management action plan to address audit findings … · policy tracking register. commitments...

MANAGEMENT ACTION PLAN TO ADDRESS AUDIT FINDINGS

MANABELA CHAUKE, DIRECTOR

Overview

1. Historical Audit Information

2. Key Achievements

3. Key Controls implemented

4. 2016/17 Audit report

5. Action Plan

5.1 Annual Financial Statement

5.2 Predetermined Objectives

6. Towards clean audit

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1. Historical Audit Information

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DETAILS 2012/13 2013/14 2014/15 2015/16 2016/17

Audit Opinion Qualified Unqualified Unqualified Unqualified Unqualified

Significant uncertainties SIA Law suits

SIA Law

suits SIA Law suits

Law suits &

Demolition

cost

Law suits &

Demolition

cost

Going Concern Yes Yes Yes No No

Material losses Yes Yes Yes No No

Material impairments Yes Yes Yes Yes Yes

Restatements of corresponding figures Yes Yes Yes Yes No

Pre- determined objectives

Law Enforcement SMART No No No No

CRM and Training SMART No

Usefulness &

Reliability Reliability Reliability

Irregular Expenditure Yes Yes Yes No No

Fruitless and Wasteful Expenditure Yes Yes Yes Yes Yes

IRREGULAR AND FRUITLESS EXPENDITURE

REPORT ON LEGAL AND REGULATORY REQUIREMENTS

REPORT ON FINANCIAL STATEMENTS

Emphasis of matter

2. Key Achievements

• Unmodified Audit opinion (Clean Financial Statement)

• Reduction of Material findings

• Irregular expenditure eliminated

• Implementation of Governance structure

• 85% of the planned targets achieved

• Fines increased to enhance compliance

• Reduced fruitless and wasteful expenditure

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3. Key Controls Implemented

• Risk Management and Combined Assurance model

• Risk based Audit plans

• Consequence management

• Document management system

• Implementation of Workplace Skills Plan

• Effective oversight structures

Council

Audit and Risk Committee

Internal Audit

Risk Management Committee (EXCO)

Operation Clean Audit Committee (Adhoc)

Stakeholder and Core Business Committee

Performance Management Committee

4

2016/17 Audit

Report

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Emphasis of Matters

• Material Impairments

- Provision of impairments to the amount of

R44 389 024( 2016:R28 860 133) was raised

on trade debtors , as a result of uncertainty

regarding

• Significant uncertainties

- Law suits and Demolition costs for Arcadia

building.

6

Additional Matters: Non-Compliance to Legislation

Adequate, effective and appropriate steps were not taken to

collect money as required by (section 51(1)(b)(i) of the PFMA

and Treasury Regulations.

Effective steps to prevent fruitless and wasteful expenditure not

fully effective.

Internal controls implemented not fully effective.

Lack of Document Management System.

Inadequate oversight role regarding performance information.

Proper controls were not implemented over daily and monthly

processing, reconciling and reporting of financial and

performance information.

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2016/17

ACTION PLAN

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Status of Action Plan

9

Resolved 57%

Not Resolved 43%

Status of Action Plan

Resolved

Not Resolved

Annual Financial Statement

Responsible official :

Deputy Director Finance and

Administration

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Annual Financial Statements cont.…

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Action Plan: Matters affecting the Audit Target Date

Revenue Management

• Partner with State Attorney (through MOU) to give PSiRA

access to their platform for purposes of litigation through

PSiRA resources.

31 Jan 2018

• Capacitate the debt collection office (legal experts) to

strengthen soft collection process.

Done

• Automation and improvement of the debtors system (ERP

System)

April 2019

• Interest and penalties to be implemented in the next

financial year will be communicated during the 2017/18

Annual Fees review consultation.

01 April 2018


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Action Plan Target Date

Project plan has been developed and synchronised to ensure that

there is adequate time for quality assurance by oversight

structures.

Done

Monthly, Quarterly and Year end cut off procedures will be

intensified to ensure completeness and accuracy of financial

information.

Done

Implementation of Compliance checklist to enhance compliance to

legislation and standards i.e. PFMA, PSiRA Act, GRAP standards.

Done


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Action Plan Target

Date

Financial Management Capability Maturity Model (MCMM) and

Risk Maturity Model implemented to assess and improve

internal controls.

31 Jan 2018

Monthly and Quarterly exception report will be reviewed on a

regular basis.

