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CFO Report25 May 2007

DOJ & CD

Select Committee on Security and

Constitutional Affairs

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AGENDA

1. 2005/06 AUDIT MATTERS

2. 2006/07 EXPENDITURE OUTCOME (PRELIMINARY/UNAUDITED)

3. MTEF BUDGET ALLOCATIONS

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2005/06 AUDIT MATTERS

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2005/06 AUDIT MATTERS• Vote Account

– Qualified audit opinion on Monies in Trust Revenue Receivable for Departmental Revenue

– NAQ previous two financial years (2003/04 and 2004/05)

• Monies in Trust– Audit in progress (Audit opinion to be

disclaimed)

• Guardians Fund– 2002/03 to 2005/06: Disclaimer of audit opinions

• President Fund – Unqualified audit opinion

• NPA – Unqualified audit opinion

• CARA – Unqualified audit opinions from period 1999 to 2005/06

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AUDIT MATTERS

2005/06 Audit Qualification• Monies in Trust Revenue Receivable for

Departmental Revenue / National Revenue Fund– Disclosure Note 26 – AFS– Transition to accrual accounting / GRAP– Accounting Standards Board Exposure

Draft – IPSAS 23 (non-exchange revenue)– Accounting policies – “Modified cash basis

of accounting” – Preliminary Legal opinion MMT PPP Legal

Stream– Administering Monies in Trust (DFI,

Governor Brown)

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AUDIT MATTERS

2005/06 Audit Qualification (cont)

• Audit Action Plan (hand-out)– Emphasis of Matter:

• Financial Management (Budget Reprioritisation Process)

• Asset and Inventory Management (Inventory Management and Policy for Software and Intangibles)

• Compensation of Employees (Policies not approved, Long suspended employees, Human Resources Management)

• Contingent Liabilities• Performance Information• Forensic Audit

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AUDIT MATTERS

2005/06 Audit Qualification – Action Plans

• Monies in Trust Revenue Receivable– Legal opinion/s Chief State Law

Advisor– Reconciliations and Information

from offices– OAG / ASB / AG discussions– MMT PPP

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AUDIT MATTERS

2006/07 Audit on Vote and Monies in Trust?

• Monies in Trust audit – “…Lack of effective and efficient financial management system…” and “…not being able to prepare reliable, accurate and complete accounting records for Monies in trust…”

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2006/07 EXPENDITURE OUTCOME

(PRELIMINARY / UNAUDITED)

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Budget Expenditure Percentage

BUDGET

Current payments

Compensation of employ ees 2,656,576,323 2,632,814,413 99%

Goods and serv ices 2,048,740,380 1,932,494,380 94%

Fin Trans in Assets&Liabilites 2,669,435 2,669,435 0%

Total current payments 4,707,986,138 4,567,978,228 97%

Transfers and subsidies to:

Prov inces and municipalities 4,456,000 2,219,671 50%

Departmental Agencies and Accounts 795,110,000 795,108,716 100%

Foreign Gov &International Organisations 3,644,000 4,724,068 130%

Households 12,650,856 12,650,856 100%

Total Transfers and Subsidies 815,860,856 814,703,311 100%

Payments for capital assets

Buildings and other fix ed structures 591,949,661 328,936,074 56%

Machinery and equipment 341,724,487 272,393,487 80%

Cultiv ated assets - 0%

Softw are and other intangible assets 21,125,858 21,125,858 100%

Land and subsoil assets - - 0%

Total payments for capital assets 954,800,006 622,455,419 65%

TOTAL 6,478,647,000 6,005,136,958 93%

VOTE: Expenditure per Economic Classification

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BRANCH Budget '000 Expenditure '000 Percentage

CEO 84,795,000 86,463,284 102.0%MINISTRY 17,427,000 15,573,647 89.4%COO 210,811,000 139,649,304 66.2%CFO 192,288,000 100,373,000 52.2%PEC 38,903,000 37,226,243 95.7%ISM 278,789,000 219,585,119 78.8%HR 68,472,000 53,277,852 77.8%L&CD 37,953,000 30,687,229 80.9%SLA 21,949,000 18,579,522 84.6%CLO 141,165,000 131,625,904 93.2%MASTERS 160,508,000 144,227,681 89.9%COURT SERV 2,616,585,000 2,610,844,058 99.8%JUST COLL 51,510,000 45,386,644 88.1%IND BODIES 792,840,000 794,344,340 100.2%NPA 1,583,970,000 1,535,676,000 97.0%

Expenditure per Branch

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Comments and Observations : 2006/07

• 2006/07 R473,5 million (7%) under spending

• Major contributing factors are: - average vacancy rate of 14 % in DOJ and 24 % in NPA - concurrent savings on operational and capital expenditure - most of staff appointments are through internal promotions - facilities requirements – the appointment of additional personnel requires investment in additional office accommodation.

