i 
 
THE CHALLENGES OF AUDITING IN THE PUBLIC SECTOR:  
A CASE OF THE NORTH WEST DEPARTMENT OF  
EDUCATION AND SPORT DEVELOPMENT 
 
 
 
Initials and surname: LR MONKWE 
Student number: 16916042 
 
 
 
Mini-thesis submitted in partial fulfilment of the requirements for the degree 
Masters in Business Administration - Finance at the Mafikeng Campus of the 
North-West University 
 
 
Supervisor:  Prof WS Musvoto 
 
 
Month and year of submission: November 2016 
 
 
 
ii 
 
DECLARATION 
 
I declare that the mini-dissertation entitled “The Challenges of Auditing in the Public 
Sector: A Case of the North West Department of Education and Sport Development” 
is my own work. This work is submitted in partial fulfilment of the Master of Business 
Administration - Finance to the North-West University, Mafikeng Campus and has 
not been submitted before for any degree to any other university. 
 
 
Lerato Rebecca Monkwe 
November 2016 
 
 
 
 
 
 
 
 
 
 
 
 
 
iii 
 
ACKNOWLEDGEMENTS 
 
I would like to take this moment to thank God the Almighty for giving me the 
guidance, wisdom, strength and power to complete the research project.  
This mini-dissertation is dedicated to my ever caring and supportive mother, Bertha 
Baratamang Monkwe. Special dedication goes to my lovely and ever encouraging 
daughters Olerato Molale and Oreneile Molale and my niece Mahlatsi Sepeng.  You 
are my pillars of strength and success, every time when I am down and out I think of 
you and regain my strength immediately.  I would like to thank the father of my 
beautiful daughters, Dr IS Molale for the support he gave me during my study.  My 
late grandmother Ketlogetswe Hilda Moloi (Mannibo) for her unwavering love – “I 
know you would be smiling, kissing and dancing for me by now”.  
Dr Phorabatho (my mentor), a very supportive and reliable child-minder Tlamelo 
Sipele, my family and special friends who always gave me support, I am grateful to 
be associated with people like you. The sky is always the limit.   
My sincere thanks and appreciation goes to Professor Wedzerai Musvoto, my 
supervisor for his patience, motivation, guidance and positive contribution in the 
completion of this mammoth task. I am very humbled and grateful for his advice 
which helped me to improve the quality of the work. 
Mafikeng Lutheran Church Young Adult League for their understanding and support, 
especially the Finance and Planning Committee which carried over my Treasurer 
responsibilities with complete care and cautiousness, you are the best team. May 
God continue to abundantly bless this league.  
Finally, my respondents from different directorates of the department – your 
contributions are highly appreciated.  
May the Light and Grace of the Almighty God continue to shine upon all of you all the 
time.  
“Your attitude, not your aptitude, will determine your altitude” – Zig Ziglar 
  
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ABSTRACT 
 
Auditing of financial reports in any organisation is the epicentre of organisational 
growth. Financial data has to be gathered, collated and analysed so that audit 
opinions can be established. The study sought to investigate the roles played and 
challenges encountered by senior management during the conduct of audit 
exercises in the Department of Education and Sport Development in Mafikeng. 
Quantitative research techniques were used to gather data. A sample size of 50 
participants was used in the study and was determined through simple random and 
convenience sampling techniques. 
 
The study was confined to the Department of Education and Sport Development in 
Mafikeng. The study looked at the respondents’ gender, age, level of education, 
position in the department, duration in the current position and perceptions thereof 
regarding auditing processes in the department. The majority of the participants 
indicated that auditing was the foundation of good governance and assisted in 
curtailing wasteful expenditure. It was further established that political and skills 
related issues had an impact on the type of audit outcomes in an organisation. 
 
 
 
 
 
 
 
 
 
v 
 
TABLE OF CONTENTS 
Declaration ii 
Acknowledgements Iii 
Abstract iv 
Table of Contents v-vi 
List of Tables vii 
List of Figures viii 
CHAPTER ONE: ORIENTATION TO THE STUDY 
1.1 Introduction 1-2 
1.2 Background to the problem statement 2-4 
1.3 Problem statement 4-5 
1.4 Research aim and objectives 5 
1.5 Rationale for and importance of the research project 5-6 
1.6 Delimitations of key concepts 6 
1.7 Definitions of key concepts 6-7 
1.8 Research methodology 7-9 
1.9 Ethical considerations 9 
1.10 Division of chapters 9-10 
1.11 Conclusion 10 
CHAPTER TWO: LITERATURE REVIEW 
2.1 Introduction 11 
2.2 Brief overview of auditing in the public sector 11-25 
2.3 The role and responsibilities of senior managers during public 
sector entity audit exercises 
26 
2.4 Theory of auditing in the public sector 26-27 
2.5 Summary 27 
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY 
3.1 Introduction 28 
3.2 Research methodology 28 
3.3 Research design 29-33 
3.4 Sources of data 33-35 
3.5 Research instruments validation 35-38 
3.6 Sampling design 38-40 
vi 
 
3.7 Probability sampling 40 
3.8 Simple random sampling 41 
3.9 Non-probability sampling 41 
3.10 Convenience sampling 41 
3.11 Sample size 41 
3.12 Conclusion 42 
CHAPTER FOUR: PRESENTATION, INTERPRETATION AND ANALYSIS  
                               OF DATA 
4.1 Introduction 43 
4.2 Results 43-68 
4.3 Conclusion  68-69 
CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS 
5.1 Introduction 70 
5.2 Auditing compliance 70 
5.3 Research design and methodology 72 
5.4 Summary of findings 73 
5.5 Limitations 73 
5.6 Recommendations 73-75 
5.7 Conclusion 75 
 References 76-84 
APPENDICES 
1 Questionnaire 86-90 
2 Turn it in report 91 
3 Certificate of language editing 92 
 
  
vii 
 
LIST OF TABLES 
Table 2:1 Different kinds of audit opinions 
Table 3.1  Differences between probability and non-probability sampling 
Table 4:1  Level of education 
Table 4.2  Duration in current position 
Table 4.3  Perceptions of employees regarding auditing in the public sector 
Table 4.4  The roles and responsibilities of senior managers during public sector 
entity audit exercises 
Table 4.5  Challenges experienced during the auditing processes 
Table 4.6  Recommendations to improve efficiency of the functions of senior 
officials during auditing exercises 
Table 4.7  Cronbach’s alpha coefficients 
Table 4.8  Spearman’s rank correlation between level of education and views of 
respondents concerning challenges experienced during auditing 
processes  
Table 4.9  Spearman’s rank correlation between position in the Department and 
views of respondents about the auditing route in the public service 
Table 4.10  Spearman’s rank correlation between job experience in current position 
and views of respondents about auditing process in public sector 
 
 
 
 
 
 
viii 
 
LIST OF FIGURES  
Figure 3.1:  Advantages of using questionnaire 
Figure 3.2:  Disadvantages of using questionnaire 
Figure 4.1  Gender 
Figure 4.2  Age group 
Figure 4.3  Position in the department 
Figure 4.4  Views of respondents versus education level (r < 0) 
Figure 4.5  Views of respondents versus position in the Department (r < 0) 
Figure 4.6  Views of respondents versus position in department (r>0) 
Figure 4.7  Views of respondents versus job experience (r<0)  
 
 
 
 
1 
 
CHAPTER ONE: ORIENTATION TO THE STUDY 
1.1 Introduction 
The purpose of this study is to identify and examine the challenges that senior 
managers and other employees face when external auditing is performed in the 
Department of Education and Sport Development.  This is motivated by the fact that 
public sector entities all over the world are currently facing their greatest challenge. 
According to Ngoepe and Ngulube (2012), most provincial departments in the North 
West Province have failed to get a clean audit since 2011.  It follows therefore that 
public sector auditing is relevant to the efficient operation of government 
departments.   
Public sector auditing is important because it channels employees to follow policies, 
guidelines and procedures as well as reduce fruitless and unauthorised expenditure 
(financial management practices). If public sector auditing is not conducted 
timeously, the endemic inefficiency in government departments is bound to continue. 
This endemic efficiency in government is highlighted by authors such as Van Vuuren 
(2014); Ngoepe and Ngulube (2014) when they point out that for several years now 
most government departments in South Africa have been yearning to get a clean 
audit report but such has been elusive.  It follows therefore that governmental bodies 
are compelled to improve their financial management practices and procedures in 
order to obtain some minimal assurance of meeting these external demands and 
consequently avoiding unclean audit reports.  
Furthermore, studies show that the imperative to obtain clean audits for all public 
sector entities at different spheres of government in the post-apartheid South Africa 
has increasingly gained currency (Van Vuuren, 2014; Ngoepe, 2014; Nel, 2011). The 
pressures on the above-mentioned entities to improve their audit outcomes are 
unlikely to recede in the next few years. Department of National Treasury (2015) 
declares that in South Africa, the government has increasingly started to value fiscal 
prudence, strategic importance of clean audit to value creation, socio-economic 
transformation and enhanced service delivery. In light of the fact that departments 
have been consistently failing to get clean audit reports, it follows that
2 
 
 there are problems that are preventing them to get clean audits.  This study 
therefore sets out to find the challenges that external auditors face when conducting 
audits in the public sector. 
This study commences with the background in Section 1.2.  This is followed by the 
problem statement in section 1.3, research aim and objectives in section 1.4, while 
the ultimate section 1.5 discusses the rationale for and importance of the study, 1.6 
discusses delimitations of the study, 1.7 discusses definitions of key concepts, 1.7 
discusses research methodology, ethical considerations is discussed in 1.9 while 
1.10 outlines the division of chapters. 
1.2 Background  
Twenty-one years on, captions such as “All-round clean audits a dream” (Sowetan 
Newspaper 31 July (2014) and Corruption Watch (2015) indicate that when audit 
reports get better, old problems stay put. Ngoepe and Ngulube (2014) assert that 
media and Auditor-General’s reports have historically been replete with problematic 
audit results concerning a number of government departments at national and 
provincial level.  The Auditor General findings of the past few financial years support 
the observation: 
• In 2011-2012, five of the nine provinces failed to receive a clean audit for any of 
their departments. The North West Province (hereafter NW Province), the focus of 
this study, was part the above cohort that failed to get a clean audit (AGSA, 2012). 
• In 2012-2013, two provinces could not achieve a single clean audit for their 
departments. The NW Province was again amongst these dismal indicators 
(AGSA, 2013). 
• In 2013-2014, Provincial Treasury became the first and only department to receive 
a clean audit in the NW Province (AGSA, 2014a) 
At a glance, the above data reflects a trend towards improvement. However, such 
improvement is at a slow pace, especially in view of the fact that these reports 
concern public funds and management. Furthermore, the reports paint a pessimistic 
picture about the NW Province where the main service delivery sectors: education, 
health, public works, and human settlement have been pathetically failing the audit 
3 
 
test. This image does not only beg for questions about public confidence in the 
functionality of government bodies that persistently fail to obtain clean audit, but 
sheds a dim  light on financial management, accountability and governance in the 
public entity. According to Ngoepe (2012), organisations receiving disclaimer of 
opinions are at risk of facing consequential implications such as intolerance from 
communities for better service delivery, loss of credibility, investigations for 
maladministration or unexpected change of leadership without succession planning, 
as is the case in the broader South Africa. 
A major factor behind recurrent unclean audit outcomes has been the slow pace with 
which most senior management structures at the auditees implement the 
recommendations based on findings from previous financial years (AGSA, 2015). In 
addition to raising doubts about the effectiveness of senior managers in executing 
their audit-related functions, this observation is laden with the potentially central role 
that senior managers have in influencing the audit outcomes.  
The NW Province’s Department of Education and Sport Development is guided by 
the ensuing vision, mission and values. Vision: Towards Excellence in Education & 
Sport Development. The vision of the Education and Sport Development Department 
in the North West is that it should be accountable and accessible to all, rendering 
sustainable and quality service, promoting lifelong learning opportunities and 
people’s self-reliance while continually contributing towards a democratic society and 
economic growth. The Department finds its vested authority and character in the 
overall objective of the South African Schools Act, (1996), which is to provide quality 
education which is accessible to all, relevant and cost effective, within the principles 
of equity, redress and affordability, after taking full account of the applicable policies 
determined in terms of the National Education Policy Act, 1996. 
 
In 1994 the North West Education Department (NWED) was faced with the challenge 
of amalgamating the schooling systems of Bophuthatswana and the other race 
groupings across the former provinces. This created transformation and logistical 
nightmares. Several adjustments to the management structures and also budgetary 
provisions were required before some level of stability could be established in the 
NWED. Even then the challenge of curriculum development, capacity building, and 
4 
 
rationalisation of educators and delivery of textbooks on time remain a daunting task 
requiring excellent leadership. The education system is still trying to correct the 
imbalances in the provision of basic infrastructure and facilities inherited from 
segregated schooling. The other area of concern is poor performance in 
mathematics and science, which to some extent is a result of a lack of libraries, 
science and biology laboratories. Another concern is the quality, dedication and 
qualifications of teachers. However, since good financial management is the fulcrum 
of sound organizational growth, this study was focused on examining the role of 
management in auditing exercises in the NWED. 
 
1.3 Problem Statement 
As noted in Section 1.2, public sector entities have been consistently failing to get 
clean audit reports. This has placed demands on those charged with oversight of 
finances in the public sector to improve their systems (Van Vuuren, 2014; Ngoepe 
and Ngulube, 2014).  
The constant failure to obtain clean audits suggests that the general financial 
management systems in the concerned public sector entities are fraught with 
inherent weaknesses, thus rendering vulnerable the government’s fiscal 
accountability (Barata, Cain and Serumaga, 2000). Gradually, this perpetuates 
problems that undermine a quest for clean audits, if not effectively tackled. The North 
West Provincial Legislature’s Standing Committee on Provincial Public Accounts 
(SCOPA, 2015) indicated poor audit outcomes for the Department and called for 
improved human capital engagement in the Department. The issues that were 
picked up by the Auditor General (2015) were asset management problems, control 
measures on leave policy, and irregular expenditure. The problem investigated in 
this study is connected to the challenges senior managers face during external audit 
processes.   
The research question can, therefore, be stated as follows: 
• What are the challenges that senior managers in the Department of Education 
and Sport Development in the North West experience when external auditors 
perform their auditing-related roles?   
5 
 
The following sub-questions are specifically developed to generate answers to the 
main research question: 
• What are the employees’ perceptions regarding external auditing in the 
Department of Education and Sport Development? 
• What are the roles and responsibilities of senior managers during an external 
auditing exercise in the Department of Education and Sport Development? 
• What challenges are experienced during the external auditing process in the 
Department of Education and Sport Development? 
• What recommendations could be made to improve the usefulness of the 
responsibility of senior managers during an external auditing exercise? 
1.4 Research aim and objectives  
Flowing from the problem statement, the general aim of this study is to: 
• Explore issues and challenges that senior managers in the public sector 
encounter when performing auditing-related roles.  
The research objectives emanating from the overall aim are thus set to: 
• Determine employees’ perceptions regarding external auditing in the 
Department of Education and Sport Development ; 
• Establish roles and responsibilities of senior managers during an external 
auditing exercise in the Department of Education and Sport Development ; 
• Identify challenges experienced during the external auditing process in the 
Department of Education and Sport Development ; and 
• Establish recommendations in order to improve the usefulness of the 
responsibility of senior managers during an auditing exercise. 
1.5 Rationale for and importance of the research project 
The statements listed hereunder served as the driving force for the researcher to 
conduct this project: 
• After 1994, the public sector in South Africa has been weighed down by an 
array of indicting audit results and a precarious financial state (Ngoepe and 
6 
 
Ngulube, 2014). As a citizen, the pervasive failure by most governmental 
bodies to obtain clean audits does not augur well with the researcher’s 
confidence in the management of public funds. There is, therefore, a 
compelling need to address this dismal state of affairs in the public sector. To 
that end, this study demonstrates vested interest in the introduction of 
intervention programmes that could assist in overcoming identified obstacles 
found in this study.  
• There is a paucity of related studies. Although much research is available on 
the failure of public sector entities regarding auditing, few studies have 
examined the issues and challenges leading to unclean audits from the senior 
managers’ perspective. This study has the potential to report on ground-
breaking findings and provide practical opportunities that could be explored to 
improve audit outcomes. 
• This research project was initiated on the anticipation that its findings and 
recommendations would have an impact on the existing body of literature in the 
area of auditing in public sector entities. It is further hoped the study improves 
public finance management and accountability, and thus taking steps toward 
enhancing service delivery in the public sector environment. 
1.6 Delimitations of the study 
This study is restricted to auditing of the public sector in South Africa as performed 
by the AGSA. Its special focus is on the auditing of the Department of Education and 
Sport Development in the NW Province. The setting of this study is consequently 
delimited to the district and corporate services offices of the aforementioned 
department.  
1.7 Definitions of key concepts  
Babbie and Mouton (2010) contend that defining terminology in research is critical to 
dispel possible misperception and misunderstanding and for better understanding of 
the terrain covered, especially by the potential readers. The key concepts are 
identified and clarified in this section to provide the context in which they are used 
and their meaning in the study.  
 
