briefing to portfolio committee on transport - pmg
TRANSCRIPT
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Budgetary review and recommendations report Add subtitle here
XX Month XXXX
Briefing to Portfolio Committee on Transport
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Reputation promise
The Auditor-General of South Africa (AGSA) 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.
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Role of the AGSA in the reporting process
Our role as the AGSA is to reflect on the audit work performed to assist the portfolio committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the committee to produce a Budgetary Review and Recommendations Report (BRRR).
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Our focus 1
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Our annual audit examines three areas
1 FAIR PRESENTATION AND
RELIABILITY OF FINANCIAL
STATEMENTS 2 RELIABLE AND CREDIBLE
PERFORMANCE INFORMATION
FOR PREDETERMINED
OBJECTIVES
3 COMPLIANCE WITH KEY
LEGISLATION ON FINANCIAL
AND PERFORMANCE
MANAGEMENT
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The AGSA expresses the following different audit opinions Unqualified opinion
with no findings
(clean audit)
Financially unqualified
opinion with findings Qualified opinion Adverse opinion Disclaimed opinion
Auditee:
• produced credible and
reliable financial
statements that are free
of material
misstatements
• reported in a useful and
reliable manner on
performance as measured against
predetermined
objectives in the annual
performance plan (APP)
• complied with key
legislation in conducting
their day-to-day
operations to achieve
their mandate
Auditee produced
financial statements
without material
misstatements or could
correct the material
misstatements, but
struggled in one or more
area to:
• align performance reports to the predetermined objectives they committed to in APPs
• set clear performance indicators and targets to measure their performance against their predetermined objectives
• report reliably on whether they achieved their performance targets
• determine the legislation that they should comply
with and implement the required policies, procedures and controls to ensure compliance
Auditee:
• had the same
challenges as those with
unqualified opinions
with findings but, in
addition, they could not
produce credible and
reliable financial
statements
• had material misstatements on
specific areas in their
financial statements,
which could not be
corrected before the
financial statements
were published.
Auditee:
• had the same
challenges as those
with qualified opinions
but, in addition, they
could not provide us
with evidence for most
of the amounts and
disclosures reported in
the financial statements, and we
were unable to
conclude or express an
opinion on the
credibility of their
financial statements
Auditee:
• had the same
challenges as those with
qualified opinions but, in
addition, they had so
many material
misstatements in their
financial statements that
we disagreed with
almost all the amounts and disclosures in the
financial statements
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The overall audit outcomes are indicated as follows:
Unqualified with no findings
Unqualified with findings
Qualified with findings
Adverse with findings
Disclaimed with findings
Audits outstanding
Movement over the previous year is depicted as follows:
Improved
Unchanged Movement of 5% or less: slight improvement slight regression
Regressed
The percentages in this presentation are calculated based on the completed audits of 14 auditees, unless indicated otherwise
DOT – Department of Transport
PRASA – Passenger rail agency of South Africa
SANRAL – South African National Road Agency
ACSA – Airports company of South Africa
SACAA – South African civil aviation authority
RTIA – Road Traffic Infringement Agency
RTMC – Road Traffic Management Corporation
DLCA – Driving License Card Trading Account
PORTS – Ports Regulator of South Africa
ATNS – Air Traffic Navigation Services
CBRTA – Cross Border Road Transport Agency
SAMSA – South African Maritime Safety Authority
RSR – Railway Safety Regulator
RAF – Road Accident Fund
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Transport Portfolio
• 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)
• Passenger Rail Agency of South Africa (PRASA)
• Railway Safety Regulator (RSR)
* Section 4(3) entity
Department of Transport entities
Road
Rail Maritime
Aviation
• Air Traffic and Navigation Services (ATNS) *
• Airports Company of South Africa (ACSA)
• South African Civil Aviation Authority
(SACAA)
• South African Maritime Safety Authority
(SAMSA)
• Ports Regulator (PR)
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The 2017-18 audit outcomes 2
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DO
PLAN
CHECK ACT
ACCOUNTABILITY = PLAN + DO + CHECK + ACT
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Portfolio snapshot (2017-18)
Quality financial
statements: 50%
(2016-17: 50%)
Clean audits: 21%
(2016-17: 43%)
Quality performance
reports: 50%
(2016-17: 43%)
No findings on compliance
with legislation: 21%
(2016-17: 43%)
Irregular expenditure:
R5 188m
(2016-17: R6 165m)
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Audit outcomes of portfolio over four years
14 auditees
14%(2) SAMSA PRASA
21% (3) SAMSA ATNS
PRASA 7% (1) DOT
58% (8)
DOT ACSA DLCA RSR
RTMC RTIA RAF
SANRAL
36% (5)
DOT SANRAL
RSR DLCA ACSA
57% (8) ACSA DLCA
PRASA RAF RSR RTIA
SAMSA SANRAL
71% (10)
ACSA C-BRTA DLCA DOT
PRASA RSR RTIA
RTMC SAMSA
SANRAL
21% (3)
C-BRTA SACAA PORTS
43% (6)
C-BRTA SACAA PORTS RTMC RTIA RAF
36% (5)
C-BRTA SACAA PORTS RTMC ATNS
29% (4)
SACAA PORTS
RAF ATNS
2017/18 2016/17 2015/16 2014/15
7% (1) ATNS
14 auditees 14 auditees 14 auditees
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Movement table (2017-18 over 2016-17)
Audit outcome
MOVEMENT
Improved
Unchanged Regressed New auditee
Outstanding
audits
Unqualified
with
no findings = 3
SACAA
PR
CBRTA
Unqualified
with findings =
8
DOT
ACSA
RSR
DLCA
SANRAL
RTMC
RTIA
RAF
Qualified with
findings = 2
SAMSA
PRASA
Adverse with
findings = 0
Disclaimed
with findings =
0
Outstanding
audits ATNS
0 10
Colour of the number indicates the audit opinion from which the auditee has moved.