• Final virement (funds shifts of savings) effected – mostly to capital for refurbishment of buildings, new court infrastructure and access to departmental facilities for disabled persons

• Total roll-over request : R438,8 million

• If roll over is approved our final under spending would be R34 million (0,5 per cent)

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Roll Over Application: 2006/07

Roll over request : R438,8 million

Roll Over Application - Detail R'000

Various items in goods and services (Furniture, equipment,

library books etc.) in regions and National offi ce43,569

Furniture and equipment as well as Services in COO and I SM 15,474

Furniture, equipment and datalines at Masters' offi ces 897

Account at Imperial Car Rental not finalised 46,500

Capital works - DPW 263,014

Motor vehicles and equipment (air-conditioners, digital

recording, computers, data related equipment etc.) at regions 69,331

TOTAL 438,785

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MTEF ALLOCATIONS

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MTEF Allocations 2006/07 – 2009/10

ProgrammeRevised Estimate

R Thousand 2006/07 2007/08 2008/09 2009/10

Administration 711,145 838,052 897,999 1,043,729

Court Services 2,446,547 2,998,673 3,333,346 3,731,042

State Legal Services 348,737 415,925 471,985 530,681

National Prosecuting Authority 1,425,893 1,804,491 2,085,314 2,380,911

Auxiliary and Associated Services 953,429 1,220,429 1,377,808 1,541,947

Sub Total 5,885,751 7,277,570 8,166,452 9,228,310

Judges & Magistrates Salaries 1,109,739 1,263,518 1,339,329 1,419,689

TOTAL 6,995,490 8,541,088 9,505,781 10,647,999

Year on Year Growth 22.09% 11.29% 12.02%

Medium -term expenditure estimates

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Observations on 2006 ENE Allocations

Growth in budget allocations

• The 2007 Budget sets out additional allocations of R385,471 million in 2007/08, R542,790 million in 2008/09 and R739,261 million in 2009/10 for spending on expanded capital works, human resource capacity and reducing criminal case backlogs. This translates to an average annual growth rate of 11, 2 per cent between 2006/07 and 2009/10 financial years, which is a growth from R7, 5 billion to R10, 5 billion – the figures include the statutory appropriation.

Priorities Funded

• The largest part of the additional allocation contributes towards taking over the personnel of the Witness Protection Unit from the Department of Safety and Security; increasing the number of personnel particularly in Court Services and the National Prosecuting Authority; setting up temporary service points to deal with criminal case backlogs; addressing the shortfall in the statutory appropriation; and providing for additional and temporary judges and magistrates.

Infrastructure spending

• The annual average growth rate of 28,5 per cent in the allocation of Facilities Management subprogramme in programme 2 – rising from R268,1 million in 2006/07 to R569,3 million in 2009/10 - will fund the construction of new court facilities and the rehabilitation of existing court infrastructure.

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Major areas of growth

• Over the MTEF, expenditure on the Lower Courts sub-programme, which accounts for 66 per cent of this programme’s budget, increase from R1,9 billion in 2006/07 to R2,5 billion in 2009/10, an average annual rate of 8,2 per cent. The increase will go towards the reduction of criminal case backlog, integrating the management of cases and people through the justice chain, human resources development and filling of vacancies

• Expenditure of the NPA is expected to increase rapidly over the MTEF at an average annual rate of 14.9 per cent, rising from R1,6 billion in 2006/07 to R2,4 billion in 2009/10. The main contributor to the growth is the Public Prosecutions subprogramme for which expenditure rises from R1,1 billion in 2006/07 to R1,7 billion in 2009/10, an average annual rate of 15,2 per cent. This sub-programme accounts for 71 per cent of the programme’s budget

• Additional amounts allocated in the 2007 MTEF budget include R57,5 million, R91,3 million and R153,5 million to increase human resources capacity in the Legal Aid Board, the Special Investigating Unit, the Commission on Gender Equality and the South African Human Rights Commission. The allocation also includes funding for the development of an electronic case management system and the integration of existing IT systems to address the operational and administrative requirements of the Office of the Public Protector.

