Possible amendments to the Audit Directive; AGSA 2024-27 Budget & Strategic Plan; Implementation of Zondo Commission Recommendations

Standing Committee on Auditor General

17 November 2023
Chairperson: Mr S Somyo (ANC)
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Meeting Summary


Tracking the Implementation of the State Capture Commission Recommendations

In a virtual meeting, the Standing Committee on the Auditor-General (Scoag) received a briefing from the Auditor-General of South Africa (AGSA) on various aspects of its work, including proposed amendments to audit directives. The meeting provided the AGSA with the opportunity to consult the Committee on its 2024-2027 draft strategic plan and budget, the 2024 audit directive, and provide feedback on progress in dealing with matters emanating from the work of the State Capture Commission.

The AGSA said its strategic plan was built on the pillars of the institution’s #cultureshift2030 strategy, which aspired to have a stronger, more direct and consistent impact on improving the lived reality of South Africans. It aimed to achieve this by sustainably and efficiently shifting the public sector culture through insight, influence and enforcement. Internally, this included improving AGSA’s technological capabilities, strengthening the organisation’s financial sustainability, and aligning organisational leadership with the internal culture focus.

The proposed amendments to the audit directives were accepted and supported by the Committee.

There had been no findings for or against the work of the institution by the State Capture Commission (SCC). Efforts continued, however, to engage key state actors on how the recommendations could be best implemented. AGSA was commended for the work it had done with state-owned enterprises (SOEs), especially at South African Airways, Denel and the Passenger Rail Agency of SA, for having been able to provide valuable insights into the health and state of these institutions at critical times and moments.

As the supreme audit institution, AGSA would continue to work with National Treasury on various matters of common interest, including issues involving the latter’s regulations and their impact on reporting efforts by auditees.

The Committee unanimously acknowledged that AGSA's strategic plan indicated its progressive efforts to strengthen measures to ensure its implementation, both within the organisation and externally. The founding principles were lauded and supported, with the Committee noting the requests for continued support on such issues as funding. The Committee would deliberate on how it could contribute towards the current debate on the need to support the strengthening of Chapter 9 institutions (within its oversight purview of AGSA), especially on their constitutionally mandated functions, including the enforcement of directives.

Meeting report

The Chairperson said the meeting would receive a briefing on various aspects of the work of the Auditor-General of South Africa (AGSA), including some proposed amendments to audit directives. These would be then aligned with the strategy, budget and human resources of the institution. He commented that Parliament had recently held a debate on the strengthening of Chapter 9 institutions, and the resolutions of the House on the matters were in line with the views of the Committee on various aspects, especially the funding challenges of the AGSA. The institution continued to execute its mandate well, and should thus be encouraged and supported. This was especially the case with the AGSA value-for-money approach and linking audit outcomes with performance. The briefing would focus on the internal institutional capacity to achieve these outcomes, guided by the #cultureshift2030 strategy.

AGSA on 2024-2027 strategic plan and budget

Ms Tsakane Maluleke, Auditor-General, and Mr Vhonani Chauke, Deputy Auditor-General, led the presentations to the Committee.

Ms Maluleke thanked the Committee for yet another opportunity to present its strategy to the Committee. She would ensure that the recommendations of the Committee were included in the AGSA's strategic plan (the Blue Book) soon after the deliberations of the day.

The plan was based on the #cultureshift2030 strategy, which aspires to have a stronger, more direct, and consistent impact on improving the lived reality of South Africans. It aims to achieve this by sustainably and efficiently shifting the public sector culture through insight, influence and enforcement. It was informed by the South African Constitution, the International Organisation of Supreme Audit Institutions' Principles (INTOSAI-P), and a view of all three spheres of government.

The key strategic goals were outlined, with the creation and nurturing of an accountability ecosystem marked as a vital success factor. The ecosystem comprised a broad-based, effective network of stakeholders that drive and deepen public sector accountability. Each played a part in driving principles of public sector performance, transparency, accountability and integrity. These collectively bore responsibility for ensuring that all stakeholders in the national system of governance contributed to resolving the weaknesses in public institutions.

