SOUTH AFRICAN REVENUE SERVICE
MEDIA RELEASE NUMBER 12 OF 2000

10 MAY 2000

COMMENTS ON AUDITOR GENERAL'S MEDIA RELEASE ON SARS ADMINISTERED REVENUE AND OWN ACCOUNTS AT 31 MARCH 1999

The South African Revenue Service (SARS) has made significant progress in proactively managing issues raised by the Auditor General in respect of SARS annual financial statement for 1999. Further strides will be made during the current financial year.

The registration of SARS and the transition from a traditional Government administrative departments to an autonomous entity (previously Inland Revenue and Customs and Excise) on 1 October 1997 imposed significant additional requirements. These include:

1. Migration from cash accounting to accrual accounting
2. Preparation of financial statements in accordance with GAAP
3. Interface between diverse revenue operations systems to support proper and complete record keeping

Two sets of annual financial statements prepared in accordance with the Generally Acceptable Accounting Practices (31 March 1998 and 31 March 1999) have thus far been published for both administered revenue and own accounts. In the 1999 annual financial statements, the Auditor General acknowledged improvements in the reporting and disclosure of administered revenue. Furthermore, the Auditor General has noted that there no GAAP guidelines that are applicable to SARS administered revenue as there are in other audits. SARS has to rely on international norms and standards, many of which are still in the development process.

The disclaimer by the Auditor General is a result of historic, systemic and skills problems. SARS is currently embarking on the following initiatives to address the issues raised by the Auditor General.

• The finance management structure and staffing are being changed.
• Training of present staff and employment of suitably skilled staff is in progress;
• Policies, procedures, control, delegation and authority levels are being strengthened;
• A new integrated revenue accounting system will be operational by April 2001. This will interface with other revenue systems. Thus far, SARS has laid the necessary foundation to facilitate a full migration to an integrated revenue accounting systems. This includes the introduction of NITS, grammatic changes in the PAYE and VAT systems to enhance the reliability of information.

Systems and processes for own accounts are being critically analysed and the necessary improvements/ enhancements will also be effected by April 2001.

ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA