The 9th International Anti-Corruption Conference
THE ROLE OF THE OFFICE OF THE AUDITOR-GENERAL IN SOUTH AFRICA
The basis for almost all the initiatives in South Africa
regarding the fight against corruption, fraud and other instances of
economic crime can be linked to the first founding provision in the
Constitution of the Republic of South Africa. The first section of
The Constitution, Act 108 of 1996, states that the country is one,
sovereign democratic state founded on, amongst others, the following
"(d) Universal adult suffrage, a national common voters roll, regular
elections and a multi-party system of democratic government, to ensure
accountability, responsiveness and openness."
The Constitution also makes provision for state institutions that
strengthen constitutional democracy. One of these institutions is the
Office of the Auditor-General (Office), which has a very distinctive
role to play in the prevention, detection and investigation of
economic crime. The role that the Office plays can be understood only
if its mandate is properly understood.
The Auditor-General's mandate is entrenched in the
Constitution and is further supported by another Act of Parliament,
the Auditor-General Act.
According to chapter 9 of the Constitution, the Auditor-General is one
of the six independent institutions that should strengthen
constitutional democracy, be impartial and exercise its powers without
fear, favour or prejudice. These powers include auditing and
reporting publicly on the accounts, financial statements and financial
management of most public sector institutions at national, provincial
and local level.
Additional powers and functionswhich states, amongst others, that:
The additional powers and functions of
the Auditor-General are described in sections 3 and 5 of the Auditor-
General Act, No 12 of 1995. I would like to emphasise section 3(3),
"The Auditor-General may at his or her discretion determine the nature
and extent of the audit to be carried out and request the details and
the statements of account which he or she considers necessary
This section basically describes the primary mandate of the Auditor-
General - which up to 1997 only included regularity auditing and
performance auditing - and clearly also provides the Auditor-General
with the authority to include Forensic Auditing as part of the
Forensic Auditing was established in 1997, and was based on the
increasing level and negative impact of economic crime on the public
accountability process, which obliges the Office to report on such
crime within the public sector. Forensic Auditing in the Office is
"an independent, cost-effective reviewing and reporting process
carried out to facilitate the prevention, detection and investigation
of economic crime (which includes fraud and corruption) in the public
This comprises mainly an objective assessment of the measures
instituted by accounting officers and all relevant role players to
prevent, detect and investigate economic crime, but it can also
include crime investigations where deemed appropriate and necessary.
Forensic Auditing has a unique focus, which
distinguishes it from regularity, performance and computer auditing,
but the interdependence of the various disciplines is acknowledged.
These audit disciplines, which form the functional audit components,
have thus far been very instrumental in highlighting instances of
possible economic crime.
The Office's objective with Forensic Auditing
The objective of the
Office of the Auditor-General with forensic auditing is to:
- Determine the nature and extent of the perpetration of economic crime
and the adequacy and effectiveness of measures that should have either
prevented or detected it;
- Facilitate the investigation of economic
crime in general by providing support to the relevant investigating
and/or prosecuting institutions (by handing over cases and providing
accounting and auditing skills).
Proactive and reactive strategies have been developed to achieve this
A - Proactive strategy
The proactive strategy is aimed at preventing
economic crime by promoting an overall fraud awareness culture in the
public sector through, inter alia, publications,
presentations/workshops and participation in relevant national and
international initiatives. This is done with the aim of promoting a
culture of "zero" tolerance through interventions such as
- Publishing relevant articles;
- Participating in workshops/seminars/conferences (which provides developmental learning
and networking opportunities);
- Presentation of training programmes;
- Providing support to national/international initiatives;
- Making stakeholders aware of deficiencies in the measures instituted to
prevent or detect economic crime.
The proactive and reactive strategies differ in that the reactive
strategy focuses on those strategies implemented to detect and
investigate economic crime, whilst the proactive strategy focuses on
the prevention of economic crime:
The most efficient and effective way to prevent economic
crime is to know the circumstances surrounding it or the conditions
that will enhance the possibility of it occurring. The approach we
follow in this regard is based on the fact that the following aspects
should minimise the risk of economic crime:
(i) Strong financial management systems
The Auditor-General Act authorises the Office to
enquire into the efficiency and effectiveness of internal controls and
financial management systems, and to report thereon.
well informed that, should the measures and systems implemented by
them not be adequate to ensure probity and reduce the risk of economic
crime, they will be held accountable through the Office's reports to
the relevant legislative bodies.
(ii) Effective internal controls
In determining the scope and extent of its audit, the Office, in terms of
Generally Accepted Government Auditing Standards, is compelled to
study and evaluate the reliability of internal controls, which could
- organisation of work;
- segregation of duties;
- physical security measures;
- authorisation and approval;
- arithmetical and accounting procedures;
- effective training of staff;
- supervision; and
The fact that the Office, in its audit approach,
conducts procedures to evaluate the effectiveness and reliability of
the relevant institution's internal controls and to report thereon,
serve as a very definite deterrent for potential perpetrators of
(iii) Adequate public awareness (and acceptable
standards of conduct)
The results of the Office's findings are made
available to all the relevant legislative bodies at all government
levels at least annually. These findings become public knowledge once
the audit reports have been tabled and the general public has access
to them. We have a disclosure policy entailing the issue of media
releases on the findings of the audit to provide additional public
awareness. This public disclosure of audit findings serves as another
deterrent to committing economic crime.
B - Reactive strategy
The reactive strategy focuses on the
investigation of allegations of economic crime. The submitted
allegations are confirmed or refuted by collecting and submitting
substantive evidence. The objective would be to investigate and
report on the following:
the nature and extent of the specific instance of economic crime;
- the suspects involved;
- deficiencies in the measures that should have prevented or detected the crime;
- recommending punitive steps and further actions in respect of:
- criminal prosecution and/or
- civil recovery and/or
- disciplinary action
- progress made by the other institutions in investigating relevant cases.
Findings are then reported on through the normal audit process or,
when applicable, are handed over to institutions with investigating
and prosecuting powers.
Principles upon which the Office bases its strategies
The Office has
developed several strategies to address economic crime, which are
being implemented on the following principles/understandings:
1) Firstly, the Office as the external auditor of state institutions
is not responsible for the prevention and detection of economic crime
in the public sector, since this is the ultimate responsibility of
management (Accounting Officers).
2) The second principle or understanding on which the Office bases its
strategies is the acknowledgement of the roles played by other
institutions in the prevention, detection and investigation of
economic crime. Where possible, these institutions are supported by,
inter alia, providing assistance and co-operation.
The assistance and co-operation between these role players is indeed
to be taken up in a formal agreement soon.
Draft agreement between the anti-corruption entities
The main purpose
is for the various stakeholders to co-ordinate the investigation of
matters where there is a possibility of duplication or overlapping
action. This in turn will optimally co-ordinate the work of the
The stakeholders are:
- The Public Service Commission;
- The National Director of Public Prosecutions;
- The Asset Seizure Unit;
- The Special Investigating Directorate;
- Investigating Directorate: Serious Economic Offences;
- The South African Police Service;
- The Anti-Corruption Unit;
- Commercial Branch;
- Fraud Unit;
- The Heath Special Investigating Unit;
- The Public Protector;
- The Office of the Auditor-General.
The main idea of the agreement will be to promote team work, a
sharing of information, common assistance in actions, distribution of
information on operations and, where practical, the creation of joint
investigating teams. Sound relations with all relevant stakeholders
potentially increase capacity and therefore prove most valuable.
3) A third principle or understanding on which the Office of the
Auditor-General bases its strategies is that of playing an active role
in supporting existing initiatives and programmes that aim to combat
economic crime, e.g. the Cabinet's National Crime Prevention Strategy,
the National Anti-Corruption Summit, etc.