The presentation went on to outline the strategic commitments for the period 2024 to 2027. As part of efforts to shift the public sector culture, the organisation planned to move a critical mass of auditees towards organisational cultures dominated by behaviours that reflected performance, transparency, integrity and accountability. This included the generation of insights that illuminate understanding, drive action and yield results, while the objective of influence aimed to move stakeholders from mere awareness of the AGSA messaging, to action on and advocacy thereof. The enforcement objectives would involve recovering losses to the state and taxpayers, directly or indirectly, ensuring the application of consequences in cases of wrongdoing.

The presentation also highlighted AGSA’s internal priorities and performance targets for the period. The long-term operational priorities were:

  • The continued implementation of the #cultureshift2030 strategy;
  • Improving technological capabilities;
  • Strengthening the organisation’s financial sustainability;
  • Resourcing for success;
  • Strengthening AGSA’s ethical posture; and
  • Leadership alignment and internal culture focus.

The targeted outcomes for each of the strategic goals were outlined.

AGSA 2024/25 budget

Presenting the AGSA budget for 2024/25, the AG recalled that in 2008, the Standing Committee on the Auditor General (Scoag) had given its approval to the existing funding model and since then, the established principles and financial metrics had been constantly maintained. Nevertheless, some of the predicted surpluses had not been realised in cash, leading to a delay in large capital expenditure and infrastructure projects. The projected cash reserve for 2024/25 was two to three months, on par with the blue strategic target of two to three months. The budgeted revenue for 2024/25 was expected to grow by 5.5%, compared to the 2023/24 revised forecast, which aligned with the projected rate of inflation of between 4% and 6%.

However, comparing the 2024/25 budget with the 2023/24 budget, the increase was 13%. Two primary factors underpinned this growth: an increase in recoverable hours by 8%, and a 5% inflationary increase in charge-out rates. The informed view was that the 2024/25 budgeted surplus was insufficient to cover the capital expenditure, and the organisation would need to draw from its reserves, which would negatively impact the cash cover going forward. A funding and cost optimisation plans would be formulated to manage this process, to ensure the organisation's financial health was preserved.

See attached for further details  


The Chairperson noted that the strategy presented by the AGSA was a continuum and reinforcement of clear objectives that the Committee had become familiar with over the past few years. The influence aspect in the strategic objectives was welcome and encouraged, as they seek to ensure a positive buy-in by all involved in the audit processes across the public sector. The strategy speaks to the capacity-building steps that the institution continues to aspire to, so as to ensure the internal capacity to execute the objectives successfully.

Mr O Mathafa (ANC) espoused the view that the strategy presented was clear and sound, and a progressive continuum of what had been presented to the Committee in the past. Noting and welcoming the reported strides in ensuring regular interactions with National Treasury on the material irregularities (MI) process, he proposed that the Committee be updated on the progress of these interactions.

The Chairperson agreed, pointing out that two of the Committee Members served on the Appropriations Committee. The sharing of updates with the Committee may assist them in seeking to influence discussions on that platform, from an informed point of view.

Ms C Phillips (DA) enquired how the support required by the AGSA on funding could be realised.

The Chairperson revisited his earlier comment on the recent debate by the National Assembly on this and other issues concerning Chapter 9 institutions. The Committee must ponder on how it could influence this debate.

Ms Z Kota-Mpeko (ANC) echoed the sentiments on the clarity and credibility of the presented strategy. The efforts towards strengthening an accountability ecosystem were welcome and must be supported through oversight. Equally, the value-for-money approach was necessary to achieve the touted culture shift in the public sector. She wished to hear more about the Ahluma project.

AGSA's response

Mr Chauke responded that when the organisation trained its people, the trainees signed a three-year agreement, after which those who qualified to become chartered accountants either stayed or were signed off to go and work elsewhere. Observing the dynamics of the movements of these graduates, there was the creation of a central pool of people who had qualified, and they were used as and when the need arose. This culminated in the introduction of the Ahluma Centre, which created opportunities for retained audit seniors or audit clerks to work with multiple business units and gain diverse skill sets. In turn, they conducted some AGSA audits, eliminating the need to use private audit firms.

