to the PFMA, MFMA and, in the case of financial misconduct, the processes prescribed by the Amendment Act. SCOAG further recommends that Sixth Parliament orientation activities include engagements with the AGSA in this regard.


9.2.5     The SCOAG of the Sixth Parliament should, in the first year of implementation, receive quarterly updates from the AGSA on the implementation of the amendments.


9.3        Statutory Appointments

9.3.1     SCOAG has supported the re-appointment of the current Deputy Auditor-General for a further five-year term from 1 April 2019 to 31 March 2024.


9.3.2     The current Auditor-General’s term comes to an end on 30 November 2020, and the SCOAG of the Sixth Parliament must therefore ready itself for the appointment of a new Auditor-General in terms of section 6 and 7 of the Act. SCOAG recommends that its orientation and strategic planning programmes include a session explaining the processes to be followed.


9.4        Matters arising from the High Level Panel Report

9.4.1     SCOAG has identified the following matters related to the AGSA for further action:

  • a mechanism should be developed to track and monitor matters referred to other institutions by the AGSA
  • the number of complaints investigated, the outcome of the investigations, and matters referred to other bodies should be reported on annually; and
  • the appropriate resourcing/funding of Chapter 9 institutions should be re-visited to ensure that these bodies are able to perform their functions without impediment.


9.5        Method of work

9.5.1     SCOAG recommends that the Sixth Parliament starts its term with an expansive orientation around the work of the AGSA, its own roles and functions and an overview of the work performed during the Fifth Parliament.


9.5.2     During the Fifth Parliament, SCOAG was allocated a meeting slot on Friday mornings. While this slot allowed SCOAG members, all of whom serve on other committees that sit on Tuesdays and Wednesdays to attend, attendance of meetings was often low. Therefore, the SCOAG recommends that the Sixth Parliament engages the House Chairperson: Committees, Oversight and ICT around a more suitable slot that would allow full attendance or alternatively that SCOAG not be allocated a specific slot, but that committee members be allowed to determine their own meeting slots based on their availability.


10.        Acknowledgement

10.1      SCOAG wishes to express its profound gratitude to its members and secretariat and to the Auditor-General and the AGSA for their commitment throughout the Fifth Parliament. SCOAG is especially grateful to all those who participated in the processes leading up to the amendment of the Act.



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