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Auditor-General of South Africa: a recognised model organisation both locally and internationally

CAPE TOWN – Deputy Auditor-General Kimi Makwetu today presented Parliament with yet another set of positive annual results for the Auditor General of South Africa (AGSA) for the period 2010-11.
The annual report he presented, shows that the country’s supreme audit institution, which celebrates 100 years of existence this year, has maintained its illustrious track record of being a model organisation both locally and internationally.
The AGSA continued to lead by example in good governance, accountability and financial reporting in the public sector. The organisation obtained an unqualified audit opinion from its external auditors, Kwinana and Associates, for the year under review. Moreover, the AGSA continued to receive global recognition for the exemplary hosting of the XXth Congress of the International Organisation of Supreme Audit Institutions (INCOSAI) in November 2010. At the congress, the organisation was awarded the prestigious Jörg Kandutsch Award by the International Organisation of Audit Institutions (INTOSAI) for significant contributions in the field of public auditing. The organisation also demonstrated outstanding work as auditors to the United Nations.

Managing the AGSA to ensure financial viability

Amongst other noteworthy achievements, the AGSA continued to show improved financial results, an indication that the institution’s revised funding model is starting to yield tangible returns.
For example, the AGSA exceeded its net surplus target of 4% by achieving 7, 2% (R133 million) against a budget of R68, 6 million. Audit income for 2010-11 amounted to R1,850 billion against a budgeted R1,836 billion, while the AGSA continued to trade in a positive financial position with a 51% improvement in the closing cash balance of R352 million (2009-10: R233 million).
“During the year under review we focussed on the monitoring of the revised funding model implemented in 2009-10 to ensure that the organisation is run economically, efficiently and effectively in order to maintain financial stability. We closely monitored our margins, effectively managed our working capital, including debt collection, and optimised our contract work mix. For the past two years, we enjoyed a healthy cash flow position and were able to meet our ongoing financial obligations and improve the payment of creditors.”

Engaging stakeholders to encourage clean administration

The AGSA leadership continued to work closely with those charged with governance and oversight and to encourage them to focus the target of clean administration by 2014. Public Finance Management Act (PFMA) and Municipal Finance Management Act (MFMA) audit outcomes were presented to Cabinet, the National Assembly and the National Council of Provinces. These engagements resulted in commitments by leadership in government to strengthen oversight and to take decisive action towards the goal of clean administration. Meetings were also held with individual ministers, provincial leadership and local government leadership. These interactions centred around deficiencies in controls, audit findings on predetermined objectives and lack of compliance with laws and regulations at auditees. Such engagements, Makwetu says, are meant to improve audit outcomes and bring the goal of clean administration to a reality.

Contributing towards transformation

In its drive to support development of the auditing industry and broad based economic empowerment in the country, the AGSA increased its actual spend on private audit firms by 7% to R543 million, 57% of which was spent on the development and growth of emerging audit firms.
Through interventions such as bursary and trainee auditor schemes, the organisation also increased the pass rate of its audit professionals who passed their final qualifying examinations and completed their practical experience by 73% from the previous year, and retained 82% (138) of trainee auditors who had completed their final year of training. This contributed positively towards building a pool of auditing skills within the organisation.
“Overall, we are pleased with our performance. We believe that in all the initiatives we have undertaken in the year under review, we have contributed positively to the well-being of our country and its citizens. In the next financial year, we will focus our energies in ensuring that gains achieved in the previous years are sustainable,” concludes Makwetu.

About the AGSA

As the supreme audit institution, the AGSA, which turned 100 years on 12 May 2011, is responsible for the auditing of national and provincial state departments and administrations, all municipalities and any other institution or accounting entity required by national and provincial legislation to be audited by the AGSA.
The AGSA is answerable only to Parliament. It is held accountable by a number of parliamentary mechanisms, including the Standing Committee on the Auditor-General (SCoAG), which maintains oversight of the AGSA, and an Audit Committee, which ensures that the AGSA maintains sound financial and risk management and internal control systems. External auditors, Kwinana and Associates, are currently responsible for auditing the AGSA’s financial statements and performance information.
As required by the Public Audit Act (PAA), the AGSA has to submit to Parliament an annual report which includes audited financial statements. The report also incorporates performance information, measured against predetermined objectives, on how the AGSA performed in key areas, such as public sector auditing, employment equity and broad-based black economic empowerment.
MEDIA NOTE: The AGSA’s complete Annual Report is available on: www.agsa.co.za

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