Chapter 2 - P rogramme 1 - Department of Defence

| Financial Performance |
7.
8.
Annual Report FY 2007 - 2008 334
| Department of Defence | Vote 20 |
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT
ON THE FINANCIAL STATEMENTS AND PERFORMANCE
INFORMATION OF THE SPECIAL DEFENCE ACCOUNT
for the year ended 31 March 2008 (continued)
I have determined that my audit of certain sensitive expenditure incurred in connection with special
defence activities per section 2(2)(a) of the Defence Special Account Act, 1974, as amended, have
been limited to those procedures necessary for the purpose of expressing an opinion on the financial
statements and were not extended to include the circumstances under which they were incurred and
utilised, or compliance to any legislation and approvals in respect thereof.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for
my audit opinion.
Basis of accounting
9. The Special Defence Account’s (SDA) policy is to prepare financial statements on the entity-specific
basis of accounting, as set out in note 1 to the financial statements.
Opinion
10. In my opinion the financial statements of the Special Defence Account as at 31 March 2008 and
its financial performance and cash flows for the year then ended have been prepared, in all material
respect, in accordance with the basis of accounting as set out in note 1 to the financial statements and
in the manner required by PFMA.
Emphasis of matters
Without qualifying my audit opinion, I draw attention to the following matters:
Significant uncertainties
Contingent liability
11. With reference to note 11 to the financial statements, the SDA, through the department, and its
service providers were the defendants in lawsuits. The ultimate outcome cannot be determined and
no provision for any liability that may result was made in the financial statements.
Highlighting critically important matters presented or disclosed in the financial
statements
Amendments to the applicable basis of accounting
12. As set out in accounting policy note 1, the National Treasury approved the SDA’s application of the
entity-specific basis of accounting on 31 March 2008.