Ms Maluleke appreciated the continued support of the Committee. The organisation would continue to rely on the Committee’s support concerning funding issues.

Key updates on AG's 2023/24 audit cycle directive

The Auditor-General said that as part of the legislative requirement -- the Public Audit Act (PAA), Section 13 -- this part of the presentation sought to consult Scoag on the key updates to the Auditor-General's directive for the 2023/24 audit cycle. For the audits under review, adjustments had been made to improve the audit of the relevance, presentation and disclosure of performance data, as well as amendments to the criteria to perform a review of the financial statement engagement. These changes had impacted the directive and were the source of this Scoag consultation, as mandated by the PAA's Section13.

The following phased-in criteria are included in Annexure A for full implementation from 2023/24:

▪ Performance indicators are complete considering the mandated core functions, the prioritisation for delivery of those core functions and standardised indicators; and

▪ The overall presentation of the performance information in the annual performance report is comparable and understandable. Inclusion of the bolded areas to align the final Annual Financial Statements (AFS) review criteria: The level of assurance provided may be reasonable (an opinion) or limited (a conclusion) as predetermined by the AGSA based on the following

▪Requirements of legislation applicable to the auditee and the users of the auditee’s financial statements

▪ A history of  good financial reporting controls which prevent material misstatements of the financial statement

No further significant updates have been made to the directive

All other updates are considered editorial and/or minor updates

See attached for further details


The Chairperson enquired if Treasury Notes were ever used to assist with meeting audit directives. He also wanted to know the extent to which the AGSA interacts with the Office of the Accountant-General at National Treasury on the impact of the upkeep of matters related to the Public Finance Management Act (PFMA).

The AG responded that they had agreed to support National Treasury in reviewing their regulations as far as they affected the auditees, and this work continued with the established technical teams. The collaboration between the two institutions was in good stead, and would continue into the future.

AGSA response to State Capture Commission report

Ms Maluleke said that the purpose of the submission was to provide the Committee with a high-level overview of the progress made to date on the commitments in the AGSA’s response plan to the State Capture Commission report. As part of the background to this section of the presentation, she said that during the audit of all the departments and entities under the authority of the Commission, the team had looked into every aspect of the report in the preparation and execution of the task. The product of this work yielded an implementation plan which articulated the responses and actions to bolster AGSA's strategies, as part of the persistent pursuit to have a more direct, more substantial, and more consistent impact on improving the lives of South Africans, in line with the #cultureshift2030 strategy. The audit approach, support strategies, legislative reforms, and consequence management, amongst others, were covered. This applied especially to the auditing of such institutions as the intelligence services and state-owned enterprises (SOEs) where, for example, with the former, audit teams continued to use professional scepticism, varying audit strategies and techniques to effectively address the detection risk that auditors confront in intelligence offices and bureaus, given the sensitive nature of the transactions. The continued work on MIs as a contribution to consequence management was also highlighted.

The publication of the State Capture Commission (SCC) reports was a watershed moment in the fight against corruption and, identifying the key governance weaknesses in both the public and private sectors.

The Commission’s report highlighted the role of the public sector auditor in identifying and preventing fraud, corruption and other forms of impropriety.

When the report was received, the AG commissioned a team to analyse the observations, findings and recommendations of the Commission with the intent of identifying areas of enhancements in their audit work to enable the audit teams to have a better line of sight of the indicators of capture.

The team considered the various parts of the report in the planning and execution of the audit of all departments and entities covered by the work of the Commission.

The outcome of this work culminated in an implementation plan articulating the responses and actions to enhance our strategies as part of our continuous drive to have a more direct, stronger and consistent impact on improving the lives of South Africans in line with our #cultureshift2030 strategy.

Key audit guidance

Commenced with enhancing audit procedures and guidance in auditing areas of governance, procurement process, material irregularities and other areas that were prone to abuse as identified by the Zondo Commission.

