4. Ms S T Ndabeni (ANC) to ask the Minister of Defence and Military Veterans:
What (a) plans and (b) mechanisms has she put in place to avoid a qualified audit opinion as was the case in the 2008-09 financial year? NO340E
This is the subject of a special meeting I requested with the Portfolio Committee on Defence and Military Veterans and I dealt at length with all these matters. However, as a follow up, the following are the steps undertaken by the Department of Defence.
The Acting Secretary for Defence together with the SAB & T + KPMG consortium has embarked on a project to clean the audit report of the Department of Defence.
The Scope of the Consortium covers the following resource areas;
b. Human Resources.
c. Logistics/Asset management.
d. Acquisition and Procurement; and
e. Information Technology.
2. The detailed scope for the project is as follows:
a. Clearing the audit report,
b. Review, enhance and design internal controls and assist with the implementation thereof;
c. Monitor and evaluate the effectiveness of the new controls;
d. Conduct DoD wide risk assessments and assist in implementing recommended Enterprise Risk Management Framework;
e. Empower IG Staff to effectively perform the internal audit function;
f. Impart knowledge and skills to DOD personnel through classroom and on-the-job training; and
g. Assist in the training and development of the compliance management section
Achievements to date
3. Accruals Workstream
a. The accruals process and procedure document has been completed.
b. The accruals chapter of the accounting manual has been drafted.
c. Detailed Accruals Training was presented to the DoD to explain the accruals concept. The training was provided to CMIS, DCC, DOD HQ, Defence Reserves, Military Police Division, Military Police Strategy and Planning Office, SAMHS, SA Navy and SA Air Force, as well as the Financial Accounting Service Centres (FASC) staff and to a limited extent CJ Ops, the SA Army and C LOG. Training of these services will continue in 2010.
d. No audit qualification was received for the 2008/09 disclosure, though the qualification on accruals remained as the comparative 2007/08 figure could not be verified.
4. Provisions Workstream
a. Finalised the unused leave provision calculation indicating amounts included in Annual Financial Statements (AFS).
b. Finalised capped leave provision calculation indicating amounts included in AFS.
c. Assisted to solve Auditor-General queries – Capped leave, Leave entitlement, Opening balance, Missing employee files.
d. Audit qualification was cleared.
5. Contingent liabilities Workstream
a. Two audit qualifications were cleared – the qualification relating to NEMA as well as the qualification on housing guarantees.
6. Revenue Workstream
a. Compiled an overall high level revenue risk register and a risk register relating to revenue from private telephone calls.
b. Updating the Revenue Policy.
7. Leases Workstream
a. Enhanced lease register developed for the 2008/09 AFS.
b. Updated the lease register accordingly.
c. An updated final consolidated lease register was submitted to DOD team on 30 November 2009 for submission to Auditor-General.
d. The lease register is more than 90% accurate and complete based on the payment information available.
e. Lease contract management office set up.
8. Risk Management Workstream
Developed the required ERM architecture for DOD.
Enterprise wide Risk Management training implemented.
c. Developed the draft GRC model.
d. Governance Risk Compliance.
e. Developed the draft risk appetite framework.
f. Compiled the draft ERM strategy.
g. Completed ERM and risk register training to the risk management directorate as well as the Finance, and Human Resource Divisions, the DOD Planners, the Financial Management Board, the Inspector General and the DOD Professional Internal Auditors Forum (PIAF).
h. Provision of on the job training, guidance and direction to the risk management directorate.
i. Developed the new risk register template.
j. Held risk assessment workshops (i.e. for various arms of service and or divisions).
k. Developed the required risk registers for the areas of qualification.
9. Information Technology Workstream
a. Cleared the audit management letter points related to IT with regard to user account management.
10. DOD IG Training Workstream
a. Developed Training material and conducted the respective classroom training as follows:
i. Senior Management:
ii. Risk Management;
IT Auditing (Engagement Process, IT Risk Assessment; IT Strategy Review; Business Continuity; Computer Operations Assessment; Information and Access Security IT organisation Structure; IT Steering Committee)
b. Intermediates and Juniors:
i. Internal Auditing;
ii. IT Auditing (Engagement Process, IT Risk Assessment; IT Strategy Review; Business Continuity, Computer Operations Assessment; Information and Access Security; IT organisation Structure; IT Steering Committee)
11. Monitoring and Evaluation Workstream
Developed a monitoring and evaluation charter which was submitted to the Acting Head of Internal Audit (Mr Nkosi) on 11 November 2009 for approval by the DOD.
Summary of Audit Findings (05/06 – 08/09)
05/06 06/07 07/08 08/09
Qualifications 4 16 7 6
Emphasis of Matter 19 1 0 3
Total Adverse Findings 23 17 7 9