annual report on king cetshwayo fresh ... report...1 annual report on king cetshwayo fresh produce...
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1
ANNUAL REPORT ON KING CETSHWAYO FRESH PRODUCE MARKET:
2017/2018 FINANCIAL YEAR
1. BACKGROUND
1.1. King Cetshwayo District Municipality (KCDM) established a Fresh
Produce Market with an intention to develop and expand the agricultural
sector and improve food security. The main attribute was to develop
Emerging Farmers and introduce them to markets.
1.2. KCDM Fresh Produce Market signed an MOU to supply vegetables to
the schools in all five Local Municipalities. The Fresh Produce Market is
expected to supply schools, and thereafter claim for produce supplied.
1.3. The Fresh Produce Market operations follows the value chain as
indicated below:
• Farmers: plough and produce for the Fresh Produce Market. Their
produce is bought and supplied to the schools.
• Transporters: are appointed by the Fresh Produce Market, to
collect fresh produce from the Market and the Market Hubs and
deliver fresh produce to the schools.
• Suppliers: are appointed by the Fresh Produce Market to supply
products in cases where local produce is not sufficient from local
farmers. These Suppliers buy Fresh Produce from existing Market
chains.
2. STRATEGIC GOALS
The following strategic goals were developed in a strategic review
session in January 2017 to guide performance of the Company.
Operations Unit mandate is based on the last three strategic objectives.
2
a. Sound Corporate Governance and administration;
b. Financial viability and stability
c. Reliable Quality Services and stakeholder focus
d. Broaden Market Access and Supply
e. Agrarian Socio-economic Development
3. DISCUSSION
The King Cetshwayo Fresh Produce Market’s mandate is to source fresh
produce from King Cetshwayo District Municipality farmers. However, the entity
still faces the challenge of not getting some commodities, such as carrots and
onions, within the District, but there is an improvement in the supply of fresh
produce by local farmers. There are a few farmers from iMlalazi and
Mthonjaneni local municipalities who have started to supply onions but the
volumes are still very low and inconsistent.
Fresh produce that cannot be sourced locally is augmented from the
neighbouring Districts (UMkhanyakude, Mzinyathi and Zululand) and other
suppliers (SMMEs).
The inability to source the full required quantities from the local producers has
compelled the entity to source the short produce from suppliers (SMMEs) who
source the produce from bulk markets and other farmers that require cash on
delivery.
The decrease in the availability from famers is caused by various factors, which
include:
• Unavailability of required resources for production
• Delayed payments from KCFPM, resulting in farmers missing the planting time
in a season, and demotivation
• Lack of Farmer Support and Development Programmes (Budget)
The NSNP menu of 2017/18 presented an increase in the grams of fresh produce
consumed by each learner per day per serving. This resulted in the upturn on
produce delivered to schools by UFPM on a weekly basis. The tables 2 and 3
illustrate the old menu versus the new menu.
3
Table 2 Table 3
New Menu (2017/18)
Commodity Primary Secondary
Butternut 60g 80g
Cabbage 80g 80g
Carrot 60g 80g
Beetroot 60g 80g
Tomato 5g 10g
Onion 5g 10g
PHOTOGRAPHIC EVIDENCE OF FRESH PRODUCE AND OPERATIONS
Figure 1: Farm visit and profiling butternut & tomatoes
Figure 2: Farm Visits and profiling
Old Menu (2016/17)
Commodity Primary Secondary
Butternut 40g 60g
Cabbage 40g 60g
Carrot 40g 60g
Beetroot 40g 60g
Tomato 5g 5g
Onion 5g 5g
4
Logistics Support and Operations
4. IMPROVEMENT PLAN
The Company has developed a farmer support and development programme aimed
at improving the consistent quality and diversified supply by the local farmers. The
details of the programme are entailed in the Company’s Farmer Support and
Development Programme Framework.
