annrep 1011 1 to 148.qxp - Department of Defence

D E P A R T M E N T O F D E F E N C EDepartment of Defence and Military VeteransVote 21REPORT OF THE ACCOUNTING OFFICERfor the year ended 31 March 20118.3.2.3 DACAF Mandate. To provide anti-corruption and anti-fraud services, including serving as a nodal point for forensicauditing, to the department, provided that evidence of corruption and fraud shall be handed over to the MilitaryPolice Division for further investigation in terms of and in accordance with applicable law.8.3.2.4 The Corruption and Fraud Prevention Plan (version 2) was reviewed and is effective from 1 April 2011. The PreventionPlan is distributed to Service and Divisional Chiefs and also being communicated by means of road-shows in aneffort to reach all members of the DOD on all levels.8.3.3 Internal Audit8.3.3.1 Internal Audit is an independent process conducted to evaluate internal controls implemented by management toensure that resources have been acquired economically, utilised efficiently and effectively, and to report this to managementand its legislative body. It is acknowledged that during the year under review, the Internal Audit Unit did notoperate under the leadership of the Head of Internal Audit as the post was vacant, thus all its activities were carriedout under the leadership of the Inspector General DOD. It is anticipated that the unit's head will be appointed duringthe financial year 2011/12 as the recruitment process has reached an advanced stage. It is anticipated that once theinternal audit function is fully functional in the coming years, it will provide management with the assurance aboutthe processes in place to ensure accurate reporting in-year and the adequacy of these before the external audit is conductedwhich should reduce the number of findings and misstatements in the interim and final financial and performancereports.8.3.3.2 During the period under review, 87 audits were conducted and the following components were addressed:Performance Measurement. Annual and quarterly reports were audited and inconsistencies in the reportingof targets were identified and reported to the appropriate management. However, there has been a remarkableimprovement on the accuracy of performance information reported in the quarterly and annual reports.Combat Readiness. Although no combat readiness audits were conducted in the period under review, the outcomeof the audits conducted in the previous financial year proved to be valuable. Chronic and critical shortcomingsin the resources, budget constraints and loss of technically qualified and/or skilled personnel reportedin the previous financial year, led to the improvement of combat readiness of forces reporting to the mobilisationcentres.Mobilisation and Foreign Deployment. Based on the audit findings and recommendations of the mobilisationand foreign deployment audits conducted, the Joint Operations Division is developing a mission readinesstraining curriculum.Risk based audits. 50 risk based audits were conducted. Internal auditors recommended to management asystem of internal controls to prevent, detect and correct deviations that may occur in the operational procedures. Follow-up audits. Follow-up audits were conducted mainly on two risks (Procurement System andCodification System) and the internal auditors recommended control measures to mitigate the risks.8.3.4 Audit Committee8.3.4.1 The Audit Committee provided guidance to the Defence Inspectorate Division during the period under review. TheAudit Plan and Auditor General's audit report revealed that the financial statements were not adequately addressed,which was ascribed to the lack of expertise of the internal auditors. The external members of the Audit Committeemade their services available to assist the DOD to address the lack of expertise. The Audit Committee was partly satisfiedwith the content and quality of quarterly reports prepared by the IG DOD during the period under review.164ANNUAL REPORT FY 2010/2011