Presentation to Communication Portfolio How to Use the

Presentation to Communication Portfolio How to Use the Quarterly and Annual Reports 19 August 2011

Reputation promise/mission The Auditor-General of South Africa 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.

Purpose of the presentation How to scrutinize the: – quarterly and; – annual reports

QUARTERLY REPORTS. . DETAILED FIRST QUARTER PERFORMANCE REPORT 2010 -11 -Version 4. doc

Performance Targets • • • The useful set of criteria for selecting performance information is the “SMART” criteria: Specific: the nature and required level of performance can be clearly measured Measurable: the required performance can be measured Achievable: the target is realistic given existing capacity Relevant: the required performance is linked

Business Plan-10/11 Doc. . Do. C Business Plan 2010 -2011. pdf Output Programme of Action on Cost to Communicate, quality, availability and usage of ICTs √ Performance measure / indicator Target Milestone Measure Percentage reduction in telecommunications costs 15% reduction in telecommunications costs Policy direction on quality of services (telecoms and broadcasting) issued to ICASA 5% increase of household’s broadband penetration Budget- R 1500 000 Q 1 - data collected, software developed and cost drivers analysed. Q 2 - Service provider appointed to develop IT Software to store and analyse data. Q 3 -ICT model built. Q 4 -Final Report on the cost of communications developed.

EXAMPLE- On the Digital 15 % reduction S X 15 % of reduction M √ Milestones A √ The 15% can be achievable R √ The measure is linked to the target T X Timeframe not specified There is no base, to reduce by 15% Depending on the existing capacity.

Business Plan- 10/11 DOC Output South African homes with Postal Addresses √ Performance measure / indicator 10% of South African homes with postal addresses Target Additional 10% of South African homes with postal addresses Milestone Budgeted R 250 000. Q 2 - Draft policy guideline developed Q 3 - Stakeholder consultation concluded on draft policy guideline. Q 4 - Policy guideline Gazetted

EXAMPLE- On the Postal addresses S √ Postal addresses M √ Quarterly milestones and 10% additional A √ 10% additional might be achieved R √ The measure is linked to the target How many SA household currently have postals? Depending on how many households will 10% amount to.

Business Plan-10/11 DOC Output Technological advisory & competency X Performance measure / indicator Technology industry profile and intelligence Target Number of efficient & consumer cost effective technologies deployed

EXAMPLE- Technological advisory S X The target is not specific M X The required performance can not be measured A X Target is not attainable as its not specific R X Performance measure is not liked to target T √ Time frame not specified

ANNUAL REPORT • • Review of annual report. . Annual Report 2009_10. pdf

Annual report • • • Foreword General information Programme Performance Human Resource management report Reports to the Financial statements Annual financial statements

FOREWORD • • • Summary and highlight of the entire year Significant changes Significant achievements Significant delay Major improvement

General Information • • • Organisation structure Summary of the programme Vision Mission Legal and constitutional mandates Information of the ministry visits(international) Key projects and progress Key submission to the legislature ICT Public entities mandates

Programme performance • • • Programme overview- Voted funds summary Aim of the vote Key measurable objectives Programmes Key achievements

Audit of pre-determined objectives • • • Required in terms of Sections 4, 20 and 28 of the Public Audit Act Findings on whether reported performance information is valid, accurate and complete. Whether a performance management process exist with proper controls to enable relevant and useful reporting on and oversight of service delivery Audit conclusion included in the management report of an entity on the usefulness and reliability of reported information relating to the performance of the entity against predetermined objectives

Programme 1 - Admin ( Actual Performance versus Target) Programme 1 -annual report- DOC 09/10. page no 21. . Annual Report 2009_10. pdf • Output Performance Measure Target Actual BDM public awareness strategy. High Level of Public eawareness by 2014 Minister launched digital Dzonga on 21 July 2009 at Constitutional Hill in JHB. The launch was preceded by briefing of the media on the BDM policy, nature and purpose of digital Dzonga. • 60% of TV household well informed about digital migration

Programme 3 - ICT ( Actual Performance versus Target) -annual report- DOC-09/10( page 48). . Annual Report 2009_10. pdf Output Performance Measure Target Actual Intergrated national ICT act by 2012 that advances convergence of ICT sector It should be noted that the development of an intergrated ICT act was envisaged to be done in faces. Phase 1 would involve the establishment of legal framework to govern activities of SABC, SAPO and Post bank. Variances explained Intergrated national ICT policy approved

Programme 4 - ICT Enterprise dev ( Actual Performance versus Target) -annual report- DOC 09/10( page 61). . Annual Report 2009_10. pdf Output Performance Measure Target ICT Business linkages Growth and 15 ICT business increased business linkages facilitated efficiency of SMMEs through increased uptake and usage of ICTs and linkages of ICT enterprises to new opportunities in the sector by 2014 Actual To facilitate ICT business linkages to high value opportunities in the ICT sector, the department identified and profiled 15 ICT companies. The department then initiated a process of identifying opportunities. Reason for Variances were explained.

