government departments and public entities
25 October 2007
Johannesburg - Auditor-General (AG), Terence Nombembe, today briefed the
Gauteng Legislature on the province's audit outcomes and trends for the 2006/07
financial year, and raised his concern over the level of financial management
in government departments and public entities.
The purpose of the AG's analysis, a comprehensive assessment of the state of
financial and performance information in the public sector, is to provide an
overview of the audit outcomes at provincial department and public entity
level.
Nombembe has embarked on a country-wide road show presenting his overview of
the national and provincial government audits to the various legislatures and
the national Parliament. The emphasis will be on what underpins the audit
results of government departments in the 2006/07 financial year.
According to the information available at the time of our analysis, the
Gauteng government comprised of 14 departments and 17 public entities.
Overview of audit opinions
Of the 16 provincial departments, only one (7%) department received an
unqualified financial opinion without significant concerns on any other
matters. One (7%) department received a qualified audit opinion, while the
reports of 12 (86%) departments that received an unqualified financial opinion
had concerns raised on 'other matters.'
The provincial department with financial qualifications is Economic
Development. On the other hand the 12 departments that were unqualified
financially, but had concerns in areas of internal control, governance and
legislative non-compliance are Agriculture, Conservation and Environment,
Community Safety, Education, Gauteng Provincial Treasury, Gauteng Shared
Service Centre, Health, Housing, Local Government, Office of the Premier,
Public Transport, Roads and Works, Social Development, and Sports, Arts,
Culture and Recreation.
The provincial Legislature had neither financial qualifications nor
significant other matters (clean unqualified opinion).
Of the 17 public entities included in our analysis, five (29%) received a
qualified audit opinion, while 10 (59%) that received an unqualified financial
opinion had concerns raised on 'other matters,' only two (12%) public entities
received an unqualified financial opinion without significant concerns on any
other matters.
The public entities with financial qualifications are Blue Catalyst
Investment, Blue IQ Investment Holdings (Pty) Ltd, Gauteng Government Motor
Transport Trading Account, Gauteng Housing Fund, and Gauteng Liquor Board.
On the other hand, the 10 public entities that were unqualified financially,
but had concerns in areas of internal control, governance and legislative
non-compliance are Gauteng Economic Development Agency, Gauteng Enterprise
Propeller, Gauteng Film Office, Gauteng Medical Supplies Depot, Gauteng
Partnership Fund Trust, Gauteng Tourism Authority, Cost Recovery Trading
Entity, Cradle of Humankind World Heritage Site Trading Entity, QDinokeng
Trading Entity, and Impophoma Infrastructure Support Entity.
The two public entities that had neither financial qualifications nor
significant other matters (clean unqualified opinion) are the Gauteng Gambling
Board, and the Xhasa Accounting and Technical Centre.
Says Nombembe: "We have tailor-made our audit reports and systems to track
and identify root causes of problem areas in all departments. We also make
recommendations of how departments can improve their governance and financial
control systems. We have embarked on these Legislature briefings with the
belief that our analyses will help guide both the legislators and management to
improve their internal control weaknesses. Most of these problems are basic
internal control compliance issues that require effective monitoring by the
leadership so that they could be solved immediately, while management is
sorting out structural internal control issues that seem to be confined
provincially to asset management and a few departments that have challenges
beyond asset management."
"The critical message we are leaving with the legislators and the executive
during our briefings is that it is possible to obtain an unqualified audit
report if the basics in control systems are in place and constantly monitored
by the leadership."
Nombembe will present his overall findings on local government during May
2008.
Contact:
Africa Boso
Media Liaison: Auditor-General of South Africa
Tel: 012 426 8273
Cell: 082 889 9527
E-mail: africab@agsa.co.za
Issued by: Auditor-General of South Africa
25 October 2007
