With the exception of seven public entities that stringently implemented remedial administrative plans to achieve clean audits, the overall 2011-12 audit results for Gauteng have regressed, including those of the Gauteng Office of the Premier and the Gauteng Provincial Legislature, Auditor-General (AG) Terence Nombembe announced today.

One public entity sustained its clean audit outcome from the previous year. The audit outcomes of five entities improved from financially unqualified with findings to a clean audit opinion. The AG said that these entities had achieved their impressive results because their leadership took heed of the previous year’s audit recommendations and consistently monitored the monthly financial disciplines, such as reconciliations, through clearly defined processes.

The sustained and improved audit outcomes of entities can also be attributed to the following:

• The finance units were adequately staffed with officials possessing the required skills and competencies.
• Effective action plans were implemented and monitored to address the prior year’s audit findings.

The AG cautioned, however, that despite the provincial leadership’s strong commitment to improve the provincial administration’s internal controls, the majority of these remedial measures have not been implemented. This, in turn, led to the province’s regressed audit outcomes.

The key causes of the province’s regressed audit results are the following:

• Lack of financial disciplines to ensure that financial statements, with proper supporting documentation, were prepared on a regular basis.
• Inadequate controls to prevent and detect non-compliance with laws and regulations, mainly the contravention of supply chain management processes.
• Lack of consequences for poor performance and transgressions.
• Audit committees and internal audit units not adding value.

Premier announces plans to improve good governance
The AG said that he was pleased by Premier Nomvula Mokonyane’s announcement that her administration had introduced plans to improve governance in the province.
During her state of the province address, the premier said that in their attempt to build an effective government, they had introduced an outcomes-based approach to planning, budgeting and performance management.

Through stronger performance monitoring and evaluation, the premier announced, they “have been able to quickly identify areas of underperformance, take corrective action and improve accountability for performance ... this has also helped with consequence management for senior managers and those responsible for delivery”.

Nombembe says that these administrative control measures will have a significant impact in improving audit results if applied effectively.

The AG reiterated his office’s commitment to assisting auditees, highlighting that following the launch of government’s Operation clean audit in July 2009, he had introduced regular engagements with municipal, provincial and national political leaders to share his office’s assessment of key controls in the areas mentioned above and to identify threats to clean audits. These engagements helped to create greater awareness of matters that require urgent attention to realise clean administration in all spheres of government.

Issued by:
Auditor-General of South Africa
Telephone: (012) 422 9880

Media note:
The complete General report on the PFMA audit outcomes of Gauteng is available on www.agsa.co.za.

About the AGSA:
The AGSA is the country’s supreme audit institution. It is the only institution that, by law, has to audit and report on how government is spending taxpayers’ money. This has been the focus of the AGSA since its inception in 1911 – the organisation celebrated its 100-year public sector auditing legacy in 2011.

ADDITIONAL MEDIA INFORMATION
About the Gauteng government
The Gauteng provincial government comprises 35 auditees, namely 13 departments (which include the legislature and the revenue fund) and 22 public entities.
The public entities include 15 provincial public entities and seven trading entities. Overall, the number of public entities remained unchanged since the 2010-11 financial year. However, one new public entity was established and one public entity was deregistered.
Some notable highlights

• Five (15%) auditees progressed to clean audits, while only one (3%) sustained its clean audit status from the previous year and one new entity achieved a clean audit outcome. This resulted in seven (21%) public entities in total receiving clean audit opinions. Auditees lack the systems to sustain and progress to clean audit opinions due to inadequate controls to ensure compliance with laws and regulations and predetermined objectives.
• Seventeen (50%) auditees retained an audit opinion of financially unqualified with findings and only one (3%) improved to this category, while seven (21%) regressed to this category due to a lack of adequate implementation and monitoring of controls.
• One public entity regressed from financially unqualified to financially qualified, due to a failure to design and implement adequate systems of revenue management. One department remained qualified in 2011-12 due to inadequate controls to address all prior year qualification findings.
• One entity improved from qualified to financially unqualified.

Summary of audit outcomes for the current and previous year