Wednesday, 13 March 2013

Fewer clean audits – AG of South Africa

Auditor General Terence Nombembe
South Africa Auditor General
Terence Nombembe
The number of government institutions receiving clean financial audits has decreased, according to the 2011/12 report released by Auditor General Terence Nombembe on Tuesday.

Only 117 of the 536 government institutions (22%) evaluated across South Africa achieved clean audits.

Analysis over a three-year period reveals a steady decline in the number of entities achieving clean audits.

During 2009/10, some 31% of audited entities achieved clean audits. In 2010/11, the figure dropped to 25%, and in 2011/12 only 22% received a clean bill of health from the auditors.

The report, released at the National Press Club in Pretoria, indicates the AG examined the books of "auditees" including Parliament and provincial legislatures.

The majority of the auditees were public entities listed as government business enterprises, national and provincial departments, constitutional entities, and other entities in both national and provincial spheres of government.

The majority of entities audited were experiencing problems, with 297 (55%) receiving unqualified audit opinions with findings.

A total of 74 (14%) received qualified opinions. Adverse audit opinions were given to 17 (3%) entities.

The AG's office said 6% of audits were outstanding, mainly due to non-submission of financial statements.

Nombembe writes in his foreword in the voluminous 2011/12 report that the outcomes had been "generally stagnant with less than a quarter of auditees obtaining clean audit opinions".

"My report shows that many leaders did not own and drive the commitments made when the 2011/11 audit results were issued, so the commitments are left to flounder until the next audit starts."
According to the report, the AG's office had observed "slow progress towards total clean audits" in the period under review.

Nombembe said stricter oversight on financial management processes was needed to ensure more state entities achieved clean audits. He said his office had engaged various arms of government and held discussions regarding financial administration.

"What makes us comfortable is the responses we are receiving (from the government officials). As an audit office we support the issue of how we sustain the perfection of the basic internal controls.
"Most of the issues we are talking about here have been discussed with the ministers, MECs and premiers across the country, and we are pleased to highlight that we have had the opportunity to discover the stumbling blocks leading to the regression," he said.

In accounting terms, a "clean", or unqualified opinion is where the financial statements present a fair and accurate picture of the company and comply with generally accepted accounting principles.
A qualified audit opinion means the auditor was unable to render a full opinion about an entity's finances, or a portion thereof, because the organisation's accounting did not meet generally accepted accounting principles, or because the information given was incomplete.
Edited by: Sapa

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