CAPE TOWN – Auditor-General (AG) Terence Nombembe today commended government departments and entities for registering a steady but noticeable move away from poor audit findings.
Presenting the 2009-10 audit results to Parliament, the AG said he was pleased by the commitments made by the executive and legislative leadership in further improving audit results at all spheres of government. In an attempt to support leadership and ensure that undertakings made by government leadership are implemented, his office will now monitor progress made by those he audits on a quarterly basis “instead of only coming to audit after a year and still find that the problem areas highlighted in the previous audit cycle are still intact”.
Nombembe’s report shows that capital assets remain the major reason why most departments still get poor audit results. The AG has urged oversight structures to assist departments to pay special attention in addressing this problem.
“While we appreciate that the work on resolving the matters pertaining to immovable assets by the ministerial task team is still ongoing, it is of concern that the inadequate maintenance of asset registers for movable assets continues to be a problem. Public entities, however, show a steady improvement in this area,” says Nombembe.
Other key internal control shortcomings that limit government from achieving clean audits relate to reporting on predetermined service delivery objectives and compliance with laws and regulations; supply chain management; and the occurrence of material misstatements in the financial statements submitted for audit.
Nombembe says the capacity of departments to manage their financial and performance information and comply with laws and regulations “is further eroded by shortcomings in human resource management at 71% of departments and the lack of IT governance frameworks at 82% of departments”.
“The audit outcomes are an indicator that the leadership tone on human resource capacity and the monitoring of action plans is crucial. Basic reporting disciplines, such as proper record keeping, regular processing of transactions and reconciliations, preparation of monthly reporting and controls over compliance with fiduciary responsibilities, also require the leadership’s attention. Monthly monitoring of these key controls will enhance the level of accountability to executive authorities and improve the quality of reporting on financial and service delivery information. Strengthening governance structures such as internal audit and audit committees will further complement the leadership’s monitoring in this regard.

Provincial government audits

The audit outcomes of provincial departments for the current year generally showed a steady reduction in audit qualifications. This positive trend is, however, distorted by the continued deterioration in the education, health and public works sectors in five provinces, as evidenced by the disclaimers or adverse opinions of 8% (2008-09: 5%) of departments.

Public entities (provincial)

For public entities the trend is a steady improvement towards clean audits with 28% (2008-09: 16%) achieving this status. This is informed by a reduction in audit qualifications to 12% (2008-09: 25%) and unqualified opinions with internal control shortcomings to 54% (2008-09: 48%). Disclaimers and adverse opinions for public entities improved to 6% (2008-09: 12%).
“We will continue to make every effort to collaborate with all spheres of government in order to accelerate the implementation of actions and contribute towards strengthening our country’s democracy,” Nombembe concludes.

MEDIA NOTE: The Consolidated General Report is available on www.agsa.co.za

ABOUT THE AGSA: The Auditor-General of South Africa (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 will be celebrating its 100-year public sector auditing legacy this year (2011).