7 
 
1.7.1 Senior managers 
Staff who occupy high positions in organisations and conduct strategic decisions for 
the organizations (Botha and Musengi, 2014). 
1.7.2 Auditing 
In the context of this study, auditing involves an official process of examining and 
evaluating the assertions about the organisation’s economic actions and events with 
the aim of determining the degree to which the said assertions correspond with 
established procedures or regulations, and ultimately the auditor communicating the 
findings to interested parties (Boynton and Johnson, 2006). There are two main 
types of auditing: internal auditing and external auditing (Porter et al. 2006). This 
study focuses primarily on external auditing. 
1.7.3 Public sector 
This study adopts Ngoepe’s (2012) description of the public sector in South Africa as 
consisting of four spheres of government, namely: national government entities, 
provincial government, municipalities and constitutional public entities. However, 
special attention in this study is directed to government departments, and not 
municipalities and constitutional public entities. Hence, the concept public sector is 
used interchangeably with governmental bodies in the context of this study. 
1.7.4 North West Department of Education and Sport Development 
North West Department of Education (and Sport Development) is one of thirteen 
departments that make up the NW Province (AGSA, 2015a). It comprises four district 
offices and 10 chief directorates. Over and above basic education, the department 
has oversight of sport development. 
1.8 Research Methodology 
Gilbert (2008) argues that the creation of a research question should lead to the 
research methods, which should include the purposes and design of the study 
followed by the total research project.  Mouton (2001) corroborates this view when 
he asserts that a development of research methodology follows logically from the 
8 
 
research problem. This suggests that a research problem outlines the research 
format and the procedures that are followed (Chadwick, Bahr and Albrecht, 1984). 
In light of the problem stated in section 1.3, this study adopted quantitative research 
methods. Questions like “what” in the research are used in the qualitative study 
(Nieuwenhuis, 2011; Yin, 2009). In recapping, the current study’s main issue is: what 
are the issues and challenges that senior managers in the Department of Education 
and Sport Development (NW Province) experience when performing their auditing-
related roles?    
According to Lichtman (2013) and Creswell (2009), it is anticipated that a qualitative 
research design enables the researcher to illuminate the incident under review 
according to meanings allocated by the participants.  There are no predetermined 
answers that the researcher puts forward since the responses of the participants are 
identified, clustered and interpreted in order to provide robust answers to the 
research problem (Harwell, 2011; Johnson and Christensen, 2008). 
1.8.1 Sampling  
The present study uses convenience sampling. This technique relies on the 
availability of the respondents (Creswell, 2009; Nieuwenhuis, 2011). The point is to 
select cases that respond to the key issues of the present study (Boeije, 2010).  
The provincial department under study has four districts led by District Directors and 
four Chief Directorates at head office. Four Chief Directorates based at head office of 
the Department of Education and Sport Development (NW Province) were 
purposively sampled. Apart from issues of proximity, selection of these senior 
managers is predicated on the view that since they have oversight responsibility of 
finances and related records in their respective units, they are well-informed about 
external auditing, which is the phenomenon under investigation, based on their 
professional roles, expertise or experience (McMillan and Schumacher, 2008). They 
therefore, provide the insights into auditing processes in the public sector (Harwell, 
2011). 
 
 
9 
 
1.8.2 Data collection methods 
Data was collected through the use of self-administered questionnaires, 
observations and document analysis. 
1.8.3 Data analysis 
Empirical data consisted of interview transcripts and notes taken during interviews 
and document examination. The data analysis procedure was performed on the 
following steps based on Tesch’s open coding system, as captured in Creswell 
(2009): 
• Organising data; 
• Reading each transcript thoroughly to gain an overall sense of the whole; 
• Coding the data; 
• Generating themes, categories, and patterns that emerge from the findings; 
• The testing of emergent understandings; 
• Searching for alternative reasons, and 
• Presentation of data (report writing). 
Initial data analysis began whilst data collection was still underway, and continued 
while working on the research as prescribed by Creswell (2009). By implication, the 
researcher waited until all information was ‘in’ before commencement of analysis per 
Yin, (2009). 
The research methodology is discussed in greater depth in Chapter 3 of this study. 
1.9 Ethical considerations 
Written permission to interview senior managers and perform this research project 
was obtained from the Department of Education and Sport Development in the NW 
Province. All participants were given information concerning their voluntary 
contribution, the intentions of the project and were guaranteed of their confidentiality 
and anonymity. Code names for people and places to which they are attached were 
used to ensure anonymity. Also ethical clearance was granted by the Faculty of High 
Degrees Research Committee at North-West University. 
 
10 
 
1.10 Division of chapters 
This study is organised into five chapters. The researcher protocols are discussed in 
each chapter. 
This chapter provided the background to this study. The purposes of conducting the 
project and the research enquiries followed by the basis for the current study were 
also presented. It also provided a brief discussion of the research methodology, 
delimitations of this study, ethical considerations, and explained key concepts.   
Chapter Two reviews literature related to the role of senior managers in public 
sector entities in the audit exercise.  
Chapter Three provides a detailed exposition of the research design and 
methodology adopted for the empirical investigation in this study. Data analysis 
procedures are also provided in this chapter. 
Chapter Four presents and discusses findings from the empirical data. 
Chapter Five comprises the summary, conclusions as well as recommendations of 
the research study. Limitations of the study and areas for future research are also 
highlighted in this chapter.  
1.11 Conclusion 
This chapter provided the orientation of the study. Chapter one provided background 
to the study, research objectives, significance of the study and chapter outlines. 
Chapter one also laid the foundation of Chapter two on Literature Review.  
 
  
11 
 
CHAPTER TWO: LITERATURE REVIEW 
2.1  Introduction 
In the previous chapter, a brief discussion of the research methodology, delimitations 
of this study, ethical considerations, and key concepts were explained. The 
introduction of the Public Finance Management Act (PFMA) (Act 1 of 1999) in 2000, 
with a focus on good governance and accountability, made the internal audit 
functions (IAFs) an integral part of financial management in public sector entities. 
The PFMA requires Accounting Officers to ensure that their departments have an 
effective, efficient and transparent system of financial and risk management, and 
internal control, and furthermore, requires that the National Treasury make 
regulations and issue instructions to the Accounting Officers on how to maintain an 
IAF and to manage its activities. The fundamental purpose of IAFs in the public 
sector is to assist Accounting Officers to maintain efficient and effective control in 
public service institutions by evaluating the controls (specifically, determining their 
effectiveness and efficiency) and by making recommendations supporting the goal of 
enhancing and improving governance. In the context of the above, it is important to 
know the extent to which internal auditors in the South African public sector meet the 
expectations of their stakeholders.  
 
Chapter Two gives a brief overview of auditing in the public sector, provides 
numerous definitions of auditing, delineation and discussion on the need for auditing 
in the public sector. 
2.2 Brief Overview of Auditing In the Public Sector 
In his editorial remarks, de Jager (in Ngope, 2012) states that the beginning of the 
21st century could be described as the era of accountability, transparency and good 
governance particularly in the area of auditing in the public entity. In the South 
African public entity, the demands for greater accountability and good governance 
are clearly reflected in the documents listed hereunder: 
• South African Constitution (Act No. 108 of 1996), as well as in key pieces of 
legislation such as the  
• Public Finance Management Act (PFMA),  Act No. 1 of 1999 and  
• The Municipal Finance Management Act, (MFMA) Act No. 56 of 2003.   
12 
 
In terms of these Acts, governmental bodies are required to take responsibility for 
their actions and decisions pertaining to public funds. Auditing is normally carried out 
to fulfil this commitment (Ngope, 2012). 
 
The Lima declaration of guidelines on auditing precepts of the International 
Organisation of Supreme Audit Institutions (INTOSAI) outlined auditing in the public 
sector as: 
  
The idea and formation of an audit is essential in public financial 
administration, as the management of public funds represents a trust. An audit 
is not an end in itself but rather an indispensable part of a regulatory system 
whose aim is to reveal deviations from accepted standards and violations of 
the principles of efficiency, effectiveness, legality and economy of financial 
management early enough to make it possible to take corrective action in 
individual cases, to make those accountable accept responsibility, to obtain 
compensation, or to take steps to prevent, or at least render more difficult, 
such breaches (Fiedler, 1988). 
Flowing from the above description, the following broad aspects about auditing in a 
public sector are discussed through the focused literature review in this section:  
• Definitions of auditing; 
• The need for auditing of public sector entities; 
• Scope of auditing in the public sector; and,  
• Different types of audit outcomes. 
These are discussed in turn and in such a way that describes how auditing of any 
public sector entity should unfold. 
2.2.1 Definitions of auditing 
A single definition of auditing does not exist in relevant literature. Many scholars from 
multiple backgrounds and disciplines have written about auditing and have carved 
their own definitions and perspectives.  Marx, Kelly and Bourne (2009) underscore 
this in stating that in various disciplines and situations the terms audit and auditing 
are used differently. In short, a definition of auditing is context-based. Owing to the 
13 
 
fact that auditing is a statutory requirement and widely undertaken, particularly in the 
public sector, clear definitions and a degree of agreement on what it means are 
important. It is therefore seminal to probe various definitions where auditing is 
understood in order to fully appreciate the roles it plays in the public sector. 
According to Porter, B. Simon, J. and Hatherly, D. (2003) auditing is an orderly way 
of collecting and evaluating evidence pertaining to assertions about economic 
decisions and actions in which an entity is engaged, to make sure that the extent of 
communication between those assertions and established criteria, and based on 
such detail, the auditors form an opinion which is embodied in a written report 
addressed to the parties to whom the auditors are responsible under the law.  This 
view is also shared by Boynton and Johnson (2006) who maintain that auditing is an 
objective investigation and assessment of the financial statements of an entity to 
make sure that the records are a fair and precise representation of the transactions 
they claim to represent. In agreement with this, Lubbe (in Marx et al., 2009) note that 
auditing encompasses an investigation by an auditor into the evidence from the 
financial statements of an organisation in order to establish whether or not the 
financial statements fairly present the summarised transactions for the period under 
review and of the concerned organisation’s financial condition at the end date.  
According to Visser and Erasmus (2012), auditing is a procedure concerned with the 
gathering of essential information or evidence designed to render an informed, 
professional and independent opinion on the assertions and demonstration made in 
management reports and supporting documents.  Independent certification and 
reassurance about the credibility and completeness of financial and interrelated 
records explain what auditing entails. 
Inferred from the above definitions, the researcher understands auditing as an official 
process of examining and evaluating the assertions about the organisation’s 
economic actions and events with the aim of determining the degree to which the 
said assertions correspond with established procedures or regulations, and 
ultimately communicating the findings to interested parties. In its broadest 
perspective, auditing is the method of demonstrating to the auditees’ economic 
actions and proceedings of an entity. 
14 
 
The core of the definitions above is that the purpose of an audit is to allow an 
external auditor to articulate an opinion as to whether or not the financial statements 
reasonably present a true and reasonable analysis, in all material respects, of the 
financial situation of the organisation at a stipulated time, and the results of its 
procedure and cash flow information for the period ended on that date, in agreement 
with a relevant financial reporting framework and statutory obligations. 
Besides being regarded as sufficient for the context of this study, the foregoing 
definitions are comprehensive and show values of general application. Most 
importantly, they reflect the following qualities of auditing which merit special 
attention: 
• A systematic process implies that auditing proceeds in a logical and structured 
series of steps. 
• Objective investigation and assessment of the financial statements suggest that 
the auditor examines the sources of the statements and evaluates the 
outcomes without preference either for or against the organisation making the 
assertions. 
• Extent of communication denotes the closeness with which assertions can be 
linked with recognised criteria.  The auditor ascertains the degree to which 
assertions conform to the auditees’ procedures or regulations.   
• Assertions about economic decisions are the demonstrations made by the 
organisation under audit. This consists of the business matter of auditing: 
financial statements and internal operating reports. 
• Auditees receive their results achieved through a written report. The report is 
available to all users of the documents in which the assertions are made 
(Porter, et al. 2003).  According to Boynton and Johnson (2006), the report 
either enhances or weakens the credibility of the representations made by the 
auditees. 
Although brief, these features illustrate the fundamental elements of the auditor’s 
work. For any auditing exercise to be a success, it is critical that both the 
management and employees of the public entity should know and appreciate its 
importance. The next section delineates and discusses the need for auditing of 
public sector entities. 
15 
 
