Department of Defence Annual Report 2008-2009

| Department of Defence | Vote 19 |
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT
ON THE FINANCIAL STATEMENTS AND PERFORMANCE
INFORMATION OF VOTE NO.19: DEPARTMENT OF
DEFENCE for the year ended 31 March 2009 (continued)
Non-compliance with applicable legislation
Public Finance Management Act
18. The accounting ofcer did not comply with Section 38(1)(g) of the PFMA: reporting in writing to the
National Treasury particulars of discovered irregular expenditure.
Governance framework
19. The governance principles that impact the auditor’s opinion on the nancial statements are related to
the responsibilities and practices exercised by the accounting ofcer and executive management and
are reected in the internal control deciencies and key governance responsibilities addressed below:
| Financial Performance |
Internal control deciencies
20. Section 38(1)(a)(i) of the PFMA states that the accounting ofcer must ensure that the department
has and maintains effective, efcient and transparent systems of nancial and risk management and
internal control. The table below depicts the root causes that gave rise to the deciencies in the system
of internal control, which led to the qualied opinion. The root causes are categorised according to
the ve components of an effective system of internal control. (The number listed per component
can be followed with the legend below the table.) In some instances deciencies exist in more than one
internal control component.
Par. no. Basis for qualied opinion CE RA CA IC M
7. Tangible and intangible assets 1 1
8. Lease commitments 2 3,5 1 1
9. Irregular Expenditure 1 3 1 3
10. Goods and services: consultant expenditure 3,5,6 3 1
11. Departmental revenue: other sales 1 1
12. Corresponding gure: accruals 3
Conclusion on the governance framework
21. The above-mentioned were mainly due to the following:
Insufcient monitoring controls and oversight by senior management over the preparation and
completion of nancial statements, with specic reference to the reviewing and evaluation of
supporting documentation and gures.
Insufcient guidance/procedures provided to staff regarding the preparation of nancial
statements.
Legend
CE = Control environment
The organisational structure does not address areas of responsibility and lines of reporting to support effective
control over nancial reporting.
1
Annual Report FY 2008 - 2009 240