Annual Report 2006/2007 - Department of Education

SECTION 3 REPORT OF THE AUDIT COMMITTEE
VOTE 6 • FOR THE YEAR ENDED 31 MARCH 2007
We are pleased to present our report for the financial year
ended 31 March 2007.
Audit Committee Members and Attendance:
The Audit Committee consists of the members listed
hereunder and met six (6) times as per approved terms
of reference.
Name of Member Number of
meetings Attended
V. Nondabula (Chairperson) 6
L. Dudumashe 5
N. Nicholls 6
J. Godden 6
C. Maurice 5
3.1 Audit Committee Responsibility
The committee reports that it has complied with its
responsibilities arising from Section 8 (1)(a) of the PFMA
and Treasury Regulation 3.1.13.
The Audit Committee also reports that it has adopted
appropriate formal terms of reference as its audit
committee charter, has regulated its affairs in compliance
with this charter and has discharged all its responsibilities
as contained therein.
3.2 Internal Audit
During the year under review internal audit was provided
by an outsourced service provider. They reported
functionally to the audit committee and administratively to
the Chief Financial Officer. An in-house internal auditor
has been appointed and this function will be reinforced
with further appointments and use of a co-sourced service
provider. It is important to note that the division still
needs to be strengthened by building performance audit
capability internally that will be utilized to enhance service
delivery processes.
The overall effectiveness of the internal audit during
the current year was hampered to a degree by lack of
appropriate implementation of the recommendations
made. Limited implementation has resulted from human
resource and infrastructure constraints. The consortium,
which operates under a contract and an annual plan of
activities approved by the audit committee, is winding
down its work because their contract is coming to an end.
3.3 The effectiveness of internal control
Based on the work that was undertaken as SECTION of the
annual internal audit plan, the system of internal controls
in the main was found to be ineffective.
The material areas that are affected are the human resource
administration, supply chain and asset management. The
key root causes for these weaknesses are lack of appropriate
capacity and expertise at correct levels, consistent changes
at a senior level of administration, lack of appropriate
policy framework for managing outsourcing arrangements
and also lack of a proper document management system.
The failure of the department to implement internal audit
recommendations and delays in filling critical posts is
slowing progress in addressing these maters. The Committee
made several recommendations to management, that
include the improvement of the organizational structure,
sourcing of the right skill for the critical posts, upskilling of
administration staff and completion of the Registry project
initiated to address the matters relating to incorrect human
resource information and missing documentation for
payroll related transactions. Management have formulated
specific corrective action plans to address certain of these
matters, and the audit committee is supportive of this
process.
3.4 The quality of in year management
and monthly /quarterly reports
submitted in terms of the PFMA and
the Division of Revenue Act
The Audit Committee is satisfied with the timely submission
of monthly and quarterly reports. But the committee is of
the view that the quality and the content of these periodic
reports can be improved to be more user-friendly and more
tailored to meet the specific needs of key stakeholders
in the department, including the audit committee. The
Committee has provided its feedback to the relevant
officials on how the quality of information and reporting
can be improved.
3.5 Evaluation of Financial Statements
The Audit Committee has:
1 Reviewed and discussed the annual financial statements
with management and provided its input;
2 Reviewed changes in accounting policies
and practices;
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SECTION 3 • Report of the Audit Committee • Department of Education Annual Report 2006/07