2.2.2 The need for auditing of public sector entities 
Boynton and Johnson, (2006) indicate that the demand for auditing has been 
influenced by professional managers that misled stakeholders by materially 
misstating the financial performance of their organisations’ financial statements. 
Consequently, the users of financial statements started looking for independent 
auditors to provide reports for reassurance concerning the consistency of financial 
reports and their conformance to Generally Accepted Accounting Principles (GAAP), 
Marx et al., (2009).  Although not exhaustive, the logical necessity of independent 
audits of public sector entities can further be attributed to the following conditions: 
demonstration of accountability, reduction or elimination of conflict of interest and 
complexity of the public sector entities.  
2.2.2.1 Demonstration of accountability 
Auditing, in some form, has existed, and it still relevant, for as long as people have 
been required to account for their transactions (Woolf, 1997). Van Gansberghe 
(2005) and Jackson and Stent (2014) assert that democratic governments are 
commonly expected to demonstrate accountability for the way they spend public 
money and efficiency in the delivery of services. This suggests that accountability, 
and therefore auditing, is an indispensable part of a democracy.  
Marx, et al (2011) point out that stakeholders of entities need assurances that the 
financial statements prepared by managers of such entities contain reliable 
information. By providing purposeful opinion of whether or not public possessions 
are responsibly and meritoriously managed in order to accomplish anticipated 
results, auditors enable public entity organisations to accomplish responsibility and 
reliability, make improvement on operations and inspire self-assurance among the 
public (Goodson, Mory and Lapointe, 2012). The International Standards of Supreme 
Audit Institutions (INTOSAI) attests to this view when it avows that public sector 
auditing provides legislative and oversight bodies, those charged with governance 
and the general public with information and independent and objective assessments 
regarding the stewardship and performance of government policies, programmes or 
operations. Diamond (2002) avers that auditing has always been perceived as a 
critical component of government financial management, and increasingly as a tool 
for the performance of the public entity.  This view puts auditing as a foundation of 
16 
 
good public sector governance. Jennings (2002) and Stent (2014) contend that 
auditing has been a traditional means for assuring the governments and its 
stakeholders that the taxpayers’ money is spent in compliance with relevant laws.  
Marx, et al, (2009) assert that in addition to ensuring fair presentation of the financial 
information audited, auditing also plays a key role in protecting the interests of the 
stakeholders.  
2.2.2.2 Conflict of interest 
According to Boynton and Johnson, (2006), users of financial statements have a 
growing concern on actual or possible conflict of interest between them and the 
management of the reporting entity. The main risk, as noted in Goodson, et al 
(2012), is that the latter may use their resources and authority to benefit their own 
interests rather than the user’s interests. The potential of auditing to avert this 
anomaly is recognised in the literature (Porter et al., 2003; Boynton and Johnson, 
2006). Financial statements of organisations are prepared by its managers. 
Essentially, these managers report on their own performance. Goodson, et al. (2012) 
concede that in the public sector, the employees acting as the public’s agent, must 
occasionally account to the public for their use and stewardship of resources and the 
extent to which the public’s objectives have been accomplished. By implication, the 
public, as the users of the financial statements, expect the statements to reflect the 
organisation’s financial performance, position and cash flow as accurately as 
possible (Porter, et al., 2003).  
When senior managers assume the role of player and referee at the same time, they 
are most likely to be biased in their report and to reflect favourably their management 
of the organisation’s affairs. Therefore, external audit plays a vital role in ensuring 
that the users are confident in receiving a report which is a fair reflection of the 
organisation’s financial affairs. In short, an effective audit activity minimises the 
inherent risks in a preparer-user (an officials-public) connection. The user depends 
on the auditor to provide a self-sufficient, objective evaluation of the correctness of 
the agent’s accounting and to report on whether the agent uses the resources in 
accordance with the public’s interest. 
 
17 
 
2.2.2.3 Complexity of accounting processes 
The global economy of the 21st Century has become the defining milestone which 
engendered a new direction for sound financial governance in both the private and 
public sectors (Passaris, 2011). Boynton and Johnson, (2006) and Porter et al 
(2003) contend that in recent years, economic transactions and the accounting 
systems which capture and process them have become increasingly complex. 
Boynton and Johnson, (2006) further point out that the increasing levels of 
complexity carry with them the threat of misconceptions and of deliberate or 
unintended misstatement. In the case of these changes and complexities, the 
financial statement users are less likely to possess the technical expertise needed to 
oversee the activity (Goodson et al., 2012). 
It is, therefore, appropriate for the financial statements of the public sector to be 
evaluated by an independent qualified auditor, with all the necessary attributes to 
understand the organisation’s transactions, business and its accounting system 
(Marx et al., 2009; Porter et al., 2003). 
Briefly stated, auditing enhances the credibility of financial statement by reducing 
information risk. Boynton and Johnson (2006) define information risk as the risk of 
financial statement being biased, incorrect, or incomplete.  
2.2.3 Scope of auditing in the public entity  
Auditor-General of Southern Africa (AGSA) is a public sector external auditor.  For 
that reason, the scope of public sector auditing is derived from the role of the above 
institution (IRBA, 2012). In that regard, IRBA (2012) and Stratton (2014) concur that 
the AGSA is responsible primarily for the audits of (1) financial, (2) performance 
against pre-determined objectives as well as, (3) compliance with laws and 
regulations. A brief description of the nature of each of the above audit are as 
follows: 
2.2.3.1 Financial audit 
Audit of financial statements forms the main focus of external auditors. The AGSA is 
required to audit the AFS and express an opinion thereon (Ngoepe, 2012). A 
financial statement audit encompasses the collection and evaluation of proof on an 
18 
 
entity’s results of its operations, cash flow, presentation of its financial position and 
with the intention of stating an opinion on whether or not they are fairly presented in 
conformity with criteria that is established (Jackson and Stent, 2014; Boynton and 
Johnson, 2006). It is generally expected that financial statements submitted for 
auditing must be free from material misstatements (AGSA, 2015). Misstatements 
could take the form of incorrect or omitted information in the financial statements. 
Examples include the incorrect or incomplete classification of transactions, or 
incorrect values placed on assets, liabilities or financial obligations and 
commitments. AGSA (2014) adds that the objective of an audit of financial 
statements is to indicate whether the financial statements fairly represent the 
financial position of auditees at financial year-end and the results of their operations 
for that financial year. However, financial audit is not limited to an audit of financial 
statements (Marx et al., 2009). According to IRBA (2012), it also covers some of the 
following elements: 
• Financial accountability audit involving the examination and evaluation of 
financial records and expression of opinions on financial statements. 
• The whole government administration’s financial accountability audit. 
• Financial and transactions audit, as well as an evaluation of compliance with 
applicable statutes and regulations. 
• Internal control auditing and internal auditing functions. 
• Auditing of the probity and propriety of administrative resolution taken within 
the audited entity 
• Audit of performance against predetermined objectives. 
• A valid report of any other issues raised from or relating to the audit that the 
supreme audit Institution (SAI) or Auditor-General of South Africa (AGSA) 
considers should be disclosed. 
Evidently, the various elements of a financial audit may enable the auditor to form an 
opinion on whether or not the financial statements are prepared in all material 
aspects in accordance with the applicable financial reporting framework (Marx et al., 
2009). Moreover, the above elements collectively suggest that an audit does not only 
ensure the fair presentation of the financial information being audited, but also fulfils 
a vital role in protecting the interests of stakeholders (Marx et al., 2011).  
19 
 
2.2.3.2 Audit of predetermined objectives 
The audit of predetermined objectives forms an integral part of the financial audit 
process. Goodson et al (2012) suggest that the audit of predetermined objectives 
involves a systematic collection of evidence during the financial audit process to 
assess aspects of programme performance beyond financial reporting.  The ultimate 
goal is to gain reassurance on the usefulness and reliability of the stated 
presentation against predetermined objectives (IRBA, 2012). 
Audit of predetermined objectives is mandatory in terms Sections 20(2)(c) and 
28(1)(c) of the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA). Ngoepe (2012) 
explains that compulsory audits deliberate on uniformity auditing, which must be 
done on a yearly basis. In fact, the PFMA, MFMA, MSA and related regulations 
require accounting officers to report annually on the performance of the entity 
against predetermined objectives.  In this regard, governmental bodies should 
prepare financial statements to report on their financial position and financial 
performance. The performance reports are used to assess the success of service 
delivery and the use of funds appropriated by the legislatures (IRBA, 2012; Marx et 
al., 2009). 
IRBA (2012) highlights the following as AGSA’s basis to evaluate the performance 
management system and annual performance report when drawing an audit 
conclusion: 
• All relevant laws and regulations 
• The National Treasury’s framework for the managing of programme 
performance information 
IRBA, (2012) further indicates that the audit of predetermined objectives involves the 
following: 
• Understanding the internal policies, procedures and controls related to the 
management of, and reporting on, performance information. 
• Evaluating and testing systems and controls relevant to recording, monitoring 
and reporting of performance information. 
20 
 
• Verifying the existence, measurability and relevance of planned and reported 
performance information. 
• Verifying the consistency of performance information between the strategic or 
annual performance or corporate or integrated development plan, the quarterly 
or mid-year reports and the annual performance report. 
• Verifying the presentation of performance against predetermined objectives in 
the annual performance report against the format and content requirements 
determined by the National Treasury. 
• Comparing reported performance information to relevant source documentation 
and verifying the validity, accuracy and completeness thereof. 
For audits in the public sector to improve the efficiency and effectiveness, the 
financial audits performed by the AGSA must include special focus on service 
delivery matters in certain specific sectors as well as human resource management, 
procurement and contract management.  
2.2.3.3 Compliance audit 
Public funds are entrusted to public sector entities for their proper management. 
IRBA (2012) states that it is the responsibility of management structures in these 
entities to be transparent about their actions, accountable to the citizens for the 
funds with which they are entrusted, and exercise good stewardship over such funds 
(Goodson et al., 2012; Diamond, 2002).  
IRBA (2012) maintains that compliance audits in South Africa are performed as part 
of the financial audit, and include determination on whether or not information in 
relation to a particular subject matter complies with all material respects under 
relevant conditions. Boynton and Johnson (2006) aver that through compliance 
auditing, public sector auditors test and report on the organisation’s conformity with 
objective requirements, standards, or criteria. These audits typically assess 
compliance with laws and regulations, contract requirements, grant requirements, 
and organisational policies and procedures. In endorsing the above views, IRBA 
(2012) stresses that the PAA makes provision for the auditor’s report to reflect an 
opinion or conclusion on the entity’s compliance with applicable legislation relating to 
financial matters, financial management and other related matters. 
21 
 
There are several factors to take into account when applying professional judgment 
to determine whether or not the non-compliance is material. Such factors, according 
to IRBA (2012) include the following: 
• Importance of the amounts involved (monetary amounts or other quantitative 
measures such as the number of citizens or entities involved and time delays 
in relation to deadlines). 
• Circumstances of the non-compliance. 
• Nature of the non-compliance. 
• Cause of the non-compliance. 
• Possible effects and consequences of the non-compliance. 
• Visibility and sensitivity of the programme in question (for example, is it the 
subject of significant public interest or does it impact vulnerable citizens). 
• Needs and expectations of the legislature, the public or other users of the 
auditor’s report 
• Nature of the relevant authorities. 
• Extent or monetary value of the non-compliance. 
2.2.3.4 Performance audit 
In the literature, performance audit is used interchangeably with operational audit or 
management audit (Boynton and Johnson, 2006). IRBA (2012) describes a 
performance audit as an independent auditing process to evaluate the measures 
instituted by management to ensure that resources have been procured 
economically and are used efficiently and effectively. It involves attaining and 
assessing evidence about the productivity and usefulness of the operations of an 
entity in relation to its objectives (Marx et al., (2009), Boynton and Johnson, (2006). 
According to Goodson et al. (2012), performance audit is broadly concerned with the 
auditing of:  
• Effectiveness – evaluates programme accomplishments. Has the programme 
achieved its objectives? What are the programme’s outcomes or results, both 
intended and unintended? In short, it assesses effectiveness of performance in 
relation to the achievement of policy objectives, operational goals and other 
intended effects of the audited entity (IRBA, 2012). 
22 
 
• Efficiency – examines productivity, unit cost, or indicators such as utilisation 
rates, backlogs, or service wait times. IRBA, (2012) succinctly stresses that it 
assesses efficiency of the utilisation of human, financial and other resources and 
the optimal relationship between the output of goods, services or other results 
and the resources used to produce them. 
• Economy – examines the extent to which the public sector has acquired 
resources in the right quantity, of the right quality, at the right time and place at 
the lowest possible cost. For example, an economy audit may evaluate the 
validity of a competitive procurement process to ensure that costs were 
controlled. IRBA (2012) points out that it provides factual reports on whether 
goods and services have been obtained cost-effectively, efficiently applied and 
effectively managed towards attaining the desired goals. 
According to Section 20(3) of the PAA, performance audits are discretionary. 
Ngoepe (2012) explains that discretionary audits would normally be passed out 
where there are complaints, and where there is particular public interest. Hence, 
their reporting is not limited to annual information and could cover more than one 
financial year (IRBA, 2012).  
In the light of the foregoing exposition of the scope of auditing in the public sector, 
the next section focuses the different types of audit outcomes. 
2.2.4 Different types of audit outcomes 
An audit opinion is based on audited statements. The auditor's opinion does not pass 
judgment on reported financial position or financial performance, or otherwise 
interpret the financial data. Pursuant to this understanding, Schmidt (2004) argues 
that the opinion simply states the auditor's conclusion that the financial statements 
do or do not fairly represent the financial position and performance of the company 
or organization, and that they do or do not conform to Generally Accepted 
Accounting Principles (GAAP). As a result, AGSA could express audit opinions in 
five different categories. AGSA (2014b) mentions and briefly describes these 
categories as follows:  
 
 
23 
 
2.2.4.1 Unqualified opinion with no findings (clean audit) 
An unqualified opinion with no findings is received by auditees because of the 
following: 
• The financial statements that they produce are free from material 
misstatements (material misstatements are mistakes or omissions that are 
significant in such a way that they affect the credibility and reliability of the 
financial statements); 
• measured and reported on their performance in line with the predetermined 
objectives in their annual performance plan, and in a manner that is useful and 
reliable; and 
• key legislations are complied with. 
An unqualified opinion is also known as a clean audit.  
2.2.4.2 Unqualified opinion with findings 
A financially unqualified opinion with findings is received by auditees who produced 
financial statements without material misstatements, but struggled to: 
• support their performance reports against the set objectives they committed to 
in their annual performance plans; 
• put in place clear performance indicators and targets to measure their 
performance against their set objectives; 
• report unfailingly the achieved performance targets and; 
• establish which legislation should be complied with, and put into action the 
required policies, procedures and controls to make sure that they comply. 
2.2.4.3 Qualified opinion 
Auditees that received a financially qualified opinion with findings face the same 
challenges as those that received a financially unqualified opinion with findings in the 
areas of reporting on performance and compliance with key legislation. In addition, 
they were unable to produce credible and reliable financial statements. There are 
material misstatements in their financial statements, which they could not correct 
before the financial statements were published. 
24 
 
2.2.4.4 Adverse opinion 
Auditees that receive an adverse opinion with findings have many material 
misstatements that are disagreed with virtually all the amounts and disclosures in 
their financial statements. 
2.2.4.5 Disclaimer opinion 
Auditees with adverse and disclaimer opinions are on average: 
• not capable to offer required documents for the accomplishments reported in 
their annual performance reviews; and, 
• not able to comply with key legislation. 
It may be asked how the different audit outcomes impact South African citizens. 
Lenz and Sarens (2012) assumes that an entity that has a clean audit opinion has 
strong financial management, sound internal controls and a robust budgeting 
process. All of these elements, in Lorgat’s (2012) opinion, bear testimony to the fact 
that the entity spends the funds at their disposal efficiently and effectively towards 
meeting the targets set out in their strategic plans which ultimately result in improved 
service delivery for the citizens. Table 2.1 below further explains the different types 
of audit opinions and their individual implications, as captured in Ngoepe (2012). 
Table 2.1: Different kinds of audit opinions  
Severity Audit opinion Explanation 
None Unqualified audit 
opinion 
Audit findings do not justify any further audit 
disclosure. 
Least severe 
opinion 
Unqualified audit 
opinion with 
emphasis of matter 
To bring matters to the attention of the users of 
the financial statements which are not 
significant enough for the audit opinion to be 
qualified, or with regard to statutory reporting 
requirements. 
Severe opinion Qualified opinion Except for matters highlighted under the 
qualification, the financial statements present a 
fair view. 
 
