Auditor General on assurance assessment criteria for 2016/17

Meeting report

Briefing by the Office of the Auditor-General of SA (AGSA) on assurance assessment for the 2016 financial year

Mr Vinay Rambali Senior Manager, AGSA, explained that the purpose of the briefing was to share with Members the criteria that would be used by the AGSA to evaluate the level of assurance provided by the Committee in terms of the combined assurance model. In addition the AGSA aimed to obtain commitments from the Committee on specific oversight actions to be taken to improve the audit outcomes of the portfolio. The Committee was provided with insight into the legislative requirements underlying accountability to Parliament. The Committee had to have the confidence that the Department ie NDT, the constitutional institution or public entity ie SA Tourism under review was actually delivering. Portfolio Committees were ideally placed to exercise oversight on the service delivery performance of departments and entities that fell within the same portfolios. An overview of the Combined Assurance Model was presented to members. The first level of assurance was management assurance ie senior management, accounting officers and the executive authority. The second level of assurance was oversight assurance ie coordinating/monitoring institutions, internal audit and the audit committee. The third and final level of assurance was independent assurance ie oversight portfolio committees/councils which the Committee was part of. Other independent assurance was done by the Public Accounts Committee and the National Assembly. The briefing continued with detail on assessment criteria on how the AGSA saw the effectiveness of the Committee in doing oversight. On budgets the question that needed to be asked was whether the Committee aimed to complete the oversight process on annual reports timeously so that its recommendations could be taken into account for the following year’s budget allocation process. Evidence to support compliance by the Committee would be its Budgetary Review and Recommendations Report (BRRR).  On performance information and service delivery one of the criteria is whether the Committee had reviewed the quality of the performance information as highlighted by any audit of performance information which the AGSA had performed, or in light of any other information that came to the Committee’s attention. In this regard evidence to support compliance would be Committee reports after having oversight meetings on the performance reporting of the NDT and SA Tourism. Further evidence would be minutes of meetings that reviewed the performance reporting of the NDT and SA Tourism. On accountability regarding the AGSA’s audit report one of the questions to be asked is whether the Committee reviewed the audit report/s of the NDT and of SA Tourism as included in the annual reports. Some of the issues that the Committee needed to consider was what the outcome was; besides overspending was there unauthorised expenditure and were there any serious matters raised by the AGSA under Emphasis of Matter. Evidence to support compliance by the Committee would be Committee reports after oversight meetings on the annual reports of the NDT and of SA Tourism. Minutes of Committee meetings that reviewed the annual reports of the NDT and of SA Tourism were further evidence.  In the end the AGSA had to make a decision whether the Committee provided assurance, provided some assurance or provided limited or no assurance. The AGSA also made proposals around commitments that were needed from the Committee. These included that the Committee through regular engagements with the portfolio should monitor implementation of action plans to sustain best practises. The Committee could also request management to provide quarterly feedback on the status of key controls.                             

Discussion

Mr S Bekwa (ANC) stated that even when the National Department of Tourism (NDT) obtained a clean audit there were sometimes findings that the AGSA picked up. How did the AGSA get the NDT to clean things up?

Mr Rambali responded that the AGSA allowed the NDT and SA Tourism to fix errors. It had to be remembered that the AGSA audited on a sample basis and hence could not pick up on all mistakes. The AGSA did have a tolerance level if something was perhaps misstated.

Ms L Makhubele-Mashele (ANC) said that the reporting of targets by SA Tourism ie calendar year versus financial year was of great concern to the Committee. Which route should be followed to ensure that SA Tourism reported its targets in terms of a financial year? Uniformity in reporting was after all required in the public sector. How could the matter be rectified?

Mr Rambali, on the matter of SA Tourism’s reporting issue, said that the Chief Executive Officer of SA Tourism was on board to correct things. It was up to the AGSA and the Committee to place pressure on SA Tourism to correct things. SA Tourism would at present report on two sets of achievements. In the next two years SA Tourism would report on one set of targets with two sets of achievements. In subsequent years SA Tourism would report on two sets of targets with two sets of achievements. 

Ms S Xego (ANC) asked were there any gaps that the AGSA identified. What could the Committee do to assist? She further asked that if the Committee did not perform as it should would it in any way affect the auditing of the NDT. The AGSA was asked whether it extended its scope of auditing the NDT or did it sustain the clean audit outcome of the NDT. If the AGSA looked at the minutes of meetings between the Committee and the NDT how did it inform the AGSA’s judgement of the NDT.

Mr Rambali said that the AGSA looked at quarterly reports, financial reports and internal audits etc when it assessed departments. Things that the AGSA picked up on audits related to issues like skills, leadership etc. He explained why combined assurance was so important. Various role-players contributed towards a clean administration. If things were lacking then there would be a negative outcome. He was happy to report that there were no gaps in the work of the Committee. The AGSA did however find gaps in the effectiveness of oversights. The outcome of the assessment of the Committee would not affect the audit outcome of the NDT and SA Tourism. If the AGSA did not see things as they should be then it made recommendations. It was all about self assessment. The Committee needed to reflect on what it did. The AGSA would be around to assist.  When the minutes of meetings were looked at the AGSA did so from a risk assessment perspective. On the inconsistent reporting by SA Tourism the concerns of various role-players like the Committee was noted. The AGSA looked at key touch points.

Mr G Krumbock (DA) said that he was interested to see the report of the AGSA when it was tabled before the Committee as it was an assessment of the Committee. He did raise concern that when reports were presented to the Committee consolidated figures were provided. In a sense the Committee was not well placed to see how financial figures were comprised. Another issue was that when members raised issues in meetings there was no real follow up to ensure that issues had been addressed. In meetings members asked questions and made recommendations. Answers to questions were often promised but sometimes there were huge delays. At other times presenters simply forgot to provide the answers that they had promised. The AGSA was asked when it went through minutes of the Committee’s meetings it checked whether entities had provided answers to questions that had been asked. What did the AGSA propose the Committee do to obtain greater access? Often when the Committee went on oversight it saw things that were not right. The Committee consequently expressed its concerns in the oversight report. Who checked on whether the concerns of the Committee had been addressed. He asked whether the AGSA looked at these types of matters. He commented that the follow through was not always what it should be.

Mr Rambali understood the concerns of the Committee that there was no follow up on issues that it encountered. He suggested that perhaps a tracking document could be used. The Committee could request quarterly feedback on the tracking document.

The Chairperson noted that the Committee had in the past said that it wished to see a performance audit. It was true that there was not always follow up on what members saw on oversight. This was largely due to the fact that the Committee had nine provinces to cover. She asked whether the AGSA had something of the sort that could be seen as a performance audit. The Committee had been informed that a performance audit did not at this point in time fall within the jurisdiction of the AGSA. She was pleased that the AGSA had raised the matter of quarterly reports with entities. She reemphasised the issue that SA Tourism had to report in terms of financial years as was required by the Public Finance Management Act (PFMA). Reporting in terms of calendar year was unacceptable. She remarked that the NDT had been voted the best department in the economic cluster. What distinguished the NDT from other departments in its cluster?

Mr Rambali stated that it was within the jurisdiction of the AGSA to undertake a performance audit. The NDT was doing quite a bit of work on Expanded Public Works Programme (EPWP). It was now more centralised. The idea was for the process to evolve. The NDT should be given the space to fix things. He did not wish to comment on the criteria that were used to determine the best performing department. He was convinced that audit outcomes were taken into consideration. A culture of ethical leadership was also for sure taken into consideration. 

The meeting was adjourned.