Done


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Registers are monitored to enhance quality of AFS

Contract Register.

Policy Tracking register.

Commitments register

Deviation Register

Fruitless and wasteful register

Irregular Register

Done


15


Recons are monitored to enhance quality of the AFS

Debtors recons

Creditors recons

Assets recons

Leave recons

Payroll recons

Suspense account (Clearing/Recon)

Done

Action Plan: Other Matters

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Assets management

• Capacitating Assets Management and Financial

Reporting.

30 Nov 2017

• Empower staff, regional managers on asset processes

and procedures to ensure that assets are accurately

accounted for.

30 Nov 2017

• Quarterly assets management report will be

implemented to monitor the movements of assets

both additions and disposal.

Done

• Half yearly assets verification will be conducted to

ensure that all assets are adequately accounted for.

In progress


17


Supply Chain Management

• SCM policy to be reviewed regularly to ensure

alignment with the National Treasury instruction. 30 Nov 2016

• Register of all bids received is maintained.

• Bid Evaluation Committee verifies the bid closure

register prior to evaluation.

Done


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Accounts Payable

• Age Analysis will be reviewed on monthly basis and all

variances are explained and followed up.

Done

• Monthly and Quarterly review of line items to avoid

misallocation.

Done

• Verify budget availability prior to procurement to

ensure correct General Ledger (GL) account.

Done

PREDETERMINED

OBJECTIVES

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PREDETERMINED OBJECTIVES


Deputy Director Communication,

Registration and Training

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Action Plan: Predetermined Objectives

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Registration

• Process re-engineering to effectively support record

management

• System configured to enable proper classification of

certificates

Done

• Weekly and monthly review of information captured on the

system for quality assurance purposes Done

• System configured to prevent renewal prior to 90 days

before expiry date

• Implementation of Document Management System

30 Nov 2017

• Quality review through pre-auditing of performance

information (Management Review, Internal audit and

AGSA interim audit to be conducted before year end)

30 Jan 2018


22


Training

• Both KPI and technical indicator description reviewed and

realignment for 2017/18 financial year

Done

• Database of accredited providers secured from SASSETA

quarterly

• Accreditation letters secured quarterly from training

providers to support and validate the reported

information

Done

• On-going site inspections conducted to verify

accreditation information provided

Done

• Quality review through pre-auditing of performance

information (Management Review, Internal audit and

AGSA interim audit to be conducted before year end)

30 Jan 2018

PREDETERMINED OBJECTIVES


Deputy Director Law Enforcement

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Law Enforcement

• Data control technique will be deployed to ensure

completeness and accuracy of data disclosed.

Done

• Case Management system to be implemented to avoid

duplication.

Done

• Segregation of duties to enhance the review and

quality of reported information.

Done

• Electronic Enforcement compliant register

implemented, reviewed on monthly basis at all

offices.

Done

• Quality review through pre-auditing of compliant

register.

Done

COMMITMENT TO IMPROVE INTERNAL CONTROLS

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SECTION COMMITMENTS

Financial & Performance Management

• Maintain proper record keeping of all

transactions

• Maintain effective controls over daily and

monthly processing and reconciling of

transactions

• Maintain regular, accurate and complete

financial and performance reports.

• Implementation of adequate

record/document management system.


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SECTION COMMITMENTS

Financial & Performance Management

• Ensure adequate accountability to improve

performance.

• Ensure Performance Score card includes risk

management.

• Ensure compliance by utilising Compliance

checklist, for both legislation and standards i.e.

PFMA, PSiRA Act, GRAP standards


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SECTION COMMITMENTS

Governance • Review, identify and address risks to

ensure that they effectively mitigated.

• Maintain adequate resourced functioning

internal audit unit and effectively utilised the

unit to improve internal controls.

• Ensure accountability and service delivery.

• Provide support to assurance providers to

assists to improve status of internal controls.

Accounting Authority Commitment towards Clean Audit

Leadership Commitment

• Established additional governance structure (FINCO)

• Both FINCO and ARC review performance reports before

submission to Council

• Intensify the review and monitoring of the implementation of

the recruitment plan (REMCO)

• Policy tracking register to be monitored by ARC

• Council governance structures to monitor the implementation

plan of the audit action plan relevant to their terms of

reference

• Approve Risk based Audit Plan and Combined Assurance

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Tittle Goes here…

THANK YOU

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