25 
 
Severity Audit opinion Explanation 
More severe 
opinion 
Adverse An adverse opinion is expressed when the 
effect of a disagreement between the auditors 
and the audited is so material, pervasive 
and/or fundamental to the financial statements 
that the auditor is not in agreement that the 
financial statements result in a fair 
presentation. 
Most severe 
opinion 
Disclaimer An audit opinion is disclaimed when the 
possible effect of a limitation of scope of the 
audit work is so material, pervasive and 
fundamental that the auditor has not been able 
to obtain sufficiently appropriate audit 
evidence, and accordingly is unable to express 
an opinion on the financial statements. 
Different audit opinions outlined in the table above affect the organisation in a 
positive or negative way. 
2.3 The roles and responsibilities of senior managers during public sector 
audit exercises 
The outcome of an audit exercise, to a large extent, depends on the role played by 
senior managers for instance, the entity of an external auditing team to an 
organisation or department rests on the Chief Financial Officer.  This implies that the 
Chief Financial Officer serves as the main link with the leader of the auditing team.  
This is one of the reasons why Robert (1994) argues that the success of audits relies 
on management’s guidance. 
In the light of the above, literature survey spelt out the role of managers during the 
auditing exercise as follows: 
• Development and compilation of the financial statements; 
• Beyond the sample determined by the external auditors, managers have to 
respond to the auditor’s Request for Information (RFI) within specific time 
frames (normally within three days) 
26 
 
• Provision of additional information to the auditors as per the request of the 
auditors; 
• Senior Managers of the Internal Audit in particular serve as point of entry 
because the external auditing team to a lesser extent depends on the report 
from the internal audit section; 
• What is also central to the role of managers during the auditing exercise is the 
submission of evidence to the auditing team. 
In grappling with the roles and responsibilities of managers during the auditing 
exercise, one has to appreciate the scope they are covering.  The scope of auditing 
may range from performance information, ensuring the smooth running of the 
internal administration, managing the finance section and managing the provisioning 
section to asset management. 
2.4 Theory of auditing in the public sector 
Auditing has been existing for years in different stage of development following the 
evolution of accounting. Starting since the era when the records were approved after 
a public reading, to the era when government's officials were measured by their 
honesty. Followed by the times of the industrial revolution were the ownership of 
companies started separating from management; when owners required more 
protection of their investments increasing the use of auditors, consequently; to the 
times were an auditor was always searching for frauds or errors (Whittington and 
Pany, 2004).  
Flint (1988) stated that there is a matter of public accountability demanding an 
independent audit for its demonstration with clear definition and intention, based on 
evidence that only skilled auditors gather, measure it, and compare it against the 
standards, which generates economic or social benefit (as cited in Moizer, 1989). 
Following are the seven postulates or assumptions stated by Flint (1988): 
· There is a relationship of accountability or a situation of public accountability. 
· Accountability cannot be demonstrated without an audit. 
· An audit requires independence and freedom. 
· The subject matter of audit is susceptible to verification by evidence. 
27 
 
· Auditors are skilled judges who are able to measure and compare actual 
performance against standards of accountability. 
· The meaning, significance, and intention of statements to be audited must be 
clear. 
· An audit produces an economic or social benefit. 
As far back as 1970, Arens, May and Dominiak argued that it is difficult to relate the 
important ideas (of auditing) to officials because they have not clearly established in 
their own minds an adequate frame of reference to analyse and understand auditing 
concepts.  They attributed this to the officials’ lack of exposure to accounting 
systems, source documents and evidence accumulation. 
Rudman and Terblanche (2011) report similarly that officials find it difficult to see the 
big picture of how the entire audit process works. The following statements all 
support the opinion of Arens et al. (1970) that practical experience is needed in order 
to adequately perform what is required by external auditors: 
· Officials usually have negative stereotypical perceptions of auditing in the 
public sector  
· They usually regard auditing as a difficult task to perform as they think that 
external auditors are the infiltrators and they end up panicking when they are 
around.   
2.5 Summary 
Accountability, oversight and transparency need to be maintained in both public and 
private sector entities. In the absence of these tenets of governance, fruitless and 
unauthorized expenditures become the order of the day. Chapter two reviewed 
auditing in public sector entities, its scope, and types of audit outcomes, theory of 
auditing and the role and responsibility of senior management in public sector entity 
audit exercises. The chapter laid the foundation for the ensuing Chapter three on 
research design and methodology. 
 
 
28 
 
CHAPTER THREE:  RESEARCH DESIGN AND METHODOLOGY 
3.1 Introduction 
This chapter offers a synopsis of the method used in the research.  We have looked 
at the review of the literature related to the issues and challenges which senior 
managers in the public sector experience when performing their auditing-related 
roles.  In research methodology, the researcher searches the given question 
systematically to establish answers that ultimately lead to logical conclusions.  
Exploring the research questions implies a lot of methodological and interpretation 
problems that are effectively resolved by using the correct research methodology 
(Industrial Research Institute, 2010). 
The discussion in this chapter is structured around the research design, population 
sampling, data collection and data analysis (Mamabolo, 2013).  Burns and Grove 
(2003:488) strengthen this assertion by suggesting that methodology includes the 
designing, setting, sampling, collecting data and the data analysis. 
3.2 Research methodology 
Research methodology is a valid way to solve a problem. It is a science of studying 
how research is to be carried out. Primarily, the processes by which researchers go 
about their work of clarifying problematic occurrences are called research 
methodology (Rajasekar, A. Moore, R. Vernon, F. 2013). 
For Polit and Hungler (2006:233), methodology refers to ways of obtaining, 
organising and analysing data. Methodological decisions depend on the nature of the 
research question. Methodology in research can be considered to be driven by the 
theory of correct scientific decisions (Karfman as cited in Mouton and Marais 
1996:16). Mouton (1996:35), in a rather plain fashion, describes methodology as the 
means of doing something. 
Henning (2004:36) describes methodology as a coherent group of methods that 
complement one another and that have the ability to fit data and findings that reflect 
the research question and suit the researcher purpose. According to Holloway 
(1999), methodology means a framework of theories and principles on which 
29 
 
methods and procedures are based. This range of definitions is incorporated into this 
study as it seeks to explore perceptions of auditing of public of sector organisations. 
3.3 Research design 
The research design provided the blueprint for reaching the objectives of the study. It 
answered questions originating from the research problem, hence satisfying the 
cause-and-effect relationship between variables. The research design was both 
exploratory and descriptive. To achieve the objectives of this study, a qualitative 
study was employed, Makgatho (2013).   
3.3.1 Quantitative Research 
In natural sciences and social sciences, quantitative research is the systematic 
empirical investigation of observable phenomena via statistical, mathematical or 
computational techniques (Given, 2008). The objective of quantitative research is to 
develop and employ mathematical models, theories and or hypotheses pertaining to 
phenomena. The process of measurement is central to quantitative research 
because it provides the fundamental connection between empirical observation and 
mathematical expression of quantitative relationships. Quantitative data is any data 
that is in numerical form such as statistics, percentages, and so forth (Hunter and 
Erin, 2011). The researcher analyses the data statistically. The researcher 
anticipates that numbers yield unbiased results that can be generalized to some 
larger population. Qualitative research, on the other hand, asks broad questions and 
collects verbal and textual data from phenomena or participants. The researcher 
looks for themes and describes the information in themes and patterns exclusive to 
that set of participants. 
In social sciences, quantitative research is widely used in psychology, economics, 
demography, sociology, marketing, community health, health and human 
development, gender and political science, and less frequently in anthropology and 
history (Kuhn, 2012). Research in mathematical sciences such as physics is also 
'quantitative' by definition, though this use of the term differs in context. In the social 
sciences, the term relates to empirical methods, originating in both philosophical 
positivism and the history of statistics, which contrast with qualitative research 
methods. 
30 
 
Quantitative research is generally conducted by using scientific methods, which can 
include: 
• The generation of models, theories and hypotheses. 
• The development of instruments and methods for measurement. 
• Experimental control and manipulation of variables. 
• Collection of empirical data and 
• Modelling and analysis of data 
This study focused on the quantitative method whereby research questionnaires 
consisting of questions, accompanied by a set of answer choices which were 
assigned in numeric value, making analysis of the questionnaire results easier and 
faster.  Quantitative research is often contrasted with qualitative research, which is 
the examination, analysis and interpretation of observations for the purpose of 
discovering underlying meanings and patterns of relationships, including 
classifications of types of phenomena and entities, in a manner that does not involve 
mathematical models (Kazmi, Alexander and Hudson, 2010). Approaches to 
quantitative psychology were first modelled on quantitative approaches in the 
physical sciences by Gustav Fechner in his work on psychophysics, which built on 
the work of Ernst Heinrich Weber. Although a distinction is commonly drawn 
between qualitative and quantitative aspects of scientific investigation, it has been 
argued that the two go hand in hand. For example, based on analysis of the history 
of science, Kuhn (2012:142) concludes that “large amounts of qualitative work have 
usually been prerequisite to fruitful quantification in the physical sciences.”  
Although quantitative investigation of the world has existed since people first began 
to record events or objects that had been encountered, the modern idea of 
quantitative processes has their roots in Auguste Comte's positivist framework 
(Briffin, Keith and Osborn, 2011). A response scale for the questions was developed 
whereby a Liekert scale, which uses a fixed set of responses to which the researcher 
conducting the survey assigned a numerical value.  In this sample scale, “strongly 
agree, agree, not sure, disagree and strongly disagree” was developed to assist the 
researcher.  Only thirty four questions where tabled for quantitative method and six 
31 
 
(6) for qualitative.  The reason for this is because respondents in most cases are 
busy and do not want to spend excessive amount of time responding to the survey.     
3.3.2 Statistics in Quantitative Research 
Statistics is the most widely used branch of mathematics in quantitative research 
outside of the physical sciences, and also finds applications within the physical 
sciences, such as in statistical mechanics. Statistical methods are used extensively 
within fields such as economics, social sciences and biology. Quantitative research 
using statistical methods starts with the collection of data, based on the hypothesis 
that anchors the research. Usually a big sample of data is collected and this would 
require verification, validation and recording before the analysis. Software packages 
such as SPSS and Rasch are typically used for this purpose. Causal relationships 
are studied by manipulating factors thought to influence the phenomena of interest 
while controlling other variables relevant to the experimental outcomes. Empirical 
relationships and associations are also frequently studied by using some form of 
general linear model, non-linear model, or by using factor analysis. A fundamental 
principle in quantitative research is that correlation does not imply causation, 
although some researchers such as Granger (2012) suggest that a series of 
correlations can imply a degree of causality. This principle follows from the fact that it 
is always possible a spurious relationship exists for variables between which 
covariance is found in some degree. Associations may be examined between any 
combination of continuous and categorical variables using methods of statistics. 
3.3.3 Measurement in Quantitative Research 
Views regarding the role of measurement in quantitative research are divergent. 
Measurement is often regarded as only a means by which observations are 
expressed numerically in order to investigate causal associations. However, it has 
been argued that measurement often plays a more important role in quantitative 
research (Kuhn, 2012). For example, Kuhn argued that within quantitative research, 
the results that are shown could prove to be strange. This is because accepting a 
theory based on results of quantitative data could prove to be a natural 
phenomenon. He argued that such abnormalities are interesting when done during 
the process of obtaining data, as seen below: 
32 
 
When measurement departs from theory, it is likely to yield mere numbers, 
and their very neutrality makes them particularly sterile as a source of 
remedial suggestions. But numbers register the departure from theory with an 
authority and finesse that no qualitative technique can duplicate and that 
departure is often enough to start a search (Kuhn, 2012). 
In classical physics, the theory and definitions which underpin measurement are 
generally deterministic in nature. In contrast, probabilistic measurement models 
known as the Rasch model and item response theory models are generally 
employed in the social sciences. Psychometrics is the field of study concerned with 
the theory and technique for measuring social and psychological attributes and 
phenomena. This field is central to much quantitative research that is undertaken 
within the social sciences. Quantitative research may involve the use of proxies as 
stand-ins for other quantities that cannot be directly measured. Reliability can be 
measured in multiple ways depending on the type of instrument, Polit D.F and Beck, 
C.T. (2012).  The most common forms that were used include inter alia the following: 
(a) test-retest (comparing item responses from same participants at different time 
points), (b) internal consistency (comparing item responses against other item 
responses, and the last form was (c) scorer reliability whereby the researcher was 
comparing one reviewer with the other.  
3.3.4 Advantages of quantitative research 
Quantitative research uses traditional statistical and mathematical methods for 
measuring results conclusively. All quantitative experiments use a single standard 
format. The research is constructed in such a way that it enables other people to 
repeat a certain experiment and still get similar results. Quantitative research has 
many benefits as discussed below. 
(a) Summary of large information 
The use of standard means in quantitative research means that any research may 
be replicated, analysed and also compared with other similar studies. In fact, this 
quantitative method enables people easily summarise huge information sources as 
well as facilitate good comparisons over time and across categories. 
 
