What is an audit of predetermined objectives Annual

What is an audit of predetermined objectives? Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual performance report It is an integral part of the annual regularity audit process, confirming – • compliance with related laws and regulations • usefulness of performance information • reliability of performance reporting 1

Auditing requirements Sections 20(2)(c) and 28(1)(c) of the Public Audit Act (PAA) require that: An audit report must reflect an opinion or conclusion on the performance of the auditee against predetermined objectives Applicable to all spheres of government 2

Audit criteria Main criteria Sub-criteria Compliance with regulatory requirements Applicable to performance management and reporting Usefulness Presentation Measurability Relevance Consistency Validity Reliability Accuracy Completeness 3

Audit approach 1 Understand test the design and implementation of the performance management systems, processes and relevant controls 2 Test the measurability, relevance, presentation and consistency of planned and reported performance information 3 Test the reported performance information against relevant source documentation to verify the validity, accuracy and completeness of reported performance information 4 Conclude on the usefulness and reliability of the reported performance for selected programmes or objectives per indicator 4

Audit reporting – Management report An audit conclusion will be expressed for ALL departments, constitutional institutions, trading entities and public entities in the management report, on the – USEFULNESS of reported performance for selected programmes or objectives RELIABILITY of the reported performance for selected programmes or objectives 5

Audit reporting – Auditor’s report REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Predetermined objectives Usefulness of information Material audit findings focusing on presentation, consistency, relevance and measurability of reported performance information for selected programmes or objectives Reliability of information Material audit findings focusing on reliability of reported performance information for selected programmes or objectives Compliance with laws and regulations Compliance findings relevant to the performance management and reporting 6

Planning, managing and reporting on performance The process Plan and budget Monitor and in-year reporting Report performance in annual performance report (APR) • The findings • • Indicators not well defined ((12) 38%) or verifiable ((8) 25%) Targets not measurable ((9) 28%) or specific enough ((6) 19%) • • • 4 had no performance management systems 3 had inadequate performance management systems 1 had no mechanisms to monitor or review performance • • Reported information not consistent with what was included in the plan 59% (19) Reported achievement was not reliable at 73% (26) municipalities There is no progress made towards useful and reliable performance reporting. This affects the ability of communities to hold municipalities accountable and makes it difficult for provincial and national government to track progress towards the service delivery goals. 7

Findings on water infrastructure projects and maintenance in local government Water infrastructure projects at 10 WSA municipalities Maintenance of water infrastructure at 10 responsible municipalities No policy on maintenance of water 44% 33% 11% The projects in progress do not address the cause of the water backlog reported Projects exceeded planned completion date Projects had significant findings on supply chain management 67% infrastructure 33% No maintenance plan Conditional assessment not done to inform the 22% maintenance plan and budget was not 11% Maintenance budgeted for Appropriate steps not taken to prevent overof the 11% /underspending budget allocation for routine water infrastructure maintenance Targets and time frames for 22% routine maintenance of water infrastructure were not achieved 8

Sanitation infrastructure projects and maintenance Sanitation infrastructure projects at 10 WSA municipalities 44% 22% 11% The projects do not address the cause of the sanitation backlog reported Projects exceeded planned completion date Projects had significant findings on supply chain management 9

Recommendations • Co. GSHTA/ Premier assist in development of standard/ customised indicator for basic service delivery, • Performance forum be used to provide technical competencies, • Development of standard operating procedures, proper control over compilation of performance reports • Integrate collection of performance information with other departments- technical etc. • Robust internal audit review of usefulness and reliability performance information

3 3 Audit methodology 11

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