PFMA Audit Outcomes of the Telecommunications and Postal Services Portfolio National D October 2014

Transcription

1 Audit Outcomes of the Telecommunications and Postal Services Portfolio National D October 2014

2 Our reputation promise/mission The Auditor-General of South Africa (AGSA) 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.

3 Purpose of the presentation To provide members of parliament with the necessary information/guidance on the audit outcomes for the portfolio of Telecommunications & Postal Services to enable the Portfolio Committee to effectively execute their oversight function: Audit outcomes Drivers of internal controls Root causes Assurance provided by key role players Key recommendations Oversight model

4 Improvement in overall audit outcomes over the past three years USAF, Sentech Sentech Unqualified with no findings Unqualified with findings DTPS, Nemisa, USAASA, SITA & BBI DTPS, Nemisa, USAASA, SAPO, SITA & BBI DTPS, Nemisa, USAASA, USAF, Sentech, SAPO, SITA & BBI Qualified with findings Adverse or disclaimer with findings Audits outstanding SAPO USAF auditees 8 auditees 8 auditees 4

5 Movement in audit outcomes Movement Audit outcome Unqualified with no findings 1 Improved Unchanged Regressed Outstanding USAF 2 Sentech 0 0 Unqualified with findings = 3 DTPS, Nemisa, USAASA, SITA & BBI SAPO Qualified with findings ) Adverse or disclaimed with findings Colour of name indicates the audit opinion from which the auditee has moved. 5

6 Three-year trend financial statements DTPS, Nemisa, USAASA, USAF, Sentech, SITA & BBI DTPS, Nemisa, USAASA, Sentech, SAPO, SITA & BBI DTPS, Nemisa, USAASA, USAF, Sentech, SAPO, SITA & BBI Unqualified Qualified Adverse or disclaimer USAF auditees 8 auditees 8 auditees 6

7 Quality of submitted financial statements Outcome if NOT corrected Outcome after corrections 3 auditees 43% 57% 100% DTPS SITA BBI Financially unqualified (clean audit/ unqualified with findings) Outcome if NOT corrected Outcome after corrections Avoided qualifications by correcting material misstatements during audit process Financially qualified (qualified/ adverse/ disclaimed with findings) 4 auditees 63% 38% 13% 88% Nemisa USAASA SITA BBI 7

8 Quality of annual performance reports Annual performance reports of 5 the auditees were useful and reliable Improvement over three years With no findings DTPS, USAASA, USAF, Sentech & BBI Sentech, SAPO, SITA & BBI DTPS, Sentech, SITA & BBI With findings Nemisa & SITA DTPS, Nemisa, USAASA & USAF Nemisa, USAASA, USAF & SAPO

9 Most common material findings on usefulness and reliability Usefulness Usefulness 1 Indicators were not well defined Targets were not specific and measurable Improved Stagnant or little progress Regressed Reliability Reliability 1 Completeness of reported information could not be tested against supporting evidence Validity of reported information could not be tested against supporting evidence Accuracy of reported information could not be tested against supporting evidence 9

10 Status of compliance with legislation Significant non-compliance with legislation by 5 of the auditees Improvement over three years Sentech & USAF Sentech With no findings With findings DTPS, Nemisa, USAASA, SITA & BBI DTPS, Nemisa, USAASA, USAF, SAPO, SITA & BBI DTPS, Nemisa, USAASA, USAF, Sentech, SAPO, SITA & BBI auditees 8 auditees 8 auditees 10

11 Most common areas of non-compliance Unauthorised, irregular and fruitless and wasteful expenditure SITA, USAASA Nemisa, USAASA Quality of financial statements submitted for auditing DTPS, SITA, BBI Supply chain management Human resource management Nemisa, USAASA, SITA, BBI SITA, BBI Nemisa, USAASA, SITA, BBI DTPS DTPS Improved Stagnant or little progress Regressed Strategic planning and performance management Nemisa USAF 11

12 97 instances 73 instances Irregular expenditure incurred Increase in irregular expenditure R93 million [6 (86%) auditees] R3.4 million (4%) R58 million [7 (88%) auditees] Nature Quotations not obtained Procurements done without inviting competitive bids Non-compliance with procurement processes (e.g. evaluations not done properly) Identified by auditees Identified during audit R2 million (4%) Highest contributors R89.2 million (96%) R56 million (96%) Department of R8 170 million Telecommunications & Postal ( Services (R44 million) instances) State Information Technology Agency (R35 million)

13 18 instances 27 instances Fruitless and wasteful expenditure incurred Decrease in fruitless and wasteful expenditure Nature Identified by the auditees R1.71 million [5 (71%) auditees] R6.7 million [7 (88%) auditees] Penalties and interest incurred on late legislative/contractual payments R million auditees Incurred to prevent further (80%) (64%) losses (contractual) or irregular expenditure Identified during the audit 1.71 million (100%) R0.78 million (12%) R5.9 million (88%) R164 million (20%) 83 auditees (38%)

14 Drivers of internal controls

15 Root causes Instability on vacancies in key positions A root cause at DTPS, SITA & NEMISA (3) of the auditees ( : 5 auditees) Slow response by management A root cause at DTPS, SITA & NEMISA (3) of the auditees ( : 5 auditees) Lack of consequence management A root cause at DTPS & SITA (2)of the auditees ( : 5 auditees) 15

16 Assurance provided by key role players Provides assurance Provides some assurance Provides limited/no assurance Not established Improved assurance Limited progress on assurance Less assurance 16

17 Key recommendations for improvement The following should be strengthened to create a environment that supports reliable financial and performance reporting and compliance with legislation: Increase stability within the portfolio by filling the remaining key vacant positions. Responses to implement corrective actions should be enhanced and tracked. Senior officials should be held accountable where applicable Independent reviews should be performed on financial and non-financial information. Colour of name indicates the audit opinion from which the auditee has moved. 17

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19 Considerations for Portfolio Committees when dealing with performance monitoring Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan Does the entity have adequate resources (human and financial) available to achieve predetermined objectives Are the targets realistic (can it be done) How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.) The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports) The Portfolio committee should approve and track changes to strategic plans and annual performance reports

20 20 How does clean administration improve service delivery Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY

21 Accountability and remedies to address transgressions and poor performance A common reaction to the general reports relates to the questions posed by many, including key role players in government, about the need for accountability and consequences and how these can be enforced. Legislation provides the answer to this question as it clearly defines accountability and the remedies. Details are available on pages 44 to 65 of our booklet: In Brief: The Auditor-General of South Africa

22 Accountability and remedies to address transgressions and poor performance This AGSA booklet highlights the legislation that enables remedies to be applied where national and provincial departments are guilty of transgressions and poor performance. It addresses the following typical matters reported in the general report: Failure to comply with legislated obligations and responsibilities Unauthorised, irregular and fruitless and wasteful expenditure Possible fraud and corruption Poor work performance officials and suppliers Other non-compliance with legislation