Achieving Total Compliance in Audit Reviews

Transcription

1 Achieving Total Compliance in Audit Reviews CHAMPIONING S Register Now!! Send Registration Form to : talent@audit-roundtable.com

2 Releasing the audit outcomes of the national and provincial government departments and public entities, AGSA revealed that in the three-year period under review ( to ), 24% of the auditees improved their audit results; 14% regressed; while the results of the majority (62%) remained unchanged. He further announced that during this period, public entities fared the best with continuous improvement year on year; however, the audit results of departments regressed in Whilst the AGSA said it was encouraging that the numbers of auditees that received financially unqualified opinions with no findings (commonly known as clean audits ), increased overall from 122 in to 152 in AGSA was quick to caution that 13 departments and 19 public entities that had performed well previously, lost their clean audit status in This regression was offset by nine departments and 39 public entities that obtained their clean audits in * -16 Nov 2016_PFMA Media Release_AGSA This year being the 5TH EDITION, it is with pride that Audit Roundtable has been associated with facilitating for a much sustainable audit results (clean audits) across the Public Sector. Each year, this annual Indaba offers relevant education, best practices, and thought leadership to help attendees lead their public sector departments. This Edition of the PUBLIC SECTOR TURNAROUND INDABA will further explore opportunities, challenges and sometimes pitfalls that plague public sector servants making it a must attend event for financial and audit committees, and those involved in public sector supply chain management has been a year emphasizing on Compliance and how we can best achieve and maintain the requirements set out or expected of us not only by the AGSA but by the public that we serve. Through case studies, panel discussions and closed door brainstorming sessions, best practice exchanges, delegates will grow their knowledge, careers and service delivery capabilities to create more sustainable, resilient, strategic and value driven performance. This is our 5TH ANNUAL EVENT, the PUBLIC SECTOR TURNAROUND INDABA has grown from one edition to another and it continues to grow. Our delegates have continued to applaud the amazing Indaba outcomes and have repeatedly reported on telling influence on their audit outcomes. In this edition, the event will engage further with the delegates in actionable ideas that will advance compliance knowledge and strategy. Send your team which includes FINANCE-INTERNAL AUDIT-SUPPLY CHAIN-PROCUREMENT-HUMAN RESOURCES to participate in this critical intervention that aims to continually ensure skilled, ethical and professional people within appropriate governance structures. Let your team actively engage in continuous improvement, innovation and learning for good leadership, oversight and governance. I look forward to welcoming you at Hilton Durban Hotel in Durban. I thank you! TALENT MOYO Research Director Audit Roundtable Talent Moyo Research Director talent@audit-roundtable.com Landline: Mobile: CHAMPIONING S Register Now!! Send Registration form to registrations@audit-roundtable.com Call Registration Hotline on

3 AUDIT OUTCOMES Provincial outcome analysis The provinces with the biggest improvement over the three years were the Eastern Cape (36%), KwaZulu-Natal (26%) and Gauteng (14%). The provinces with the highest number of auditees with clean audit opinions in were the Western Cape (79%), Gauteng (60%) and KwaZulu-Natal (35%). These improvements, barring the regression overall, signify the great potential evident within the departments and provinces to make a definite step away from deficient financial management. National outcome analysis At national level there has been improvement over the three years of only 9% of the auditees. Only 30% of the auditees had a clean audit status and 15% were either outstanding, disclaimed or had adverse opinions. The ministerial portfolios leading on clean audit outcomes were Arts and Culture, Trade and Industry and in the Higher Education and Training (sector education and training authorities) portfolio. Outstanding audits Twenty-seven audits were not completed in time to be fully included in this general report, of which 18 were still in progress at the date of this report. The main reason for this was non-submission or late submission of financial statements and information. However, there were audits that were delayed as a result of disagreements on accounting matters. The real essence of risk management Audit outcomes, as shown above, give a good sense of the strength of accountability in government whether the executive and administration are serious about good financial and performance management and respect the law, as indicators of their commitment to the principle of being accountable to the citizens of South Africa. Financial management environment The audit area that showed no improvement was the audit opinion on financial statements. The number of unqualified audit opinions decreased from 76% to 74% since , while auditees receiving disclaimed or adverse opinions remained unchanged at 5%. Performance management environment The quality of annual performance reports has slightly improved, with the number of auditees with no material findings in this regard having increased from 61% to 65% since The usefulness of the information in the report has slightly improved from 24% with findings to 21% but more than a quarter (26%) was still struggling to report reliable information on service delivery. Compliance with key legislation There has been an improvement in compliance with key legislation as the number of auditees with no material findings on compliance has increased from 27% to 33% since The non-compliance rate, however, is too high and needs significant attention. Irregular, fruitless and wasteful and unauthorised expenditure Irregular expenditure has increased by nearly 40% since to R46,36 billion the increase from the previous year was nearly 80%. The main reason for the increase in irregular expenditure was the continued noncompliance with supply chain management legislation. Irregular expenditure represents expenditure incurred towards procurement of goods and services without following prescribed processes. Financial health In we rated the financial health of 76% of departments and 39% of public entities as either concerning or requiring intervention a regression over the three years. Departments regressed from 53% in The signs of poor financial management are apparent in the increasing occurrence of deficits, departments funding cash shortfalls from the next year s budget, poor revenue management and the inability to pay creditors within the required 30 days Learn how to meet capacity ahead of demand to maximise efficiency within your enterprise or department. 2. Discover how to maximize career and organisational development programmes 3. You ll get tools to address your competency shortages from top employers and most successful organisations. 4. The agenda is engineered around your most pressing issues in talent management 5. Network among your most innovative and inventive peers. 6. Exchange ideas, tips and solutions for your talent challenges and build essential industry contacts 7. Join leading experts from public and private sector organisations from across South Africa seeking new ways to develop talent and make the most of human capital in Africa. 8. Meet first hand with people who manage and determine capacity development functions in organisations. 9. An opportunity for overall education for Public Sector Professionals Benchmarking your team against best practice. 10. Be part of the Best Practices exchange session. Management of grants Conditional grants are allocated to drive specific government objectives. Although most of the funds were used, the targets identified for the programmes and projects funded by the grants were not achieved by all provincial departments. We found that the targets of 31% of the projects we audited were either not achieved or not evaluated by departments. We identified non-compliance with supply chain management legislation on 16% of the key projects managed by departments. CHAMPIONING S If you are interested in presenting a paper in the conference contact: donald@audit-roundtable.com