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TABLE OF CONTENTS
Item Nº Title Page Nº 1. Organisational Performance Management System
Legislative Requirements 2 2. Introduction 2-3
3. Organisational Performance Management Processes 3-4
4. Auditing of Performance Information 4-5
5. Performance of External Service Providers 5-6 6.
7. Annual Organisational Performance Information 6-20 8. Annexure:
Organisational Performance Management Scorecard A
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Organisational Performance Management System 1. Legislative requirements
The entity has adopted the Performance Management Framework that is approved and implemented by the parent municipality. In line with various Acts and Regulations on Performance Management System, the entity has aligned itself to fulfil the obligation as outlined in Section 40 of the Municipal Systems Act of 2000 (MSA) that the entity must establish mechanisms to monitor and review its Performance Management System’’, so as to measure, monitor, review, evaluate and improve performance at organisational, departmental and employee levels. In terms of Section 34 of the MSA a municipal entity must review its Annual Performance plan in accordance with an assessment of its performance measurements in terms of section 41. The entity will review the Key Performance Areas, Key Performance Indicators and Performance targets to align with the parent municipality’s developmental priorities and goals. This review will form the basis of the review of the Organisational Performance Management Scorecard and Performance Contracts of the Chief Executive Officer and all Managers reporting directly to him/her. The Municipal Planning and Performance Management Regulations (2001) stipulates that a “municipality’s performance management system entails a framework that describes and represents how the municipality’s cycle and processes of performance planning, monitoring, measurement, review, reporting and improvement will be conducted, organised and managed, including determining the roles of the different role players” (Chapter 3, Section 7, Municipal Planning and Performance Management Regulations, 2001). Section 46 of the Municipal Systems Act (ACT 32 of 2000) stipulates the following: Annual performance reports 46 (1) A municipality must prepare for each financial year a performance report
reflecting: (a) the performance of the municipality and of each external service
provider during the financial year;
(b) a comparison of the performances referred to in paragraph (a) with targets set for and performances in the previous financial year;
(c) measures taken to improve performance.
(2) An annual performance report must form part of the municipality’s annual
report in terms of Chapter 12 of the Municipal Financial Management Act. 2. Introduction
The 2017/2018 Performance Management Framework Policy together with the standard operating procedures were reviewed and adopted on 22 September 2017 for the 2017/2018 financial year. This report includes highlights from the key performance measures included in the Annual Performance Plan for the 2017/18 financial year. These priority measures constitute the Organisational Scorecard for 2017/2018.
KCFPM Annual Performance Report 2017/2018 3 | P a g e
At the end of quarter 4 (April to June 2018), 53.33% of priority performance measures have been met or exceeded this year-end target. Areas for improvement are shown in the Organisational Performance Scorecard for 2017/18. Accountable officials have provided commentary to put performance into context and identified actions that are taken to address under performance. 2017/2108 financial year proved to be a challenging year for the entity, but the entity managed to achieve just above half of the set targets. This achievement though not overwhelming, it is encouraging and provides room for vigour to perform better in the forthcoming years. The entity realises that continuous monitoring in terms of reviewing progress regularly is fundamental in achieving priorities and delivering value for money. Early investigation of variances enables remedial action to be taken where appropriate. The following graph indicates overall performance of the entity for the 2017/2018 financial year.
Figure 1: Overall Performance for 2017/2018
3. Organisational Performance Management Process Key performance indicators have been refined in support of the entity’s development priorities and objectives as set out in the Strategic Planning Document developed during the planning session held in February 2018. These priorities and objectives will remain for the duration of the Plan for consistency in measuring and reporting on long term strategies and projects. Measurable performance targets with regard to each of these development priorities and objectives were established. A process to ensure regular reporting is in place and is fed back to the Board. Individual agreements and performance plans were prepared in line with provisions prescribed in the Performance Regulations (Notice 805, published on 1 August 2006 in the official gazette). Performance Evaluation Panel was established in 2016/2017 for the assessment of the performance of the Chief Executive Officer as well as Managers directly accountable to the Chief Executive Officer.
21,66%
31,66%
46,66%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
Target exceeded Target met Target notachieved
KCFPM Overall Performance 2017/2018
2017/2018
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The following diagram illustrates a summary of the newly developed performance management framework for King Cetshwayo District Municipality and its entity for performance measures and reporting adhering to the guidelines suggested by Kwa-Zulu Natal Province, Department of Cooperative Governance and Traditional Affairs, which the King Cetshwayo Fresh Produce Market will adhere to:
4. Auditing of Performance Information
The Municipal Systems Act 2000, Section 45 requires that the results of the performance measurements in terms of section 41 (1) c, must be audited as part of the internal auditing process and annually by the Auditor-General. All auditing must comply with section 14 of the Municipal Planning and Performance Management Regulations, 2001 (Regulation 796). Ngubane and Company were appointed by King Cetshwayo Fresh Produce Market to perform the Internal Audit function within the entity. As part of their scope, auditing of the Performance Management System and of Performance Information was performed and reports received for quarter 1 and 2 in terms of the following: Quarter 1 Review the functionality of the Performance Management System and management’s compliance thereto. Dated 30 April 2018 Quarter 2:
KCFPM Annual Performance Report 2017/2018 5 | P a g e
Review the functionality of the Performance Management System and management’s compliance thereto. Dated 30 April 2018 Quarter 3: The Internal Auditor is currently conducting quarter 3 Audit on the Performance Management System.