 
33 
 
(b) Greater accuracy 
Quantitative research allows for greater accuracy and objectivity of results obtained. 
In general, this kind of research is designed specifically to offer summaries of 
information that support generalizations regarding whatever phenomena are being 
studied. To successfully accomplish this objective, quantitative research involves 
fewer variables. Moreover, it also employs prescribed methods to ensure both 
reliability and validity. 
(c) Elimination of bias 
An important reason why most researchers opt for quantitative research is that it 
eliminates bias. It encourages researchers to keep a short distance from the 
participating subjects. It is recommended that researchers employ subjects 
unfamiliar to them for further eliminating bias. Quantitative research usually filters out 
all external factors and if well designed, it provides unbiased and real results. 
(d) Final results 
Quantitative research is a great method to finalize results and disprove or prove a 
hypothesis. It is useful for testing results gotten from doing various qualitative 
experiments, thereby leading to the final answer. It provides the benefit of narrowing 
down possible directions incase further research is needed. 
3.3.5 Disadvantages of quantitative research 
• Needs a huge sample: In using this type of research, the researcher needs to find 
great numbers of correspondents. The larger the sample of people, the more 
statistically accurate the outputs. Therefore, one needs to spend more time in 
finding these multiple correspondents. 
• Requires great amount of cash: When using this type of research, one has to 
ensure that they are financially prepared. Since one needs a huge number of 
correspondents, one has to spend more cash for printing the questionnaire, 
transportation costs and a lot more. This is more costly compared to qualitative 
research. 
3.4. Sources of data 
There are basically two sources of data namely primary and secondary.  The 
researcher considered both categories of data as the situation demanded. 
34 
 
3.4.1. Primary data 
Primary data is specifically gathered to solve the problem at hand.  This data was 
developed from respondents through verbal, written communication and observation. 
In gathering primary data, the researcher was in total control but guided by volume, 
variety, objectivity and reliability of data required. Radel, Brand and Schmock, 
(2008:63) define primary data as original information composed specifically for 
resolving the problem at hand.  It is that information collected when the researcher 
has exhausted all possible sources of available secondary data.  Such data answers 
specific questions where secondary data would have failed to offer comprehensive 
coverage issues. Appropriate tools such as questionnaires and interviews were used 
often to gather this data. 
3.4.2 Justification for use of primary data. 
Ranjit (2005:34) views primary sources of data as first-hand information.  There are 
various methods through which primary data can be collected. But, for this study, the 
researcher used a questionnaire, in-depth interview and inspection for a variety of 
reasons but more specifically due to their suitability in descriptive research.  This 
means that mixed methods were used in this instance.  Data was collected through 
the use of self-administered questionnaires, observations and document analysis. 
3.4.3 Secondary data 
Bush, Luu and Roner (2012:89) define secondary data as that which is collected and 
interpreted at least once for some specific situation other than the one under 
consideration. It is that data not gathered for the immediate study at hand but for 
some other purpose, Hair, J.F., Hult, G.T.M., Ringle, C.M. and Sarstedt, (2000:45). It 
exists in three forms.  There is external secondary data which is data collected by an 
individual organisation for accounting purposes or activity reports. External 
secondary data may exist in computerised data sources.  These are usually 
designed by specific organisations and include both internal and external data 
combined with on-line information sources. Secondary data is viewed as the filler 
attachment, or appendix to the formal research report. 
The main sources of secondary data accessed by the researcher were internal 
reports which took the form of journals, articles, magazines, the department of 
35 
 
education’s reports, books and other publications.  The internet was also consulted 
broadly. 
3.4.4 Justification for use of secondary data 
This data is already existent.  The data is relatively cheap to gather as it involves 
less time and resource consideration (Kinner and Taylor, 2000:67).  Familiarity with 
secondary data also helped the researcher to unfold gaps that required to be filled by 
an in-depth search of primary data for comparative analysis. 
3.5 Research instruments validation 
To improve on data validity, the researcher made use of the triangulation.  Through 
this approach, multiple sources of data, different investigators and research 
methodologies were combined in an attempt to check the problem study from 
dissimilar perspectives.  The explanations that follow suffice: 
• Data triangulation - the use of different sources of data, for example data from 
informants, observation and so on. 
• Investigator triangulation - the use of several investigators to look at the same 
problem. 
• Methodology triangulation - the use of different methods for instance 
questionnaire, in-depth interview, documents and observation. 
Observation guides and appropriate questions were prepared in advance and due 
care taken in including all pertinent details so as to enable the instruments to assist 
the researcher to gather all necessary data and capture essential details pertaining 
to the research problem. 
3.5.1 Observation  
Observation is an orderly data collection method. In the observation method, 
researchers observe people in naturally occurring situations.  
3.5.2 Advantages of using observation 
Ranjit (2005:121) also contends that when people are aware that they are being 
observed, they tend to change their behaviour. Depending on the situation, this 
change may be positive or negative.  Once a change in behaviour is attributable to 
36 
 
their being observed, it is termed ‘Hawthorne Effect.” They also helped generate 
primary data structures as events occurred and compiled evidence of behaviour as it 
unfolded.  There was a marked reduction of confounding factors, and the amount of 
detailed behavioural data that could be recorded. 
3.5.3 Disadvantages of using observation 
There is lack of generalisability of the data, inability to explain current behaviours 
and complexity of setting and recording the behaviour.  The use of observations 
could introduce distortions and what is observed may not represent normal 
behaviour (Philander, 2005:23).  The researcher found the observation method a bit 
expensive and time consuming as compared to other data collection methods.   
3.5.4 Questionnaire 
A questionnaire is a research instrument consisting of a series of questions and 
other prompts for the purpose of gathering information from respondents (Gault, 
2007). 
3.5.5 Advantages of using a questionnaire 
The benefits of using a questionnaire in research are outlined in Figure 3.1 
 
Figure 3.1: Advantages of using questionnaire 
Source (Gault, 2007) 
37 
 
3.5.6 Disadvantages of using a Questionnaire 
Figure 3.2 outlines the disadvantages of using a questionnaire  
 
Figure 3.2: Disadvantages of using questionnaire 
Source (Gault, 2007). 
3.5.7 Instrument Validity and Reliability Test 
A pilot survey was first conducted by the researcher. Technical guidance was sought 
from two practitioners who included a researcher with a Master of Science degree in 
Operations Research and an acclaimed academic with a Doctoral Degree. 
 
38 
 
3.5.8 Population 
According to Kumar (2005:28), population is the complete listing of elements from 
which one selects a sample in order to answer research questions. It is a finite set of 
individual items intended for study. Saunders et al (1997:65) contend that population 
in research refers to the number of elements that one chooses for investigation. 
Population is the identifiable total set of elements of interest being investigated by a 
researcher or an aggregation of elements. 
It is not always possible in most research to investigate on each and every member 
of the given population because of constraints of time, space, resources, urgency 
and practicability. Due to these limiting factors, researchers resort to sampling. They 
take a sample from a population and generalize their findings. This is based on the 
view that the chosen sample is representative of the larger population. For this study, 
the researcher studied 50 staff members from the department of education’s head 
office in Mafikeng.  
3.6 Sampling design 
It is not always feasible in research to study all elements to answer a particular set of 
research questions. For this reason a researcher resort to taking what they consider 
as representative for the study in order to generalize the major phenomenon 
emerging (Kumar, 2005:64). The main purpose for sampling is to achieve 
representativeness (Jennings, 2002:61). It seeks to provide good estimates about 
the nature of the entire population from a limited number of cases. 
Sampling is a selection of a small number of elements from a larger defined target 
group of elements and expecting that the information gathered from the small group 
allows judgements to be made about the larger group. The process of sampling 
plays an important role in the process of identifying, developing and understanding 
subjects, elements, constricts or objects that need to be investigated by the 
researcher. Another area in which sampling plays a momentous role is the process 
of developing the scale of measurements used to actually collect raw primary data 
respondents or objects. When a researcher creates a scale measurement, they must 
be able to determine the sample’s reliability and viability levels (Mpakanyane, 
2012:45).  
39 
 
There are two basic sampling designs namely, probability sampling and non-
probability sampling (McGlove and Benson, 2008:51). The two can be distinguished 
as shown in Table 3.1. In probability sampling at times called random sampling, each 
element has an equal chance of being chosen in the sample. Gilbert (2008:71) refers 
to an equal chance as a known, non-zero chance of selection. Thus each element 
has an equal independent chance of being selected for the sample (De Vos, Meston 
and Herbert, 2005:196). The selection of elements from the population is based on 
some form of random procedure. The most commonly used probability sampling 
techniques are simple random sampling, stratified random sampling and cluster 
sampling. 
A sampling approach where the population may or may not be accurately 
represented is known as a non-probability sampling. The statement means that the 
probability of inclusion is not the same for each element, an example is that a person 
may not be at work on the day of selection. It is therefore impossible to determine 
the likelihood of including each element of the population in the sample. Some 
elements may have no chance of being included in the sample. Non-probability 
sampling is less desirable than probability sampling especially if the objective of the 
research is to generalize. Non-probability sampling techniques include convenience 
(accidental), and snowball sampling. 
The study used simple random and convenience sampling techniques. Simple 
random sampling enabled all respondents equal chances of being selected for study. 
Convenience allowed the researcher to pick up participants based on availability, 
and who had time at their disposal. 
Table 3.1: Differences between Probability and non-Probability sampling.   
Table 3.1 summarises the differences between Probability and non-Probability 
sampling 
COMPARISON 
 FACTORS 
PROBABILITY 
 SAMPLING 
NON-PROBABILITY 
SAMPLING 
List of population 
elements. 
Complete list necessary None necessary. 
40 
 
COMPARISON 
 FACTORS 
PROBABILITY 
 SAMPLING 
NON-PROBABILITY 
SAMPLING 
Information about 
sampling units 
Each unit identified. Need detail on habits, 
traits and activities. 
Sampling skill required Skill required. Little skill required 
Time required Time consuming Low time consuming 
Cost/ unit sampled. Moderate to high Low 
Estimates of population 
parameters 
 Unbiased Biased  
Accuracy and Reliability. Computed with 
confidence intervals. 
Unknown 
Measurement of sample 
error 
Statistical measures No time measure 
available 
Sample 
representativeness  
Good. Assured  Suspect. Undetermined  
 
3.7 Probability sampling 
Every element in this sampling type has a non-zero probability of being selected. 
Each element in the population has an equal and equal independent chance of 
selection. Equal suggests that the probability of selection of each element in the 
population is the same, that is, the choice of an element in the sample is not 
influenced by other concerns such as personal preference. The concept of the 
independence means that the choice of an element is not dependent upon the 
choice of another element in the sampling. This means therefore, that the selection 
of rejection of another element does not affect the inclusion or exclusion of another. 
41 
 
3.8 Simple random sampling 
Simple random sampling is a unique sampling approach in that all elements in the 
population have a known equal chance of being included in the sample. Hence 
respondents were randomly selected for study. 
3.9 Non-probability sampling  
There are no statistical formulae for prior calculation of the size of a size of a non-
probability sample. The researcher relies on experience to help him determine the 
size of a sample that will be representative of the universe. Very often the number of 
respondents interviewed will depend on whether a pattern has emerged. The 
researcher may also allow himself to be guided by the sample size he would require 
if he were drawing a probability sample. Further determinants of sample size are 
often the time and funds available for conducting the research.  
3.10 Convenience sampling 
Respondents were selected on the basis of availability or convenience. The 
respondents were self- selected. They had more time at their disposal, their 
personalities were different from those of the rest of the population and their opinions 
differed radically from the universe population. Despite its weaknesses, the tool is 
useful as their ideas and insights are more important than scientific objectivity. 
3.11 Sample size 
Since the research considered both qualitative and quantitative data, the researcher 
employed probability and non-probability sampling procedures. Accordingly, random 
samples were taken where it would be appropriate, especially where senior 
management input was sought. The choice of respondents to include in the study 
was invariably influenced by such factors as their current engagements in auditing 
operations and infrastructural matters in the department of education.   
Simple random Hence respondents were randomly selected for study. 
 
 
42 
 
3.12 Conclusion 
The reasons and justifications of adopting the chosen approaches were discussed in 
broad detail. The chapter also provided information on the population considered for 
this research and also how the samples studied were chosen from the population 
and why particularly those sampling techniques were reckoned appropriate. Data 
sources and data collection techniques were also alluded to in greater scope with 
specific emphasis on the merits and demerits of using particular sources of data 
collection. This therefore laid a solid basis for the findings, analysis and interpretation 
which was the focus of discussion in the ensuing Chapter four of this study. 
  
43 
 
CHAPTER FOUR: PRESENTATION, INTERPRETATION AND ANALYSIS OF 
DATA 
4.1 Introduction 
The findings from the interviews conducted are presented in this chapter. Questions 
used focused on accomplishing the research objectives which inter alia were to 
clarify and contextualise the construct of auditing in a public sector entity, to 
establish the tasks of senior managers into the auditing exercise, to establish the 
nature of obstacles that senior officials face in performing their audit-related 
responsibilities successfully and to develop a set of suggestions that may assist as 
guiding principles to augment the role of senior officials in the auditing exercise.The 
chapter presents findings first and discussions on the research findings based on the 
research instruments, integrating the research objectives, literature review and 
theoretical framework. 
SECTION A:  DEMOGRAPHIC DETAILS 
Figure 4.1:  Gender 
Hereunder are the percentages relating to gender of respondents.   
 
 
Male
48%
Female
52%
Gender
44 
 
Figure 4.1 shows that the majority of respondents are females (52%) and 48% are 
males. This pattern reflects the national demographics of more females in the South 
African society and the traditional adage that women as good care givers by nature 
are more involved in societal issues than their male counterparts. This observation is 
also evident from Wade and Demb (2009: 11) who established that “Women do most 
of the work that helps communities deal with their problems, but have little political 
power as a senior official.” It could also be due to the fact that men as bread winners 
are often absent at social gatherings due to job commitments (Maxim Planning 
Solutions, 2012). 
Figure 4.2: Age group 
The age group of respondents appear in the following graph:  
 
Figure 4.2 shows that the majority of respondents are in the age groups of 40-49 
years and 50-59 years each forming about a third of the respondents. This is a 
reflection of people who are economically active. The researcher also concurs that 
the 40-49 year age group has higher educational attainment have made inroads on 
how the public finances and governance are operationalised. 
 
 
0
5
10
15
20
25
30
35
40
45
50
20 - 29yrs 30 - 39yrs 40 - 49yrs 50 - 59yrs 60 - 65yrs
Pe
rc
en
t
Age group
45 
 
Table 4.1:  Level of education 
Table 4.1 relates to the level of education of respondents  
Level of education Frequency % 
High school 4 8 
College (Diploma) 8 16 
Level of education Frequency % 
University (Junior Degree) 13 26 
Post graduate 
(Honors/Masters/PhD) 
25 50 
Total 50 100 
 
Table 4.1 shows that half of the respondents (50%) have post graduate qualifications 
and 8% have matric. Chambers (2008:31) suggests that the higher the level of 
education corresponds with appreciation of current affairs in community 
development. He also reiterates that such a bias puts the marginalised at the mercy 
of the better informed elites. The foregoing scenario could be reflected as a relic of 
pre-independent South Africa (Dodaro, 2012:45). 
 
