INTERGRATING THE WORK OF OAG TO THE SCHEDULE OF SCOPA

National Treasury: Republic of South Africa22 March 2006

BRIEFING TO SCOPA

Contents

• Purpose & Mission

• Stakeholders

• Functions & Powers

• Structure & specific functions

• Role of Scopa

• Conclusion

Purpose of the OAG

• ACCOUNTABILITY THROUGH TRANSPARENCY

• To achieve accountability by promoting To achieve accountability by promoting

transparency and effective management in transparency and effective management in

respect of revenue, expenditure, assets and respect of revenue, expenditure, assets and

liabilities in SA public sector.liabilities in SA public sector.

• Contribute to the enhancement of service delivery Contribute to the enhancement of service delivery

capability of govtcapability of govt

OAG Mission Statement

To provide Financial Management information and provide regulatory services to empower oversight bodies to ensure public transparency through accountability.

To empower team members to become the leading knowledge repository in best practice risk management, internal audit, financial reporting and accounting services across the South African Public Sector.

To provide a learning environment with fair and non-discriminatory practices, thereby becoming the employer of choice for finance professionals.

To strive for clean audit reports in public sector.

OAG

Nat & ProvDepartments

Training institutions

Local Govt & SALGA

Auditor- General

Parliament &Its committees Public Entities

ConstitutionalInstitutions

Global stakeholders

Standard setters &Professional bodies

Stakeholders in brief

STAKEHOLDERS (2)STAKEHOLDERS (2)

Central Government 6 depts and 7 public entities

Financial and Admin Services 7 depts and 20 public entities

Social Services 7 depts and 85 public entities

Justice and Protection Services 5 depts and 11 public entities

Economic Services and Infrastructure 9 depts and 90 public entities

Provincial Governments Avg. 10 depts and on average 8 PE per Province

Local Governments – 284 municipalities

Functions and powers of NT (1)

Promote Government’s Fiscal Policy Framework

Coordinate Intergovernmental Financial and Fiscal Relations

Manage the Budget Process

Control the Implementation of the Annual Nation Budget

Facilitate Implementation of the Division of Revenue Act

Monitor Implementation of Provincial Budgets

Promote and Enforce effective management i.r.o. revenue,

expenditure, assets and liabilities

Prescribe uniform Treasury Norms and Standards

Enforce the PFMA and any prescribed norms &

standards (GRAP & SCOA) in National Departments

Monitor and assess implementation of PFMA in

provincial departments and public entities

Functions and powers of NT (2)

Assist Departments in building capacity for efficient,

effective and transparent financial management

Investigate any system of financial management and

internal control

Intervene by taking appropriate steps to address a

serious or persistent material breach of the PFMA

May do anything that is necessary to fulfill its

responsibilities

Functions and powers of NT (3)

Prescribe uniform Treasury Norms and Standards

Issuing of Treasury Regulations

Audit coms, internal audit and internal controls (CH 3 of TR)

Revenue and expenditure management (part 4 of TR)

Asset Management (Chapter 10 of TR)

Management of debtors (Chapter 11 of TR)

Money & property held in trust (Chapter 14 of TR)

Banking, cash management and investment (Chapter 15 of TR)

Accounting and reporting requirements (part 7 of TR)

Government payroll deductions (chapter 23 of TR) Other

Issuing of Treasury Instructions (Practice Notes)

Issuing of Frameworks

Enforce the PFMA and prescripts

Ensure that Departments meet reporting requirements

Ensure that financial statements are compiled in

accordance with standards set for purposes of compiling

consolidated statements

Conduct regular surveys on compliance with PFMA and

Treasury Regulations (appointment of CFO, effective

internal audit units, etc)

Follow-up on issues in audit reports regarding internal

controls, accounting, reporting and asset management

Assist in capacity building

Issued best practice guidelines (internal controls)

Prepare guidelines concerning standards for

GRAP

Facilitate knowledge sharing

Facilitate & Provide training on relevant topics IT

systems, GRAP, IA & RM function

Training strategy for development of FM, IA & RM

staff

Investigate any system of FM & IC

Conduct investigations regarding the effectiveness of internal

audit functions

Regular visits to departments to determine whether internal

control and financial management systems are effective

Commission investigations regarding revenue and

expenditure management systems

Request support from Auditor-General to conduct

investigations regarding Internal Control Systems

Interventions where PFMA is breached

Report to Cabinet on the extent of failure by an

institution and stating steps to rectify

Ensure that accounting officer initiate disciplinary

proceedings against officials

Ensure that executive authority initiate

appropriate disciplinary proceedings against

accounting officers

Structure of the OAG

• 4 Chief Directorates

– Internal Audit

– Risk Management

– National Accounts

– Accounting Services

Functions: Internal Audit

• Develop internal audit policy framework

• Assist departments with internal audit capacity

building

• Provide support and guidance on internal audit

practices

• Influence the state of governance through

participating on oversight and governance structures

• Review and report on status of internal audit and

audit committees in govt.

