INTERNAL CONTROL FOR PUBLIC FINANCE - PowerPoint PPT Presentation

Loading...

PPT – INTERNAL CONTROL FOR PUBLIC FINANCE PowerPoint presentation | free to download - id: 6f173a-MzBkO



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

INTERNAL CONTROL FOR PUBLIC FINANCE

Description:

INTERNAL CONTROL FOR PUBLIC FINANCE THE SOUTH AFRICAN EXPERIENCE Presenter: Beerson Baboojee | National Treasury | 2 December 2014 – PowerPoint PPT presentation

Number of Views:21
Avg rating:3.0/5.0
Slides: 21
Provided by: bron167
Learn more at: http://www.pempal.org
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: INTERNAL CONTROL FOR PUBLIC FINANCE


1
INTERNAL CONTROL FOR PUBLIC FINANCE
  • THE SOUTH AFRICAN EXPERIENCE

Presenter Beerson Baboojee National
Treasury 2 December 2014
2
Contents
  • Brief introduction to South Africa
  • The importance of internal control
  • The control architecture in the South African
    public sector
  • How the components of the control architecture
    function
  • Conclusion

3
South Africa
  • LOCATION
  • PROVINCES

4
Background
  • South Africa is known as the rainbow nation
  • The political system is a constitutional
    multiparty democracy
  • The Constitution is the supreme law
  • Land mass is approximately 1 219 090 square
    kilometers
  • Population is roughly 52,9 million
  • There are 3 spheres of government
  • National departments and public entities
    reporting to these departments
  • Provincial departments and provincial public
    entities
  • Local government (municipalities and municipal
    public entities)

5
Importance of internal control
  • The Constitution requires public resources to be
    managed efficiently, effectively and economically
  • South Africa has enormous social and development
    challenges which makes it even more critical for
    Government institutions to
  • Deliver on their objectives
  • Report timeously and accurately on their use
    public funds
  • Comply with laws and regulations
  • Exercise responsible stewardship
  • Proper systems of control provide comfort that
    order, consistency, uniformity, noble intentions
    and a high level of public service ethos are
    present in the functioning of government
  • Properly designed and implemented controls
    increase the successful outcomes of legitimate
    government actions

6
Control architecture
7
Legislation (1/2)
  • Financial management legislation requires that
    the Accounting Officer must ensure that the
    institution that he or she is in charge of has an
    effective, efficient and transparent system of
    financial and risk management and internal
    control
  • Additional internal control requirements are also
    scattered across other legislations and
    frameworks but there is no nationally prescribed
    control framework at present
  • The philosophy of managerial accountability is
    embedded in the financial management laws
  • This philosophy implies that even in the absence
    of a prescribed control framework, management
    must implement proper internal procedures and
    control measures

8
Legislation (2/2)
  • The principles of the COSO framework and King
    Code of Corporate Governance for South Africa are
    widely adopted by government institutions
  • A benchmarking exercise undertaken by the
    National Treasury has shown that collectively the
    control requirements embedded in government
    legislations exceed those of COSO and the King
    Code
  • This implies that if there is full compliance
    with government legislations the requirements of
    COSO and the King Code will be exceeded

9
Institutional arrangements (1/5)
  • A control environment encompassing
  • Effective leadership
  • High levels of ethics and integrity
  • Competent and qualified personnel
  • Policies, procedures and systems
  • Strategic and operational planning that take
    account of national priorities
  • Systems and processes to manage performance
    against the strategic and operational goals

10
Institutional arrangements (2/5)
  • Delegation of authority
  • The Accounting Officer is ultimately accountable
  • Every employee is accountable to the extent of
    his or her delegated authority
  • Managers are directly responsible in terms of
    their delegated authority for all activities of
    the programmes they are in charge of, including
  • Designing, implementing and maintaining the
    internal control system
  • Exercising supervision
  • Monitoring the functioning of the system
  • Managing performance
  • Officials execute tasks within the parameters of
    established policies and procedures

11
Institutional arrangements (3/5)
  • Risk management
  • The Public Sector Risk Management Framework
    provides guidance on the risk management activity
    in government
  • Management are responsible for managing risks
    within their areas of responsibility
  • Risk management specialists assist the accounting
    officer and management to maintain an effective
    system of risk management by
  • Developing and communicating the institutions
    risk management framework
  • Working with management to identify, assess and
    prioritise risks, and develop strategies to
    manage important risks
  • Maintaining the risk register and reporting on
    risk control
  • Providing technical support and guidance in the
    execution of any risk management activity
  • The Accounting Officer and the Audit Committee
    are required to make statements on risk
    management in the annual report

