4.1 Report of the Auditor General of South Africa 4.1.1 The DCS received a qualified audit opinion owing to its failure to comply with section 40(1)(a)-(b) of the Public Finance Management Act which requires that an accounting officer "must keep full and proper records of the financial affairs of the department..." and "must prepare financial statements for each financial year in accordance with generally recognised accounting practice". The DCS' poor performance related to inadequate oversight and monitoring by senior management, a number of human resource-related challenges, and weak internal controls. 4.1.2 The DCS' audit qualification was again based on its inadequate asset management. It had understated movable tangible capital assets to the approximate value of R88 million as these could not be physically traced to the asset register; movable tangible capital assets were overstated to the approximate value of R36 million and could not be physically verified; and, movable tangible capital assets were understated to the approximate value if R16 million and did not reflect appropriate costs or fair values. 4.1.3 The DCS' under-expenditure in relation to its Administration, Rehabilitation, Care and Social Reintegration warranted significant emphasis. 4.1.4 The AGSA ascribed the DCS' failure to achieve a number of pre-determined objectives to its failure to prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information; and to the DCS senior management's failure to ensure oversight over such reporting. 4.1.5 In relation to supply chain management too, the AGSA found that the DCS had failed to prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information, that lack of oversight had resulted in non-compliance with laws and regulations related to internal controls, and that the DCS' management had failed to adequately review and monitor compliance with applicable practice notes and National Treasury regulations. 4.1.6 The DCS had failed to effectively communicate policies and procedures to enable and support, understanding and execution of internal control objectives, processes and responsibilities; and to ensure effective human resource management so that adequate and sufficiently-skilled resources were in place and available at all times. In addition, the National Commissioner did not exercise his oversight responsibility regarding financial and performance reporting, and compliance with related internal controls. These human resource-related weaknesses had contributed to the DCS' poor performance. 4.1.7 In 2012 the Committee had reported that it was "pleased that the Minister of Correctional Services undertook to drive the process of reporting to the AGSA on a quarterly basis with regard to the deficiencies identified". Unfortunately, the 2012/13 audit outcome revealed that commitments made during the 2012/13 financial year were not honoured. In 2012 the Committee reported that upon interrogation of the DCS' 2011/12 Annual Report and Audit outcome, the DCS' senior management appeared reluctant to acknowledge their part in the department's continued poor performance. As was the case then, and despite the DCS senior management's statements to the contrary, the Committee remains concerned about the DCS' senior management's capacity to implement the necessary strategies to ensure a better audit outcome, better service delivery, and the DCS contribution to achieving the government priorities outlined above.