Internal Audit and Financial Misconduct: The Case of the South African Social Security Agency (SASSA)

04 Jun 2019

The paper, which emanates from the author’s doctoral study, explored the role of an internal audit function in averting financial misconduct, at the South African Social Security Agency (SASSA). A review of literature pointed to the scarcity of research that focuses on the role that an effective internal audit function can play in making recommendations for the institution of internal controls that would contribute to averting or reducing financial misconduct, in developing countries such as South Africa. In this context, the study emphasised that although an internal audit function plays an advisory and indirect role, the function still has an important task to play as highlighted above. Thus, the problem statement for the study was articulated as follows: The existence of an internal audit function at SASSA had not resulted in improved internal controls, which contribute to the curbing of financial misconduct. Consequently, the main research question for the study was: What are the necessary conditions under which an internal audit function could be improved? Using the Agency theory, the study conceptualised an internal audit function as an important part of internal management controls that functions by reviewing, evaluating and making recommendations for the improvement of other controls within an institution, with the aim of promoting good governance. The research design and methodology for the study was qualitative, as it was necessary to get the views of the respondents on the various themes covered in the interview schedules and survey questionnaire. The case study design was employed as the operational framework for data collection. The main findings of the study are articulated in a conceptual framework for the effective implementation of an internal audit function. Thirteen conditions have been identified as necessary for an internal audit function to be effective. In addition, the study makes recommendations for amendments to the PFMA and/or Treasury Regulations: PFMA, to contribute to the efficiency of internal audit functions in South Africa’s public sector.