AGSA Strategic plan and budget SCoAG engagement 17 November 2017

Transcription

1 AGSA Strategic plan and budget SCoAG engagement 17 November 2017

2 Reputation promise The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. 2 2

3 Presentation outline Main external and internal factors and trends considered in this plan Strategic objectives and performance measures Synopsis of the organisational budget for

4 Our aspirations and strategic goals 4

5 Major environmental trends considered in this plan Intensified public discourse on corruption, poor governance and lack of consequences Spotlight on the performance of the SOEs Increased pushback by the auditees Slow pace of transformation in the country and the professions, including slow growth of skills levels Increased interest on improving the lives of people national priorities and sustainable development goals Fast pace of technological changes and associated risks 5

6 Strategic objectives VALUE- ADDING AUDITING 1. Demonstrate value add to stakeholders 2. Ensure high quality of our audit 6

7 Our focus remains on auditing areas that matter and influencing all role players in the public sector to take action for improvement. We will persist with detecting and exposing practices that ultimately result in wasting of public money. We will endeavour to establish a direct line of sight from detection of breaches to implementation of consequence management We will continue to implement various measures to maintain and, where possible, increase the adherence to audit quality standards. We will support the reporting on the achievement of the SDGs through the information contained in our reports. 7

8 Demonstrate value add and high quality of audits Measure Target Main strategic initiatives % implementation of actions to improve our stakeholders perception Auditor-general s assessment of the organisation s performance % adherence to quality standards: audit engagements 8 80% - 100% of the actions for the financial year Achieved organisational objectives on value add 80% - 90% (C1, C2 and C3 rating) Annually review our audit portfolio to ensure its relevance. Develop models for low-risk and small-to-medium audits in our new audit methodology. Continue to intensify the use of CAATs. Continue to develop deep knowledge of auditees. Enhance reporting on the SDGs. Prepare the organisation for alignment with the amendments of the PAA once assented to. Continue our strict oversight over the governance of section 4(3) audits. Continuously improve the quality of our audits.

9 VISIBILITY FOR IMPACT Strategic objectives 1. Achieve impact through our visibility programs 2. Engage actively with citizens 9

10 We will explore better and innovative ways of communicating what matters to stakeholders. We will implement a well-structured status of records and commitments review to provide depth to discussions on key controls. We will drive continual improvements in our engagement tools and build capacity for impactful stakeholder interactions. We will contribute significantly to the advancement of the professionalisation of auditors worldwide with specific focus on the African continent. 10

11 Achieve impact through visibility programmes Measure Target Main strategic initiatives % implementation of actions to improve out stakeholders perception Auditor-general s assessment of the organisation s performance % rollout of status of records review 80% - 100% of the actions for the financial year Achieved organisational objectives on visibility 80% - 100% of the actions for the financial year Implement systematically and consistently the status of records and commitments reviews programme. Implement our external thought leadership programme. Increase the reach and impact of engagement on our mandate and role. Enhance stakeholder awareness and understanding of audit outcomes. Provide effective support to Afrosai-E and collaborate with African SAIs and other members of INTOSAI. 11

12 Strategic objectives 1. Maintain financial viability and legal independence VIABILITY 2. Attract, develop and retain great talent 3. Create an enabling culture and leadership 4. Increase operational efficiencies 12

13 Financial viability remains our utmost priority to the preservation of our independence. We will engage all relevant stakeholders with the aim of securing full payment of audit fees We will pursue even better utilisation and development of our human capital. We will elevate the integrated thinking in the organisation through the increased understanding of our resources / capitals. We will work hard on the institutionalising of the desired culture and leadership. We will manage our physical infrastructure, improve our operational processes and maintain information technology to ensure that we are best positioned to execute our mandate. 13

14 Maintain financial viability and legal independence Measure Target Main strategic initiatives Net surplus 1% - 4% Pursue effective debt collection: Safety/Cash margin 3-4 months - Continue to implement ring-fencing and litigation processes - Quantify and monitor efficiencies realised from the implementation of the revised audit methodology Intensify cost-optimisation tactics such as: - Continued moratorium on recruitment, - Strategic sourcing and others Regularly review available legal instruments to support the execution of our mandate and to promote consequence management in the public sector. 14

