REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS OF THE SOUTH AFRICAN HUMAN RIGHTS COMMISSION FOR THE YEAR ENDED 31 MARCH 2004

1. AUDIT ASSIGNMENT

The financial statements as set out on pages XX to XX, for the year ended 31 March 2004, have been audited in terms of section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), read with sections 3 and 5 of the Auditor-General Act, 1995 (Act No. 12 of 1995) and section 16(2) of the Human Rights Commission Act, 1994 (Act No. 54 of 1994). These financial statements, the maintenance of effective control measures and compliance with relevant laws and regulations are the responsibility of the accounting officer. My responsibility is to express an opinion on these financial statements, based on the audit.

2. NATURE AND SCOPE

The audit was conducted in accordance with Statements of South African Auditing Standards. Those standards require that I plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

Furthermore, an audit includes an examination, on a test basis, of evidence supporting compliance in all material respects with the relevant laws and regulations, which came to my attention and are applicable to financial matters.

3. AUDIT OPINION

In my opinion, the financial statements fairly present, in all material respects, the financial position of the South African Human Rights Commission at 31 March 2004 and the results of its operations and cash flows for the year then ended, in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended.

4. EMPHASIS OF MATTER

4.1 Late submission of the financial statements

In terms of section 40(1)(c)(i) of the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) the accounting officer must submit financial statements within two months after the financial year to the Auditor-General for audit. The financial statements were only submitted on 7 July 2004.

4.2 Reconciliations

General ledger reconciliations in respect of bank and cash balances, salaries and wages accounts receivable, accounts payable, fixed assets and projects were not prepared on a monthly basis throughout the period, and were only compiled subsequent to the year-end.

4.3 Staff advances

For the year under review, the staff advance policy was not adhered to. Some deviations from the policy were:

• Staff loans were repaid in more than three installments.

• In certain instances the advances granted exceeded the net salary of the recipient.

• Employees were not taxed on fringe benefits received.

• Staff members received more than one advance during the year under review.

4.4 Internal audit and audit committee

Section 38(1)(a)(ii) of the PFMA prescribes that the accounting officer is inter alia responsible for maintaining a system of internal audit under the control and direction of an audit committee. Our audit identified the following:

4.4.1 Internal audit

4.4.2 Audit committee

In addition to its responsibilities in terms of section 38(1)(a)(ii) the audit committee did not fulfill its mandate in terms of the draft audit committee charter:

• The audit committee charter was not approved.

• The audit committee did not evaluate the effectiveness of the internal audit for the period under review.

4.5 Supply chain management

In terms of section 76(4)(c) of the PFMA the National Treasury may make regulations or issue instructions applicable to all institutions to which this Act applies concerning the determination of a framework for an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective.

On 5 December 2003 the National Treasury issued regulations regarding a framework for supply chain management in terms of section 76(4)(c) of the PFMA (Government Gazette No. 25767). At 31 March 2004, the Commission did not develop and implement a framework for supply chain management.

5. APPRECIATION

The assistance rendered by the staff of the South African Human Rights Commission during the audit is sincerely appreciated.

lmran Vanker

for Auditor-General

Johannesburg

4 October 2004