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Development of offenders - DCS-Home

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Nature <strong>of</strong> qualification, disclaimer,<br />

adverse opinion and matters <strong>of</strong><br />

non-compliance<br />

Qualified opinion<br />

Department <strong>of</strong> Correctional Services - Vote 21<br />

Report <strong>of</strong> the Accounting Officer<br />

for the year ended 31 March 2012<br />

Financial year in which it first arose<br />

R57 million (2009: R236 million).<br />

This resulted from inadequate<br />

controls over the review <strong>of</strong><br />

information captured on the<br />

asset register<br />

Minor movable tangible assets 2009/2010 Audit finding<br />

• The existence <strong>of</strong> minor<br />

tangible capital assets valued<br />

at approximately R31 million<br />

(2009: R38 million) as disclosed<br />

in disclosure note 31.5 to the<br />

financial statements could<br />

not be physically identified.<br />

Furthermore, the completeness<br />

<strong>of</strong> minor tangible capital assets<br />

disclosed in disclosure note<br />

31.5 to the financial statements<br />

could not be verified. Unable to<br />

trace some <strong>of</strong> the assets to the<br />

asset register. Management had<br />

failed to implement adequate<br />

controls to ensure that the assets<br />

as per the asset register and<br />

financial statements agree with<br />

the physical assets on hand.<br />

The Department’s records did<br />

not permit the application <strong>of</strong><br />

alternative audit procedures<br />

to verify the existence and<br />

completeness <strong>of</strong> these assets.<br />

Asset Management The Department received a<br />

qualified audit opinion in 2010/11<br />

on fixed assets. The basis for<br />

qualified opinion was due to the<br />

following:<br />

• Non-cash additions overstated<br />

by internal transfers <strong>of</strong> movable<br />

tangible capital assets between<br />

departmental stores<br />

• Non-cash disposals overstated<br />

by internal transfers <strong>of</strong> movable<br />

tangible capital assets between<br />

departmental stores.<br />

This was a result <strong>of</strong> LOGIS<br />

deficiency in not being able to<br />

account for internal transfers<br />

separately. The matter was brought<br />

to the attention <strong>of</strong> National Treasury<br />

for National Treasury to amend the<br />

Annual Financial Statement (AFS)<br />

Framework as well as LOGIS.<br />

Progress made in clearing /<br />

resolving the matter<br />

Actions taken by department (what<br />

was done)<br />

An action plan was developed to<br />

address the findings <strong>of</strong> AGSA:<br />

Achievements:<br />

• The department has appointed<br />

asset controllers and sub asset<br />

controllers to carry out functions<br />

<strong>of</strong> asset management. These<br />

<strong>of</strong>ficials are required to conduct<br />

monthly spot-checks.<br />

• The annual asset verification<br />

is also conducted with the<br />

assistance <strong>of</strong> the interns.<br />

Actions taken by department (what<br />

was done)<br />

This was a result <strong>of</strong> LOGIS<br />

deficiency in not being able to<br />

account for internal transfers<br />

separately. The matter was brought<br />

to the attention <strong>of</strong> National Treasury<br />

for National Treasury to amend the<br />

Annual Financial Statement (AFS)<br />

Framework as well as LOGIS.<br />

In the meantime while National<br />

Treasury was in the process <strong>of</strong><br />

amending the AFS framework<br />

and LOGIS, the Department<br />

implemented an improved system<br />

<strong>of</strong> internal controls. A template was<br />

designed and implemented with<br />

effect from 1 April 2011; to account<br />

for non-cash additions and noncash<br />

disposals.<br />

The Department managed<br />

to account for inter-store<br />

transfers using the template; the<br />

reconciliation was performed for<br />

non-cash additions and non-cash<br />

disposals from April 2011 to March<br />

2012.<br />

ANNUAL REPORT 2011/12 93

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