Programme 5 - ICT Infrastructure Develop ( Actual Performance versus Target) -annual report- DOC 09/10( page 72). . Annual Report 2009_10. pdf Output Performance Measure Target Actual National radio frequency spectrum policy and implementation plan approved National radio frequency spectrum policy approved and implemented. The department developed a draft spectrum policy which was presented to the economic cluster. The draft policy was then gazetted for public comment in the third quarter. The updated spectrum policy was submited to cabinet and received cabinet approval on 10 Mar 2010.

Human Resource • • • Service delivery Expenditure by programme and by salary bands Salaries, overtimes, home owners allowance and medical assistance by programme and by salary bands Employment and vacancies( by programme and by bands) Job evaluations(Lower skilled, Skilled, Highly skilled and senior management, etc)

Human Resource- Continued • • • Employment changes( resignations, promotions, recruitments, terminations) Performance reward Foreign workers and Leave utilisation HIV and AIDS and health promotion programmes Labour relations and skills developments Injuries on duty and Utilisation of consultants

REPORTS TO THE FINANCIAL STATEMENTS • • Report of the audit committee Management report Report of the Auditor General Statement of Accounting policies

Report of the Auditor General • • • Introduction Accounting Officer’s responsibility to the Financial statements Auditor General’s responsibility Opinion Emphasis of matter Additional Matters Report on Other legal and regulatory requirements Predetermined objectives Compliance with laws and regulations Internal control Investigations

Format of the Audit report • • • Report on the Financial Statements – Opinion paragraph Report on other legal and regulatory requirements – Findings on the report on predetermined objectives – Findings on compliance with applicable laws and regulations Status of Internal control – – – • Leadership Financial and performance management Governance Information on other audits conducted – Investigations – Agreed upon procedures – Performance audits

The different audit opinions – Unqualified( Clean) • – Unqualified with matters • – The auditor concludes that, except for specifically listed material misstatements, the financial statements remain a fair reflection Adverse • – The financial statements present fairly in all material respects with findings on non-compliance or internal control or Ao. PI Qualified (except for) • – The financial statements present fairly in all material respects The auditor disagrees with the representation made by management in the financial statements to the extent of confirming that it is not a fair reflection of the financial position, financial performance and cash flows Disclaimer • Where there is a lack of sufficient appropriate audit evidence to the extent that the auditor is not able to form an opinion on the financial statements as a whole

Emphasis of matter • • • Financial reporting framework Revision of previously issued financial statements Restatement of corresponding figures Irregular expenditure Material losses/impairments Significant uncertainties Material under spending of the budget Accruals Fruitless and wasteful expenditure Funding/sustainability/going concern

Additional matters • • Prior year audited by predecessor auditor Material inconsistencies in other information in annual reports Unaudited supplementary schedules Revision of previously issued financial statements

Internal control • Status of internal control relevant to the audit of the financial statements, predetermined objectives and compliance with laws and regulations is reported under the three fundamentals of effective internal control: • • • Leadership Financial and performance management Governance

Internal control (cont. ) Leadership • • • Tone at the top creating an environment favourable to good financial management and service delivery Identify key controls aimed at achieving the organisation’s objectives Assessing skills / competencies of finance staff, ensuring the right staff mix and managing consultants to ensure effective skills transfer

Internal control (cont. ) Financial and performance management • • Monthly financial statements and quarterly performance reports, plus continuous monitoring of both Implementation of sound financial and performance management systems Proper controls over documentation to ensure that documents are easily retrievable Operating basic internal controls for an efficient financial and performance management environment

Internal control (cont. ) Governance • • Adequately resourced and effectively functioning internal audit and audit committee Maintenance of effective risk management strategies, including fraud prevention plans

Annual Financial Statements • • • Statement of Accounting Policies Appropriation statement Statement of Financial Performance Statement of Financial Position Statement of Changes to Net Assets Cash Flow Statements Notes to the Annual Financial Statements Disclosure Notes Annexures

APPROPRIATION STATEMENT • • Per Programme and per Economic classification, Adjusted Appropriation Shifting of Funds(Within same programme) Virement(8%)-( programme 1 to programme 2) Final Appropriation Actual Expenditure Variance( Final App less Actual Exp) Expenditure as % of final appropriation

STATEMENT OF FINANCIAL PERFORMANCE • • • Revenue( Annual Appropriation, Departmental Revenue, Direct exchequer Receipts) Expenditure( Goods and services, Compensation of employees). . Annual Report 2009_10. pdf Transfers and Subsidies Expenditure for Capital assets( tangible and intangible) Surplus/Deficit for the year Comparison of the previous and current year

NOTES TO THE ANNUAL FINANCIAL STAMENTS q • • q • Irregular expenditure Def: means expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with requirement of any applicable legislation Opening balance, Prior year, Current year, Condoned Irregular expenditure awaiting condonation Details of irregular with disciplinary steps taken Fruitless and wasteful expenditure Def: means expenditure which was made in vain and would have been avoided had reasonable care been exercised. Example- Penalties, Interests, Fines, etc

THE END • Questions for clarity?