November 14, 2018

This is the way it is supposed to work

The fourth term of Parliament is traditionally taken up with the annual task of poring over the Annual Reports of Departments and the public entities linked to them. This is when Parliamentary Committees really exercise oversight of the executive.

Committees peruse these annual reports and the audited financial and non-financial performance results of Departments and entities and find out whether the funding given to Departments and entities were used as intended and whether they met the objectives they had set out with.

Parliament’s Committees demand accountability on the part of departments, and inform the public if government departments’ financial statements are correct and correspond to the amounts allocated in the Budget, or if they fail to do so.

They also check to see if departments complied with laws and regulations governing financial matters and if its non-financial performance delivered according to predetermined objectives.

It is at the time that Parliament's irregular, fruitless and wasteful expenditure picked up by the Auditor-General come under the spotlight.

This is not only that time of the parliamentary year when audited financial reports are exposed by Parliament to the public. Committees also hold the Departments and entities that they oversee accountable for the audited outcomes of non-financial performance as well, which include whether Departments delivered their predetermined objectives and met the standards of delivery that they committed themselves to.

With thanks to the Parliamentary Monitoring Group here is a comprehensive, though not exhaustive, list of what Committees are looking for during the Annual Report hearings:

  • Quality of performance information
  • Technical quality of Annual Reports
  • Economy, efficiency and effectiveness of service delivery
  • Implementation of the Department’s/entity’s service delivery improvement plan
  • Evaluating management’s explanations for why service delivery was not in line with targets
  • Financial probity and corporate governance
  • General Report of the Auditor General
  • Compliance with the PFMA
  • Unauthorised and irregular expenditure
  • Fruitless and wasteful expenditure
  • Internal control and risk management systems
  • Supply chain management and debt write offs
  • Major financial losses suffered
  • Payments are made to service providers within 30 days as required by law.

It is at this time that irregular, fruitless and wasteful expenditure picked up by the Auditor-General come under the spotlight of Parliament’s Standing Committee on Public Accounts (SCOPA) and the Appropriations Committee. SCOPA may investigate matters during hearings and the accounting officer and/or Minister must explain how problems highlighted by the Auditor-General are going to be responded to.

It’s a hectic time at Parliament because when the Committees have done their oversight task of analysing Annual Reports and audit outcomes, and holding hearings directly with Departments and entities themselves, they put all this information into Budgetary Review and Recommendation Reports, or what are known in Parliament as the B Triple Rs (BRRRs).

These are essential because they provide a reliable assessment of departmental performance that can guide future Departments practice, and that provide recommendations for the improvement of performance and the future use of resources and budgets.

In the words of PMG: “The Reports provide insight on what Departments have done i.e. services delivered and those not. The BRRR also reflects on whether the Committee, after considering relevant reports, is satisfied with the Department’s performance.”

Very important to note is that after the B Triple Rs comes the Medium Term Budget Policy Statement, presented to Parliament in October each year along with the Division of Revenue Amendment Bill and the Adjusted Appropriations Bill. In other words this is when Parliament, based on Departments’ past performance, can adjust revenue and spending estimates for the second half of the year.

If annual reports, and audited financial reports are not in by the due date, BRRRs cannot be completed and the essential task of revising department budgets and outcomes cannot be completed, leave the Budget Cycle incomplete.

This is a revised version of the PMG’s essay, “Audits, Annual Reports and BRRRs”. Errors and oversimplifications are entirely the responsibility of the editor of Notes from the House.

Additional Info

  • Author: Moira Levy
Last modified on Friday, 19 October 2018 16:49

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