INTERNAL AUDIT AND INVESTIGATION SERVICES

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• PRESENTATION TO THE PORTFOLIO COMMITTEE ON THE
  UNITS ACTIVITIES FOR THE YEAR ENDING
• 31 MARCH 2006
• Z MXUNYELWA, CIA
• CHIEF AUDIT EXECUTIVE
• 13 TO 15 MARCH 2006

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• CONTENT
• AUDIT COMMITTEE
• UNIT CAPACITY
• CO-SOURCING ACTIVITIES
• RISK MANAGEMENT AND FRAUD PREVENTION
• SYSTEMS OF INTERNAL CONTROL
• FRAUD AWARENESS AND INVESTIGATIONS

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• AUDIT COMMITTEE
• The Department has a fully functional Audit
  Committee with an approved
• Charter.
• The Audit Committee is effectively ensuring that
  the Internal Audit is fully
• functional and management actions are adequate to
  effectively address
• the risks, controls and corporate governance
  processes in the
• Department.
• The Management has resolved that the committee
  will only be composed of
• only external members in order to enhance its
  independence, in line with
• the recommended best practices by National
  Treasury.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• UNIT CAPACITY
• The Internal Audit and Investigation Services
  establishment has been
• Increased to adequately address the challenges of
  the Department. All
• permanent employees of the unit possess relevant
  professional qualifications. The
• current establishment has 37 Auditing staff and
  6 investigation staff
• Members.
• The current challenge is the increase in
  resignations, due to external
• audit firm recruiting its professionally
  developed staff, as a result of an
• increased demand in the private sector of
  qualified internal auditors.
• The Minister approved in 2005, the building of
  permanent capacity in the
• Unit, over a period of three-years ending 31
  March 2008. The unit has already
• achieved 80 of its target for capacity building,
  in terms of quantities and
• staff development.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• CO-SOURCING ACTIVITIES
• The unit is currently engaging professional audit
  firms on a co-sourcing
• basis to address its capacity while phasing in
  the permanent professional staff.
• Both the capacity building and transfer of skills
  by the co-sourced audit
• and forensic firms is envisage to end by 31 March
  2008.
• The main challenges in the unit are computer
  auditing skills and capacity for
• forensic investigations, hence there is a need
  for the co-sourcing.
• The current co-sourced audit firms have a 40 to
  45 BEE component.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• RISK MANAGEMENT AND FRAUD PREVENTION
• The Department has an approved Risk Management
  and Fraud Prevention strategy,
• facilitated by Internal Audit and Investigation
  Services.
• The Risk Management plan and Fraud Prevention
  strategy has served as a basis for
• focusing the Departments resources to ensure
  that the Department objectives are
• achieved with minimum impact of risks.
• Both Risk Management plan and Fraud Prevention
  strategy are revised annually to
• ensure that, previous risks are effectively
  addresses and emerging risk are
• identified.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• SYSTEMS OF INTERNAL CONTROL
• The Department has effective Audit Steering
  Committee that ensure that both
• Auditor General and Internal Audit findings are
  effectively addressed.
• The Chief Audit Executive is monitoring the
  effectiveness of the Regional Audit
• Steering Committees and Top Management members
  attend the Departments Audit
• steering committees.
• There has been a significant improvement in the
  Regions internal control
• systems and financial management with the
  decentralization of Internal Audit
• function to the Regions of the Department.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• FRAUD AWARENESS AND INVESTIGATIONS
• The Department conducted workshops on Fraud and
  corruption awareness
• in all its Head office units and Regional
  offices. These workshops resulted in the
• Departments officials aware of their role in
  identifying, reporting and detecting
• fraud and corruption activities in their
  environment.
• The Department experiences an increase, by
  employees of the Department, in
• reporting fraud, corruption and irregularities
  to the Departments Chief Audit
• Executive. All the cases are successfully
  investigated by the unit.
• The Department adopted an integrated strategy to
  deal with fraud and
• corruption with the memorandum of understanding
  between Top management
• Internal Audit and Investigation Services and
  Labour Relations processes.

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INTERNAL AUDIT AND INVESTIGATION SERVICES

• UNIT CHALLENGES FUTURE PLANS
• CHALLENGES
• Audit Beyond Compliance.
• Risk Management plan not fully addressing service
  delivery initiatives
• IIA International Standards on Quality Assurance.
• Staff turnover.
• Increase in allegations of fraud corruption
• Delays in processes dealing with fraud
  corruption.
• Future plans
• Conduct performance audits- Service delivery.
• Facilitate training of Management on risk
  assessment.
• Conduct Internal External QA by 1 September
  2005.
• Conduct Workshops Develop MOU with HR Labour
  relations Unit.
• Ongoing Co-Source of forensic services from
  private sector audit firms.
• Improve Internal Control environment through
  Regional I/A Sections.