Briefing to the Portfolio Committee on Transport Audit outcomes of the Transport portfolio for the financial year

Transcription

1 Briefing to the Portfolio Committee on Transport Audit outcomes of the Transport portfolio for the financial year 13 October 2015

2 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. 2

3 Purpose of the presentation Annually oversight committees set aside time to focus on assessing the performance of departments. On completion of the process, portfolio committees are required to develop department-specific reports, namely budgetary review and recommendations reports (BRRR) which express the committee`s view on the department s budget for recommendation to the National Treasury ahead of the following year`s budget period. Our role as the AGSA is to reflect on the audit work performed to assist the portfolio committee in its oversight role in assessing the performance of the departments taking into consideration the objective of the committee to produce a BRRR. 3

4 Contents Slide no. 1. Transport portfolio structure 5 2. Overall audit outcomes for Transport portfolio 6 3. Auditor-General six key focus areas 8 4. Unauthorised/ Irregular / Fruitless & Wasteful expenditure Combined assurance and assessment of assurance providers Drivers of key controls for portfolio Root causes and recommendations Minister commitments to address root causes 22 4

5 Transport Portfolio Road Air Air Traffic and Navigation Services (ATNS) * Airports Company of South Africa (ACSA) South African Civil Aviation Authority (SACAA) South African National Road Agency (SANRAL) Road Accident Fund (RAF) Cross Border Road Transport Agency (CBRTA) Road Traffic Management Corporation (RTMC) Road Traffic Infringement Agency (RTIA) Driving License Card Account (DLCA) Department of Transport Rail Maritime Passenger Rail Agency of South Africa (PRASA) Railway Safety Regulator (RSR) Autopax (Pty) Ltd (Autopax) South African Maritime Safety Authority (SAMSA) Independent Ports Regulator (PR) Intersite Property Management Services (Pty) Ltd (Intersite) * Section 4(3) entities (ACSA will be audited by the AGSA directly from 14/15) 5

6 2. Overall audit outcomes for Transport portfolio 23% (3) 38% (5) 31% (4) Unqualified no findings Unqualified with findings 77% (10) 54% (7) 69% (9) Qualified with findings Adverse with findings Disclaimer with findings 8% (1) auditees 13 auditees 13 auditees *Section 4(3) entity (ATNS) is excluded 6

7 2.1. Audit outcomes for ATNS (section 4 (3) entity) Unqualified no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimer with findings

8 3. Auditor-General six key focus areas Quality of submitted financial statements Quality of submitted performance reports Compliance with legislation 31% 62% 38% 24% Good 69% 38% 38% Concerning Intervention required Financial health Human resource management Information technology Improvement 46% 31% 23% 62% 8% 30% 8% 38% 54% Stagnant or limited progress Regressed 8

9 Quality of submitted financial statements Outcome if NOT corrected Outcome after corrections 31% (4) 9 auditees Financially unqualified with/without findings 69% (9) Outcome if NOT corrected 100% (13) Outcome after corrections Avoided qualifications by correcting material misstatements during audit process Financially qualified (qualified/ disclaimed with findings) 46% (7) 92% (12) 5 auditees 54% (6) 8% (1)

10 3.2 Usefulness and reliability of reported performance 62% Annual performance reports of were reliable and useful compared with 36% in the previous year 62% (8) 38% (5) With no findings With findings % (4) 64% (7) Improved Usefulness Reliability Stagnant or little progress 62% (8) Regressed 8% (1) 92% (12) 38% (5) All auditees submitted their annual performance reports on time. 10

11 Quality of submitted annual performance reports Outcome if NOT corrected Outcome after corrections 62% (8) 77% (10) 2 auditees Annual performance report not materially misstated 38% (5) 23% (3) Avoided findings by correcting material misstatements during audit process Annual performance report contained material misstatements Outcome if NOT corrected Outcome after corrections 46% (6) 54% (7) 31% (4) 69% (9) 3 auditees 11

12 3.4 Most auditees did not comply with legislation in the following areas Quality of annual financial statements submitted Prevention of unauthorised, irregular and/ or fruitless and wasteful expenditure Management of procurement and or contracts 31% 54% 38% 24% Good 69% 46% 38% Concerning Intervention required Management of strategic planning and performance 85% 15% Human resource & consequence management 62% 8% 30% Internal audit & Audit committee 77% 8% 15% Improvement Stagnant or limited progress Regressed 12

13 3.5 Financial health of the portfolio Focus areas for financial health Status Comment Good Going concern The turnaround strategies of CBTRA, SAMSA, RAF and PRASA need to be monitored in order to improve their asset and liability management and cash management. Concerning Intervention required 13

14 3.6 Information technology Status on the information technology focus areas Department Public entities Security management User access management IT service continuity IT governance 41% 17% 42% 42% 17% 41% 50% 25% 25% 33% 58% 8% Good Concerning Intervention required Improved Stagnant or little progress Regressed 14

