DEPARTMENT: PUBLIC ENTERPRISES
REPUBLIC OF SOUTH AFRICA
NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
QUESTION NO.: 212
DATE OF PUBLICATION: 11 May 2012
212. Mr H B Groenewald (DA-NW) to ask the Minister of Public Enterprises:
(1) Whether the state-owned enterprises (SOEs) have adequate (a) strategies
and (b) resources to appropriately deal with risks associated with (i)
financial misconduct and (ii) the maintenance of ethical corporate
governance; if not, why not; if so what are the relevant details;
(2) Whether the SOEs have (a) the capacity and (b) dedicated resources to
(i) investigate the allegations of (aa) fraud and (bb) corruption and (ii)
respond promptly and effectively to complaints; if not, why not; if so,
what are the relevant details;
(3) Whether there are clear definitions of what constitutes financial
misconduct; if not, why not; if so, what are the relevant details;
(4) Whether the SOEs have a tracking system in place for financial
misconduct cases; if not, why not; if so, what are the relevant details?
CW309E
Reply:
(1)(a-b)(i-ii) All State Owned Companies (SOC) within the Departmentâs
portfolio have strategies and resources to deal with risks associated with
their business operations. As required by the Public Finance Management
Act, 1999, the Companies Act, 2008 and the Public Audit Act, 2004 amongst
others, the SOC have internal audit function which play an important role
in scrutinising SOC governance practices, reporting routines, the
implementation of risk management policies and internal control processes.
Internal auditors constitute the first level of review of the quality of
information concerning the extent to which the organisation has achieved
its statutory objectives.
In addition, SOC have established governance structures and frameworks to
deal with various risks facing their operations. Such structures and
frameworks include:
a) Audit and Risk Committees;
b) Audit Plans;
c) Risk Management Policies; and
d) Fraud Prevention Policies.
These Frameworks are important instruments to assist the SOC to better
identify and evaluate operational and strategic risks in order to improve
their risk management and control systems.
(2)(a-b)(i)(aa-bb)(ii)(3) SOC have resources and capacity to respond to any
allegation of fraud, corruption and any misconduct in line with National
Treasury Regulations (Regulation 33). SOC report on financial misconduct in
the Annual Report and in addition to such reporting, SOC are expected to
submit a detailed report to the Department on all cases of financial
misconduct describing in detail the extend of the misconduct, the internal
control structure and remedial action taken by the Board and management to
address the misconduct.
(4) The Department has been engaging with the Office of the Auditor-General
to make certain that the legality and regularity of the SOC financial
management and accounting is in line with Governmentâs objectives. In
doing so, the Auditor-General is able to assist the Department and its SOC
to undertake full performance audits and in depth reviews of the efficiency
and economic effectiveness of the SOC performance covering the full range
of activities, not only financial but also the organisation and operational
systems.