Figure 4.3:  Position in the Department 
Different officials of different positions responded to the questionnaire ranging from 
senior management to the lowest level 
46 
 
 
Human capital is assumed to grow through education, experience and impact of 
human capital on the organisation thus offering success to the organisation 
(Magrassi, 2002:34). Some studies have concluded that human capital investments 
are essential for sustaining economic growth. The law of diminishing returns 
“suggests that investments in physical capital and land eventually fail to result in 
economic growth” (David, 2012:34). Long strides taken by organisations in human 
capital training have been credited in per capita incomes and economic productivity. 
David (2012:57) also noted that skilled people are more likely to have competence, 
self-discipline and ambition that culminates in higher earnings for an organisation. 
The study established that staff in middle management and senior management had 
the largest percentages (34% and 30% respectively). These people were found to 
have the most years of experience and offered highly credible and consistent 
information during the conduct of the study.  
0
5
10
15
20
25
30
35
40
Senior Management Middle Management Lower Management Other (specify)
Pe
rc
en
t
Position in the Department
47 
 
Table 4.2: Duration in current position 
Duration of employment in the current position of respondents are as follows:  
Period Frequency % 
1-4 yrs. 10 20 
5-9 yrs. 18 36 
10-14 yrs. 15 30 
15-20 yrs. 6 12 
Over 20yrs 1 2 
Total 50 100 
 
Certain standards are expected from staff that mould expected professional 
behaviour (Bianca, 2007:23). Such standards help the organisation to develop a 
workplace environment into one that is respectful to employees and clients (Lewis, 
2009:34). For the employees, they should nurture behaviour that is acceptable to the 
organisation. There are certain forms of behaviour that impact upon an organisation 
in either a positive or negative manner. Employees should not show preferential 
treatment of some clients over others when rendering service (Nelson and Quick, 
2012:45). Indeed organisational policies are found in the workplace environment and 
it is incumbent on staff to be custodians of such a regulatory framework (Hackett, 
2010:32). 
Jaison (2012:11) inferred from the Human Capital Theory that organisations expect 
staff to behave in some way which supports the organization’s culture. Hiring people 
who fit well into the culture of the organisation should view qualifications, skills and 
experience as critical. Spencer (2002:34) submits that where staff lack requisite 
knowledge and skills, management should make an effort to self-develop such 
workforce. Hence the longer staff stay in an organisation is reflective of 
organisational culture and it is also a positive return of investment to the 
organisation. 
48 
 
The duration of 5-9 years and 15-20 years highlighted the highest tenure and 
retention of staff in the department. Implications are that the environment is 
employee friendly, hence helps the department in saving costs that would have been 
lost through replacements of skills flight. 
SECTION B 
Table 4.3:  Perceptions of employees regarding auditing in the public sector 
Perceptions of employees regarding auditing in the public sector are outlined with 
percentages and explained further 
 
 
Strongly 
Agree 
(%) 
Agree 
(%) 
Not 
sure 
(%) 
Disagree 
(%) 
Strongly 
Disagree 
(%) 
6 Auditing is a foundation of good 
public sector governance (N = 49) 
57.14 38.78 4.08 0 0 
7 Auditors help public sector 
organizations achieve accountability 
and honesty, improve operations, 
and instill confidence among 
citizens (N = 50) 
64 30 6 0 0 
8 Public entity auditor’s function is to 
give support on the governance 
tasks of oversight, insight, and 
foresight (N = 50) 
50 30 16 2 2 
9 In your best understanding, the real 
purpose of the external auditing in 
your department is to check 
wasteful expenditure (N = 50) 
22 46 10 8 14 
10 Evaluating value for money of the 
state financial resources explains 
what auditing in the public sector (N 
= 48) 
31.25 45.83 20.83 0 2.08 
 AVERAGE RESPONSE (%) 44.12 38.12 11.38 2 3.62 
49 
 
Perceptions on how respondents viewed auditing were configured in 5 groups. 
57,14% strongly agreed that auditing was the foundation of good public sector 
governance. This was a reflection that the majority of the research participants 
perceived auditing as significant as also 38,78% agreed that auditing was critical. 
64% of the respondents concurred that “Auditors assist public sector organisations 
achieve responsibility and trustworthiness, improve operations, and instill self-
confidence among citizens.” This was further supported by 30% who also agreed 
that auditing achieved accountability and honesty in public spheres. 
50% and 30% of the respondents strongly agreed and agreed respectively that 
public sector auditing enhanced oversight, insight and foresight. Transparency and 
accountability are borne out of external auditing which checks on wasteful 
expenditure, and 22% and 46% strongly agreed and agreed on this proposition. No 
effective enterprise prospers when evaluation of its activities is not conducted.  
45,83% and 31,25% of the respondents respectively agreed and strongly agreed that 
evaluating value for money of the state’s financial resources enhanced explaining 
the nature of auditing in public sector entities in the NW province. 
Most prospective employees could have many different jobs throughout their working 
lives, each requiring a different level or set of skills. No matter the industry; from 
customer service to an office job to construction and the trades, all of these jobs 
have one thing in common: in order to succeed and move ahead, one needs to 
demonstrate professionalism. Professionalism does not mean wearing a suit or 
carrying a briefcase; it rather means conducting oneself with integrity, accountability, 
responsibility and excellence. This means communicating effectively and 
appropriately and always finding a way to be productive (Stein, 2014:67). Employers 
expect new workers to be ethical, team oriented, responsible and to possess strong 
communication, interpersonal, and problem solving skills. Wrap these skills up all 
together and there is evidence of professionalism.  
 
Jobseekers need to continually find ways to stand out from the crowd in today’s 
labour market that is becoming more competitive. There are few things an employer 
values more than employees who carry out their duties in a professional manner. 
Professionalism is a combination of qualities. A professional employee should arrive 
on time for work and manage time in an effective manner. Professional workers take 
50 
 
responsibility for their own behaviour and work effectively with others. High quality 
work standards, integrity and honesty are also part of the package. Professional 
employees look clean, neat and dress properly for the job. Effective and appropriate 
communication is also an essential part of professionalism (Stoker, 2012:81).  
 
Irrespective of the occupation or industry, it is easy to spot professionalism. On a 
construction site or in a trade, a professional worker works hard and manages time 
effectively, including arriving and returning on time from breaks. A professional 
worker in a customer service setting speaks clearly and politely to customers and 
colleagues and has neat and clean appearance. In an office setting, an employee 
with professionalism works productively with others and strives for a high standard 
and constant improvement. Various settings in professionalism may look slightly 
different, but the core features are always the same and give young employees an 
edge as they begin their careers (Bergman, 2007:12).  
 
On the Likert assessment tool used, it was established that auditing is a foundation 
of good public entity governance. A public entity auditor’s function is to give support 
on the governance tasks of oversight, insight, and foresight. The real purpose of the 
external auditing in a public sector department is to check wasteful expenditure and 
that evaluating value for money of the state financial resources explains what 
auditing in the public sector entails. The respondents at 44,12% showed a strongly 
positive disposition towards the auditing procedures. 
Proponents of human capital management accede that the synergy between 
employee capacitation and organisational success cannot be under-estimated 
(Meyer, 2007:54). Knowledge of what one is mandated to do is considered a 
currency for success (Wessels, 2014:32). It is further surmised that the quality 
performance of staff is a determinant of the success, progression and sustainability 
of any organisation. Qwabe and Pillay (2009:67) further amplify that a culture of skills 
acquisition in any organisation enhances the level of service delivery. 
 
 
 
51 
 
SECTION C 
Table 4.4:  The roles and responsibilities of senior managers during public 
sector entity audit exercises 
 
 
Strongly 
Agree 
(%) 
Agree 
(%) 
Not 
sure 
(%) 
Disagree 
(%) 
Strongly 
Disagree 
(%) 
11 I reliably carry out the 
policies of the government 
of the day in the 
performance of official 
duties as enclosed in 
constitutional and other 
prescripts (N = 50) 
42 50 8 0 0 
12 Senior Managers and other 
staff members are very 
helpful during audit exercise 
(N = 50) 
28 60 12 0 0 
13 I serve the public in an 
impartial and patient way in 
order to build confidence in 
the public service (N = 50) 
34 56 8 2 0 
14 I try hard to accomplish the 
objectives of my 
organisation efficiently and 
in the public interest? (N = 
48) 
35.42 50 10.42 2.08 2.08 
15 The main role of the Chief 
Financial Officer during the 
auditing exercise is put 
management under 
pressure to perform (N = 
47) 
21.28 29.79 17.02 21.28 10.64 
52 
 
15.1 The other role of the Chief 
Financial Officer is to act as 
an interface and point of co-
ordination between the 
Department and the leader 
of the auditing team as far 
as management letters and 
request for information 
(RFI) is concerned (N = 48) 
41.67 41.67 12.5 2.08 2.08 
16 Senior Managers 
understand their roles and 
are able to discharge their 
duties relating to auditing 
exercise (N = 47) 
12.77 46.81 23.40 6.38 10.64 
 AVERAGE RESPONSE 
(%) 
30.73 47.75 13.05 4.83 3.63 
 
Loyalty to organisational policies is a critical aspect of good governance. 42% and 
50% of respondents strongly agreed and agreed that they loyally executed policies 
of government in line of their duties as contained in statutory prescripts. Senior 
management and other members were identified as helpful during the conduct of the 
audit exercise. 60% and 28% of the respondents agreed and strongly agreed with 
this assertion. Creation of confidence through public service is also perceived as key 
in public sector entities. 56% of the respondents agreed and 34% strongly agreed 
that they served their clients in an unbiased and patient manner. 
It is incumbent upon every member of staff to strive towards accomplishing 
organisational goals. 35.42% and 50% of participants respectively strongly agreed 
and agreed that they strived to achieve their organisation’s objectives in a cost 
effective manner. Accountability and oversight are critical components of an audit 
exercise. However, varied perceptions were established. 21,28%, 29,79% and 21, 
28% indicated that they strongly agreed, agreed and strongly disagreed that the 
53 
 
main role of the CFO during the auditing exercise was to put management under 
pressure to perform. 
The CFO is an interface between the Department and the leader of the auditing 
team. 41,67% strongly concurred with this assertion and a similar percentage agreed 
as well. Understanding one’s professional mandate is key for organisational 
performance and growth. 46,81% agreed that that senior managers in the 
Department understood their roles and were able to discharge their duties relating to 
auditing exercises. 23.40% were not sure, implying that they were uncertain of senior 
management’s official mandate. 
The Systems Theory of Governance espouses that organizations are hierarchical 
and should operate under the guidance of visionary management. In the delivery of 
public service, such organisations should be staffed by competent people who are 
ready to offer service to the people (Ostrom, 2003:14). Another aspect of the theory 
is that services should be provided through multi-organisational imperatives. Such 
imperatives are “interrelated group of firms, organisations, and associations which 
come jointly within the structure of these programmes” (Hjern and Porter, 2001: 212-
213). The implementation mechanism of these imperatives emanate from a notion of 
governance which is driven by consensus. 
There exists a pervasive, shared, global perception of governance where 
governance is seen as a topic far broader than government. This governance is seen 
as a “new procedure of governing, or a reformed situation of ordered rule or the new 
technique by which society is administered” (Stoker, 2012:17).  
Governance theory underscores the multi-faceted nature of policy and focuses on 
the “multi-layered structural context of rule-governed understandings, along with the 
role of multiple social actors in arrays of negotiation, implementation, and service 
delivery. Addressing governance entails attending to social patterns and thoughts 
about how to concert action among them (Millward and Provan, 2000: 276). It shows 
that the theory is driven by several implementation themes. Governance broadens 
itself into a variety of designs whose horizons can be depicted within the context of 
private and public sector domains. 
54 
 
The roles and responsibilities of senior management were studied under these 
variables: loyally perform the guidelines of the government of the day in the 
performance of official duties as contained in constitutional and other policies. Senior 
Managers and other staff members are very helpful during audit exercises, strive to 
achieve the objectives of the organisation in an effective manner and in the interest 
of the public, the main role of the Chief Financial Officer during the auditing exercise 
is to put management under pressure to perform. The other role of the Chief 
Financial Officer is to act as an interface or point of co-ordination between the 
Department and the leader of the auditing team as far as management matters and 
request for information (RFI) are concerned and Senior Managers understand their 
roles and are able to discharge their duties relating to auditing exercises. 
The study established that 30, 73% and 47, 75% strongly agreed and agreed with 
the foregoing. This could be clear indication that management is conversant with 
auditing legal frameworks such as PFMA and AGSA’s annual audit opinions. 
However, there is need to also comply with audit opinions from internal audit 
committee recommendations in the department. 
SECTION D 
Section D outlines the responses to challenges that are normally experienced during 
the auditing process  
Table 4.5: Challenges experienced during the auditing process 
The following responses in percentages relate to the challenges experienced during 
the auditing process: 
 
 
 
 
Strongly 
Agree (%) 
Agree 
(%) 
Not 
sure 
(%) 
Disagree 
(%) 
Strongly 
Disagree 
(%) 
17 We are always informed 
about the actual 
commencement of the 
external audit team in our 
Department (N = 50) 
20 44 12 12 12 
55 
 
  Strongly 
Agree (%) 
Agree 
(%) 
Not 
sure 
(%) 
Disagree 
(%) 
Strongly 
Disagree 
(%) 
18 Audit findings of 2014/15 
were shared with 
management of the 
Department 
 (N = 50) 
24 52 22 2 0 
19 The Audit Committee of the 
Department monitors the 
implementation of internal 
control effectively (N = 48) 
12.5 47.92 31.25 4.17 4.17 
20 The Chief Financial Officer 
ensures that regular 
financial reporting is done  
(N = 50) 
28 52 16 0 4 
21 The common non-
compliance matter raised by 
the auditor general at the 
end of the auditing exercise 
is lack of cooperation from 
management (N = 50) 
12 46 18 10 14 
22 Management sometimes fail 
to acknowledge 
correspondence from the 
auditors (N =50) 
16 42 24 8 10 
23 Management does not the 
capacity to handle all the 
issues relating to the 
external auditing process (N 
= 49) 
18.37 30.61 18.37 16.33 16.33 
24 The qualified audit opinion 
is mainly caused by issues 
40 34 12 10 4 
56 
 
relating to  unauthorised, 
irregular, fruitless and 
wasteful expenditure (N 
=50) 
25 Management fully 
understands the opinion 
expressed by the auditor in 
the audit report (N = 50) 
24 56 10 8 2 
26 Sometimes the 
management is unable to 
respond timeously to the 
request for information by 
the external auditors within 
the required minimum 
period (N = 49) 
32.65 40.82 10.2 6.12 10.2 
27 Sometimes management 
argue with the external 
auditors with regard to the 
scope of the audit (N = 49) 
22.45 22.45 26.53 20.41 8.16 
28 There’s poor 
communication between 
external auditors and 
employees (N = 50) 
26 36 10 14 14 
29 There’s a lack of strategic 
leadership in the 
Department of Education 
and Sport Development (N 
= 50) 
14 16 34 18 18 
 AVERAGE RESPONSE (%) 22.31 39.98 18.80 9.93 8.99 
 
 
57 
 
Every growing organisation has challenges. These challenges can exist at a micro, 
task or macro-level within the organization. The staff also need to be appraised of all 
developments in an organisation. 20% and 44% of the respondents strongly agreed 
and agreed that they were always informed about actual commencement of external 
audit teams in their department. 52% and 24% agreed and strongly agreed that there 
was sharing of audit findings of the 2014/15 with management in the department. 
Monitoring of the implementation of internal control practices should be conducted 
effectively in any department and in this regard,  47,95% and 12,5% agreed and 
strongly agreed with this assertion though 31,25% were not sure, possibly reflecting 
staff with no knowledge on the relevance of auditing in public sector entities. 
Teamwork demands that someone should take the reins of leadership. 52% of the 
respondents agreed that the CFO should ensure that regular financial reporting is 
done. Compliance with laid down statutory prescripts is fundamental. 46% of the 
respondents indicated that there was non-compliance with the Auditor General’s 
recommendations due to lack of cooperation from management. The study also 
established that management at times failed to acknowledge correspondence from 
auditors. This was reflected by 42% of the respondents. 
Skills deployment is an integral part of quality service delivery. 30,61% indicated that 
management lacked the capacity to handle issues relating to external audit 
exercises. These could be material or human hence the urgent need to work on this 
shortcoming. 40% and 34% of the respondents strongly agreed and agreed that the 
qualified audit opinion was mainly caused by issues relating to unauthorised, 
irregular, and fruitless expenditure. Also the organisation needs to understand 
recommendations put forward by the audit teams. 56% of the participants highlighted 
that management fully understood the opinion expressed by the auditor in audit 
reports. 
Every organisation should ensure that deadlines are adhered to. 40,82% and 
32,65% agreed and strongly agreed that sometimes their management failed to 
respond timeously to the request for information by external auditors. In some 
instances, management argued with external auditors with regards the scope of the 
audit, and 22,45% respectively strongly agreed and agreed with this assertion. 
26,53% were not sure, possibly reflecting respondents who were not conversant with 
58 
 
audit exercises in the Department. Where arguments prevail, communication 
becomes ineffective. 36% of the respondents indicated that there was poor 
communication between external auditors and employees in the Department. 
Organisations could lack strategic and visionary leadership. 14% and 16% 
respectively strongly agreed and agreed that there was crop of leadership was 
lacking in the Department. However 34% were not sure, possibly indicative of staff 
who feared victimisation and who knew little in terms of strategic leadership. 
Peters and Pierre (2008:232) also note that “governance is about maintaining public-
sector resources under some degree of political control and developing strategies to 
sustain government’s capacity to act” in the face of management tools that replace 
centralised systems which have always impacted negatively on quality service to 
clients. The foregoing perceives governance as a technique in programme 
development and implementation. Governance is seen as a multi-faceted approach 
with an “ordered rule.” As a developmental rule, it advocates for numerous social 
players and is open to novel ideas. There is need to consult even those in junior 
spheres so that there is buy-in. 
The study established the ensuing variables as critical in auditing challenges in the 
department: the participants were always informed about the actual commencement 
of external audit team in their department, audit findings of 2014/15 were shared with 
management of the department, audit findings of 2014/15 were shared with 
management of the Department, the Audit Committee of the Department monitors 
the implementation of internal control effectively, the Chief Financial Officer ensures 
that regular financial reporting is done,  and the common non-compliance matter 
raised by the auditor general at the end of the auditing exercise indicated lack of 
cooperation from management among other institutional issues. 22, 31% and 39, 
98% strongly agreed and agreed to all these constructs. 
The researcher also concurs that there are challenges encountered during auditing 
processes, some which can be political and skills related as some members are 
political deployees. 
 
