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Audit Outcome Analysis 2022-23 Science & Innovation Department

The audit outcome analysis for the 2022-23 period of the Science & Innovation Department in South Africa reveals a regression from unqualified with no findings to unqualified with findings. This change was influenced by various factors such as restatement of financials, irregular expenditure, delays in submissions, and technical accounting interpretations. Management has implemented controls to ensure compliance with accounting standards. Several audit findings were addressed through action plans and adjustments to financial statements, including loan restructuring and innovation funding recognition.

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Audit Outcome Analysis 2022-23 Science & Innovation Department

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  1. Technology Innovation Agency 2022/23 Audit Action Plan Patrick Krappie Chief Executive Officer science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA

  2. AUDIT OUTCOME

  3. 2022/23 EXTERNAL AUDIT OUTCOME [Improvement/Stagnation/Regression] in Audit Outcomes Types of audit outcomes Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings 2022-23 2021-22 2020-21 science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 3

  4. 2022/23 MANAGEMENT REPORT Risk areas Status of drivers of internal controls Quality of submitted financial statement Quality of submitted performance information Supply Chain management Effective leadership culture Proper record keeping Risk management Processing and reconciling control Oversight responsibility Internal audit Regular reporting HR Management Audit committee Policies and procedures Financial health Human Resource management Information technology Compliance monitoring Audit action plans IT system controls IT governance Intervention required Good Of concern Intervention required Good Of concern Positive Audit Outcome – UnqualifiedAudit Outcome science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 4

  5. AUDIT OUTCOME ANALYSIS Audit Outcome regressed from Unqualified with No Findings to Unqualified with Findings due to:  Restatement to Prior Year Financials due to successful restructure of historically impaired loan resulting in R22m recovery  Irregular Expenditure arising from continued support towards securing Technology and Assets within a non- performing Technology Platform situated in the Northen Cape (Upington)  Delays in submissions of Financials by SMMEs resulting in later recognition of Royalties  Technical accounting interpretation (GRAP) in relation to recognition of conditional assets Management has implemented relevant controls including quality review to ensure relevant compliance and reporting in line with GRAP. Good science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 5

  6. AUDIT FINDINGS & LOG: 31 JANUARY 2024

  7. 2022/23 FINDINGS Audit Finding Action plan Progress Complete No adjustment made to the carrying value of assets with Management has reviewed and assessed the finding in line with the accounting zero balances after the reassessment of useful life. standards and the TIA asset Policy. As agreed with the auditors, Management did not consider it to be material to adjust the Asset register / AFS. Management also considered that necessary controls have been implemented in this regard. Complete Loan restructuring not recorded accurately in the AFS and Management exercised a thorough review of the matter including accounting (GRAP) implications. The necessary adjustments were processed in the final auditedAFS. the resultant recognition of interest was not recognised in prior years Complete Incorrect recognition of Innovation Funding agreement with The necessary adjustments were processed in the final audited AFS. Based on the DSI as conditional grant and Loan advanced to a project feedback from the Office of the AG, no adjustments/changes were made in line with incorrectly recognised on the financial statements as a GRAP 109 between TIA and the DSI with reference to the Innovation Fund deferred conditional grant agreement in place. science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 7

  8. 2022/23 FINDINGS Audit Finding Action plan Progress Complete Contingent liabilities – Disclosed amount do not agree The necessary adjustments were processed in the final audited AFS. with the legal counsel representation letter Management has ensured that it maintains a robust process of controls in respect of the preparation of its AFS. This includes an independent review by the internal auditors. All information provided to the auditors have been supported by valid, accurate and complete schedules. Royalty income recorded in the incorrect period Complete In line with GRAP 9, TIA can only raise royalty invoices when the amount can be measured reliable. The raising of royalties is conditional on the receipt of signed AFS, with some delays experienced from SMMEs. Management will continue to ensure that it looks at methods to improve the recording of royalty income. Recognition and payment of expenses incurred in As a result of delays and difficulties in the establishment of the platform, TIA’s In Progress – respect of an external Platform outside of terms of continued to assist the platform in securing assets on behalf of the NSI. due date 31 funding agreement March 2024 Management notes the finding, and the actions in respect of closure of the platform are currently being finalised. The determination test and submission to National Treasury will be completed by the end of the financial year. No new irregular expenditure has been incurred due to relevant approval process. science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 8

  9. 2022/23 AUDIT LOG Audit Findings Log as at 31 January 2024 3.5 3 2.5 2 1.5 1 0.5 0 Adjustment of zero book value assets Restructured loan not appropriately recognised Royalty income recorded in incorrect period Recognition and recording of Platform expenditure outside agreement Contingent liability disclosure Incorrect recognition of Funding Agreement At 31 March 2023 At 31 January 2024 science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 9

  10. CONTACT US +27 (0)12 472 2700 +27 (0)12 472 2700 www.tia.org.za www.tia.org.za FOLLOW US ON SOCIAL MEDIA FOLLOW US ON SOCIAL MEDIA CORPORATE OFFICE CORPORATE OFFICE KWAZULU KWAZULU- -NATAL NATAL WESTERN CAPE WESTERN CAPE 4th floor, Central Park, Black River Business Park, Fir Road, Observatory, Cape Town, 7925 TIA House, 83 Lois Avenue, Menlyn, Pretoria, 0181 4th Floor, 102 Stephen Dlamini Road, Musgrave, Durban, 4062 science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 10

  11. THANK YOU THANK YOU science & innovation Department: Science and Innovation REPUBLIC OF SOUTH AFRICA 11

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