2019-20 Integrated Annual Report
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INTEGRATED ANNUAL REPORT TWENTY TWENTY AUDITOR-GENERAL OF SOUTH AFRICA INTEGRATED ANNUAL REPORT 2020 THE 2020 REPORT THEME This integrated The public debate about the failure of accountability annual report is available mechanisms in the public sector led to the amended on the AGSA website Public Audit Act enhancing the auditor-general’s www.agsa.co.za powers to enable accountability. The powers allow us to take binding remedial action if material irregularities are not appropriately addressed and, where necessary, issue a certificate of debt to recover lost money from accounting officers or authorities. We accept our powers with the seriousness that they deserve and, in turn, we subject our use of these powers to full scrutiny, ensuring that we are held to 2 the same strict level of accountability as those Preamble to the Constitution we audit. ABOUT 3 THIS REPORT Letter to the Speaker As part of our legislated accountability, we provide Parliament with a detailed report of the Auditor- General South Africa’s annual activities. We also 4 align to the following best practices, standards and legislation: Performance snapshot • Public Audit Act 25 of 2004 (PAA) • Global Reporting Initiative (GRI) standards • International Integrated Reporting <IR> framework • King IV principles and codes • ISSAI 12 • Sustainable development goals This report is based on our annual activities measured against our commitments detailed in our 2019-22 strategic plan and budget. We welcome feedback on our integrated annual report to continue providing pertinent information in our reporting. Written feedback can be sent to [email protected] or reach out on twitter at @AuditorGen_SA 1 PREAMBLE TO THE CONSTITUTION We the people of South Africa, Recognise the injustices of our past; Honour those who suffered for justice and freedom in our land; Respect those who have worked to build and develop our country; and Believe that South Africa belongs to all who live in it, united in our diversity. We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the republic to: • Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights; • Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law; • Improve the quality of life of all citizens and free the potential of each person; and • Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations. 2 AUDITOR-GENERAL OF SOUTH AFRICA INTEGRATED ANNUAL REPORT 2020 LETTER TO THE SPEAKER Ms Thandi Ruth Modise Speaker of Parliament PO Box 15 Cape Town 8001 30 September 2020 Honourable Speaker Modise Report to the Speaker in terms of section 10(2) of the Public Audit Act 25 of 2004 It is an honour to submit my integrated annual report, which includes the audited financial statements for the financial year ended 31 March 2020, as required by our governing legislation. It gives me great pleasure to announce that the audit committee, established in terms of section 40 of the Act, is satisfied with the Auditor-General of South Africa’s (AGSA) audited financial statements and unmodified audit opinion. This report presents both our financial results and a review of our performance against predetermined objectives. I respectfully draw your attention to section 41(5) of the Public Audit Act, which requires that we submit our report within six months of the end of the financial year. I therefore request that this report be tabled in Parliament by 30 September 2020. Yours sincerely THEMBEKILE KIMI MAKWETU Auditor-General 3 2019-20 INTEGRATED ANNUAL REPORT VALUE-ADDING AUDITING Implemented the MI process We audit at 16 national and 14 of the 21 section provincial, and 9 local schedule 2 institutions Resistance from certain government auditees with 2 in the pipeline auditees to our audit messages and opinions increased: Identified 57 during the national Integration continued 45 MIs in 2019-20 and provincial audits and worth an estimated to gain momentum 41 during the local and in some instances government audits R4,25 billion produced audit efficiencies Successfully executed 1 070 audits Deployed a multi-disciplinary team Requests for investigations to facilitate government’s Achieved increased by 126% preventative controls 76% compliance with from 34 to 77 on covid-19 procurement quality standards VISIBILITY FOR IMPACT Our media briefings have Status-of-records-review led to widespread coverage was implemented on various media in 91% of instances platforms (print, Played a leading role broadcast, online, social in the Intosai and media and community) Afrosai-e capacity- Portfolio committees development efforts used our insight to hold auditees