Presentation for APP review to Portfolio Committee 14 April 2015

Reputation promise/mission

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

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Topics to discuss

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Background

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Proactive auditing by the AGSA

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Roles and responsibilities

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Roles and responsibilities:

Ministers/MECs Accounting officer or head of an institution (assisted by chief information officer)

Line managers Other officials

To ensure that institutions under their control set up appropriate performance information systems

Accountable for establishing and maintaining the systems to manage performance information

Accountable for establishing and maintaining the performance information processes and systems within their areas of responsibility

Responsible for capturing, collating and checking performance data relating to their activities

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The functions of internal audit relevant to performance information and management should typically include the following:

Monitoring of internal controls relating to performance information processes

Examination of the usefulness and reliability of performance information

Review of critical performance management activities Review of compliance with laws and regulations relevant to

performance planning, management and reporting Risk management

Also refer to Treasury Regulations (TR) 3.2.11 - 3.2.12 (applicable to departments) and TR 27.2.10 -27.2.11 (applicable to public entities) for the responsibilities of the internal audit function

The functions of internal audit relevant to performance information and management should typically include the following:

Monitoring of internal controls relating to performance information processes

Examination of the usefulness and reliability of performance information

Review of critical performance management activities Review of compliance with laws and regulations relevant to

performance planning, management and reporting Risk management

Also refer to Treasury Regulations (TR) 3.2.11 - 3.2.12 (applicable to departments) and TR 27.2.10 -27.2.11 (applicable to public entities) for the responsibilities of the internal audit function

Role of internal audit

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Definitions

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Annual audit of reported actual performance against Annual audit of reported actual performance against predetermined objectives, indicators and targets as predetermined objectives, indicators and targets as contained in the annual performance report contained in the annual performance report

Annual audit of reported actual performance against Annual audit of reported actual performance against predetermined objectives, indicators and targets as predetermined objectives, indicators and targets as contained in the annual performance report contained in the annual performance report

It is an integral part of the annual regularity audit process, confirming –

• compliance with related laws and regulations• usefulness of performance information• reliability of performance reporting

It is an integral part of the annual regularity audit process, confirming –

• compliance with related laws and regulations• usefulness of performance information• reliability of performance reporting

Audit of predetermined objectives defined

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AppropriateAvoid unintended consequences and encourage service delivery improvements

AppropriateAvoid unintended consequences and encourage service delivery improvements

ReliableMust be accurate enough for its intended use and respond to

changes

ReliableMust be accurate enough for its intended use and respond to

changes

RelevantMust relate logically and directly to an aspect of the institution's mandate

RelevantMust relate logically and directly to an aspect of the institution's mandate

Well definedClear, unambiguous definition so that data will be collected consistently and will be easy to understand and use

Well definedClear, unambiguous definition so that data will be collected consistently and will be easy to understand and use

VerifiablePossible to validate the processes and systems

VerifiablePossible to validate the processes and systems

Cost-effectiveUsefulness of the indicator must justify the cost of collecting the data

Cost-effectiveUsefulness of the indicator must justify the cost of collecting the data

Good performance indicators should be:

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SMART performance targets

SS

MM

AA

RR

TT

Nature and required level of performance can be clearly identified

Required performance can be measured

Realistic given existing capacity

Required performance is linked to achievement of goal

Time period/deadline for delivery is specified

PECIFICPECIFIC

EASURABLEEASURABLE

ELEVANTELEVANT

CHIEVABLECHIEVABLE

IME BOUNDIME BOUND

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Audit process

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ValidityValidity

AccuracyAccuracy

CompletenessCompleteness

Applicable to performance management and reportingApplicable to performance management and reporting

PresentationPresentationMeasurabilityMeasurability

RelevanceRelevance

Consistency Consistency

Compliance with regulatory Compliance with regulatory requirementsrequirementsCompliance with regulatory Compliance with regulatory requirementsrequirements

UsefulnessUsefulnessUsefulnessUsefulness

ReliabilityReliabilityReliabilityReliability

Audit criteria

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Understand and test the design and implementation of the performance management systems, processes and

relevant controls

Understand and test the design and implementation of the performance management systems, processes and

relevant controls 11

Test the measurability, relevance, presentation and consistency of planned performance information22

Audit approach

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Audit outcomes

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Programmes selected for review

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Programmes selected for review

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From the selected programmes in the APP, there were two major findings on the performance indicators and targets that were identified and reported to management.•There were 7 performance indicators that were identified to be not well defined and verifiable by the auditors.•There were 3 targets that were identified not to have been specific by the auditors.

On these two findings, management agreed with the auditors and either made the necessary changes or provided further clarity

See the attached annexure

From the selected programmes in the APP, there were two major findings on the performance indicators and targets that were identified and reported to management.•There were 7 performance indicators that were identified to be not well defined and verifiable by the auditors.•There were 3 targets that were identified not to have been specific by the auditors.

On these two findings, management agreed with the auditors and either made the necessary changes or provided further clarity

See the attached annexure

Overview of the outcome of the review and how management responded to the findings

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THANK YOU

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