briefing to the portfolio committee on science and...

Briefing to the portfolio committee on Science and Technology

Audit outcomes of the Science and Technology portfolio for the 2014-15 financial year

14 October 2015

Reputation promise/mission

The Auditor-General of South Africa has a constitutional mandate and,

as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our

country’s democracy by enabling oversight, accountability and governance in the

public sector through auditing, thereby building public confidence.

2

Purpose of the presentation

Annually oversight committees set aside time to focus on assessing the performance of departments. On completion of the process, portfolio committees are required to develop department-specific reports, namely budgetary review and recommendations reports (BRRR) which express the committee`s view on the department’s budget for recommendation to the National Treasury ahead of the following year`s budget period.

Our role as the AGSA is to reflect on the audit work performed to assist the portfolio committee in its oversight role in assessing the performance of the departments taking into consideration the objective of the committee to produce a BRRR.

3

Content

1. Overall audit outcomes for Science and Technology portfolio 5

2. Auditor-General’s six key focus areas 6 - 9

3. Unauthorised/ irregular / fruitless and wasteful expenditure 10

4. Drivers of key controls for portfolio 11

5. Best practice 12

6. Combined assurance and assessment of assurance providers 13 - 14

8. Minister’s commitments to address root causes 15

9. Entities included in the portfolio not audited by AGSA 16

4

1. Overall audit outcomes for Science and Technology portfolio

40%DSTAISA

40%DSTAISA

100% DSTCSIRHSRCNRF

60% CSIRHSRCNRF

60% CSIRHSRCNRF

2014-15 2013-14 2012-134 auditees 5 auditees5 auditees

5

Unqualified no findings

Unqualified with findings

Qualified with findings

Adverse with findings

Disclaimer with findings

Audit not finalised

5

2. Auditor-General’s six key focus areas

100%

Quality of submitted

financial statements

(2.1)

50%(DSTNRF)

50%

Quality of submitted

performance reports

(2.2)

50% (DSTNRF)

50%

100%

100%

100%

Compliance with

legislation

(2.3)

Financial health Human resource

management

Information

technology

2014-15

PFMA

Good

Concerning

Intervention required

Regressed

Stagnant or limited progress

Improvement

6

2.1 Quality of submitted financial statements

100% (4)

100% (4)

Outcome if

NOT corrected

Outcome

after corrections

Avoided

qualifications by

correcting material

misstatements

during audit process

2014

-15

100% (5)

40% (DSTAISA)

60%(3)

Outcome if

NOT corrected

Outcome

after corrections

2013

-14

0 auditees

2 auditees

Financially unqualified

Financially qualified (qualified/ disclaimed with findings)

2014-15

PFMA

7

2.2 Quality of submitted annual performance reports

100% (5)

50% (DSTNRF)

50% (2)

Outcome if

NOT corrected

Outcome

after corrections

Avoided findings by

correcting material

misstatements

during audit process

2014

-15

100% (5)

Outcome if

NOT corrected

Outcome

after corrections

2013

-14

2 auditees

1 auditee

20% (NRF)

80% (4)

8

No material findings reported

Material findings on usefulness and/or reliability

2014-15

PFMA

8

9

2.3 Most auditees did comply with legislation in the following areas

100%

Quality of annual

financial statements

submitted

100%

Prevention of unauthorised,

irregular and/ or fruitless and

wasteful expenditure

100%

100%

100%

100%

Management of

procurement and or

contracts

Management of

strategic planning

and performance

Human resource &

consequence

management

Internal audit &

Audit committee

2014-15

PFMA

9

Good

Concerning

Intervention required

Regressed

Stagnant or limited progress

Improvement

2014-15

PFMA

10

3. Unauthorised, Irregular and Fruitless & Wasteful Expenditure

Unauthorised expenditure

Irregular expenditure

Fruitless and wasteful

expenditure

Definitions

Expenditure not in

accordance with the

budget vote/

overspending of

budget or

programme

Expenditure incurred

in contravention of

key legislation; goods

delivered but

prescribed processes

not followed

Expenditure

incurred in vain and

could have been

avoided if

reasonable steps

had been taken. No

value for money!