15 Unauthorised, Irregular and Fruitless and wasteful expenditure Unauthorised expenditure Irregular expenditure Fruitless and wasteful expenditure Definitions Expenditure not in accordance with the budget vote/ overspending of budget or programme Expenditure incurred in contravention of key legislation, prescribed processes not followed Expenditure incurred in vain and could have been avoided if reasonable steps had been taken. No value for money! DoT ACSA CBRTA PRASA RAF RSR Legends: Decrease in incurred expenditure No change Increase in incurred expenditure RTIA RTMC SAMSA

16 Unauthorised, Irregular, Fruitless and wasteful expenditure Unauthorised expenditure Irregular expenditure Fruitless and wasteful expenditure Definitions Expenditure not in accordance with the budget vote/ overspending of budget or programme Expenditure incurred in contravention of key legislation, prescribed processes not followed Expenditure incurred in vain and could have been avoided if reasonable steps had been taken. No value for money! SANRAL Totals Legends: Decrease in incurred expenditure No change Increase in incurred expenditure 16

17 5. Combined assurance Management assurance First level of assurance Oversight assurance Second level of assurance Independent assurance Third level of assurance Senior management Accounting officers/ authority Executive authority Coordinating / Monitoring institutions Internal audit Audit committee Oversight (portfolio committees / councils) Public accounts committee National Assembly Required assurance levels Required assurance levels Required assurance levels Extensive Extensive Extensive Management s assurance role Senior management take immediate action to address specific recommendations and adhere to financial management and internal control systems Accounting officers/ authority hold officials accountable on implementation of internal controls and report progress quarterly and annually Executive authority monitor the progress of performance and enforce accountability and consequences Extensive Extensive Extensive Oversight s assurance role National Treasury/ DPSA monitor compliance with laws and regulations and enforce appropriate action Internal audit follow up on management s actions to address specific recommendations and conduct own audits on the key focus areas in the internal control environment and report on quarterly progress Audit committee monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans Extensive Extensive Extensive Role of independent assurance Oversight (portfolio committees) review and monitor quarterly progress on the implementation of action plans to address deficiencies Public accounts committee exercise specific oversight on a regular basis on any report which it may deem necessary National Assembly provide independent oversight on the reliability, accuracy and credibility of National and provincial government 17

18 Third level Second level First level 5.1 Assessment of assurance providers for portfolio Senior management Accounting officer/authority Executive authority Improvement Internal audit unit Stagnant or little progress Audit committee Regressed Portfolio committee Provides assurance Provides some assurance Provides limited/ no assurance Vacancy Not Established/ Evaluated 18

19 Effective leadership culture Oversight responsibility HR management Policies and procedures Action plans IT governance Proper record keeping Processing and reconciling controls Reporting Compliance IT systems controls Risk management Internal audit Audit committee 6. Driver of key controls for portfolio Drivers of internal control Department & Entities Leadership Financial & performance management Governance Good Concerning Department of Transport SANRAL RAF DLCA SAMSA CBRTA PRASA RSR Intervention required Improvement Stagnant or little progress Regressed SACAA RTIA Ports Regulator RTMC ACSA 19

20 7. Root causes should be addressed (top three) Instability or vacancies in key positions 38% 46% Positions such as Chief Financial Officer, General Manager and other key management were vacant during the year or in acting positions for longer than the prescribed period at several entities (DLCA, PRACA, RTMC). There was instability in key positions as the board at PRASA took office during the year. SAMSA board members resigned and where not timeously replaced. no alternative method put in place to ensure leadership during the absence of the board. There was no alternative method put in place to ensure leadership during the absence of the board. Key officials lack appropriate competencies 38% 46% SCM officials were not adequately trained on the implementation of the SCM policy and the relevant laws and regulations. Annual financial statements were not adequately reviewed to ensure compliance with the reporting framework before submission for audit Improved Stagnant or little progress Regressed Slow response by management in addressing the root causes of poor audit outcomes 31% 38% Management developed action plans however the actions taken were not effective to ensure that the prior year audit findings could be resolved. Management did not provide commitments to address internal control deficiencies highlighted in the dashboard. 20

21 7.1 Root causes & Recommendations (top three) Root causes Recommendation Instability or vacancies in key positions Ensure that vacancies in key positions are filled with appropriately skilled and competent people in a timely manner to address instability in leadership Key officials lack appropriate competencies Ensure that key officials involved in the preparation of the financial statements and performance reports receive adequate training on the relevant applicable legislation and standards. Slow response by management Monitor that key commitments made by management to address the root causes identified are implemented in a timely manner to prevent a recurrence of matters that gave rise to unfavourable audit outcomes

22 8. Minister commitments to address root causes Status of key commitments by minister To monitor and evaluate all deliverables on the PRASA locomotive and rolling stock Request regular feedback from Transport on key issues impacting entities in the portfolio. Monitor the take-over of major IT-related contracts Management of vacancies Enhance performance and consequence management Implementation of the action plan to address the prior year audit findings Contract management over all entities in the portfolio In progress New 22

23 Questions