Functions: Risk Management

• Develop uniform risk management policy framework

• Provide support and guidance on development of risk

management strategies and policies

• Assist departments build capacity and attain

operational excellence in risk management.

• Influence the state of governance through

participating on oversight and governance structures

• Evaluate the state of risk management in government

and report to various stakeholders

Functions: National Accounts

• Train stakeholders on reporting format for financial and

non-financial information

• Consolidate government’s annual financial information

• Manage National Revenue and RDP Funds

• Provide support and guidance on financial reporting

• Assist in capacity building in departments

• Support the implementation of new policies

Functions: Accounting Services

• Develop broad accounting policies

• Investigate the appropriate reporting basis for govt

• Prescribe the reporting frameworks annually

• Spearhead financial management reforms

• Facilitate discussions on accounting standards in govt

• Facilitate implementation of the GRAP standards

• Advise on the implementation of GRAP standards

OAG Challenges

• Capacity within OAG to respond to demand

• Staff retention

• Capacity of stakeholders

• Accessibility of critical & strategic stakeholders

• Sufficient buy-in

• Skills availability

• Information systems

• Strengthening governance & oversight

Mitigating strategies

• Recruitment

• Internship, TOPP and talent pool

• Marketing of OAG services

• Strengthen stakeholder relationships

• Continued professional development/education

• Knowledge-sharing initiatives

• Participate in the IFMS project

• Formalise OAG link to SCOPA & PCs

Governance StructuresLegislative Authority Executive Authority Judicial Authority

President Deputy President Ministers National Council of Provinces

(90 Delegates) Deputy Ministers

Constitutional Court

Supreme Court of AppealHigh CourtsMagistrates’ Courts

Judicial Service Commission

National Level

Provincial Level

Local Level

Provincial Government

Provincial Legislature

Premier Members of Executive Council

Executive Council

Executive Authority

Legislative Authority

6 Metro’s 39 District Councils 239 Municipalities

National Assembly (350 – 400 Members)

Parliament Cabinet

Role of SCOPA

Committee should continue to fulfill its important role of “Protector of the Public Purse”

Consider Annual Reports focusing on:

• Issues raised in reports of the Auditor-General/External Audits

• Interrogation and evaluation of instances of unauthorised expenditure

• Pronounce on unauthorised expenditure timeously

• Interrogation of instances relating to Irregular and Fruitless and Wasteful Expenditure

Role of SCOPA (2)

• Risk Management, Financial management, Internal

Control (Including Internal Audit) and Personnel

Management Systems

• Supply Chain Management (particularly large tenders

and PPP deals)

• Disposal of significant assets and major financial or

related losses suffered

• Corporate Governance issues within Departments

and Entities

• Consolidated Financial Statements of Government

Role of the Portfolio Committees

Portfolio Committees should consider Annual Reports focusing on: • Technical quality of Annual Reports produced by

Departments and Entities• Actual performance (non financial ) against targets

specified in Budgets and Strategic Plans• Quality of performance information as highlighted by

an audit of performance information• The Economy, Efficiency and Effectiveness on

Service Delivery• Impact of under- or over-expenditure on Service

Delivery

Link Between PCs and SCOPA

• Oversight process should give a complete picture of

entities performance

• Committees of Parliament should not work in silos

• SCOPA should bring key issues to the attention of

Portfolio Committees

• Portfolio Committees should share info with SCOPA

• Primary linkage should run from Portfolio Committee

to SCOPA

Proposed interface

• Regular (Quarterly?) meeting between SCOPA and National Treasury

• Participate in Oversight Hearings and Supply Information (Reporting requirements, Accounting Policies, etc)

• Respond to SCOPA Resolutions of a general nature regarding financial management (AG recommendations)

• Submission of Quarterly Consolidated Internal Audit Reports (Including Risks Identified)

Proposed interface (2)

• Reports on Unauthorised Expenditure– Approval/Non approval– Additional Funding/Available Funds

• Interaction with SCOPA regarding Consolidated Financial Statements

• Review & prioritisation of audit issues

THANK YOU