DST - R1 922 000 R0.00

CSIR - R117 000 R0.00

HSRC - R241 000 R64 000

NRF - R22 356 000 R14 000

Totals R0 R24 636 000 R78 000

Legends:

Decrease in

incurred

expenditure

No change

Increase in

incurred

expenditure

Finding not

repeated

New finding

Repeat finding

21.85% identified by

auditees100% identified by

auditees

4. Driver of key controls for portfolio

11

2014-15

PFMA

11

DST CSIR HSRC NRF

Leadership

Effective leadership culture

Oversight responsibility

HR management

Policies and procedures

Action plans

IT governance

Financial and performance management

Proper record keeping

Processing and reconciling controls

Reporting

Compliance

IT systems controls

Governance

Risk management

Internal audit

Audit committee

Good Concerning Intervention required

Improvement

Stagnant or little progress

Regressed

5. Best practices to maintain audit outcomes

Senior management’s positive attitude and commitment must be

consistently reinforced in their daily responsibilities.

In order to sustain audit outcomes, the auditees must ensure

effective leadership that is based on a culture of honesty, ethical

business practice and good governance.

12

12

2014-15

PFMA

Senior

management

Accounting

officers/

authority

Executive

authority

Required assurance levels

Extensive Extensive Extensive

Management’s assurance role• Senior management – take

immediate action to address specific

recommendations and adhere to

financial management and internal

control systems

• Accounting officers/ authority –

hold officials accountable on

implementation of internal controls

and report progress quarterly and

annually

• Executive authority – monitor the

progress of performance and enforce

accountability and consequences

Management assurance

First level of assurance

Senior

management

Accounting

officers/

authority

6. Combined assurance – complimentary mandate

Oversight assurance

Second level of assurance

Coordinating /

Monitoring

institutions

Internal

audit

Audit

committee



Oversight’s assurance role• National Treasury/ DPSA – monitor

compliance with laws and regulations

and enforce appropriate action

• Internal audit – follow up on

management’s actions to address

specific recommendations and

conduct own audits on the key

focus areas in the internal control

environment and report on quarterly

progress

• Audit committee – monitor risks and

the implementation of commitments

on corrective action made by

management as well as quarterly

progress on the action plans

Independent assurance

Third level of assurance

Oversight

(portfolio

committees /

councils)

Public

accounts

committee

National

Assembly



Role of independent assurance• Oversight (portfolio committees)

– review and monitor quarterly

progress on the implementation of

action plans to address

deficiencies

• Public accounts committee –

exercise specific oversight on a regular

basis on any report which it may deem

necessary

• National Assembly – provide

independent oversight on the

reliability, accuracy and credibility

of National and provincial government

13

6.1 Assessment of assurance providers for portfolio

14

2014-15

PFMA

Improvement

Stagnant or little progress

Regressed

14

Fir

st

leve

l

Se

co

nd

level

Provides assurance Provides some assurance

Provides limited/ no assurance

VacancyNot

Established/ Evaluated

4

3

4

2

1

2Senior management

Accounting officer/

authority

Executive authority

Internal audit unit

Audit committee

7. Status of Minister’s commitments to address root causes

1. Management monitors the dashboard monthly and updates the minister quarterly

on improvements and the actions taken to improve the controls.

2. Management monitors the planning process properly to ensure compliance with

the National Treasury’s framework and obtain quarterly feedback.

3. The supply chain management process checklist was implemented and must be

completed for all tenders, quotations and deviations. Internal audit will audit the

process to ensure compliance.

1. The minister will require a detailed plan addressing the audit findings, and

quarterly updates on the progress and implementation of the plan.

2. The minister will address ASSAF matters reported with the chairperson of the

ASSAF board to ensure that a turnaround strategy is implemented.

3. The DST will provide necessary support to its public entities to ensure

compliance with its mandate and PFMA.

Implemented In progress Not implemented New 15

15

2014-15

PFMA

8. Entities included in the portfolio not audited by AGSA (section 4(3) audit entities)

AUDIT OPINIONS 14/15 13/14 12/13

Technology Innovation Agency

South African National Space Agency

Academy of Science of South Africa

PREDETERMINED OBJECTIVES 14/15 13/14 12/13



Academy of Science of South Africa N/A N/A

COMPLIANCE WITH LAWS AND REGULATIONS 14/15 13/14 12/13



Academy of Science of South Africa N/A N/A

AUDIT OPINION LEGEND

CLEAN AUDIT OPINION: No findings on PDO

and Compliance

UNQUALIFIED with findings on PDO and

Compliance

QUALIFIED AUDIT OPINION (with/without

findings)

DISCLAIMER/ADVERSE AUDIT OPINION

ENTITY NOT YET ESTABLISHED

DEPARTMENT/ENTITY HAD FINDINGS (in the

related matter)

16

16

2014-15

PFMA

17

Questions

briefing to the portfolio committee on science and...

Documents