IMFO WORKSHOP PE AUDIT APPROACH 2012/13 AND HOW TO PREPARE FOR THE ANNUAL AUDIT CHRISTO VAN DYK

1. IMFO WORKSHOP PE AUDIT APPROACH 2012/13 AND HOW TO PREPARE FOR THE ANNUAL AUDIT CHRISTO VAN DYK SENIOR MANAGER [OFFICE OF THE AUDITOR-GENERAL SA] SEPTEMBER 2013

2. REPUTATION PROMISE/MISSION The Auditor-General of South Africa [AGSA] has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. CONSTITUTIONAL MANDATE STRENGHTEN DEMOCRACY ENABLE OVERSIGHT, ACCOUNTABILITY, GOVERNANCE

3. KEY CONCEPTS IMPROVE .... GOVERNANCE IN ORDER TO ACHIEVE A ...... OUTCOME ACCOUNTABILITY ARRANGEMENT CLEAN AUDIT? WHAT EXACTLY DOES IT MEAN? IMPROVING CORPORATE GOVERNANCE TO ACHIEVE A CLEAN AUDIT OUTCOME

4. CLEAN AUDIT = CLEAN ADMINISTRATION FUNDAMENTALS OF CLEAN ADMINISTRATION RECORDKEEPING KEY CONTROLS PROPER OVERSIGHT NEEDS TO BE IN PLACE 24/7.....12MONTHS A YEAR REMEMBER .... GETTING A CLEAN AUDIT REPORT FOLLOWS IMPROVEMENT IN GOVERNANCE AND HAVING CLEAN ADMINISTRATION .... IMPROVING CORPORATE GOVERNANCE TO ACHIEVE A CLEAN AUDIT OUTCOME

5. ACHIEVING CLEAN AUDIT OUTCOME • Year on year we see improvements. However the ever present regressions is a clear indication that the improvements are not sustainable. • The audit creates an energy that needs to be translated into in-year monitoring initiatives that will instil effective financial management and oversight through out the year. • The drive is not towards a clean audit but towards a sustainable clean administration where the focus is on managing the institution and not the audit. We all have the same goal; we need to find a common denominator/ language to ensure that all energy is focused and that we push in the same direction.

6. TIMELINE 2012/2013 FINANCIAL YEAR AG DOOR 2 DOOR AUDIT APPROACH HOW TO PREPARE FOR THE AUDIT DURING THE AUDIT PITTFALLS TOPIC : AUDIT APPROACH 2012/2013 AND HOW TO PREPARE FOR THE ANNUAL AUDIT

7. TIMELINE 2012/2013 • MAY/JUNE 2012 – AG D2D • JUNE 2012 – FINANCIAL YEAREND 2011/12 • AUGUST 2012 - FINANCIAL STATEMENTS SUBMITTED • OCTOBER 2012 – MANAGEMENT REPORT ISSUED • NOVEMBER 2012 – AUDIT REPORTS 2011/12 ISSUED • JANUARY 2013 – ANNUAL REPORTS DUE IN COUNCIL • FEB/ MARCH 2013 – MPAC ..OVERSIGHT PROCESS • MARCH 2013 - ANNUAL REPORTS ADOPTED • APRIL 2013 – LAST QUARTER 2012/13 FINANCIAL YEAR • JUNE 2013 – FINANCIAL YEAR 2012/3 END • AUGUST 2013 – FINANCIAL STATEMENTS SUBMITTED FOR AUDIT

8. SHARING OF INFORMATION PLATFORM TO ENGAGE DIRECT KEY OUTPUTS FROM D2D: COMMITMENTS MADE BY KEY ROLEPLAYERS CREDIBILITY OF INFORMATION KEY CONTROLS – ACCOUNTABILITY FOR IT ENERGY LEVELS WERE HIGH AUDIT 2012/3 WILL INDICATE THE EXTENT TO WHICH COMMITMENTS HAVE BEEN DELIVERED ON AG DOOR 2 DOOR VISITS

9. QUESTION ? HOW MANY COMMITMENTS MADE ...... a HOW MANY HONOURED ....................... b % COMMITMENTS KEPT ........ b/a x 100 RESULTS - NR OF CASES LESS THAN 50% LESS THAN 80% BETWEEN 90% -100% BASED ON ABOVE RESULTS .... WHAT AUDIT OUTCOME IS EXPECTED. AG DOOR 2 DOOR VISITS

10. Ito AG DIRECTIVE RISK BASED KEY CONTROLS COMMITMENTS AUDIT APPROACH 2012/13

11. EACH AUDIT STRATEGY IS TAILORMADE PRIOR AUDIT OUTCOMES MUNICIPALITIES AUDIT ACTION PLAN STATUS OF KEY CONTROLS WHAT CHANGES TOOK PLACE AT THE MUNICIPALITY DURING THE FY? KEY PERSONNEL SYSTEM CHANGES NEW POLICIES AUDIT APPROACH 2012/13

12. WHAT IS COMMON ACCROSS AUDITS PAY ATTENTION TO AG’S GENERAL REPORT SCM [ABNORMAL EXPENDITURE] HUMAN RESOURCES USE OF CONSULTANTS AUDIT APPROACH 2012/13

13. FEEDBACK FROM A MUNCIPALITY WHO MOVED FROM A DISCLAIMER TO QUALIFICATION: AUDIT READINESS BACK TO BASICS INCLUDE IT IN KPI’S UTILISE OPERATION CLEAN AUDIT COMPILE PROJECT PLAN KEEPING PROJECT PLAN ON TRACK HOW TO PREPARE FOR THE AUDIT

14. IMFO NATIONAL TREASURY DPLG AGSA ASB AVAILABLE RESOURCES

15. NT CIRCULAR 50 SCHEDULE OF KEY DATES CONTENTS OF FILE : SUPPORT OF AFS VERIFICATION & AUTHORISATION INTERNAL AUDIT DON’T FORGET ABOUT THE PERFORMANCE REPORT! COMPLIANCE WITH LAWS – ESPECIALLY SCM? MUNICIPAL AUDIT FILE

16. RFI COF DISAGREEMENTS LETTERS OF NON ACCEPTANCE DURING THE AUDIT

17. RECORDKEEPING RETRIEVAL OF INFORMATION OVER RELIANCE ON CONSULTANTS KEY STAFF NOT AVAILABLE NOT CORRECTING THE POPULATION OPINION SHOPPING MANAGING THE AUDIT PITTFALLS

18. YOU CANNOT KEEP ON DOING THE SAME THING AND EXPECT A DIFFERENT RESULT CLEAN ADMINISTRATION WON’T BE ACHIEVED IF THE BULK OF EFFORT ONLY OCCURS CLOSE TO OR AFTER THE BALANCE SHEET DATE FOR CLEAN ADMINISTRATION TO BE ACHIEVED, THE POLITICAL WILL SHOULD BE DEMONSTRATED AND ADMINISTRATIVE ABILITY NEED TO TRANSLATE WORDS INTO DEEDS. FINAL THOUGHTS