 
 
59 
 
SECTION E 
Table 4.6: Recommendations to improve efficiency of the function of senior 
officials during auditing exercises 
The Table showing recommendations by respondents on how to improve efficiency 
of the function of senior officials during auditing exercises are outlined in 
percentages in this section. 
 
 
 
 
Stron
gly 
Agree 
(%) 
Agree 
(%) 
Not 
sure 
(%) 
Disagree 
(%) 
Strongly 
Disagree 
(%) 
30 It is important to recruit, orientate, 
educate senior managers about 
audit exercises (N = 49) 
57.14 40.82 2.04 0 0 
31 It is important to have proper 
reporting relationships between 
management and the audit 
committee (N = 49) 
67.35 30.61 2.04 0 0 
32 It is important to regularly assess 
the effectiveness and contribution 
of the senior managers during 
audit exercise (N = 49) 
55.10 42.86 2.04 0 0 
33 It is important to make effective 
use of executive sessions with 
the audit committee (N = 49) 
61.22 32.65 4.08 2.04 0 
34 It is important to ensure that audit 
committee independence is real 
(N = 48) 
 
62.50 35.42 0 2.08 0 
 AVERAGE RESPONSE (%) 60.66 36.47 2.04 0.82 0 
60 
 
In a large organisation like the Department of Education and Sport Development, 
challenges are likely to arise. Therefore there is a need to propose recommendations 
in order to enhance the effectiveness of the role of Senior Management during the 
auditing exercise. 50,14% and 40,82% strongly agreed and agreed that it is 
important to recruit, orientate, and educate senior management about audit 
exercises. 67,35% further concurred that it was important to have proper reporting 
relationships between management and the audit committee. 55,10% also concurred 
that regular assessments needed to be conducted to enhance effectiveness and 
input of management during audit exercises. Interaction between management and 
the audit committee was considered critical, with 62,50% acceding to this assertion. 
62,50% further indicated that it was important to ensure that the audit committee’s 
independence was real.  
Organisational performance focuses on actual output or results (Richard, 2009:34). 
Some organisations benchmark their performance by integrating the balanced 
scorecard technique to measure dimensions like employee stewardship, customer 
care, performance improvement, financial performance and organizational re-
engineering. Jennings and Ewalt (2009:23) advocate for a scholarship of 
organisational performance that should focus on achieving collective effort among 
staff. Blame avoidance and scapegoating should be detested but everyone should 
be held accountable for performance outcomes. They further propose that there 
should be adherence to shared beliefs and exercise of power through collective 
consent by every organisational member and social actor. 
The study established that 60,66% strongly agreed with the following parameters: it 
is important to recruit, orientate, educate senior managers about audit exercise; it is 
important to have proper reporting relationships between management and the audit 
committee; it is important to regularly assess the effectiveness and contribution of 
the senior managers during audit exercise; it is important to make effective use of 
executive sessions with the audit committee; and it is important to ensure that audit 
committee independence is real. 
 
 
 
61 
 
SECTION F:  RELIABILITY ANALYSIS  
Cronbach’s alpha (α) reliability coefficient, whose numerical value ranges from 0 to 
1, measures the reliability (or internal consistency) of items in the Likert scale. A high 
value (close to 1) for Cronbach’s alpha reliability coefficient indicates good internal 
consistency of the items in the scale. 
 
Table 4.7 Cronbach’s alpha coefficients 
Section Cronbach’s  
Alpha (α) 
N of 
Items 
B 0.672 5 
C 0.578 6 
D 0.670 13 
E 0.842 5 
 
The Cronbach’s alpha coefficients in Table 4.7 above are close to 1, suggesting that 
the items in the scale have relatively high internal consistency. This part therefore 
confirms that the measures used in the study were consistent (Bless, 2013:222). It 
amplifies that equivalent results could be produced for repeated trials. Hence 
according to the study’s findings, perceptions raised here are likely to be raised in 
similar study areas. 
 
The variables with this high internal consistency were perceptions of employees 
regarding auditing in the public sector, the roles and responsibilities of senior 
managers during the public sector entity audit exercise, challenges experienced 
during the auditing process and recommendations to improve the efficiency of the 
function of senior officials during the auditing exercise. 
 
 
 
62 
 
Section G:   Correlation Analysis 
Spearman’s status rho test 
The relationship between two ranked variables (X and Y) is being tested here. The 
relationship is statistically significant if the p-value has a lesser amount than 0.05 
level of implication.   
The coefficient of Spearman’s rank correlation is given by the formula:  
                          r   =  1  -   
where 
D = differentiation of ranks of matching figures of X and Y 
N = number of paired values in the data 
                  -1 ≤ r  ≤  1 
The p-value is less than 0.05 as it reflected -1. Therefore the relationship of the 
Spearman’s rank rho test was statistically significant. This establishes that there is a 
statistically significant  relation between perceptions of employees regarding auditing 
in the public sector, the roles and responsibilities of senior managers during public 
sector entity audit exercise, challenges experienced during the auditing process and 
recommendations to improve the effectiveness of the role of senior officials during an 
auditing exercise. 
The respondents’ views are tabled in the Spearman’s rank correlation between level 
of education and views of respondents concerning challenges experienced during 
auditing processes 
Table 4.8:  Spearman’s rank correlation between level of education and views 
of respondents concerning challenges experienced during auditing processes  
Views   
The Chief Financial Officer ensures that regular 
financial reporting is done (N = 50) 
 
Correlation 
coefficient(r ) 
0.326 
p – value 0.021 
63 
 
Sometimes the management is unable to respond 
timeously to the request for information by the external 
auditors within the required minimum period (N = 49) 
Correlation 
coefficient(r ) 
-0.328 
p – value 0.022 
It is important to recruit, orientate, educate senior 
managers about audit exercise (N = 49) 
Correlation 
coefficient(r ) 
-0.462 
p – value 0.001 
 
To get the correlation analysis and results shown in Table 4.8, SPSS 23 software 
package was used. Since all the p-values are less than 0.05 level of significance, the 
connection between the level of education and views of respondents about the items 
listed in Table 4.8 is significant. The study established that the CFO ensures that 
regular financial reporting is conducted, that sometimes management is unable to 
respond timeously to the request for information by external auditors within the 
required minimum period. 
Negative correlation coefficients imply that more educated respondents tend to 
agree with the listed views, whereas less educated respondents tend to disagree. 
This is conveyed in Figure 4.4. 
                            Disagree   
 r< 0 
Views  
 
                            Agree 
                                                           Less                                                   More 
Level of education 
Figure 4.4:  Views of respondents versus education level (r < 0) 
The educational discrepancies amongst the research participants may have a 
negative impact on how respondents perceive service delivery and their appreciation 
64 
 
of it. In situations where information is provided, the literate and illiterate may have 
variances in levels of inquiry and comprehension as depicted in Figure 4.4. 
Chambers (2008:31) perceives that the level of education influences appreciation of 
current affairs in community development. He also reiterates that such a bias puts 
the marginalised at the mercy of the better informed elites. Hence this qualifies the 
different perceptions between the educated and less educated respondents in the 
study. 
 
The respondents’ views are tabled in the Spearman’s rank correlation between 
position in the Department and their view about the auditing route in the public 
service auditing processes 
Table 4.9:  Spearman’s rank correlation between position in the Department 
and views of respondents about the auditing route in the public service 
Views   
Audit findings of 2014/15 were shared with 
management of the Department (N = 50) 
 
Correlation 
coefficient(r ) 
0.459 
p – value 0.001 
The Audit Committee of the Department monitors the 
implementation of internal control effectively (N = 48). 
Correlation 
coefficient(r ) 
0.360 
p – value 0.012 
The Chief Financial Officer ensures that regular 
financial reporting is done  (N = 50) 
 
Correlation 
coefficient(r ) 
0.388 
p – value 0.005 
There is  a lack of strategic leadership in the 
Department of Education and Sport Development (N = 
50) 
Correlation 
coefficient(r ) 
-0.445 
p – value 0.001 
 
65 
 
Table 4.9 shows that most significant loadings (|loadings|<0.05) are allocated to 
factor 1, some factors violate the rule of thumb of at least three items per factor. As 
such, rotation of the initial factor matrix is necessary in order to improve 
interpretability of the factor matrix. Interpretability is a highly essential criterion in 
determining the number of features. Factor solutions should be assessed not only 
according to empirical criteria but also according to the criterion of “theoretical 
meaning." Extracting more aspects assures that the residual correlations get smaller 
and thus the chi-square values get reduced relative to the number of degrees of 
freedom. However, non-interpretable issues may have little utility. 
A family of statistical techniques concerned with the reduction of a set of observable 
variables in terms of a small number of latent factors is a generic term for factor 
analysis. This has been established mainly for analysing relationships among a 
number of measurable entities (such as survey items or test scores). The underlying 
assumption of factor analysis is that there exists a number of unobserved latent 
variables (or "factors") that account for the correlations among observed variables, 
such that if the latent variables are partialled out or held constant, the partial 
correlations among observed variables all become zero. In other words, the latent 
factors determine the values of the witnessed variables. Hence it was critical to 
develop a summation of the variables which guided this study which were configured 
as constructs of position in the Department and views of respondents about the 
auditing process in the public sector. 
Since all the p-values have a lesser amount at the 0.05 level of significance in Table 
4.12, the correlation between the position in the Department and views of 
respondents about the items listed in Table 4.12 is significant.  Positive correlation 
coefficients imply that the respondents who occupied higher positions in the 
Department tend to agree with the listed views, whereas the respondents who 
occupied lower positions in the Department tend to disagree. The views of those in 
higher positions could have been instigated by their level of education and period of 
service in the Department. 
Negative correlation coefficients imply that the respondents who occupied higher 
positions in the Department tend to disagree with the listed views, whereas the 
66 
 
respondents who occupied lower positions in the Department tend to agree.   This is 
the essence depicted in Figure 4.5 
                            Agree   
 r< 0 
Views  
                            Disagree            Low                                High 
Figure 4.5:  Views of respondents versus position in the Department (r < 0) 
Position in the Department 
Respondents in lower positions in the Department agreed with the following 
assertions: audit findings of 2014/15 were shared with management of the 
Department, the Audit Committee of the Department monitors the implementation of 
internal control effectively, the Chief Financial Officer ensures that regular financial 
reporting is done and there is  a lack of strategic leadership in the Department of 
Education and Sport Development. 
The variances with what those in senior positions could be a result of “Hawthorne 
effect” where those in lower positions felt they could be victimised. In terms of lack of 
strategic leadership, those in higher positions could not have agreed with this 
perception as it would be shooting themselves in the foot. Furthermore, those in 
lower positions agreed that audit findings were shared though the practice reflected 
that their input was not highlighted as significant and any concerns they could raise 
were not incorporated (Figure 4.6). 
                Agree 
  
Views r > 0 
 
                 Disagree         Low                                            High 
Figure 4.6:  Views of respondents versus position in the Department (r > 0) 
67 
 
Table 4.10:  Spearman’s rank correlation between job experience in current 
position and views of respondents about auditing process in public sector 
Views   
In your best understanding, the real purpose of 
external auditing in your department is to check 
wasteful expenditure (N = 50) 
Correlation 
coefficient(r ) 
-0.290 
p – value 0.041 
Senior Managers and other staff members are very 
helpful during audit exercises (N = 50) 
Correlation 
coefficient(r ) 
-0.305 
p – value 0.031 
Senior Managers understand their roles and are able 
to discharge their duties relating to audit exercises (N 
= 47) 
Correlation 
coefficient(r ) 
-0.333 
p – value 0.022 
Section 153(a) of the South African Constitution 1996 prescribes the duties of a 
municipality, which are to: “…structure and manage its administration and budgeting 
and planning process to give priority to the basic needs of the community and to 
promote the social and economic development of the community.” Pretorius and 
Schurink (2007:19) point out that access to effective public services should not be an 
advantage to the few privileged only, but a legitimate right to everyone, particularly 
those who were previously disadvantaged during the apartheid era. It further goes on 
to cite that community engagement in decision-making should be an epicentre. 
Since all the p-values have a lesser amount of 0.05 level of significance in Table 
4.10, the correlation between the job experience in the current position and views of 
respondents about the items listed in Table 4.10 is significant. The findings show that 
the purpose of external auditing in the department sought to check on wasteful 
expenditure, that senior management helped during audit exercises and that senior 
management understood their roles and were able to discharge their duties relating 
to auditing exercises. 
68 
 
Negative correlation coefficients mean that questionnaire respondents who have 
more experience are likely to agree with the views that are listed, whereas less 
experienced respondents tend to disagree. See Figure 4.7. 
                            Disagree   
 r< 0 
Views  
 
                            Agree 
                                               Less                                                   More 
Job Experience (yrs.) 
Figure 4.7:  Views of respondents versus job experience (r < 0) 
Spencer (2002: 12) views human capital theory as the sum total of knowledge, 
talent, skills, experience, and intelligence that should be promoted. This assertion 
concurs with Nel, Mark and Teasdale (2011; 29) when they suggest that right skills 
and knowledge should determine where to place an employee. Also, Jaison 
(2012:11) considers the foregoing as a wealth that should be incorporated in 
organisational activities in the quest to accomplish institutional imperatives. A 
workforce with knowledge and skills understands profoundly their operational 
mandate. This is instigated by numerous factors that can range from period of 
service, level of education and nature of motivation. The negative perceptions 
emanating from those in lower positions could have been due to the foregoing 
imperatives. 
4.3 Conclusion 
An open system model is a common phenomenon in public institutions in a 
democratic dispensation. It should be borne in mind that such institutions in terms of 
sustainable service delivery are negatively impacted by employment equity policies, 
brain drain, and deployment policies and skills shortage. This chapter focused on the 
roles and responsibilities of senior managers during public sector entity audit 
69 
 
exercise, challenges experienced during the auditing process, recommendations to 
improve the efficiency of the role of senior officials during the auditing exercise 
among other variables. The study established that people occupying different 
positions viewed auditing exercises in the Department differently. Level of education 
and duration of employment were perceived as some of the contributory factors to 
these differing perceptions. 
  
