Committee Reports

Meeting report

Opening remarks

The Chairperson welcomed everyone and indicated the meeting was likely to be brief as the intention was to focus on the administrative details necessary for the Committee to pursue legislation of the Public Audit Amendment Act which is the Committee’s priority for the current term.

The agenda was adopted by the Committee as presented and apologies were tabled as well.

Adoption of minutes

The Committee adopted two sets of minutes; dated 8 September 2017 and 24 November 2017 respectively. Both were approved without amendments.

Memorandum in terms of the NA’s Rule 274(3) informing the NA of the publication of the Draft Public Audit Amendment Bill

The Chairperson advised that the purpose of the Memorandum was to inform the NA that the Draft Public Audit Amendment Bill was published for public comment in the Government Gazette on 19 January 2018. The closing date for submissions would be 19 February 2018. The Committee intended to report on the outcome of the consultation process by 29 March 2018.

The Chairperson said three comments had been received so far. All comments received would be analysed by the Committee’s staff before a decision could be made on who would be invited to table their submissions in person before the Committee. Furthermore, in light of the religious holiday of Good Friday which fell on 30 March 2018, efforts would be made to conclude the consultation process before 29 March 2018, if possible, to enable Committee Members wishing to travel home sufficient time to do so.

Mr B Topham (DA) raised a potential calendar conflict during the period leading to 29 March 2018 citing the scheduled pre-budget briefing by the Attorney General (AG) to the Finance Committee on 22 March 2018. Some Standing Committee Auditor-General (SCAG) Members who were also Members of the Finance Committee were expected to attend the closed session pre-budget briefings.

The Chairperson reminded committee members that the initial timetable had been drawn up before the postponement of the State of the Nation Address (SONA) and that the 29 March 2018 deadline represented the worst case scenario. He said that perhaps it was best to wait and see what happened with the rescheduling of the SONA and then make amendments to the Committee’s calendar accordingly. Appropriate flexibility would be allowed to ensure the potential calendar conflict with the AG’s pre-budget presentation is avoided.

Mr A McLoughlin (DA) sought clarification on the correct NA Rule number as the meeting programme indicated 273(3) while the number on the Memorandum was 274(3). The Chairperson clarified the correct Rule number was the one shown on the Memorandum i.e. 274(3).

The Chairperson reiterated that the Committee’s overriding objective was finalisation of the Amendment to the Public Audit Act as the legislation would become the legacy of the current Committee.

There being no further comments, Mr A McLoughlin moved for the adoption of presentation of the Memorandum to Parliament and Mr Topham seconded the motion.

Report to the NA on the Appointment of an External Auditor for the AGSA

The Chairperson provided a brief background to the report, reminding Members that in 2017, the AGSA’s office unsuccessfully sought candidates for the role of independent external auditor. Despite conducting up to three tendering rounds, no suitable candidates had been identified. The main challenges centred on BEEE and transformation criteria. Upon presentation of these challenges to the Committee on 24 November 2017, and after due deliberation, permission was granted to the AGSA to amend the selection criteria slightly in order to relax but not eliminate key BEEE and transformation requirements. Following this, AGSA’s office successfully identified one audit firm, Howarth Leveton Boner Partnership, which met the revised selection requirements and proceeded to appoint the firm for a period of five years with the consent of the Committee. The purpose of the report is to inform the NA of this chain of events as well as well as confirm that the firm’s appointment is subject to;

1. the Committee’s annual confirmation of the appointment
2. the tabling before the Committee of a transformation plan between the firm and AGSA’s Audit Committee no later than 30 June 2018.

Ms Z Dlamini-Dubazana (ANC) sought to be reminded of details about the selected firm’s partnership and its representivity in terms of BEEE and transformation requirements.

The Chairperson responded by pointing out that the firm had seven partners, including one black male and two white females. This was as per the report circulated by the AGSA’s office to the Committee on 13 December 2017 containing credentials of the selected firm.

Mr T Mpanza (ANC) queried if the audit firms invited to bid and in particular the one selected had been vetted to ensure compliance with all statutory and professional requirements, especially in light of recent malpractices by firms such as KPMG and Deloitte.

Ms Dlamini-Dubazana enquired if there existed any means of establishing if the process of accreditation of the selected audit firm had been properly followed. She further sought to establish if there were any legal instruments available, over and above reports furnished by external audit firms, which confirmed that the entity being audited had complied with all necessary statutory requirements.

The Chairperson, responding to the concerns raised by Mr Mpanza and Ms Dlamini-Dubazana, said that the only nationally recognised vetting body is the Independent Regulatory Board for Auditors (IRBA) which had since been taken to task by the NA in the Steinhoff matter, whereby IRBA had been reprimanded for not exercising its oversight role effectively. Furthermore, the Chairperson mentioned that he was not aware of any instrument or body that performs the task of verifying the work carried out by external audit firms, citing that like doctors, qualified auditors are professionals. The only other avenue perhaps would be to ask AGSA seeing that its own role is that of auditor, if it was satisfied with the past work experience and professional credentials of the selected audit firm. Given the time constraints and the procedural need to let the appointment of the selected firm stand, the Chairperson pointed out that AGSA’s office had been instructed to report back to the Committee by 30 June 2018 on whether the selected firm had presented an acceptable transformation plan.

Mr Topham said that reliance had been placed on the requirement for qualified auditors to register with the Auditors board. Considering that several auditors work within a given audit firm, shortcomings on the part of one partner may not necessarily mean the entire firm is incapable of carrying out its professional mandate. Another challenge pertaining to AGSA had been that few audit firms applied for the role of external auditor as that precluded them from taking on any of the several audit assignments under the custodianship of the AGSA which were typically more lucrative.

Ms N Mente (EFF) sought clarification on the tenure of appointment of the external auditor which the report had cited as five years but subject to annual confirmation by the Committee. She wanted to know how that would work practically and what provisions had been set for AGSA to report back to the Committee on the appointed firm’s compliance with conditions including but not limited to BEEE status.

The Chairperson said that AGSA’s Audit Committee reported to the Committee annually on the performance of the external audit firm. During this engagement, the Committee could seek updates on the firm’s compliance with BEEE and other transformation requirements especially if some dispensations had been granted at the time of initial appointment. Should the annual report from the AGSA point to shortcomings, remedial action could then be proposed by the Committee including termination of appointment.

He then asked the committee to adopt the motion to send the report to the NA.

The Committee responded favourably by adopting the motion.

MyParliamentApp Training

The Chairperson invited the parliamentary ICT staff present to proceed with a presentation to the Committee on the MyParliamentApp.

The Information and Communications Technology (ICT) staff assisted Members with setting up the MyParliamentApp on their devices.

The Chairperson encouraged Members to take interest in the training as the future of how parliamentary business was conducted would involve less paper and rely more on electronic channels.

The meeting was adjourned.