3 0 1
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100% (14)
100% (14)
15% (2)
21% (3)
85% (11) 79%
(11)
2017-18 2016-17
50% (7)
50% (7)
77% (10)
57% (8)
23% (3)
43% (6)
2017-18 2016-17
Audit of financial statements Findings on
annual performance reports
Findings on compliance
with key legislation
Unqualified Qualified Adverse Disclaimed
AFS submitted
on time
AFS and APR submitted with no
material misstatements
With no findings
With material findings
Movement on the opinion of financial statements, conclusion on the annual performance reports and finding on compliance - (excluding
outstanding audits)
23% (3)
29% (4)
77% (10)
71% (10)
2017-18 2016-17
50% (7) 43%
(6)
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70% (9)
23% (3)
62% (8)
23% (3)
62% (8)
23% (3)
15% (2)
15% (2)
Governance
Financial and performancemanagement
Leadership
7% (1)
Status of internal control (excluding outstanding audits)
Good Of concern Intervention required
Drivers of internal controls
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Assurance provided (excluding outstanding audits)
First
le
ve
l
9
7
8
8
3
13
2
5
3
3
7
1
1
2
2
3
Senior management
Accounting officer/authority
Executive authority
Internal audit unit
Audit committee
Portfolio committee
Third
le
ve
l
Se
co
nd
le
ve
l
----------------------------------------------------------------------------------------
Provides assurance
Provides some assurance
Provides limited/ no assurance
Not established Not assessed
----------------------------------------------------------------------------------------------
Assurance
----------------------------------------------------------------------------------------------
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Financial health and financial management 3
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50% (7)
54% (7)
29% (4)
31% (4)
21% (3)
15% (2)
2016-17
2017-18
There are liquidity concerns over SANRAL and RAF within the portfolio.
Two or less unfavourable indicators
More than two unfavourable
indicators
Significant doubt that operations can
continue in future
• Management should enhance timely remedial action to improve
the management of working capital especially with regards to
debtor and creditor collection period.
Key concerns identified
Financial health (excluding outstanding audits)
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Unauthorised, irregular as well as fruitless and wasteful expenditure decrease over 5 years
Expenditure incurred
in contravention of
key legislation;
goods delivered but
prescribed
processes not
followed
Expenditure not in
accordance with the
budget vote/
overspending of
budget or
programme
Expenditure
incurred in vain and
could have been
avoided if
reasonable steps
had been taken. No
value for money!
Definition
R5 188 million
R 86 million
R million
R6 588 million
R 250 million
R 177 million
R16 142 million
R 301 million
R million
R2 605 million
R 579 million
R 393 million
R2 808 million
R 40 million
R 768 million
Irregularexpenditure
Fruitless andwasteful expenditure
Unauthorised expenditure
The audit of ATNS is outstanding and the amount of irregular expenditure for 2017/18 is not included.
2013-14 2014-15 2015-16 2016-17 2017-18
Most common findings on supply chain management
0%
23% (3)
0%
23% (3)
31% (4)
23% (3)
15% (2)
38% (6)
Performance of contractors not monitored on monthly basis
Inadequate contract performance measures and monitoring
Suppliers' tax affairs not in order
Preference point system notapplied or incorrectly applied
Declarations of interest not submitted
Competitive bidding not invited
Local content minimumthreashold for local production
not adhered to
Three written quotations not invited
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If officials who deliberately or negligently ignore their duties
and contravene legislation are not held accountable for
their actions, such behaviour can be seen as acceptable
and tolerated.
Management (accounting officers/ authorities and senior
management do not respond with the required urgency to
our messages about addressing risks and improving internal
controls. 64% (7)
27% (3)
36% (4)
Slow response to improving key controls and addressing risk areas
Inadequate consequences for poor performance and transgressions
Instability or vacancies in key positions
The instability and prolonged vacancies in key positions can
cause a competency gap and affect the rate of
improvement in audit outcomes.
Root causes
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Recommendations
• Monitoring and regular follow up with the executive authority and the accounting officer/authority on :
o Appointment of boards and other governance structures to ensure that they are fully constituted with members with the appropriate skills and experience for effective governance and oversight over the entities.
o Management of vacancies to ensure stability of leadership
o Progress on action plans put in place by the entities to address undesirable audit outcomes
o performance and consequence management especially around supply chain management
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Little improvement in plan-do-check-act cycle
Status of audit action plans regressed
Usefulness of performance indicators and targets improved
PLAN
DO Overall internal controls regressed
Basic financial and performance management controls regressed
ICT controls slightly regressed
Vacancies in CFO positions slightly regressed
CHECK Assurance provided by:
• Senior management and accounting officers/authority regressed
• Internal audit units and audit committees regressed
ACT Compliance with consequence management legislation regressed
Investigation of previous year UIFW slightly regressed
Investigations into SCM findings we reported in previous year slightly improved
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