Observations on 2006 ENE Allocations

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Regional Budget Allocation (Court Services)

2006/07 2007/08 2008/09 2009/10

KWAZULU NATAL 260,104,000 294,107,000 323,098,000 334,989,000

EASTERN CAPE 282,485,000 299,126,000 323,444,000 342,242,000

GAUTENG 317,208,000 349,781,000 377,967,000 399,866,000

MPUMALANGA 98,883,000 108,844,000 117,470,000 124,268,000

LIMPOPO 160,890,000 171,265,000 184,053,000 194,701,000

WESTERN CAPE 162,712,000 212,381,000 229,685,000 242,666,000

FREESTATE 135,764,000 155,972,000 165,184,000 174,540,000

NORTHERN CAPE 60,036,000 66,665,000 70,661,000 74,664,000

NORTH WEST 121,064,000 137,454,000 146,396,000 154,833,000

NATIONAL OFFICE 731,770,000 916,388,000 1,094,708,000 1,370,188,000

TOTAL 2,330,916,000 2,711,983,000 3,032,666,000 3,412,957,000

Expenditure is expected to continue to rise rapidly, at an average annual rate of 11 per cent between 2006/07 and 2009/10. This increase will provide for the departmental projects to reduce the criminal case backlogs, integrated case flow management, rehabilitation and day-to-day maintenance of court buildings and management capacity at court level.

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State Legal Services

R ThousandRevised

Estimate2007/08 2008/09 2009/10

State Law Advisors 21,949 23,003 24,337 26,534

Litigation and Legal Services 156,088 148,648 156,080 175,125

Legislation and Constitutional development 44,953 47,661 50,006 58,375

Master of the High Court 162,764 196,613 241,562 270,647

Total 385,754 415,925 471,985 530,681

Year on Year Growth 7.82% 13.48% 12.44%

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State Legal Services

Expenditure is expected to continue to increase steadily, rising from R385,8 million in 2006/07 to R530,7 million in 2009/10, at an average annual rate of 11,2 per cent over the MTEF.

The increase in spending on this programme goes towards –

• improving access to Guardian Fund Services;• facilitating accessibility of deceased and insolvent estates services; and• increasing capacity through employment of additional personnel and developing the skills of existing personnel.

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National Prosecuting Authority

NPARevised

Estimate

R Thousand 2006/07 2007/08 2008/09 Oct-09

Public Prosecutions 1,115,975 1,265,099 1,468,754 1,686,412

Witness Protection Programme 59,271 104,435 126,171 139,744

Directorate of Special Operations 352,900 373,100 414,650 469,555

Asset Forfeiture Unit 53,916 62,057 75,739 85,200

Total 1,582,062 1,804,691 2,085,314 2,380,911

Year on Year Growth 14.07% 15.55% 14.18%

Medium -term expenditure estimates

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Within the additional amounts allocated in the 2007 Budget, R120 million, R170 Million and R199 million have been provided for each of the MTEF years to the -

• acquisition of a new building in KwaZulu-Natal;

• the refurbishment of the Innes Chambers building in Johannesburg;

• taking over 85 SAPS officials currently performing the witness protection functions; The revised baseline of the NPA includes additional allocations of R 118 million for the witness protection unit; and

• the appointment of 650 prosecutors to fully implement the initiative of assigning two prosecutors per court and to reduce criminal case backlogs.

National Prosecuting Authority

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Transfer payments Public Entities and Constitutional

Institutions

Public Entities and Constitutional

Institutions

Revised

Estimate

R Thousand 2006/07 2007/08 2008/09 2009/10

South African Human Rights Commission 49,220 55,281 60,603 66,129

Commission on Gender Equality 37,757 39,745 44,193 46,550

Special Investigating Unit 55,582 93,111 116,297 149,435

Legal Aid Board 501,409 574,729 650,312 740,094

Public Protector 67,784 78,722 86,475 95,099

Total 711,752 841,588 957,880 1,097,307

Year on Year Growth 18.24% 13.82% 14.56%

Medium -term expenditure estimates

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Within the additional amounts allocated in the 2007 Budget, R27,5 million, R41,25 million, and R93,5 million have been provided for each of the 2006 MTEF years to -

– increase human resources capacity in the Legal Aid Board (R120 million); and

– increase capacity in the office of the Public Protector, the Commission on Gender Equality and the South African Human Rights Commission.

In the 2007 budget The Special Investigating Unit receives an additional R130 million for increasing capacity.

Transfer payments Public Entities and Constitutional

Institutions

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