Notices > Audits of institutions by auditors

Notice No. 544

10 April 2006

Part 1

Under the powers vested in me by section 2 of the Public Audit Act, 2004 (Act No. 25 of 2004) (hereafter referred to as the Act), I, Shauket Allie Fakie, Auditor-General of the Republic of South Africa, hereby wish to announce that—

1)	Appointment of auditors (section 25)

1.1)

In terms of section 25(1)(a) of the Act, unless advised otherwise prior to this announcement, I have opted not to perform any audits of institutions referred to in section 4(3) of the Act for the 2006-07 financial year. All auditees may therefore proceed to appoint their own auditors or continue with their existing arrangements, only for the 2006-07 financial year. The Checklist: Consultation of the Auditor-General on the appointment of an auditor remains a requirement and should be forwarded to my office in good time.

1.2)	The auditors in private practice thus appointed should take cognisance of their functions, powers and duties contained in chapter 3, part 2 of the Act.

2)	Submission of financial statements

Auditees for whom requirements in respect of financial statements, such as amongst others the format, submission period and information to be contained, are not prescribed by any legislation are subject to the contents of Audit Circular 1 of 2005. This Circular was issued by the Auditor-General on 1 April 2005.

3)	Standards for audits (section 13)

The International Standards of Auditing apply in the auditing of financial statements in respect of any financial year ending on or after 31 March 2006.

4)	Auditing 0% performance information (section 28)

The information related to the performance against predetermined objectives of the 2005-06 financial year is subject to audit in terms of section 28(1)(c) of the Act. Section 13 of the Act furthermore requires of me to determine the standards to be applied in performing such audits. In the absence of any specific auditing standards at this stage, I have adopted a phased-in approach for compliance with the relevant section of the Act until such time as the necessary standards have been developed and the environment promotes a state of readiness to provide reasonable audit assurance in the form of an audit opinion or conclusion. Guidance in this regard is contained in the Public audit manual.

The audit procedures for auditing the performance information of the 2005-06 financial year, as part of the phased-in approach, include the following:

•	Obtain an understanding of the entity and its environment, including its internal controls relating to performance information.

•	Determine the level of performance reporting by evaluating the following aspects:

•	The existence of and reporting against predetermined objectives.

•	The existence of the following principles relating to the specific objectives:

•

Specific

•	Measurable

•	Time bound

•	The consistency of reporting on predetermined objectives.

•	The format and presentation of the performance information in the annual report.

The performance information should be submitted together with the annual financial statements within two months after the end of the financial year. The auditor appointed should ensure that the reported information is audited in accordance with the requirements listed above and is reported on as required by the Act.

5)	Submission of audit reports (Section 28(3))

The auditor must submit copies of the audit report to:

•	The auditee;

•	If the auditee has an executive authority, to that executive authority for submission to the relevant legislature;

•	The Auditor-General; and

•	The National Treasury or the relevant provincial treasury, as may be appropriate.

Part 2

General

1)	Complaints against the Auditor-General and/or authorised auditors (section 13(1)(c))

The Auditor-General approved a policy and procedure for the handling of complaints in respect of all audits performed in terms of the Act. The policy is implemented with immediate effect and may be amended after consultation with the parliamentary oversight mechanism established in terms of section 10(3) of the Act.

2)	Audit reports

Where an audit is undertaken in terms of the requirements of the Act, and there is no applicable legislation setting out the period within which the audit report is to be submitted to the relative legislature, the Auditor-General must, in terms of section 21(2) of the Act, submit such audit report to the relevant legislature within a reasonable time. I have, depending on the circumstances, determined a period of up to a maximum of six months after finalisation of the audit report to b e a reasonable expiry of time.

3)	Searches of property, premises, vehicles and persons (section 16)

The powers provided for search and seizure in the abovementioned section are available to the external auditor performing the audit only through my direct facilitation.

Any enquiry related to this notice should be addressed to the following office:

W J Tutani

Business Executive: Governance

The Auditor-General

Tel. : (012) 426 8248

Fax : (012) 426 8225

Email : [email protected]

S A Fakie

Auditor-General

31 March 2006

Public Audit Act, 2004 (Act No. 25 of 2004)

Notices

Audits of institutions by auditors

Notice No. 544 of 2006