accountable Our citizen engagement efforts Collaborated with have increased the civil society to pilot a understanding of our social audit on delivering Scopa elevated key mandate and audit governance issues sanitation in an informal message settlement focusing on entities that did not submit financial statements The National Treasury used The auditor-general our audit insight to was awarded the help improve financial 2019 Abasa management in public sector Presidential Award 4 AUDITOR-GENERAL OF SOUTH AFRICA INTEGRATED ANNUAL REPORT 2020 PERFORMANCE SNAPSHOT VIABILITY R107million saved The R50 million Trained by pooling initiatives appropriation 2 263 employees on supported revenue from National Treasury the MI process optimisation did not materialise and had to be absorbed in our overhead costs Enhanced our Reduced overheads cybersecurity through cost initiatives containment Total recruitment strategies 949 appointments Ranked 5th on Universum’s most Internal progressions Debt owed to the AGSA attractive employers 74% internal by students studying R931 million, an appointees increase of 25%, with accountancy local government owing 42% of the whole Graduated 1 195 CAs since 1991 Successfully upgraded TeamMate R11 to TeamMate R12 VISION AND VALUES DRIVEN Achieved 62% of our outsourced Closed B-BBEE level 1 status audit work allocated to 94% of our audit for the second year 51% black-owned findings in a row firms R686 million spent 21% spent on Received a favourable rating on outsourced work 30% black women- on the status of ethics in owned firms our organisation 90% of our audit work to Graduated B-BBEE levels 1 Received and 2 firms 11 enterprises from our ESD programme 23 complaints through the whistle blowing mechanism Created 81 jobs through ESD 5 CONTENTS SECTION ONE SECTION THREE 10 The auditor-general’s message 46 Integrated annual report profile 14 The deputy auditor-general’s overview of 46 Reporting cycle and approach performance 46 Reporting principles, policies and practice 22 Executive committee 47 External assurance on this report 47 Approval of the report 48 The AGSA strategy SECTION TWO 49 Conditions under which we operate 28 Who we are 51 Strategic risks 28 Our mandate and legal form 52 Value creation 28 Public Audit Act amendments 53 Our business capitals 30 Scale of the organisation 35 Corporate governance framework SECTION FOUR 42 External charters, principles and initiatives that we subscribe to or endorse 64 Accountability report – implementing the MI process 66 Implementation approach 66 Phase 1 – implementation 71 Phase 2 – preparation effort 72 Stakeholder engagement 73 Conclusion on the accountability report 6 AUDITOR-GENERAL OF SOUTH AFRICA INTEGRATED ANNUAL REPORT 2020 SECTION FIVE SECTION SEVEN 76 Reporting on performance 209 References 76 Value-adding auditing (V1) 210 Acronyms and abbreviations 94 Visibility for impact (V2) 212 AGSA strategic objectives 114 Viability (V3) 213 2019-20 GRI content index 138 Vision and values driven (V4) 216 International Integrated Reporting Index 217 Sustainable development goals SECTION SIX 158 Audit committee’s report 160 Remuneration committee’s report The reports and statements that follow comprise the financial statements 162 Deputy auditor-general’s responsibilities and approval 163 Independent auditor’s report to Parliament 167 Independent assurance practitioner’s limited assurance report to Parliament on selected key performance indicators 170 Statement of financial position 171 Statement of surplus or deficit and other comprehensive income 172 Statement of changes in equity 173 Statement of cash flows 174 Notes to the financial statements – Accounting policies 182 Notes to the financial statements 7 8 AUDITOR-GENERAL OF SOUTH AFRICA INTEGRATED ANNUAL REPORT 2020 SECTION ONE 10 The auditor-general’s message 14 The deputy auditor-general’s overview of performance 22 Executive committee 9 THE AUDITOR- GENER AL’S MESSAGE THEMBEKILE KIMI MAKWETU AUDITOR-GENERAL No matter where we start, we make sure that the end is always better than the beginning. Accountability is at the heart of the level of trust in any government and is an ultimate indicator of the AGE: 54 administration’s capacity to manage public resources in QUALIFICATIONS: CA(SA) a way that benefits the citizens it serves. Not knowing APPOINTMENT: 2013 what happens to public money leads to mistrust in EXPERIENCE: the government. The year 2020 will be remembered Kimi was a director in Deloitte’s forensic unit before as a time of upheaval for the world, our country and his appointment as deputy auditor-general. In 2013, our organisation. It introduced great uncertainty and Kimi was appointed as South