NON - COMPLIANCE A U D I T

Transcription

1 EASTERN CAPE FREE STATE GAUTENG KWAZULU-NATAL LIMPOPO MPUMALANGA NORTHERN CAPE NORTH WEST WESTERN CAPE NATIONAL PUBLIC SECTOR NON - COMPLIANCE A U D I T SYMPOSIUM ND ANNUAL EDITION Beyond Compliance... Accountabilty and Sustainability An Event From: 200+ PARTICIPANTS FROM ALL PROVINCES talent@audit-roundtable.com EXPERT SPEAKERS FROM PUBLIC SECTOR LEADERSHIP BOOK NOW!!! BEFORE 02 FEBRUARY 2018 & QUALIFY FOR EARLY BIRD DISCOUNTS

2 NON - COMPLIANCE A U D I T FOREWORD Our Annual 5th Edition of the National Public Sector Clean Audit Indaba held in Durban on the 30th of November to the 1st of December 2017 was a great success and much more informative than the previous editions. At the Indaba, the AGSA 2016/17 Report was unpacked and it was welcomed with much drive to work smart and achieve clean audits with no findings in 2017/18. Unfortunately,as highlighted in the previous year s report the common term was non-compliance which in turn adversely affected the audit findings for most entities. Of the 19 audited State-owned Entities (SoEs), five received clean audits, or unqualified with no findings, while five received qualified or adverse opinions. Others received unqualified audits with findings that must be addressed. SoEs are in governance turbulence and mired by financial mismanagement scandals as SoE irregular expenditure almost doubled over the past three years to R2.884-billion in the 2016/17 financial year. That is double the R1.439-billion irregular expenditure incurred just a year earlier. One of the things that is contributing to the irregular expenditure is deviations from supply chain for emergency procurement there are also things like sole supplier arrangements there are issues of no competitive quotes obtained and there are also areas that deal with extensions of existing contract, so contracts exist and the principle amount of the initial contract was let s say R100 million and because of extension you end up with a contract which is now suddenly in the billions, said Kim Makwetu. Leading to the 6th Edition of the Clean Audit Indaba 2018, we aim to work on specifics and highlight the Auditor General list on Non-Compliance and Irregular Expenditure. While we will gladly welcome our regular teams of Finance, SCM please fuse them with your line managers of different departments at this mega conference in Durban. I look forward to welcoming you at Elangeni and Maharani Towers in Durban. I thank you Meet and Network with... Municipal Managers Mayors City Council Leaders Provincial Directors Ministers Premiers MEC s Thought Leaders Solution Providers The Board of Directors The Executive Committees HR Directors HR Managers HR IT Personnel Buyers Procurement Managers Finance Managers Internal Auditors Chief Audit Executives Quality Assurance Managers Chief Executive Officers Chief Procurement Officers Supply Chain Managers Supply Chain Officers Parastatals and SOE s Government Official Unions Compliance Directors Talent Moyo Research Director Audit Roundtable For Sponsorship & Exhibition Opportunities - Talent Moyo : talent@audit-roundtable.com TEL:

3 NON - COMPLIANCE A U D I T SYMPOSIUM GREAT REASONS TO ATTEND THE 2018 ANNUAL SYMPOSIUM Learn how to meet capacity ahead of demand to maximise efficiency within your enterprise or department Discover how to maximise career and organisational development programmes You ll get tools to address your competency shortages from top employers and most successful organisations. The agenda is engineered around your most pressing issues in talent management Network among your most innovative and inventive peers. Exchange ideas, tips and solutions for your talent challenges and build essential industry contacts Join leading experts from public and private sector organisations from across South Africa seeking new ways to develop talent and make the most human capital in Africa. Meet the first hand with people who manage and determine capacity development functions in organisations Opportunity for overall education for Public Sector Professionals Benchmaking your teams against practice. Be part of the Best Practices exchange session For Early Bird Registration Specials Contact - : registrations@audit-roundtable.com TEL:

4 NON - COMPLIANCE A U D I T The AG says... Plan +do+check+act cycle PLAN Irregular expenditure increased by 55% 25% of the auditees disclosed that they had irregular expenditure BUT the full amount was unknown Process set out in the Constitution and the PFMA were not folowed Irregular Expenditure could rise to R65 billion Financial Management did not have technical competence to manage expenditure ACT 6. Better Audit Outcome 7. IMPACT Better life for all 5. Consequences Handbook on Accountability 1.Accou ntablity 2. Define target 4. Monitoring by ALL ASSURANCE PROVIDERS 3. Internal control & supervision Implement the basics CHECK DO What does the Auditor- General DO? It s not difficult to receive an unqualified audit - in fact it s a no-brainer, Auditor General Kimi Makwetu said clean auditeverything done the way it should be. UNQUALIFIED AUDIT WITH FINDINGS Not bad, but could compromise accountability Qualified auditdid not manage AND ACCOUNT FOR FINANCES to achieve best results. Adverse audit LOTS OF PROBLEMS EVERYWHERE, and nothing done according to correct rules and procedures. Disclaimer Things were so bad, they couldn t even PRODUCE RELIABLE EVIDENCE TO SUPPORT financial statements. For Sponsorship & Exhibition Opportunities - Talent Moyo : talent@audit-roundtable.com TEL:

