PFMA 2019-20 Report

on national and provincial audit outcomes 133 in the performance reports is useful and reliable enough to enable oversight bodies, the public and other users of the reports to assess the performance of the auditee. The programmes and objectives we select are those that are important for the auditee to deliver on its mandate. In the audit report, we report findings that are material enough to be brought to the attention of these users. As part of the annual audits, we audit the usefulness of the reported performance information to determine whether it is presented in the annual report in the prescribed manner and is consistent with the auditee’s planned objectives as defined in strategic and annual performance plans. We also assess whether the performance indicators and targets set to measure the achievement of the objectives are: • well defined (the indicator needs to have a clear, unambiguous definition so that data can be collected consistently, and is easy to understand and use) • verifiable (it must be possible to validate the processes and systems that produce the indicator) • specific (so that the nature and the required level of performance can be clearly identified) • time bound (the time period or deadline for delivery must be specific) • measurable (so that the required performance can be measured) • consistent (with the objective, measures and/or targets) • relevant (so that the required performance can be linked to the achievement of a goal). We further audit the reliability of the reported information to determine whether it can be traced back to the source data or documentation and whether it is accurate, complete and valid. When is human resource management effective? Human resource management refers to the management of an auditee’s employees or human resources. Human resource management is effective if adequate and sufficiently skilled staff members are in place and if their performance and productivity are properly managed. Our audits include an assessment of human resource management, focusing on the following areas: ■ management of vacancies ■ stability in key positions ■ finance department resourcing. Our audits also look at the management of vacancies and stability in key positions, the competencies of key officials, performance management, and consequences for transgressions, as these matters directly influence the quality of auditees’ financial and performance reports and their compliance with legislation. Based on the results of these audits, we assess the status of auditees’ human resource management controls. When are internal controls effective and efficient? A key responsibility of accounting officers, senior managers and officials is to implement and maintain effective and efficient systems of internal control. We assess the internal controls to determine the effectiveness of their design and implementation in ensuring reliable financial and performance reporting and compliance with legislation. This consists of all the policies and procedures implemented by management to assist in achieving the orderly and efficient conduct of business, including adhering to policies, safeguarding assets, preventing and detecting fraud and error, ensuring the accuracy and completeness of accounting records, and timeously preparing reliable financial and service delivery information. To make it easier to implement corrective action, we categorise the principles of the different components of internal control under leadership, financial and performance management, or governance. We call these the drivers of internal control . The key basic controls that auditees should focus on are outlined below. PROVIDING EFFECTIVE LEADERSHIP In order to improve and sustain audit outcomes, auditees require effective leadership that is based on a culture of honesty, ethical business practices and good governance to protect and enhance the interests of the auditee. AUDIT ACTION PLANS TO ADDRESS INTERNAL CONTROL DEFICIENCIES Developing and monitoring the implementation of action plans to address identified internal control deficiencies are key elements of internal control, which is the responsibility of heads of departments, chief executive officers and their senior management team.