Topic: Are Forensic Investigations - PowerPoint Presentation

Topic: Are Forensic  Investigations
Topic: Are Forensic  Investigations

Topic: Are Forensic Investigations - Description

in Government Beneficial Are there Consequences Adv Boyce Mkhize Director Forensic Audits 21 June 2017 Imfo Risk and Audit Indaba Cape Town Contents Trends Analysis National Departments ID: 629310 Download Presentation


sekelaxabiso 2017 expenditure investigations 2017 sekelaxabiso investigations expenditure irregular 2014 forensic municipalities consequences governance report agsa findings management unauthorised

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Topic: Are Forensic Investigations in Government Beneficial? Are there Consequences?

Adv Boyce MkhizeDirector: Forensic Audits21 June 2017

Imfo Risk and Audit Indaba

Cape TownSlide2


Trends Analysis - National DepartmentsTrends Analysis - MunicipalitiesConsequence Management Trends

Common Causes for Failure to Act

Benefits of Forensic Audits


© 2017 SekelaXabisoSlide3

National Departments Trends [Irregular Expenditure]© 2017 SekelaXabiso


AGSA Report


Investigations / Consequences© 2017 SekelaXabiso


AGSA Report 2015-16Slide5

Consequence ManagementOver

80% of the auditees conducted the required investigations into unauthorised, irregular and fruitless and wasteful expenditure


There was a slight improvement from the previous year, but 24

of the 63 auditees that did not conduct investigations in 2014-15 also did not do the required investigations in 2015-16.

Recurring trend with those failing or neglecting to investigate and hold responsible officials accountable.

© 2017 SekelaXabisoSlide6

Consequence ManagementAlthough investigations were done, insufficient steps were taken

to, in compliance with the PFMA:recover





or condone unauthorised, irregular and fruitless and wasteful expenditure

for 2014-15




a result, the year-end balance of irregular expenditure that has accumulated over many years and has not been dealt with as required in terms of the PFMA, was R100,7 billion, while that of unauthorised expenditure was R5 399 million and fruitless and wasteful expenditure


174 million.

© 2017 SekelaXabisoSlide7

Municipalities Irregular Expenditure Trends© 2017 SekelaXabiso


AGSA Report 2014-15Slide8

Consequences for Transgressions - Municipalities© 2017 SekelaXabiso


AGSA Report 2014-15Slide9

Consequences for Transgressions - MunicipalitiesThe figure shows that at 45% of the municipalities (2013-14: 47%) the council failed to conduct the required investigations for all instances of unauthorised, irregular and fruitless and wasteful expenditure



87 of the municipalities that failed to conduct investigations in 2013-14 attracted similar findings in 2014-15.

Recurring trend of failure to investigate and take action resulting in regression.

© 2017 SekelaXabisoSlide10

Common Transgressions© 2017 SekelaXabiso


AGSA Report 2014-15Slide11

Consequences for Transgressions - MunicipalitiesIn 2013-14,

AG reported SCM-related findings for investigation to 139 municipalities. As shown in figure 2, findings in all areas except payments to possible fictitious suppliers have increased.


105 of the municipalities that had such findings in 2013-14 had similar findings in 2014-15. This means that investigations are not conducted or are not yet having the desired impact of discouraging fraud and improper


© 2017 SekelaXabisoSlide12

Common Causes : Failure to Act‘We all have our

smallanyana skeletons’;

Collusion to compromise procurement system for personal gain;

No moral high ground for superiors to hold junior staff accountable because Superiors direct juniors to act in conflict with the frameworks;

Junior employees have a sense of impunity because of perceived protection from superiors; and

Lack of adequate internal forensic capacity to pursue investigations and limited resources for external resources.

© 2017 SekelaXabisoSlide13

Common Causes : Failure to ActDeliberate destruction of evidence – no supporting documents (perception that absence of documents is a lesser offence than straight evidence of irregular expenditure);

Inconsistencies in application of discipline (labour law considerations);Poor governance – lack of follow through on consequence management reporting;

Culture of impunity; and

Resignations without follow through principle.

© 2017 SekelaXabisoSlide14

Benefits of Forensic AuditsHeighten sense of governance and accountability;

Instill confidence in the rate payers to continue paying rates and local taxes;

Ability to approach local and foreign investors through PPP for major infrastructure projects if books and governance are in order;

Preventative interventions such as proactive fraud management, ICT reviews, probity reviews and transaction advisory; and

© 2017 SekelaXabisoSlide15

Benefits of Forensic Audits

Identification of weaknesses in internal controls and enhancement mechanisms.

© 2017 SekelaXabisoSlide16


Absence of records must be equally punishable as evidence of irregular expenditure;Set a culture of accountability with a robust and obligatory reporting system – Municipal space to Provincial MEC; National Department to Cabinet Minister;

Obligatory consequence management reporting to Governance structures;

© 2017 SekelaXabisoSlide17


Train Bid Committees on procurement framework;Follow through individuals who resign to avoid consequences – possibly review employment contracts in this regard to create obligation for clean governance beyond organization with follow-through consequences in case of resignation;

Revive importance of Risk Management structures; and

Take pride in clean governance.

© 2017 SekelaXabisoSlide18

Thank You

Shom More....