DRAFT QUESTIONS: POSSIBLE EXAMPLES (COMPILED BY RESEARCHER)
RP214/2003 AUDIT OUTCOMES:
ASSET MANAGEMENT:
Your report RP214/2003 Pg.2 par.2 highlights some widespread problems regarding asset management by departments and their entities. Incomplete asset register is a major concern to this committee, as some officials in most government departments and provincial level do not even know about the existence of their assets. The PFMA has been in operation for 3 years now and the asset management is coming from a number of years ago that principally incomplete and inaccurate asset registers.
Questions:
1. What is your comment on the above statement and what are the major reasons given to your auditors when auditing the departments? For how long do we still have to see this chronic problem?
2. What action plan do you have in place to rectify the situation? And indicate to the committee how the departments have performed against such plan?
3. Can we perhaps AG highlights the issue of high vacancy rate among senior management and give that as an excuse of non-compliance with the PFMA?
INTERNAL CONTROLS:
It appears that not all departments nationally and provincially had adequate internal control policies and procedures in place. In most of the national departments and the provincial departments the auditors could not rely on their internal controls. Internal control is a fundamental feature of financial management and is critical to the overall control of the organization and ultimately, the quality of services and performance of functions. On page 13 Par.1.4 shows that a number of recurring issues have been reported during 2002/2003 financial year. S38 (1) of the PFMA states that it is the responsibility of the accounting officer to ensure that the department had, effective, efficient and transparent systems of financial and risk management and internal control
Questions:
1. What is the response of management on these issues?
INTERNAL AUDIT:
The auditor's could not put reliance on the work done by internal auditors due to the fact that some Internal Auditors have different focus areas, lack of internal audit reports and failure to meet the requirements of the Institute of Internal Audit Standards. The Internal Audit functions have a vital role in the assessment of risks and the effectiveness of the internal control system, including performance audits and value for money auditing and reporting.
Questions:
1. What is the role of the AG in this regard and what is their action now to ensure that the Internal Auditors do comply with the Standards required?
2. What reasons were provided to the AG in terms of Internal Audit function by various departments?
3 Do auditors sit with Internal Auditors when they do planning the beginning of the financial year?
4. What are the lines of communications between the AG"s office and the Internal Auditors, in order to prevent future non reliance
AUDIT COMMITTEE:
The primary role of the Audit Committee is to advice the Board that in its opinion, the auditors have performed a quality audit and are regarded as independent. Audit Committee should have an appropriate understanding of the business to appreciate the risks in the business and the internal control environment.
Questions:
1. When doing audit do you normally communicate with the Audit Committees, and what are your major findings that you can share with the committee?
2. In the case of STATSA the Audit Committee believes that you were too soft with the Agency. You decided to give the entity the qualified audit opinion instead of Adverse/Disclaimer. Are there any significant changes with the said department from 2001/2002 to 2002/2003 financial year?
DORA: (Act 1 of 2000) requires the provincial departments to submit reports to the national departments for review purposes and should be submitted timeously.
Although the departments do have framework in place to monitor the conditional grants transferred to the provinces, there are certain limitations in this monitoring framework which result amongst others from the lack of capacity in some clusters of the national departments to perform effective monitoring through physical inspection and is deemed necessary for certain grants that are transferred. The lack of skills in some clusters of the departments to properly evaluate information submitted in the reports by provincial departments and to identify any possible transgressions of the conditions attached to the grants. On Pg.16 table 3 a list of departments reported on transfer payments and problems in complying with the requirements of the DORA. The major problem revolves around the monitoring and review systems by the national departments to their provincial departments.
Questions:
1. Could you explain to the committee what measures are implemented by the transferring departments to ensure that controls over condition~ grants are improved?
2. Funds were transferred to provinces even where trends reflected very low spending. Are there any intervention mechanisms in place to address this problem, as it cannot be allowed anymore?
3. Is the National Treasury aware of these problems?
4. Can we highlight this problem to the lack of required skills or what else can it be?
UNAUTHORIZED EXPENDITURE:
The PFMA defines unauthorized expenditure as an
(a) overspending of a Vote or a main division within a vote
(b) expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in accordance with the purpose of the main division
Questions:
1. How do auditors differentiate between the unauthorized expenditure and Fruitless/wasteful expenditure?
2. Can this committee be informed of what exactly causes the unauthorized expenditure if departments do properly plan
3. If the unauthorized expenditure has not been approved by SCOPA, is there a way that a particular department can function without incurring more unauthorized expenditures?
HUMAN RESOURCES:
The prevalence of senior management vacancies in national and provincial departments limits the capacity of government to deliver much-needed services and that the vacancies also limit the ability of departments to spend all monies allocated to them.
Questions:
1. Despite low salaries what are other major contributing factors to the lack of necessary skills in government?
2. How long do departments take to fill the vacancies?
3. In your view AG, do you think that SAMDI is playing a major role in assisting the departments to acquire the relevant skills? If not what advices can you offer to departments?
4. What types of training programmes do they budget for, is it accredited training or what?
PUBLIC ENTITIES:
On pages 27 Par. 3.3, Pg.28 and Pg.29, the AG reveals major problems relating to the submission of information to the office by the entities for audit purposes. PEMA requires that any entity that receives money from the government must comply with the requirements of the Act and this provides evidence that the lack of submission of annual reports is a widespread and points to serious concern accountability.
Questions:
1. Are the ministerial portfolio heads aware of this problem?
2. What are they planning to do to overcome these problems?
NATIONAL TREASURY
The national treasury provides financial and administrative services within government and externally through the Treasury Department and a number of Provincial agencies. addition, the department is responsible for the administration of a number of funds. NT has responsibility of ensuring where the money goes and basically the responsibility of ensuring accountability.
Questions:
1. How do you think accountability can be improved? And to what extent does this impact on a service delivery as you can see that there are Red Highlighted departments by the AG for almost a continuous period of 3 years in some other instances?
2. What remedies do you have to improve the situation?
3. How many departments and their respective entities are still lacking behind the implementation of the PFMA and what are the reasons?
4. Do you have monitoring mechanisms in place to deal with such departments?
BUDGET:
Before any funds can be allocated to departments, a comprehensive business plan should be submitted consisting of all departments' activities for the year or 3 years according to the MTEF.
Questions:
I. What is the impact on National Treasury if departments continuously spend less / over spend?
2. Does National Treasury verify justification of the Budget Votes? Has it ever happened that departments are given amount of money to deliver services in a form of Budget Vote then after those services there are still a substantive amount of money left?
3. Does it deliberately happen that departments inflate their Budget Votes? And what impact of the support of portfolio committees has on the approval of department Budget Votes?
4. Does National Treasury have any role on quality assurance basically on Capital Projects e.g. Building of roads where money could be invested in the project. Is it the role of the National Treasury in not whose role it is?
5. The AG has raised the issue of DORA continuously, how do you view this matter as it concerns this committee?