Ninth Report of the Standing Committee on Public Accounts, dated 5 February 2003:

The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Financial and Fiscal Commission for the year ended 31 March 2002 [RP 132-02], tabled in Parliament on 28 August 2002 and referred to it, reports as follows:

1. Audit opinion
The Committee commends the Chairperson and management of the Financial and Fiscal Commission (FFC) for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Emphasis of Matter
The Committee notes that the Auditor-General has raised one issue of concern under "Emphasis of Matter". This issue requires the attention of management, and the Committee deals with it in paragraph 4 below.

3. Tabling of Annual Report
The Committee commends the management of the FFC for having timeously tabled its Annual Report, thereby complying with section 65(1)(a) of the Public Finance Management Act.

4. Internal audit
The Committee notes:
* That the FFC obtained Treasury approval on 22 October 2002 for sharing the internal audit function with National Treasury.
* That the internal audit function was not operational during the financial year under review because National Treasury had obtained exemption until 30 April 2002.
* That at the time of completing its Report (June 2002), the FFC was still waiting for Treasury to complete its internal processes of contracting an appropriate service provider.

Since the Committee considers the establishment of the internal audit function as vital for the development of a fraud prevention plan, necessary for the detection and prevention of fraud, it trusts that this outstanding matter will be resolved speedily, and recommends that the Auditor-General report thereon in his next report on the FFC.

5. Matters arising from management report
(a) State of financial affairs
The Committee notes:
* That the accounts reflect a net surplus of R422 963, which has been earmarked for capital expenditure during the 2002-03 financial year.
* That estimates suggest a more sustainable budget level for the FFC to be in the region of R10 million per annum.
* That a significant part of the expenditure is related to personnel, together with the contracting in of researchers, analysts and various experts, whose inputs are essential to the FFC.

(b) IT-server network
The Committee notes that the revamping of the FFC's IT-server network was originally earmarked for implementation during the 2001-02 financial year, but that the implementation will only be effected during the 2002-03 financial year.
The Committee recommends that the Auditor-General report thereon in his next report on the FFC.

6. Decision on hearing
Having considered the Report of the Auditor-General, as well as having dealt with the Matter of Emphasis raised by him, the Committee recommends that no hearing be held on the Financial and Fiscal Commission for the financial year under review.

Report to be considered.