12
Institutional arrangements (4/5)
  • Internal audit functions in accordance with local
    laws and the International Internal Auditing
    Standards, to
  • Evaluate the adequacy, effectiveness and
    efficiency of the complete system of control
    (governance, risk management and control)
  • Provide recommendations to fix control problems
  • Provide audit reports to management and the Audit
    Committee
  • Consult to management as specialist advisors in
    certain areas
  • The Accounting Officer and the Audit Committee
    are required to make statements on internal audit
    in the annual report

13
Institutional arrangements (5/5)
  • Audit committees
  • Bring specialist experience, qualifications and
    qualities such as independence and objectivity to
    bear in advising government institutions
  • Function in accordance with an explicit terms of
    reference
  • Provide oversight over governance, risk
    management, control and related matters such as
    financial management, financial reporting,
    compliance and the audit process
  • Have functional control over internal audit
  • Provide protection to internal and external audit
    from manipulation
  • Have no executive status and act in an advisory
    capacity to the Accounting Officer
  • In terms of the law are empowered to escalate
    concerns to the Executive Authority,
    Auditor-General and the National Treasury
  • Required to make a statement in the departments
    annual report on their view of governance, risk
    management and control, amongst other matters
    within their purview

14
Regulatory Oversight
  • A number of different government agencies are
    charged with overseeing that specific controls
    exist and are being adhered to
  • The National Treasury exercises oversight of
    financial management of government departments
    through
  • Monthly budget reviews
  • Review of quarterly financial statements
  • Approving the amount to be withdrawn by
    departments from the national revenue fund each
    month
  • Annually assessing departments financial
    management capability
  • The Department of Performance Monitoring and
    Evaluation
  • Reviews the performance of departments each
    quarter against their pre-approved performance
    plans
  • Annually assesses departments broader
    performance capabilities

15
Public Audit (1/2)
  • Each government institution is required by law to
    produce annual financial statements within the
    prescribed period and submit these for audit
  • The Supreme Audit Institution (Auditor-General)
    performs statutory audits of government
    institutions annually
  • Within the process of the statutory evaluation of
    an institutions financial and performance
    management, the Auditor-General assesses
  • Leadership (Political, Executive and Management)
  • Governance (quality of policies, procedures,
    institutional arrangements etc. geared to achieve
    institutional goals)
  • Compliance to laws and regulations, as well as
    policies and procedures internal to the
    institution

16
Public Audit (2/2)
  • The Auditor-General provides detailed reports of
    their findings and recommendations to fix them
  • In terms of the financial management regulations
    institutions are required to develop and
    implement plans to fix the control deficiencies
    raised in the Auditors report
  • Departments table their audit reports in
    Parliament
  • The Auditor-General tables a consolidated report
    of audit findings in Parliament
  • The Auditor-General also undertakes specialised
    non-financial audits in high risk areas

17
Parliamentary Oversight
  • The Standing Committee On Public Accounts (SCOPA)
    exercises political oversight over departments
    financial management and control
  • Departments appear before SCOPA to present their
    annual reports
  • Departments also appear before SCOPA at its
    request to account for any matter that SCOPA has
    an interest in (e.g. Unauthorised expenditure,
    fruitless and wasteful expenditure, irregular
    expenditure, internal audit, fraud)
  • The respective Portfolio Committees (e.g. for
    Health, Defence, Education etc.) exercise
    political oversight over technical matters
    related to a departments mandate

18
Conclusion (1/2)
  • Studies have shown that the control frameworks
    adopted in South Africa are conceptually sound
    ones, however, application is not always of the
    required standard
  • Failure of application is predominantly as a
    result of behavioural and technical problems,
    with behavioural issues being more prominent than
    technical ones
  • Behavioural problems usually manifest as lack of
    discipline, lack of integrity, non-compliance
    with rules, not taking accountability and
    responsibility seriously, management overrides
    and lack of consequence management
  • Technical problems manifest as the failure to
    fully understand the operating environment and to
    adapt control systems to suit the peculiarities
    of the environment

19
Conclusion
  • Internal control goes to the heart of responsible
    management of public funds and government
    performance
  • It is crucial therefore to continually find ways
    to improve systems of internal control and
    importantly its application
  • That is the purpose of this plenary
  • South Africa wishes you all the best in this
    journey of discovery

20
  • Thank you
About PowerShow.com