4 Consequence management, accountability and action by the leadership in addressing root causes are the key cornerstones to improve audit outcomes. Who Should Attend? The 5th Edition of the National Public Sector Clean Audit 2017 is designed for but not limited to: 1st line of defence - Management Assurance Assists in setting and executing strategies. Provides direction, guidance and oversight. Promotes a strong risk culture & sustainable risk return thinking. Promotes a strong compliance culture and management of risk exposure. Ongoing monitoring and management of risks. 2nd line of defence - Risk Management, Legal & Compliance Formal, robust and effective risk management within which the organisation s policies and minimum standards are set. Objective oversight and the ongoing challenge of risk mitigation, management and performance while reporting is achieved across the business units. Overarching risk oversight across all risk types. 3rd line of defence - Internal Audit & other Independent Assurance Providers Independent and objective assurance of overall adequacy and effectiveness of governance, risk management and internal controls within the organisation as established by the 1st and 2nd lines of defence. Ability to link business risks with established processes and provide assurance on the effectiveness of mitigation plans to effectively manage organisational risks. Municipal Managers Mayors City Council Leaders Provincial Directors Ministers Premiers Members of Parliament Thought Leaders Solution Providers The Board and Directors The Committees of the Board HR Directors HR Managers HR IT Personnel Buyers Procurement Managers Internal Audit Auditing Firms Quality Assurance Managers CEOs, CFOs, COOs, CPOs Parastatals Government Officials Union CHAMPIONING S Register Now!! Send Registration form to registrations@audit-roundtable.com Call Registration Hotline on

5 Provincial audit outcomes in compared to (all auditees) Source: Fin24_17 November 2017 R million (236 municipalities [90%]) R6 019 million (36%) R million (64%) 31% (R5 206 million) R million (232 municipalities [88%]) R million (225 municipalities [86%]) R4 137 million (37%) R5 965 million (53%) R6 999 million (63%) R5 369 million (47%) Identified by municipalities 24% (R2 662 million) Identified during audit Three-year trend in irregular expenditure Source: Fin24_22 July 2017 These provinces also had the highest amounts of irregular expenditure in , as indicated below: Eastern Cape R5 657 million (increased by 60%) North West R2 520 million (increased by 117%) KwaZulu-Natal R2 361 million (increased by 50%) Mpumalanga R2 279 million (increased by 162%) Incurred in previous years identified in current year Provincial audit outcomes in compared to (municipalities) Source: Fin24_17 November % (R2 179 million) It is the responsibility of all key stakeholders to bring about accountability for improvements in all the disciplines to be realised. If care is taken in all these disciplines, there will be more funding available for service delivery. With transparency having been introduced, limited resources will be utilised more effectively. As long as we have such high levels of irregular expenditure, with no consequences for responsible officials, we will not be able to deliver the required level of services to our people. Register Now!! Send Registration form to Call Registration Hotline on

6 Celebrating 5 years Championing Clean Audits 30 November, 2017 Gala Dinner Hilton Durban Hotel, Durban 2000 hrs hrs Join us for a night full of fun festivities If you are interested in presenting a paper in the conference contact: donald@audit-roundtable.com