 
  
70 
 
CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS 
5.1 Introduction 
Skills and capacity hiccups are symptomatic of deep-seated human capacity 
management deficiencies in public entities.  Such deficits compromise the promotion 
of quality human capacity value chain and worker value. Without a strong talent 
management base, profound service delivery hiccups persist to affect the planning 
trajectory of the public sector.  Numerous factors could be attributed to the shortage 
of skills and capacity in the sector. These could be lack of career growth 
opportunities, a non-conducive work environment and a lack of collaborative 
mechanisms between the public sector and private entities. Such strategic 
challenges are a panacea for human capital inefficiencies in public bodies; hence 
this stifles sustainable service delivery. 
A working environment that is not conducive attracts and retains scarce skills. In 
most cases, such an environment experiences high labour turnover. There is 
therefore urgent need for a reflective talent management strategy which negatively 
impacts on sustainable service delivery. Intolerance and social instability have been 
the result in the public service. This has been so because communities find 
themselves pushed to “a hard brick wall” as they perceive public authorities as being 
insensitive to their basic needs. The Auditor General’s Report (2014-2015) concurs 
that reliance by public institutions on consultants has been destructive. The 
exorbitant calls of compliance could have been reduced if public institutions had in 
their midst employed scarce-skilled staff. This strategy has proved that it is not cost-
effective or sustainable. In addition the performance constructs of consultants are 
barely aligned with the annual service delivery and budget implementation plans. 
Thus it becomes paramount to render precedence to the acquisition and retention of 
scarce skills in public entities. 
5.2 Auditing compliance 
Auditing is an assessment of sound financial management, namely of the economy, 
efficiency and effectiveness with which audited entities have carried out their 
responsibilities. The Public Finance Act No. 15 of 2004, provides legislative support 
for internal and external auditors in the public sector. Section 11 (2) (c) of the Public 
71 
 
Finance Act, 2004 provides that: “… internal auditors may investigate whether there 
are adequate measures and procedures for the proper application of sound 
economic, efficient and effective management of public funds.”  
 
Section 45 (1) of the Public Finance Act, 2004, empowers the Auditor General to 
“carry out performance and specialised audits in a Ministry, Government department 
or statutory corporation as the Auditor General may consider necessary and shall 
prepare a report on the audit for submission to the National Assembly.” It is worth 
noting that sections 7 (3) (e) and 9 (2) (b) of the Public Finance Act, 2004 repose 
upon controlling officers and accountants, respectively, a duty to ensure efficiency, 
economy and effectiveness in the management of resources. Auditing in the public 
sector takes place in an environment where it is the responsibility of the 
management of a given entity to institute measures to:-  
• acquire resources of the right quality, in the right quantity, at the right time and 
place at the lowest possible cost (Economy);  
• achieve the optimal relationship between output of services or other results 
and the resources used to produce them (Efficiency); and  
• achieve policy objectives, operational goals and other intended effects 
(Effectiveness).  
 
The primary objective of a performance audit is threefold. It has to confirm 
independently that adequate measures exist to:  
• ensure that the above stated standards for economy, efficiency, and 
effectiveness are achieved. 
• provide management with information on adequate and inadequate 
management measures by means of a structured reporting process.  
explain the effect or impact of the management measures. 
Apart from examining aspects of economy, efficiency and effectiveness, a 
performance audit also looks at whether management measures are in place or that 
are inadequate for ensuring attainment of the three (3) E’s.  Therefore, an audit 
ensures that the reasons for inadequate management measures or the causes for 
the ineffectiveness, inefficiency and uneconomical procurements are identified.  
Auditing in the public sector provides the Government with an avenue to 
demonstrate to the public whether or not it has fulfilled its responsibilities with regard 
72 
 
to accountability of resources. An audit, therefore, helps in holding implementers of 
Government programmes accountable for the economic, efficient and effective 
discharge of programmes. This promotes better public service delivery while 
enhancing public accountability and management. Benefits of audits in the public 
and private sectors are generally similar, although in the private sector focus is 
largely on improving efficiency and effectiveness of operations in order to maximise 
profits and value to shareholders.  
An audit: 
• Helps in evaluating performance of individuals and departments or sections in 
an organisation. Evidently, audits assist in obtaining a critical view of 
compliance with legal requirements, policies, objectives and procedures;  
• Helps citizens obtain insight into the management of different government 
programmes and activities.  
• Audits may serve as a basis of decisions on future funding and priorities. 
 
5.3 Research design and methodology 
Quantitative research is generally associated with the positivist or post positivist 
paradigm. It usually involves collecting and converting data into numerical form so 
that statistical calculations can be made and conclusions drawn. Objectivity is very 
important in quantitative research. Consequently, researchers take great care to 
avoid their own presence, behaviour or attitude affecting the results. They also 
critically examine their methods and conclusions for any possible bias. The research 
design used in this study was both exploratory and descriptive. 
Quantitative research methods describe and measure the level of occurrences on 
the basis of numbers and calculations. Moreover, the questions of “how many?” and 
“how often?” are often asked in quantitative studies. Quantitative research is defined 
by Bryman and Bell (2005) as ‘entailing the collection of numerical data and 
exhibiting the relationship between theory and research as deductive, a predilection 
for natural science approach, and as having an objective conception of social reality’. 
The most popular research methods from this category are closed-ended 
questionnaires, experiments, correlation and regression analysis methods and 
others. For this study, the researcher used self-administered questionnaires, 
observation and document analysis as data collection methods. 
73 
 
5.4 Summary of findings 
A quantitative research design was used to collect relevant data. This encompassed 
the use of questionnaires, observations and document analysis. A sample size of 50 
respondents was used for the study, selected through convenience sampling 
techniques. 
The study’s research instruments captured the demographics of the respondents, 
their perceptions regarding auditing in the public sector, the role and responsibilities 
of senior management during public sector entity audit exercises, challenges 
experienced during audit exercises, and established recommendations for policy 
implications. Reliability analysis was done through Cronbach’s alpha, and correlation 
conducted through Spearman’s rank rho test. 
The study established that respondents in the age group 40-49 years had the 
highest attendance and there were more females than males involved in the study. 
Differences in level of education, duration of employment, job experience and 
position at work were perceived as determinants of how respondents perceived the 
variables used in the study. A Likert scale was used to configure respondents’ 
perceptions regarding auditing in the public sector; role and responsibilities of senior 
management in auditing; and challenges experienced during audit exercises. 
50% of the respondents had post graduate qualifications. 44.12% strongly agreed 
that auditing was a foundation of good governance and helped to cut down on 
wasteful expenditure. They further indicated that public sector staff should comply 
with audit opinions from internal audit committee recommendations in the 
department. They also concurred that numerous challenges were encountered 
during audit processes, some of which were political and skills related. 
Cronbach’s alpha test was used and established a high internal consistency. 
Spearman’s rank rho test determined a statistical significance between perceptions 
of staff in the department; roles and responsibilities of senior management during 
audit exercises; and challenges experienced thereof. For instance, the Spearman’s 
rank correlation for views in Table 4.11 showed a p-value of less than 0.05 indicating 
that the Spearman’s rank rho test was statistically significant. 
 
74 
 
5.5 Limitations 
The study was focused on the Department of Education and Sport Development. 
However, there is need to expand this critical component to the private sector and 
other public sector entities in the entire North West Province. 
 
5.6 Recommendations 
Enhancing unqualified audit opinions in any organisation is of paramount 
importance. Wasteful and fruitless expenditure should be averted in public service 
organisation as it impacts on service delivery. Therefore it becomes imperative for 
organisations to strive to improve their audit outcomes. This has placed pressure on 
those tasked to ensure unqualified audit outcomes to improve their operational 
systems. 
Informed by the foregoing findings, recommendations were developed: 
• Stakeholder audit at all levels of governance, that is local, district, provincial 
and national. 
• Stakeholder identification and mapping. 
• Alignment of stakeholder engagement to National Treasury strategy. 
• Prioritisation of stakeholder concerns. 
• Apolitical deployment of staff and appointments should be merit-based. 
• Implementation of programmes should be governed by existing legislative 
frameworks. 
• Transparency, accountability and oversight should be upheld. 
• Implementation of a results-based monitoring and evaluation system for public 
sector staff. 
• Regular report back to public sector staff. 
Effective human resource management is a key driver of audit outcomes. The 
following areas relating to human capital acquisition, deployment and retention 
should be looked into:  
•  All key vacancies in the Department should be filled. 
75 
 
•  Provincial and national government must find a sustainable way to bring the 
essence of public service home in the hearts and minds of all officials. Without 
this key breakthrough, the pace of transformation continues to be 
unsatisfactory and slow as evident in the current audit results.  
•   The leadership should set the tone by implementing sound performance 
management processes; evaluating and monitoring performance; and 
consistently demonstrating that poor performance has consequences.  
•  Public sector departments should develop frameworks, succession plans and 
recruitment strategies to ensure that employees with the necessary skills and 
competencies are employed and retained.  
•  As part of the staff development process, management should ensure that key 
officials who lack the minimum competencies receive training and on-going 
learning and development that their positions require, and link these to 
performance and audit outcomes. There should be a clear understanding that 
the expected results are higher because upgrading of skills has taken place.  
5.7 Conclusion 
Public sector entities experience numerous challenges related to auditing. The study 
has shown that senior management in public organisations should understand their 
roles and responsibilities during auditing exercises.  
Weaknesses in the effective conduct of auditing in public entities promote wasteful 
and fruitless expenditure. Staff also needs to understand their input in auditing 
processes; where this is lacking, upgrading skills becomes imperative. Resource 
constraints faced by Government in general underlie the necessity for audits as a 
means to help government to prioritise programmes and ultimately provide quality 
service delivery. Therefore, the need for Audits in the public sector cannot be over 
emphasised. 
 
Regular research is critical in the NWP’s districts to ensure up-to-date findings on 
auditing matters. Therefore the researcher further proposes that periodic research on 
governance and skills impact on auditing services ought to be conducted in future. 
76 
 
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Appendices 
Appendix 1: Questionnaire 
Appendix 2: Turn it in report 
Appendix 3: Certificate of language editing 
 
 
  
86 
 
Appendix 1: Questionnaire 
 
QUESTIONNAIRE 
 
SECTION A 
 
DEMOGRAPHIC DETAILS 
 
1. Gender? 
Male  
Female  
 
2. Age group? 
20-29  
30-39  
40-49  
50-59  
60-65  
 
3. Level of education 
High school  
College (Diploma)  
University (Junior Degree)  
Post graduate (Honours/Masters/PhD)  
Other (specify)  
 
4. What is your position in the Department 
Senior Management  
Middle Management  
Lower Management  
Other (specify)  
  
 
5. How long have you been in that position? 
1-4 yeas  
5-9 years  
10-14 years  
15-20 years  
Other (specify)  
 
  
87 
 
SECTION B 
 
Perceptions of employees regarding auditing in the public sector 
 
 
Strongly 
Agree 
Agree Not sure Strongly 
Disagree 
Disagree 
6 Auditing is a foundation of good public 
sector governance 
     
7 Auditors help public sector organisations 
achieve accountability and honesty, 
improve operations, and instil confidence 
among citizens  
     
8 Public sector auditor’s role supports the 
governance responsibilities of oversight, 
insight, and foresight 
     
9 In your best understanding, the real 
purpose of the external auditing in your 
department is to check wasteful 
expenditure 
     
10 Evaluating value for money of the state 
financial resources explains what 
auditing in the public sector 
     
 
In your view, do you see any value for an external auditing team? 
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
................................................................................................................................................... 
 
  
88 
 
SECTION C 
What are the role and responsibilities of senior managers during public sector entity 
audit exercise? 
 
 
Strongly 
Agree 
Agree Not sure Disagree Strongly 
Disagree 
11 I loyally execute the policies of the 
government of the day in the 
performance of official duties as 
contained in statutory and other 
prescripts 
     
12 Senior Managers and other staff 
members are very helpful during audit 
exercise  
     
13 I serve the public in an unbiased and 
impatient manner in order to create 
confidence in the public service 
     
14 I strive to achieve the objectives of 
your institution cost effectively and in 
the public interest? 
     
15 The main role of the Chief Financial 
Officer during the auditing exercise is 
put management under pressure to 
perform 
     
15.1 The other role of the Chief Financial 
Officer is to act as an interface or 
point of co-ordination between the 
Department and the leader of the 
auditing team as far as management 
letters and request for information 
(RFI) is concerned 
     
16 Senior Managers understand their 
roles and are able to discharge their 
duties relating to auditing exercise 
     
 
As an employee of the Department, what frustrates you more about the auditing exercises? 
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
.................................................................................................................................................................. 
 
 
For the purpose of avoiding a disclaimer opinion, what role should management play during 
the auditing exercise? 
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
. 
 
 
89 
 
 
SECTION D 
What challenges are experienced during the auditing process? 
 
 
 
 
Strongly 
Agree 
Agree Not 
sure 
Disagree Strongly 
Disagree  
17 We are always informed about the 
actual commencement of external 
audit team in our Department 
     
18 Audit findings of 2014/15 were 
shared with management of the 
Department 
     
19 The Audit Committee of the 
Department monitors the 
implementation of internal control 
effectively. 
     
20 The Chief Financial Officer ensures 
that regular financial reporting is done  
     
21 The common non-compliance matter 
raised by the auditor general at the 
end of the auditing exercise is lack of 
cooperation from management  
     
22 Management sometimes fail to 
acknowledge correspondence from 
the auditors 
     
23 Management does not the capacity to 
handle all the issues relating to the 
external auditing process 
     
24 The qualified audit opinion is mainly 
caused by issues relating to  
unauthorised, irregular, fruitless and 
wasteful expenditure 
     
25 Management fully understands the 
opinion expressed by the auditor in 
the audit report 
     
26 Sometimes the management is 
unable to respond timeously to the 
request for information by the 
external auditors within the required 
minimum period  
     
27 Sometimes management argue with 
the external auditors with regards to 
the scope of the audit 
     
28 There’s poor communication between 
external auditors and employees 
     
29 There’s a lack of strategic leadership 
in the Department of Education and 
Sport Development 
     
In your view, what often causes tension between the Department’s management and AG 
auditing team? 
...................................................................................................................................................
...................................................................................................................................................
................................................................................................................................................... 
90 
 
SECTION E 
 
What recommendations can be made to enhance the effectiveness of the role of 
senior managers during the auditing exercise? 
 
 
 
 
Strongly 
Agree 
Agree Not 
sure 
 Disagree Strongly 
Disagree 
30 It is important to recruit, orientate, 
educate senior managers about 
audit exercise 
     
31 It is important to have proper 
reporting relationships between 
management and the audit 
committee 
     
32 It is important to regularly assess 
the effectiveness and contribution of 
the senior managers during audit 
exercise 
     
33 It is important to make effective use 
of executive sessions with the audit 
committee 
     
34 It is important to ensure that audit 
committee independence is real 
     
 
What recommendations can be developed to enhance the effectiveness of your role as 
senior managers in the auditing process? 
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...............................……………………………………………………………………………………
…………….. 
 
 
Do you have any comments for the researcher on how best to achieve clean audits? 
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
.....................……………………………………………………………………………………………
…………………………………………………………………………………………………………… 
 
THANK YOU FOR YOUR TIME 
 
 
  
91 
 
Appendix 2: Turn it in report 
  
92 
 
Appendix 3: Certificate of language editing