By Charndré Emma Kippie

Public sector auditing is absolutely imperative as it provides legislative and oversight committees, individuals in governance, as well as the general public, with critical insight independent and objective evaluations regarding the conduct, administration and performance of government programmes, operations and policies. 


What is Public Sector Auditing?

Public sector auditing is a systematic process of impartially gathering and assessing evidence needed to ascertain whether financial, compliance and performance information (or actual conditions influencing this data) abide by established criteria.


In terms of Section 188 of the Constitution, the Auditor-General is responsible for auditing and reporting on the accounts, financial statements and financial management of the public sector.


The mandate of the Auditor-General South Africa (AGSA) to audit public sector institutions, is informed by the Constitution of the Republic of South Africa. Additionally, the Public Audit Act (PAA) authorises the functions of the AGSA (which is a Chapter 9 institution according to the Constitution). 


The scope of the annual audit in the public sector includes the audit of the financial statements, formally disclosed performance data, and compliance with key legislation. The AGSA is also at liberty to perform discretionary engagements, such as performance audits, inquiries and special audits.


Types of Public Sector Audits 


Financial audit

All financial statements must be audited in order to obtain reasonable assurance about

whether the financial statements, as a whole, are free from ‘material misstatement’ ie. fraud or human error, and are in accordance with the applicable financial reporting and regulatory framework. 


Performance audit

Performance audits are necessary for guaranteeing that the reported performance

information for the selected programmes, objectives, and development priorities (which are presented in the annual performance report) is truthful, useful and reliable. This is analysed according to the applicable criteria developed from the performance management and reporting framework, which is set out in the Directive.


Compliance audit 

The aim of compliance audits (which checks compliance with key legislation) is to obtain affirmation on whether or not the auditee, with reference to the individual compliance sections scoped into the audit, has complied with necessary requirements of key legislation that have been selected as the compliance criteria for the engagement. 


Principles of Auditing

As a Supreme audit institution (SAI), the Auditor-General South Africa (AGSA) fundamentally believes in making a difference in the lives of all South African citizens. 

Its overall objective is to strengthen the accountability, integrity, and the transparency of government and all public sector institutions. AGSA also aims to demonstrate ongoing relevance to citizens, Parliament and stakeholders. Thus, it is essential for AGSA to exhibit a model organisation by way of leading by example.

This organisation operates according to the following core principles: 


Ethics & Independence – Auditors should comply with the relevant ethical requirements and

be independent


Professional judgment, due care and scepticism – Auditors should maintain appropriate professional behaviour by applying

professional scepticism, professional judgment and due care throughout

the audit


Quality control – Auditors should perform the audit in accordance with professional standards on quality control


Audit team management & skills – Auditors should possess or have access to the necessary skill set

Audit risk – Auditors should manage the risks of providing a report that is inappropriate

in the circumstances of the audit


Materiality – Auditors should consider materiality throughout the audit process


Documentation – Auditors should prepare audit documentation that is sufficiently detailed to

provide a clear understanding of the work performed, evidence obtained

and conclusions reached


Communication – Auditors should establish effective communication throughout the audit



 Public Audit Act (PAA)

In terms of Section 39 of the PAA, the overseeing cohort established in terms of Section 10(3) of the PAA is required to appoint an auditor to audit the accounts, financial statements, and financial management and performance information of the Auditor-General, every year. 

The PAA also requires the AGSA to audit and report on the accounts, financial statements and financial management of:


  • National and provincial state departments and administrations
  • Constitutional institutions
  • The administration of Parliament and of each provincial legislature
  • All municipalities
  • All municipal entities
  • Any other institution or accounting entity required by other national or by provincial
  • legislation to be audited by the Auditor-General


Auditing in the public sector is a highly specialised field. All individuals taking up auditor roles need to make sure that they have the required knowledge set to accurately conduct audits according to prescribed quality control standards, thereby ensuring the performance of high-quality public sector audits.


*Check out the latest edition of the Public Sector Leaders publication here.

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