7 PRELIMINARY AGENDA (TOPICS) DAY 1 KEYNOTE ADDRESS: - THE GOOD, THE BAD AND THE UGLY - THE AUDITOR GENERAL S REPORT CARD Unpacking the AGSA Report Improvements for Audit Targets CURBING IRREGULAR EXPENDITURE Curbing the huge amount of expenditure and its combination with the failure of controls that gives rise to these kinds of irregular expenditure Unauthorized vs Irregular expenditure, toeing the thin line POOR MUNICIPAL AUDIT OUTCOMES SIGNAL AN INABILITY TO COMPLY More needs to be done to hold municipalities accountable for the maladministration of public funds Continued oversights at the level of political and leadership and leadership in local government departments. Recurring problem of unauthorized and irregular expenditure CAN RESIDENTS BE HELD ACCOUNTABLE FOR AUDIT OUTCOMES? Residents play a critical role in the income generation of municipalities and how these monies contribute to the efficient runnings of local municipalities and service delivery. THE BIGGEST CHALLENGES FOR LOCAL GOVERNMENT OVER THE YEARS HAS BEEN TO ATTRACT AND RETAIN QUALIFIED AND COMPETENT PERSONS IN ALL AREAS OF ADMINISTRATION Inadequate capacity in these units negatively affects the management, controls and quality of financial reporting The unwillingness to improve the systems precisely because it benefits certain people. SERIOUS CONSEQUENCES FOR AUDIT TRANSGRESSIONS Recurring problems identified by the Auditor General include poor financial planning, lack of accountability and the sluggish response of managers and political leaders to serious issues within municipalities. Identifying municipalities that need intervention in terms of of taking over the administration, but assisting them to perform better the next financial year. IRREGULAR EXPENDITURE, DUE TO SIGNIFICANT INTERNAL CONTROL DEFICIENCIES Procurement processes not fair, equitable, transparent and competitive, and proper control systems deficiencies. THE IMPLEMENTATION OF THE STATE S LOCALISATION POLICY Overall evaluation of localisation to ensure its effective Non-compliance with procurement legislation being made an audit finding and for consequences to follow on it for those responsible, such as CEO s of SOE s and Accounting Officers of Departments FINANCIAL FLAWED REPORTS Breach of Section 55 of the PFMA Adequate systems for identifying all irregular expenditure and that no satisfactory audit procedures could be performed by the auditors to obtain reasonable assurance that irregular expenditure have been accurately recorded. The poor quality of the financial statements we receive in the audit reports of some auditees as a material finding on compliance, as it also constitutes non-compliance with the Municipal Finance Management Act (MFMA). Register Now!! Send Registration form to registrations@audit-roundtable.com Call Registration Hotline on

8 PRELIMINARY AGENDA (TOPICS) DAY 2 ACCELERATING LEADERSHIP TO ACHIEVE S Establishing a culture of honesty, ethical business practice and good governance Oversight responsibility Effective Human Resource Practices Implementing appropriate policies and procedures Internal control deficiencies Information technology governance framework AUDIT TURN AROUND STRATEGY Unqualified with no findings workshop. Knowledge synergies with all departments and functions in the Audit process creating a professionally acceptable environment A REVIEW OF EXTERNAL FACTORS THAT INFLUENCE SUPPLY CHAIN PROCUREMENT, ISSUES ON COLLABORATION, TALENT RECRUITMENT, THE CONTRACT GAP, AND TOTAL COST OF OWNERSHIP CASE STUDY: PROCUREMENT UNDER PUBLIC PRIVATE PARTNERSHIP (PPP): Creating a conducive environment for transacting between the public and private sectors. BEST PRACTICE SESSION: INSIGHT ON LEADING AUDIT PRACTICES FOR EFFICIENT GOVERNANCE PRACTICES CASE STUDY FROM THE BEST PERFORMING MUNICIPALITIES AND ENTITIES The role of management, AGSA, Internal Audit, Risk Management and the Audit Committees in promoting sound financial management, better risk management and long term sustainability of the : Management responsibilities Risk Management Processes The Management Challenge UNEVENNESS IN CAPACITY THAT LEADS TO UNEVEN PERFORMANCES IN PUBLIC SERVICE. Addressing lack of leadership and accountability existing to ensure that municipal officials perform the duties for which they were appointed. Effective leadership (political and administrative) that is based on a culture of honesty, ethical business practices and good governance, protecting and enhancing the interests of the auditee. PROCESSES TO ENSURE SOUND FINANCIAL MANAGEMENT AND THE POOR ECONOMIC CONDITIONS PREVAILING IN THE COUNTRY OVER THE PAST SEVERAL YEARS, WHICH ARE CHARACTERISED BY HIGH CONSUMER DEBT AND RESULTANT DEBTOR DEFAULT. ** Agenda Subject to change. TACT has the right to change speakers, edit agenda or event in any cases of arising emergencies. CHAMPIONING S If you are interested in presenting a paper in the conference contact: donald@audit-roundtable.com