5 NON - COMPLIANCE A U D I T Symposium Preliminary Agenda**... GOVERNANCE AND COMPLIANCE Inadequate understanding of regulatory frameworks Unstable governing policies Lack of initiatives for workforce, supplier development and strategic community investments affecting project success Inappropriate decisions in meeting local content requirements MANAGEMENT S RESPONSIBILITIES IN COMPLIANCE Management s responsibility for the departments compliance taking corrective action when instances of non-compliance are identified, including corrective action on audit findings of the compliance audit Establishing and maintaining effective controls that the departments administer AGSA programs in compliance with the compliance requirements INADEQUATE REVIEW AND MONITORING OF COMPLIANCE compliance universe not completely understood Task of the audit & risk Committee Not entrenched within operations composition of the audit & risk committees appropriate capacitation of function SLOW RESPONSE IN ADDRESSING AUDIT RECOMMENDATIONS - REGARDING CONTROLS AND GOVERNANCE assurance service providers - management, internal audit, external audit focus misplaced - energy misdirected assurance functions rendered ineffective inappropriate capacitation/ skills ignoring of internal reports CONSEQUENCES FOR NON-COMPLIANCE The review of the AG s powers by Parliament to enable it to refer auditees for investigation and possibly take legal action against those who have diverted public funds The strict disciplinary action against executives who have allowed irregular expenditure to balloon. A legal process as a mechanism to restore money to the fiscus. ** Agenda Subject to change. Audit Roundtable has the right to change speakers, edit agenda or event in any cases of arising emergencies. For Solution Provider Speaking Opportunities Contact - donald@audit-roundtable.com TEL:

6 NON - COMPLIANCE A U D I T Symposium Preliminary Agenda**... 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. Monitoring of key officials performance regarding the maintenance of adequate systems of internal control that ensure credible monthly financial reporting, reliable reporting against predetermined objectives, and compliance with key legislation. Establishing clear lines of accountability Implementing the required formal codes of conduct and regularly communicating their existence and continued applicability to officials Financial and performance management Ensuring proper record keeping so that records supporting financial and performance information as well as compliance with key legislation can be made available when required for audit purposes Ensuring that transactions are processed in an accurate, complete and timely manner, which in turn will reduce errors and omissions in financial and performance reports Mechanisms to identify applicable legislation as well as changes to legislation, assess the requirements of legislation, and implement processes to ensure and monitor compliance with legislation Ensuring that there is an adequately resourced and functioning internal audit unit Audit committees that can identify internal control deficiencies and recommend corrective action effectively. Promoting accountability and service delivery through evaluating and monitoring responses to risks and providing oversight of the effectiveness of the internal control environment Conducting regular risk assessments, including the consideration of IT risks and fraud prevention, and that a risk strategy to address the risks is developed and monitored. making jointly significant contributions to the audit outcomes Designing the audit action plan and monitoring the implementation thereof Monitoring the appropriateness and timeliness of actions taken by management in instances of known transgressions by officials ignoring of internal reports Playing a more active and effective role in tracking the progress made in implementing management commitments in respect of previously raised IT audit findings and in improving IT controls generally. POOR Status of financial statements 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 received in the audit reports of some auditees as a material finding on compliance, as it also constitutes non-compliance with the PFMA/MFMA. Addressing the lack of implementation of basic financial disciplines, such as regular reviews of financial information during the year, the lack of in-year reporting, and reliance on consultants to prepare financial statements at some auditees as well as reliance on auditors to identify errors in the financial statements For Early Bird Registration Specials Contact - : registrations@audit-roundtable.com TEL:

7 NON - COMPLIANCE A U D I T Symposium Preliminary Agenda**... integrating performance reporting into the regular financial reporting Ensure that there are sufficient controls to address the gaps created by treating performance reporting as an isolated event rather than a process linked to financial reporting. Collaboration with other sectors to implement and improve adequate computerised systems for identifying, collecting, collating, verifying and storing information;and move away from manual processes. Ensuring that there are adequate available resources that are under the control of the auditee, and that targets are achievable within the set time frames and financial constraints. Evaluating the potential financial impact of performance information that is not useful or reliable. aligning service delivery requirements to reporting systems Achieving sustainable improvements in performance management and service delivery through leadership clearly defining the targets to be achieved by using, among other, the strategic plan, annual performance plans and the annual budget curbing Irregular expenditure caused by weaknesses in scm Deviations from the SCM process as well as non-compliance with PFMA requirements when making transfers and paying subsidies Procurement processes incorrectly applied, as preference points are incorrectly calculated The extension or modification of contracts without appropriate approval Addressing the control weaknesses that allow the non-compliance to occur and preventing a regression in audit outcomes in future Strengthening the SCM control environment How to implement SCM compliance checklists to supplement policies and procedures Creating a less tolerant approach by all parties, including those charged with governance and oversight, will result in accountability and consequences being enforced against those who intentionally fail to comply with legislation Ensuring that the principles of fairness, transparency, completeness, equity and cost-effectiveness in procurement processes are consistently applied Focusing on achievement of a clean audit and good governance should be part of the mandate, constitutional obligation and daily operations All 3 Spheres of Government cannot be selective regarding the provisions of the constitution it complies with All 3 spheres of Government should maintain a developmental rather than an administrative attitude, to place emphasis on project implementation and service delivery CLEAN AUDITS ARE THEREFORE, AN ENABLER FOR RAPID SERVICE DELIVERY For Solution Provider Speaking Opportunities Contact - donald@audit-roundtable.com TEL: