1 DOJ & CD Portfolio Committee Briefing by CFO 18 November 2009 1
2 Table of Contents 2008/09 BUDGET AND EXPENDITURE OUTCOME 2008/09 AUDIT OUTCOMES 2009/10 AUDIT ACTION PLANS 2
3 Department of Justice and Constitutional Development – Excluding NPA 2008/09 2007/08 2006/07 6, 403, 716 5, 677, 401 4, 893, 562 Expenditure 6, 362, 176 5, 513, 497 4, 469, 462 Balance 41, 540 163, 904 424, 100 Percentage Expenditure 99, 4% 97, 1% 91, 3% Final Budget Less 3
Expenditure outcome per Programme: DOJ&CD 4 4
Expenditure per Economic Classification 5 5
6 Expenditure: Year-on-year comparison 6
Key Observations: 2008/09 Financial year 7 • Improved departmental spending – expenditure increased from 97. 8 % in 2007/08 to 99, 4% in 2008/09 • Under spending decreased with R 83 million from R 163, 9 million in 2007/08 to R 41, 4 million in 2008/09 • Spending on compensation of employees at 100 per cent of parliamentary approved budget whilst absorbing OSD expenditure within baseline through reprioritisation and cost curtailment • Goods and services spending at 99, 7 % • Early reprioritisation to fund OSD (R 280, 0 million), Guarding Services and Cash in Transit (R 20 million), Masters (R 38 million) and opening of new Courts (Tiyani, Northam etc) • March spending as a percentage of total spending down from 16 % in previous years to 8, 6% in 2008/09 7
8 AUDIT OUTCOMES 2008/09 8
9 Vote Account – Qualifications Third Party Funds (TPF) – (i) Departmental Revenue, (ii) Contingent Liability Disclosure note and (iii) Receivables for Departmental Revenue Disclosure note * Previous audit qualification Qualification refers to the impact of the financial administration of the Third Party Fund (TPF) on the Vote Account Employee Benefits (Disclosure note – leave entitlement/benefit as at reporting date) * New audit qualification The Audit Report was qualified due to the lack of control over the timely capturing of leave taken. The late capturing of leave impacts on the provision for leave entitlement as disclosed in the annual financial statement disclosure notes 9
10 Vote Account – Qualifications Finance Lease Commitments (Disclosure note – lease commitments owing from the reporting date to the end of the lease contract) * New audit qualification The audit qualification relates to the availability of adequate supporting documentation requested by the auditors resulting into that lease commitment calculations could not be verified Irregular Expenditure Condoned * New audit qualification The qualification on irregular expenditure condoned for lease expenditure refers to the availability documents as indicated above. The auditors could therefore not examine all the underlying lease agreements to satisfy themselves that the department’s leases did indeed conform to Treasury’s guidelines 10
11 Vote Account – Qualifications Capital and Minor Assets * Previous audit qualification The Audit Report was qualified as the AG indicated that errors relating to the completeness (59/2603) and existence (81/2685) of capital and minor assets were still identified 11
12 KEY ROOT CAUSES AND IMPROVEMENT AREAS IDENTIFIED • GRAP Accrual Accounting Transformation & IFMS – DISCLOSURE NOTES TO AFS - Inadequate Financial Systems Capability i. e. BAS & JDAS etc. • Finance and Court Operations Capabilities (vacancies, inadequate and inconsistent job levels, inconsistent reporting structures and skills shortage) • Inadequate Management Information relating to Financial Matters in Decentralized Financial Management Environment in order to be Proactive • AG Audit Approach to Extrapolate errors for the 1 st time during 2008/09 * 80 % of Departments qualified on Asset Management as per AG General Report 12
13 KEY INITIATIVES TO ACHIEVE NAQ • Debriefing workshops – Regional Heads / Regional Finance Directors / Human Resources Branch / Regional Directors Human Resources / Other Branches / National Office • Financial Reporting and Audit Facilitation Ø Audit Action Plans – Compiled per Financial Statement Component – National Office Champions responsible for actions Ø Task team/s visiting Regions to follow-up on Leases etc. Ø Task team/s dealing with the problems experienced with AFS Disclosure Notes Ø Monthly Financial Statements wef September 2009 (October 2009) Ø Enhanced National Operations Centre (NOC) tool Ø Used as pointers for training and other interventions • TPF - Implementation of MMT PPP (TPF) - Timelines in slide 15 13
14 KEY INITIATIVES TO ACHIEVE NAQ • Asset Management – Deployment of Asset Scanners / Sustaining Purified Asset Register / Quarterly Asset Verifications as per DFI / N/O champion’s Monitoring and Verifications / Asset Controller’s Appointment and Training • Supply Chain Management (SCM) – SCM Business Process Reengineering and Organisational Re-design will ensure that work in this area is conducted in a Regulatory-compliant manner, is Performance-driven and that the SCM unit is staffed with appropriate capacity • Extensive and ongoing consultation and interaction with Regional Heads, Branches 14
15 Third Party Funds (TPF) PPP High-level timelines Finalise negotiations: By end of November 2009 Obtain acting DG and NT TA 3 approval : By 31 December 2009 Obtain PFMA consents by mid-January 2010 Contract signature: By 31 January 2010 System development: Finalised by mid-September 2010 System pilots completed: By 31 October 2010 System implementation: From 1 November 2010 15
16 Audit Action plans 2009/2010 16
17 AUDIT ACTION PLANS FOR 2009/10 • The approach with the audit action plans was changed from an action plan per Regional Office / Court / National Office to an audit action plan per financial statement component (e. g. assets) • National Office Champion/s responsible for developing action steps, continuous monitoring and ensuring that actions address the audit finding/s in order to achieve NAQ and compilation of progress reports as required by CFO The following Audit Action Plans were compiled in addressing audit findings for National Office and Regions: Ø Ø Ø Ø Expenditure Management Performance Information Revenue Management Stock Management Assets Cash & Cash Equivalents Compensation of Employees Disclosure Notes to Annual Financial Statements 17
