PFMA Audit outcomes of national and provincial government 2015-16 - PowerPoint PPT Presentation

2015-16 PFMA Audit outcomes of national and provincial government

2015-16 PFMA Reputation promise 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. 2

Our annual audits examine three areas 2015-16 PFMA 1 2 3 FAIR PRESENTATION AND RELIABLE AND CREDIBLE COMPLIANCE WITH KEY RELIABILITY OF FINANCIAL PERFORMANCE INFORMATION LEGISLATION ON FINANCIAL STATEMENTS FOR PREDETERMINED AND PERFORMANCE OBJECTIVES MANAGEMENT 3

Unqualified opinion with no findings Financially unqualified opinion with 2015-16 (clean audit) findings PFMA Auditee produced financial statements without Auditee: material misstatements but struggled to: • produced credible and reliable financial • align their performance reports to the statements that are free of material predetermined objectives they committed to misstatements; and in their APPs; and/or • reported in a useful and reliable manner • set clear performance indicators and targets on performance as measured against to measure their performance against their predetermined objectives in the annual predetermined objectives; and/or performance plan (APP); and • report reliably on whether they achieved their • observed/complied with key legislation in performance targets; and/or conducting their day-to-day to achieve on their mandate. • determine which legislation they should comply with and implement the required policies, procedures and controls to ensure 4 compliance.

Qualified opinion 2015-16 Auditee: PFMA • had same challenges as those that were unqualified with findings but, in addition, they could not produce credible and reliable financial statements. • had material misstatements on specific areas in their financial statements, which could not be corrected before the financial statements were published. • did not comply with key legislation in certain instances. Adverse opinion Auditee: • has so many material misstatements in their financial statements that we disagree with almost all the amounts and disclosures in the financial statements. • did not comply with key legislation. Disclaimed opinion Auditee: • could not provide us with evidence for most of the amounts and disclosures reported in the financial statements, and we were unable to conclude or express an opinion on the credibility of their financial statements. • was unable to provide sufficient supporting documentation for amounts in the financial statements and achievements reported in the annual performance report. 5 • did not comply with key legislation.

Audit outcomes of departments are slow to improve with a slight regression from 2014-15. Public entity outcomes are improving 2015-16 PFMA Departments Public entities 25% (40) 26% (44) 27% (82) 29% (48) 29% (89) 34% (108) Unqualified with no findings Unqualified with findings Qualified with findings 53% (88) 45% (143) 49% (152) 53% (92) 38% (122) 53% (88) Adverse with findings Disclaimed with findings 12% (39) Audits outstanding 16% (51) 15% (46) 1% (2) 1% (1) 17% (28) 20% (32) 7% (21) 2% (4) 17% (29) 1% (2) 1% (1) 6% (19) 7% (22) 7% (23) 2% (5) 1% (1) 2% (3) 1% (3) 2% (3) 2015-16 2014-15 2013-14 2015-16 2014-15 2013-14 169 166 163 315 311 307 6 departments departments departments public entities public entities public entities

Improvements are off-set 1 by regressions in four 19 21 15 Limpopo Gauteng 15 provinces 4 5 Mpumalanga 14 14 5 7 1 1 1 1 1 68 7 76 6 2014-15 2015-16 2014-15 2015-16 National 5 6 110 121 1 3 1 2014-15 2015-16 North West 13 17 31 2 2 41 6 12 2 22 11 Free State 4 9 8 6 KwaZulu-Natal 10 12 2014-15 2015-16 1 3 7 6 10 Northern Cape 6 7 19 2014-15 2015-16 17 1 10 2 1 1 10 1 4 2014-15 2015-16 6 1 2 7 2014-15 2015-16 3 1 4 2014-15 2015-16 8 Unqualified with no findings Eastern Cape Unqualified with findings 16 Western Cape 16 Qualified with findings 19 21 5 Adverse with findings 1 2014-15 2015-16 Disclaimed with findings 5 2 1 Outstanding audits 7 2014-15 2015-16

Movement in audit outcomes of national auditees – per function budget groups Agriculture, rural development Health and land reform 2014-15 2014-15 1 2 1 1 7 1 2015-16 2015-16 1 2 2 1 5 3 A long and healthy life for all Comprehensive rural Unqualified with no findings South-Africans development and land reform Adverse with findings Human settlements and Defence, public order and safety infrastructure 2014-15 2014-15 1 5 1 4 9 5 2015-16 2015-16 1 5 4 9 7 Unqualified with findings Disclaimed with findings Sustainable human settlements All people in South-Africa are and improved quality of and feel safe household life Economic affairs Skills development 2014-15 2014-15 51 25 2 2 6 26 29 22 8 2 1 2015-16 2015-16 43 29 Qualified with findings 9 5 11 20 30 19 Outstanding audits 7 2 1 Decent employment through A skilled and capable work-force inclusive economic growth to support an inclusive growth path General public services Social protection 2014-15 2014-15 16 3 9 2 5 2015-16 2015-16 14 11 3 2 2 5 A responsive, accountable, An inclusive and responsive 8 effective and efficient social protection service developmental pubic service

Movement in audit outcomes of national auditees – per function budget groups 2015-16 PFMA • Overall improvement in the national auditees (8%) Only 30% of the auditees had a clean audit status and 14% were either • outstanding, disclaimed or had adverse opinions. • The ministerial portfolios leading on clean audit outcomes were Arts and Culture, Trade and Industry and the sector education and training authorities in the Higher Education and Training portfolio. • The technical and vocational education and training colleges (also in the Higher Education and Training portfolio) had the poorest outcomes. Other ministerial portfolios with poor outcomes were the museums in the Arts • and Culture portfolio as a result of their inability to measure the value of the heritage assets under their control, and the auditees in the portfolios of Labour and Transport. Movement in audit outcomes of national auditees (depicted as function budget • groups): - Four function budget groups improved - Three function budget groups remained unchanged - One function budget group (Skills development) regressed (Includes departments of Basic Education, Higher Education and Training, Arts and Culture, and Sport and Recreation) 9

Audit outcomes of education, health and public works slightly regressed and remain significantly worse than other departments 2015-16 PFMA 3% (1) 7% (2) 10% (3) 30% (42) Unqualified with 47% (14) no findings 53% (16) Unqualified with 50% (15) findings Qualified with findings 55% (76) Adverse with findings Disclaimed with 47% (14) findings 37% (11) 37% (11) Audits outstanding 12% (17) 1% (1) 2% (3) 3% (1) 3% (1) 3% (1) 2015-16 2015-16 2014-15 2013-14 Other departments Education, health and public works 10

An outcome analysis of education, health and public works 2015-16 PFMA WC WC Nat EC Unqualified with GP Nat no findings Nat WC GP Unqualified with EC KZN findings FS NC Qualified with GP NW findings KZN Adverse with FS MP findings KZN NC Disclaimed with LP EC findings MP FS Audits outstanding NC MP NW LP NW LP Education Health Public Works 11 10 auditees 10 auditees 10 auditees

Provincial high-level overview – education, health and public works 2015-16 Departments of Education, Health and Public Works are responsible • PFMA for almost 37% of the budget • Continue to have the poorest outcomes of all the departments – 40% of these departments received qualified or disclaimed audit opinions compared to 13% of other departments Regressions in audit opinions were noted at Education (Free State), • Public Works (Free State) and two Health (Limpopo and North West) departments 90% of these departments had findings on compliance with key • legislation 80% of these departments had findings on the quality of their annual • performance reports • Experienced challenges to adequately define and implement basic controls • The poor audit outcomes of these key sector departments require urgent attention to ensure accountability and service delivery 12

Audit outcomes versus budget allocations 2015-16 PFMA Total budget: R1 218 billion 17% 26% (R203 billion) (44) Unqualified with no findings Unqualified with • The three outstanding findings departments (Home Affairs, Qualified with Transport and Cooperate 55% findings Convert audit Governance) comprised (R674 billion) 53% outcomes to the Adverse with 11% of budget – Only (92) expenditure findings Cooperative Governance (budget) they has been finalised to date represent Disclaimed with (30 Sep 2016) findings Audits outstanding 15% (R183 billion) <1% 17% (R1 billion) (28) 1% (1) 2% 11% 1% (1) (R25 billion) (R132 billion) 2% (3) Audit outcomes Budget – rand value 13