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 AUDITOR-GENERAL TO PARLIAMENTON VOTE NO. 21: DEPARTMENT OF DEFENCEAND MILITARY VETERANSU n a u d i t e d s u p p l e m e n t a r y s c h e d u l e sThe supplementary information set out in annexures 1A to 6 on pages 255 to 269 do not form part of the financial statements andis presented as additional information. I have not audited these schedules and, accordingly, I do not express an opinion thereon.R E P O R T O N O T H E R L E G A L A N D R E G U L A T O R Y R E Q U I R E M E N T SIn accordance with the PAA and in terms of General notice 1111 of 2010, issued in Government Gazette 33872 of 15 December2010, I include below my findings on the annual performance report as set out on pages 23 to 93 and material non-compliancewith laws and regulations applicable to the department.P r e d e t e r m i n e d o b j e c t i v e sThere are no material findings on the annual performance report.C o m p l i a n c e w i t h l a w s a n d r e g u l a t i o n sI n t e r n a l A u d i tThe accounting officer did not ensure that an internal audit function was in place as per requirements of Treasury Regulation(TR) 3.2.2. However, the Inspector General did perform certain compliance and other procedures which were reported to theaudit committee.F i n a n c i a l m i s c o n d u c tSufficient appropriate audit evidence was not available in all instances, to determine if the accounting officer ensured that investigationswere conducted into all allegations of financial misconduct made against officials within 30 days from the date of discoveryof the allegation as required in terms of TR4.1.2.A n n u a l f i n a n c i a l s t a t e m e n t s , p e r f o r m a n c e a n d a n n u a l r e p o r tThe accounting officer did not implement adequate control systems for the safeguarding and maintenance of assets to preventtheft, losses, wastage and misuse, as required by the PFMA section 38(1)(d) and TR 10.1.1(a).The accounting officer submitted financial statements for auditing that were not prepared in all material aspects in accordancewith modified cash basis of accounting determined by the National Treasury, supported by full and proper records in all instancesas required by section 40(1)(a) and (b) of the PFMA. Certain material misstatements identified with regards to operating leasecommitments were subsequently corrected, however, the uncorrected material misstatements in capital assets resulted in thefinancial statements receiving a qualified audit opinion in contravention of section 40(3)(a).H u m a n r e s o u r c e m a n a g e m e n t a n d c o m p e n s a t i o nSome senior managers did not enter into a performance agreement for the current year as per the requirements of PSR 4/III/B.1and Department of Defence Instruction: POL and PLAN No. 00065/2002 (Edition 2) dated 1 January 2005.180ANNUAL REPORT FY 2010/2011