15 Create an enabling culture and leadership to drive strategy execution Measure Target Main strategic initiatives Develop and implement a culture improvement strategy/plan Define the desired culture, establish and develop a plan of action As per our people strategy. Develop and implement a culture strategy/plan. Increase operational efficiencies Measure Target Main strategic initiatives % optimisation of business processes 80% implementation of actions planned for the year Continuously enhance our IT solutions and organisational processes. Strengthen information security and information management. 15

16 Create an enabling culture and leadership to drive strategy execution Measure Target Strategic initiatives Develop and implement a culture improvement strategy/plan Define the desired culture, establish and develop a plan of action Continue to implement our people strategy. Develop and implement a culture strategy/plan. Increase operational efficiencies Measure Target Strategic initiatives % optimisation of business processes 80% implementation of actions planned for the year Continuously enhance our IT solutions and organisational processes. Information security and information management. 16

17 VISION AND VALUES DRIVEN Strategic objectives 1. Drive the AGSA s transformation programme 2. Demonstrate clean administration 3. Safeguard the ethical character of our organisation 17

18 Ensure highest levels of accountability, ethics and effective governance. Support transformation objectives of our country by: continuously fine-tuning our procurement policies and practices managing people targets at all levels, paying specific attention to employment of people with disabilities. Our contribution to the transformation of the accounting and auditing profession in the country will be achieved through: the distribution of contract audit work in support of black-owned audit firms our enterprise and supplier development programme support to schools, universities, Thuthuka programme 18

19 Demonstrate that we live our vision and values Measure Target Strategic initiatives BBBEE level Level 2 Implement our transformation strategy by growing our people, supporting our suppliers and our communities. External audit opinion Clean audit Demonstrate quality and transparency of reporting in our accountability instruments. Cultivate an environment that enables the desired ethical behaviour. % decisive and timely action against reported ethical breaches 100% Continuously enhance the ownership and accountability of business process owners. 19

20 BUDGET 20

21 Funding model principles and key financial indicators Current funding model Tariff increase in line with salary increase Mark-up factor No capping on tariffs Self-funding Key performance indicators Compliance 2015/ / / / / / / /19 Own hours % 75% 76% 77% 78% CWC and S&T % 25% 24% 23% 22% Gross profit % (30% to 33%) 31.6% 31% 32% 33% Overheads % 31% 34% 31% 33% Actual surplus % 3.7% -0.5% 2.1% 1.3% NOW Revised in 2008, the funding model allows the generation of surplus. Big part of the surplus has not translated into cash due to inability of auditees, mostly the financially distressed ones, to settle their audit fees. As a result, our cash cover* has declined from 2.5 months in the last few years to around 1.8 months currently. Budgetary constraints at the auditees (manifesting through unbillable audit hours) are beginning to exert pressure on the revenue line. THEN The model did not foster financial viability and hence threatened our independence Tariffs were capped resulting into massive operational loss and no funds to cater for operational daily expenditure The budget deficit resulted in the suspension of key projects, lack of capacity in support services, high vacancy rate in audit and high CWC%. * The AGSA margin of safety (cash cover) is a measure of the ability of the organisation to fund its day-to-day operational costs in the event of lack of cash inflows. Our risk tolerance on this measure is 3 months. 21

22 (R million) Summary income statement: budget Actual 2016/17 6% Budget 2017/ /19 Audit income Own hours Contract Work Direct costs Gross profit Other income Overhead expenses 5% 5% Net Surplus R million R R R R R R R R 500 R - R % Audit Income 2% Direct Costs Other income Overheads Surplus Actual R R R 72 R R -15 Budget R R R 68 R R 68 Budget R R R 71 R R 42 Budget revenue for 2018/19 is expected to grow by 3% or below CPIX, mainly driven by AGSA s continuous commitment to affordable fees and the auditees budgetary constraints. Furthermore, the revenue will be reduced by R67 million arising from the implementation of the new IFRS15 standard which prohibits recognition of revenue that can not be collected. Though overheads are growing by 9.6%, the organisation implemented cost containment tactics which translated into savings, evidenced by the reduction in head count by 54. However other items, e.g. Learning & Development increased due to investment in the Thuthuka graduate programme in line with the new strategy to improve the intake of trainee auditors with CTA and other people related investment costs. 22 9,6%

23 How to get in touch with the AGSA 23 23