QUALITY ASSESSMENT

Objective, Comprehensive Internal Audit and Audit Committee Evaluation. Does your internal audit department adhere to the Standards of Professional Practice as presented by the Institute of Internal Auditors (IIA)? These standards state that any internal audit function should be assessed at least once every five years. All internal audit departments must be externally assessed by January 2007.

Capabilities

A comprehensive assessment of the internal audit function, focusing on compliance with the IIA standards which include the following:

· Managing of the Internal Audit Activity.
· Nature of Work.
· Engagement Planning.
· Performing the Engagement.
· Communicating the Results.
· Proficiency and due Professional care.
· Purpose, Authority and Responsibility.

We also assess the effectiveness of the audit committee.

Quality assessments include:

· Interviews with board members, auditors, management and auditees.
· In-depth reviews of processes, working papers and reports issued by
  internal audit specialists.
· Engagement Planning.


Benefits

We provide you with recommendations to:

· Improve the audit approach to conform to best practices and to add the
  maximum value to the entity.
· Improve the efficiency of the audit process.

We also provide assurance regarding adherence to the standards of Professional Practice of the IIA. We also provide assurance and guidance to the effectiveness of the Audit Committee.

MFMA

Extracts from the:

Local Government : Municipal Finance Management Act
No 56, 2003

To secure sound and sustainable management of the financial affairs of municipalities and other institutions in the local sphere of government; to establish treasury norms and standards for the local sphere of government; and to provide for matters connected therewith.

Supervision over Local Government Finance Management

General functions of National Treasury and provincial treasuries

(d) investigate any system of financial management and internal control in any municipality or municipal entity and recommend improvements;

    78. (1) Each senior manager of a municipality and each official of a municipality exercising financial management responsibilities must take all reasonable steps within their respective areas of responsibility to ensure–
      (a) that the system of financial management and internal control established for the municipality is carried out diligently;

General financial management functions of accounting officers

    95. The accounting officer of a municipal entity is responsible for managing the financial administration of the entity, and must for this purpose take all reasonable steps to ensure –
      (b) that the entity has and maintains effective, efficient and transparent systems-
        (i)   of financial and risk management and internal control; and
        (ii)  of internal audit complying with and operating in accordance with any prescribed norms and standards;

Internal audit unit
    165. (1) Each municipality and each municipal entity must have an internal audit unit, subject to subsection (3).
    (2) The internal audit unit of a municipality or municipal entity must –
      (a) prepare a risk-based audit plan and an internal audit program for each financial year;
      (b) advise the accounting officer and report to the audit committee on the implementation of the internal audit plan and matters relating to –
        (i) internal audit;
        (ii) internal controls;
        (iii) accounting procedures and practices;
        (iv) risk and risk management
        (v) performance management
        (vi) loss control; and
        (vii) compliance with this Act, the annual Division of Revenue Act and any other applicable legislation; and
      (c) perform such other duties as may be assigned to it by the accounting officer.
    (3) The internal audit function reffered to in subsection (2) may be outsourced if the municipality or municipal entity requires assistance to develop its internal capacity and the council of the municipality or the board of directors of the entity has determined that this is feasible or cost-effective.

PFMA

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Extracts from the:‘Guide for Accounting Officers’ PFMA

The National Treasury is today releasing the ‘Guide for Accounting Officers’, a publication designed to assist those charged with the responsibility for implementing the Public Finance Management Act (PFMA).

• Establish effective internal controls
Accounting officers must prioritise the setting up of audit committees and internal audit units, in line with modern practice. They must evaluate whether the ‘blanket’ controls are appropriate to their particular circumstances, by assessing the risk facing their department.

• Clear up audit queries
Accounting officers must take personal responsibility to address any outstanding queriesraised by the Auditor-General or audit committee, or face strong sanctions.

Establishment of the Internal Audit function and eliminating of audit query backlogs:
    1. According to Section 38(1) (a) (ii) of the PFMA departments are required to establish an internal audit component and audit committee as soon as possible.
    Departments should identify all outstanding audit queries and set target dates for their finalisation before commencement of the implementation process of the PFMA.
Risk assessment:
    1. Accounting officers should evaluate the extent to which existing controls are appropriate to their specific situation.
    A risk assessment should be performed, followed by any necessary changes to the internal control system.
Review of systems and training of personnel on systems:
    1. The accounting officer must ensure that his/her department has and maintains effective, efficient and transparent systems of financial and risk management and internal control according to Section 38(1)(a)(i) of the PFMA.
    (Systems include all guides, procedures, processes and internal departmental prescripts necessary to ensure effective implementation of the act.)