The National Anti-Corruption Summit, held in April 1999, also
emphasised the need for mutual support and working together with
government to communicate a national integrity strategy.
Resolutions of the National Anti-Corruption Summit
During this summit it was commonly acknowledged that corruption:
- Adversely affects all sectors in society, especially the poor,
- Is corroding the national culture of democracy and good governance,
- Depletes all scarce resources that are needed to ensure equality and prosperity,
- Gives personal affluence priority above the pursuit of economic justice.
In terms of combating corruption, the following resolution, in brief,
was taken to be implemented as the basis of a national strategy to
a) Combating corruption
- To critically review and revise legislation in place to combat corruption;
- To encourage and implement whistle- blowing mechanisms in all sectors;
- To support the speedy enactment of the Open Democracy Bill to foster
- To establish special courts to ensure effective investigation and
- To establish Sectoral Coordinating Structures to
effectively lead and manage the National Anti-Corruption Programme,
especially in the Public Service;
- To establish, eventually, a National Coordinating Structure with the authority
to effectively monitor and manage the National Anti-Corruption Programme.
b) Preventing corruption
- To publicise and support the blacklisting of businesses,
organisations and individuals proven to be involved in corruption and
- To establish a National Anti-Corruption Hotline
for the reporting of corrupt practices. Sectoral and other hotlines
are to be established to strengthen the National Hotline;
- To take
disciplinary action against perpetrators;
- To monitor and report
consistently and fairly on corruption at all levels of society.
c) Building integrity and raising awareness
- Promoting analysis and research to analyse the causes, effects and
growth of corruption;
- Developing and enforcing Codes of Good Conduct
and Disciplinary Codes throughout civil society (In this regard the
Public Service regulations were amended on 10 June 1997 by the
addition of a Code of Conduct for Public Servants. Public awareness
of the code also increases the probability of detection and helps
prevent fraud and corruption.)
- Working together to inspire society with a higher moral purpose and ethos
that will not tolerate corruption;
- Promoting training and education in occupational ethics;
- Creating a sustained media campaign to highlight the causes of, and
solutions to corruption, and communicating a national integrity
The Office's strategy as I have set it out, is in line with
recommendations that followed from discussions in Montevideo at the
International Congress of Supreme Audit Institutions (INCOSAI) in
November 1998. Some of the guidelines agreed upon were:
- Taking a more active role in evaluating the efficiency and
effectiveness of financial and internal control systems;
- Focusing audit strategy more on areas prone to fraud and corruption;
- Developing high-risk indicators for fraud; and
- Closely cooperating and exchanging information with national and international bodies
In part, the strength of corruption lies in the fact that
there is no simple remedy therefor. Defences must therefore be
strengthened to keep corruption to a minimum. Defences employed by
the Office include the publishing of audit reports to increase public
awareness, advising auditees on how to safeguard their accounting
systems against unlawful manipulations, and promoting the
establishment of efficient and effective internal controls.
These are common-sense defences based on sound and transparent
management, sound bookkeeping, and on well-trained and highly
In closing I would like to say that an effective fraud detection
programme will provide the opportunity for the public and for the
civil servant to report fraud and other suspicious, unethical or
illegal behaviour anonymously and without fear of reprisal.
SAIs in this regard cannot shirk this immense responsibility toward
auditees and the public at large, but must face the challenge head on.
Only a combined effort can lead to any real success.
1. Draft agreement: Anti-Corruption Entities, Heath Special
Investigating Unit, 30 August 1999.
2. Resolutions of the National Anti-Corruption Summit, 14-15 April 1999. 3. International Congress of
Supreme Audit Institutions (INCOSAI), Report on INCOSAI, Montevideo,
4. The role of SAIs in fighting corruption and
mismanagement, Report on the 12th UN/INTOSAI Seminar on Government
Auditing, Vienna, 21-25 October 1996.
5. The Constitution of the Republic of South Africa, Act 108 of 1996.
6. Auditor-General Act, 12 of 1995.