Guidance papers issued by Public Sector Audit Committee Forum

The guidance papers cover the following topics:

1. Challenges facing public sector audit committees;
   
2. Terms of reference and annual planner for the national and provincial government audit committee;
   
3. Relationship between audit committee and council (local government);
   
4. Public sector audit committee's role in overseeing internal audit.
   

Enhancing the oversight function

Parmi Natesan, senior governance specialist at the Institute of Directors in Southern Africa says, "Audit committees play a key oversight role in the governance structure of both private and public sector entities - but they need to have the right knowledge and insights to perform this extremely important role. Public sector audit committees, specifically, face numerous challenges in being able to fulfil this role effectively."

Imran Vanker (national leader: internal operations and audit support) from the office of the Auditor-General, says, "As part of the drive to improve governance practices in the public sector and ultimately the audit outcomes, it is critical for public sector audit committees to be guided by comprehensive, enabling terms of reference that set out their roles and responsibilities. In addition, audit committees should carefully consider the scheduling of meetings so as to be able to give timely attention to these responsibilities." In response to this, one of the papers released by the PSACF contains a term of reference template and an annual meeting planner for national and provincial government audit committees.

An additional factor for consideration by audit committees is accountability and reporting lines. Audit committees do not always secure the buy-in and support of those who they are meant to be supporting (i.e. the board/ accounting authority/ council). This is seen as a particular challenge in local government. To this end, one of the guidance papers addresses the relationship between the audit committee and council in local government. Zolisa Zwakala from National Treasury notes: "It is critical that a municipal council effectively and regularly engages with the audit committee which is appointed to advise council, amongst other things, on the matters of internal financial control, performance management and effective governance. By engaging closely and properly with their audit committees, municipal councils will enhance their ability to perform their oversight function, and ultimately benefit service delivery to ratepayers."

Striving for efficiency and effectiveness

Another key governance challenge faced by municipal audit committees is the lack of role clarity between various committees, including the audit, finance and municipal public accounts committees. SAICA's Mohammed Lorgat emphasises: "Councils must spell out the role that each committee plays to maximise synergies and minimise duplication."

One of the audit committee's duties is to oversee the internal audit function. According to Claudelle von Eck from the Institute of Internal Auditors in South Africa, "It is important for the audit committee to understand the environment within which the internal audit function operates. Audit committee members should have sufficient knowledge to create and support an environment that enhances efficiency and effectiveness and compliance of the internal audit function. The relationship is important, as the internal audit function can add immense value to an organisation if there is proper oversight and understanding of the true role of this function."

The four guidance papers were prepared through the collaborative efforts of founding members of the PSACF together with Nkonki and the GIZ, which also sponsored the time and/or costs involved. The papers can be viewed on the IoDSA website, www.iodsa.co.za.

^[1]The PSACF was founded in November 2011 by Institute of Directors in Southern Africa (IoDSA), The Institute for Internal Auditors in South Africa, the South African Institute of Chartered Accountants, The Institute of Risk Management South Africa, the National Treasury, the Auditor-General and the Development Bank of Southern Africa.