18 AUDIT ACTION PLANS FOR 2009/10 • Audit Action plans for Revenue; Cash and cash equivalents; Assets; Expenditure management; Stock Management and Employee Benefits were finalised. Progress reports were received 6 October 2009 and 3 November 2009 • The Audit Action Plan on the AFS Disclosure Notes was refined based on the first round information received for the compilation of the monthly financial statements (MFS) - for October 2009. Forwarded to Regions for completion of progress • Next progress report expected 3 December 2009 (National Audit Facilitator) • Audit Action plan on Performance Information is work-inprogress – Finalisation dependant on meeting with the AG • Action steps developed by Champions are not restricted to audit qualifications but also include all other reported control weaknesses • Monthly CFO report to Exco • Latest progress report per component (3 Nov 2009) – next slide 18
19 Assets Inventory Expenditure Cash & Cash Equivalents Revenue Compensation of Employees Gauteng 20% 100% 91% ACTION WC 41% n/a 100% N/A 100% PLAN NC 35% n/a 70% 100% N/A 66% EC 6% 73% 15% N/A 80% 51% KZN 28% 100% 50% N/A 100% Mpumalanga 44% 63% 35% 70% 76% Limpopo 18% n/a 35% 50% N/A 100% AT THE Free State 25% 79% 90% 87% 75% 59% TIME OF North West 43% 65% 90% 88% 91% 74% THIS National Office 29% 40% 70% 100% 40% Overall progress 28% 73% 60% 88% 76% Performance information WORK IN PROGRESS REPORT 19
20 Irregular expenditure 20
21 AG report paragraph 22 page 147 refer to R 69 million: • R 60. 4 million refer to note 28. 2 to the AFS – ( page 194) • R 9. 478 million included in note 28. 4 to the AFS – (page 194) Detail of R 60. 4 million note 28. 2 (page 194) • • • R 526 000 – Procurement of urgent security services (2001/02 financial year)/No loss suffered/Official left the service of the DOJ&CD R 2 572 000 – Procurement of IT equipment on transversal contract/No loss suffered/Caused by SITA (2002/03 financial year) R 257 000 – Competitive bids not invited/Official dismissed following disciplinary hearing (2006/07 financial year) R 5 517 000 – 41 cases were quotations and bids were not obtained/Expenditure relate to venues used by Justice College for training initiatives/Under investigation (2007/08 financial year. R 17 010 00 –Absence of delegations required by SCM guide and PFMA/Technical of nature/Condoned/(Period December 2003 to July 2006) R 34 615 000 – Finance leases transversal contract/Condoned by NT for all Departments Detail of the R 9. 4 million included in note 28. 4 page 194 • Refer to expenditure where proper tender processes were not followed/Transformation of Justice College/Officials involved were subjected to disciplinary hearings and dismissed/Civil action in progress against the service provider. ( 2006/07 financial year) 21
22 Footnote to note 28 of the AFS (page 195) refer to irregular expenditure of R 53 million identified as a result of the audit. Included are: • • R 29, 715 million – Cyberia Consulting – tax clearance certificate in name of one of the affiliated companies/tax affairs in order/ Condonation requested R 13, 8 million – Lechabile – tax clearance certificate not on file (misfiled)/tax affairs in order/ Condonation requested R 3 426 million – Public Service Regulations require that an approved policy must be in place before overtime can be paid/ Policy approved on 12 August 2008 payments prior to this date regarded as irregular/Relevant authority to be requested for condonation R 7, 840 million - The AG raised a finding relating to the award of security services and questioned the process as the bids were evaluated for a second time before the bid was awarded. The re-evaluation of the bid was necessitated after it came to the attention that the evaluation during the first round was manipulated. The Department is in the process of investigating the matter and once it is finalised and will decide in consultation with the AG and NT whether the amount should be regarded as irregular 22
23 Fruitless expenditure 23
24 • AG report paragraph 23 page 147 refer to R 18 million: (Note 12 of AFS, page 186) • The Auditor-General raised a finding questioning the appointment of a service provider to prepare a user asset management plan (UAMP) in terms Government Immovable Asset Management Act, 2007 (Act No. 19 of 2007) (GIAMA) The finding raised by the AG suggest that the DOJ&CD incurred fruitless expenditure because the DOJ&CD did not make use of an offer by the Department of Public Works (DPW) to participate in a process where the DPW appointed a service provider to compile UAMP’s on behalf of the Departments The AG indicated that the total budgetary implication for the DPW for the compilation of the UAMPs for 29 government departments and 10 agencies, amounted to approximately R 1. 4 million The cost incurred by the DOJ&CD amounted to R 19 million and the AG is of the opinion that the difference of approximately R 18 million must be regarded as fruitless expenditure The Department is of the opinion that there was a difference of scope between the Do. J&CD’s exercise and the DPW exercise on behalf of client departments: It must be stressed that the scope was determined by taking into account the needs of DOJ&CD. The aforementioned is supported by the fact that the Service Provider that performed the work for DPW at a total costing of R 1, 4 m also submitted a bid for the DOJCD UAMP with a total costing of R 22 million The Department is in the process to appoint an independent evaluator/assessor to assess and report on the contract awarded by DOJCD • • • 24
25 Questions? Thank you 25
Скачать презентацию 1 DOJ CD Portfolio Committee Briefing by
e5549c9a6c3a87b935ff75b2424c0d72.ppt