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Justin Scharneck EOH

Justin Scharneck EOH. Government CIO Summit. Operation Clean Audit 2014: Governance of ICT: Contribution to the reduction of ICT costs and improved service delivery. Using innovative technology solutions to reduce audit risk and improve service delivery. Date: 30 th May 2013. Overview.

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Justin Scharneck EOH

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  1. Justin Scharneck EOH Government CIO Summit Operation Clean Audit 2014: Governance of ICT: Contribution to the reduction of ICT costs and improved service delivery Using innovative technology solutions to reduce audit risk and improve service delivery Date: 30th May 2013

  2. Overview • ICT Governance – Extracting Business Value • What is Operation Clean Audit 2014 (OCA -2014)? • OCA -2014: Progress to-date • AG Audit Opinion Types + Risk Areas • EOHPSAS Response to OCA - 2014 • Our approach - Leveraging Technology • Achievements in support of OCA - 2014

  3. ICT Governance – Extracting Business Value

  4. GITO - Considerations • Moratorium on Systems (IFMS) • Value for Money (3 E’s) • Pressure to reduce use of 3rd Parties (Consultants) • Cost of Compliance (CGICTF) vs Reduction of ICT Costs • Clean Audit Requirement • Inherent Limitations of Transversal Systems

  5. What is Operation Clean Audit 2014 (OCA -2014) ? • OCA-2014 is a clarion call to all municipalities, national and provincial departments to achieve clean audits by 2014. • Launched in 2009 by ex Minister of COGTA (SiceloShiceka) • This bold initiative is aimed at sustaining quality financial statements and management information. • Its core objective is the improvement of service delivery, in pursuance of further building public confidence in government. “There can be no compromise on the basic principles of sound financial management in ensuring that resources are mobilised efficiently to serve our people” – PravinGordhan (12/13 Budget Speech)

  6. AG Audit Opinion Types • Unqualified with No Emphasis of Matter/Control Findings • Supported Variance Analysis • Consistency Strategic Plans & App • Performance Indicators & Targets • SMART Criteria • Validity, Accuracy, Completeness of Performance Reporting in Annual Report • Audit Evidence • Phase 1 – March 2014 • Phase 2 – March 2015 • Phase 3 – March 2016

  7. OCA -2014: Progress to-date (Based on 12/13 Outcomes)* *2012/13 CONSOLIDATED GENERAL REPORT on NATIONAL and PROVINCIAL audit outcomes Fewer and fewer clean audits since the launch in 2009 of OCA- 2014! • Central Government and Public Entities • Gradual decline from the 152 clean audits achieved in 2009-10, to 132 in 2010-11, to only 117 in 2011-12. • Slightly more regressions than improvements • 50 of these entities were unable to maintain the clean audit reports they received in prior year.

  8. OCA -2014: Progress to-date (Based on 12/13 Outcomes)* *2012/13 CONSOLIDATED GENERAL REPORT on NATIONAL and PROVINCIAL audit outcomes Main Risk Areas and Controls “Even though I have stressed for the past three years the urgent need to address the quality of the financial statements submitted for audit and weaknesses in supply chain management, human resource management and information technology controls, there has been minimal improvement” – Terence Nombembe (Auditor General)

  9. Transversal Systems vs Disclosure Requirements Cash – Based Systems Modified - Cash Accounting • Disclosure Note Items • Commitments • Accruals • Irregular, Fruitless & Wasteful Expenditure • Movable Assets • Leases ?

  10. EOHPSAS Clean Audit Response • EOH has conceptualised several pioneering solutions, incorporating specialist consulting services, underpinned by bespoke-developed, custom software • These innovative and practical solutions enable our clients to respond to challenges such expenditure management, project accounting and movable asset management. • We have devised a unique, cost-effective engagement model whereby we provide a specialist service and work with public service officials in a co-sourced environment. Our approach to delivering projects and improving the internal control environments of our clients through our commitment to skills transfer, technical advice, audit evidence and reconciliation.

  11. EOHPSAS Technology Solutions Project Accounting • Multi-year MIS • Commitments register • Disclosure notes • Lead schedules, • Working papers • Audit evidence • BI Reporting for the above… Movable Asset Management • National Treasury format • Asset record capturing • SCOA classification • Major / Minor • Consolidation • Gap analysis • Digitised audit evidence • Inventory sheets • Duplication elimination • Disclosure Expenditure Review • Reduce material and inherent expenditure misallocation and misclassification risk • Audit trail of expenditure review • Segregation of duties • Internal controls consistently in place • Digitised audit evidence • Automated journal functionality

  12. So how do we do this?

  13. Movable Asset Management

  14. Typical Movable Asset Management Challenges FAR not in Treasury Format (Excel) Additions not in AR Assets not Bar-coded Lack of Reconciliation to BAS Misclassification: Minor Vs Major Manual Journals – Time Consuming Insufficient Supporting Docs Physical Verification Inaccurate Asset Data in AR Incorrect SCOA application Leases

  15. Key Information Required in Movable Asset Register

  16. ART – Asset Register Toolset • Browser-based, hosted solution • Asset Additions reconciled to BAS • National Treasury format • Asset record capturing • SCOA classification • Major / Minor • Gap analysis • Digitised audit evidence

  17. ART – Screenshots

  18. ART – Screenshots ART – Screenshots

  19. Achievements in support of OCA - 2014 • ERA has enabled the review of R8billion worth of provincial government expenditure over the last three years, fully supported by digitised evidence, at the click of a button. • eWIP produces an automated commitments register at a project level. • An MEC can now use their tablet or smartphone to access reconciled project information to support reporting on service delivery to community members. • ART - Recently, we have supported a Department of Health to account for its movable assets across 1200 health facilities, in accordance with the requirements of National Treasury.

  20. Case Study - DPW • AG Finding – R6,3million Misclassified as Transfer Payments • Full audit trail of review provided to AG from ERA RESULT: AG audit finding mitigated

  21. Case Study - DORT • 2009/10 Audit Opinion – Qualified: Misclassification of Expenditure • 2010/11 • 7500 Transactions Review with Full Audit Trail • 2500 Journal – 1500 Consolidated • R475 million worth of adjusting journals Audit Opinion - Unqualified

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