Insights on human resource management (HRM) continuously shared with roleplayers in the accountability ecosystem, who have the power to influence HRM in the public sector.


Conducted training and awareness sessions based on lessons learnt from the Commission reports, to support and capacitate our audit team in execution of audits.

Training material was updated to include specific fraud risks/red flags that emanated from the State Capture Commission reports.

Scoping decisions

Reconsidered the timing and frequency of our audit scoping decision process to allow for agility to focus our audit efforts towards factors that indicate an elevated risk.


Refined fraud risk database with fraud risks/high-risk indicators to enhance the insights we extract during the audit process.

Enhanced oapproach and capabilities to computer-assisted audit techniques (CAATs) and data analytics to broaden our view across all spheres of government.

Established centralised data analytics and business intelligence capabilities.

Audit of procurement

Integration of the audit process within specialised services units to enhance the audit machinery and improve risk intelligence in auditing procurement.

Enhanced technical guidance to better equip teams to evaluate significant public procurement projects holistically.

On a continuous basis, audit teams evaluate the supply chain management policies to assess whether there is any possible abuse of weakened procurement control environment.

Collaboration with other institutions

Continuously collaborate with professional bodies such as  Independent Regulatory Board for Auditors (IRBA) and SA Institute for Chartered Accountants (Saica) to dissect the findings and recommendations of the Commission, especially where these influence the AGSA’s drive to restore the audit profession’s reputation.

Continuously recognise the importance of partnering with private audit firms in the public sector, strengthening our combined ability to be assurance providers to all government institutions.

Accountability ecosystem

Commenced with processes to enhance understanding of the accountability roles and responsibilities between the accounting officer/authority and the executive authority to be able to better share audit insights to improve the effectiveness of the accountability ecosystem.

Continue to share audit insights with parliamentary and other governance structures to better equip them to perform their constitutional obligations

Legislative reforms

Continue to participate and assist roleplayers in areas of legislative reforms or enhancements recommended by the Commission. A total of 11 statutes identified where the organisation can provide valuable insights during the development of the required reforms. Commentary provided on seven legislative reforms issued to date.

Consequence management

Utilised lessons from the SCC to refocus the link with public bodies (in MoUs) to broaden the scope of referrals to include Material Irregularities (MIs), but also other insights from audit process for further investigation by these bodies.

Continuously utilise relevant platforms, e.g. Public Sector Audit Committees forum (PSACF), to elucidate the mandate of all the roleplayers in the accountability re effective consequence management.

Continuously elevate the messaging on internal audit as part of improving the effectiveness of the internal audit process.

Intelligence departments/agencies

Due to the sensitivity of the transactions, audit teams continue to apply professional scepticism, different audit approaches and tools to best deal with the detection risk that the auditors face in intelligence departments and agencies.

AGSA recognises the contribution other roleplayers(such as audit committees and internal auditors) can play in providing assurance (even limited assurance) to Parliament and other governance structures on how money has been spent and how the mandates of the different auditees in this sector have been executed. These are continuously highlighted to the Joint Standing Committee on Intelligence for consideration.

Material irregularities

AGSA continue to notify the accounting officers or authorities of MIs identified during the audit process to enable the AO/AA to resolve identified irregularities that are causing financial loss or significant harm to the institutions.

Notified AO/AA of: 268 MIs in the local government space (MFMA MI report, November 2023), with: R182.75m financial loss recovered, R18,85m financial loss prevented from taking place, and R310.16m financial loss in process of being recovered.

Up-to-date information for departments and entities, subject to the Public Finance Management Act (PFMA), will be tabled on 29 November 2023

Internal environment

Continuously capacitate our specialised audit services (SAS) units to ensure that the organisation has sufficient skills and capacity to enhance our risk assessment capabilities, and to give effect to the need for integration between audit streams.

Developed a people strategy to strengthen AGSA people management processes and empower leaders as culture advocates using the lessons learnt from the SCC reports. The strategy is currently in consultation stages.

Developed an ethics strategic programme to enhance our organisational culture of ethics savviness while introducing tools, systems and processes to strengthen the AGSA ethics management machinery.

Updated procurement policy to enhance procurement process to enhance transparency, integrity and accountability in our procurement function.

 Facilitated ethics sessions with all roleplayers in the procurement space.

Reviewed the contract management function to enhance effectiveness of proper contracts management.

Enhanced due diligence assessments/vetting processes of suppliers that the AGSA appoints.

Reviewed the process to restrict suppliers in line with appropriate legislative requirements.

The AGSA has made some strides in the implementation of a response plan to address the areas of concern raised by the Commission. Internal governance structures, such as Audit Integration Forum (AIF) and Executive Committee (Exco), will continue to monitor progress and cause correct where necessary.

The AGSA will continue to enhance audit process to ensure it is better equipped to identify the risk factors that have an element of state capture and report these to the relevant bodies or authorities for further action.

See attached for full presentation


Ms P Mpushe (ANC) appreciated that the AGSA had been able to analyse and respond to the findings of the State Capture Commission report.

Mr Mathafa sought clarity on the views he had come across, shared by the Chief Justice, on establishing a permanent anti-corruption structure. Was there a process through which AGSA updated the Commission on its analysis of the outcomes, or was this done internally within AGSA?

In its analysis of the Commission's report, Mr N Singh (IFP) asked if the AGSA had found any significant omissions that may have been there in the way the AGSA operated. What were they, if any? Was there a need arising out of the report, to go back and implement specific interventions in departments or SOEs, that the Commission might have pointed out? The AGSA currently audits 17 of 21 SOEs -- was there a timeframe set for the AGSA to take on audits of the rest?

AGSA's response

Ms Maluleke responded that on the Schedule 2 audits, Eskom currently utilised private sector auditors, but a team from AGSA formed part of this arrangement. The objective was to infuse the public sector audit framework and approach. This also afforded the AGSA the opportunity to gain some insight into the entity's workings, which would benefit when it had to implement a full take-over of this audit in the future, as was intended. The same approach had been taken in the lead-up to taking over the auditing of Transnet. With Eskom, the AGSA noted the process underway to restructure the entity, which would be observed by the institution as the supreme audit institution, with a view to influencing the relevant processes when opportune. The space was also being watched from the perspective of the remaining time, with the various contracts held by the other entities with private auditors. From this, AGSA was able to plan strategically and sharpen its own tools in readying itself for the responsibilities ahead in this area. AGSA continued to improve its oversight even for those audits not yet taken over.

No omissions in the AGSA's work had been identified by the Commission -- in fact, it had been lauded for the work done, especially at South African Airways (SAA), Denel and the Passenger Rail Agency of South Africa (Prasa). AGSA has been able to provide valuable insights into the health and state of these institutions at very critical times and moments. The institution had resolved to learn continuously from its work and to remain proactive in its approach. AGSA had noted the finding of poor accountability within the intelligence services, prompting the organisation to keep examining.

At his request, AGSA had reported to the President on what it aimed to do in response to the findings and to provide an update on progress in this regard. The organisation stands ready to work with the key functionaries of the state, in their efforts to strengthen accountability and safeguard resources across government.   The AGSA had become clearer and sharper in its communication of the undesirability of disclaimers, and had made pointed recommendations on how these must be dealt with. With municipalities, transactions were being looked at, with a view to identifying material irregularities and linking the dysfunctionalities and the breakdown in the delivery of services. AGSA also intended to focus on those institutions with outstanding audits, and elevate in its reports the underlying issues that lay siege to the challenges at these entities.

Closing remarks

The Chairperson appreciated the interaction with the AGSA. It was encouraging that the institution continued to innovate around strategies to fight corruption, which continued to cost the country a lot. The Committee would seek to influence the conversations within the legislature, as part of the wider debate, on the role and support required by the AGSA to ensure the implementation of the State Capture Commission's recommendations.

The meeting was adjourned.


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