Quarter 4:
The Internal Auditor is currently conducting quarter 4 Audit on the Performance Management System.
5. Performance of External Service Providers
The monitoring of the service provider performance is ensured through the signing of Service Level Agreements. It is currently being done on a user department level. The end user department provides reports on performance of service providers through Board Committees.
The following are the service providers engaged in each business unit during the 2017/18 financial year on critical functional areas of the entity:
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7. Annual Organisational Performance Information The Annual Performance Report for the 2017/2018 financial year has been completed and reflected in the Organisational Performance Scorecard in a table format (as prescribed by KZN CoGTA). The Organisational Performance Scorecard table will be presented to the Auditor General for auditing together with the Annual Financial Statements and Draft Annual Report. This Annual Performance Report should be read in conjunction with the Annual Report, including the Annual Financial Statements as well as the Auditor General Report on the Annual Financial Statements and Performance Information for 2017/2018. The colour coded system used to report performance is as follows:
ASSESSMENT OF EXTERNAL SERVICE PROVIDERS
No. Department External Service Provider
Service provided in terms of signed SLA
Performance Target / Time
frames
Assessment of Service Providers
Performance
PoE and corrective measure in case of under performance
Scoring Performance of the Service
Provider
Using 1-5 rating scale: 1=Poor; 2=Fair;
3=Good; 4=Very Good;
5=Excellent
1. FINANCIAL
SERVICES
MAKHEDA
BUSINESS
PROJECTS
The tender is for the
provision security
services at King
Cetshwayo Fresh
Produce Market
premises situated at
A1252, Ngwelezane,
Empangeni, 3880.
One security guard
during the day and
two security guards at
night and weekends.
01 July 2015
To
30 June 2016
A month to
month
contract was
entered into
after 30 June
2016.
The level of service by
the service provider
was satisfactory up to
the month of June
2018. We experienced
no problems
4
2. FINANCIAL
SERVICES
NGUBANE & CO The tender is for the
provision of internal
audit services.
Ngubane & Co
provides auditing
services on a quarterly
basis according to the
audit plan.
1 July 2017 –
30 June 2020
The service was
satisfactory, the late
appointment of
Internal auditors
adversely affected the
audit as a result
quarter 3&4 is still in
progress.
4
3. CORPORATE
SERVICES
RIS VEHICLE
HIRE
The tender is for the
provision of two
bakkies on a full
maintenance lease.
1 July 2016 –
30 June 2019
The service was
satisfactory up to 30
June 2018.
4
KCFPM Annual Performance Report 2017/2018 7 | P a g e
o Blue – Performance above 2% of the target o Green- Performance meets target o Amber- Performance less than 5% adverse target o Red – Performance more than 5% adverse target. The OPMS for 2017/2018 had 60 targets. Out of 60 targets, 32 targets were achieved. The breakdown of the indicators is as follows: Key Performance Area 1: Sound Corporative Governance and Administration:
Total Number of Targets
No. Of Targets Exceeded
No. Of Target Achieved
No. Of Target Not Achieved
Overall Percentage
9 1 1 7 22.22%
Key Performance Area 2: Reliable Quality Services and Stakeholder Focus:
Total Number of Targets
No. Of Targets Exceeded
No. Of Target Achieved
No. Of Target Not Achieved
Overall Percentage
5 0 3 2 60%
Key Performance Area 3: Broaden Market Access and Supply:
0
2
4
6
8
10
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
0
1
2
3
4
5
6
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
KCFPM Annual Performance Report 2017/2018 8 | P a g e
Total Number
of Targets
No. Of Targets
Exceeded
No. Of Target
Achieved
No. Of Target Not Achieved
Overall Percentage
12 7 2 3 75%
Key Performance Area 4: Financial Viability and Sustainability:
Total Number of Targets
No. Of Targets Exceeded
No. Of Target Achieved
No. Of Target Not Achieved
Overall Percentage
14 0 6 8 42.86%
Key Performance Area 5: Sound Corporate Governance and Administration:
0
2
4
6
8
10
12
14
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
0
2
4
6
8
10
12
14
16
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
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Total Number of Targets
No. Of Targets Exceeded
No. Of Target Achieved
No. Of Target Not Achieved
Overall Percentage
16 1 7 8 50%
Key Performance Area 6: Agrarian Socio-Economic Development:
Total Number of Targets
No. Of Targets Exceeded
No. Of Target Achieved
No. Of Target Not Achieved
Overall Percentage
4 4 0 0 100%
For the 2017/2018-year end performance results and the final position of the municipal entity
shows that:
0
2
4
6
8
10
12
14
16
18
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
Total Number ofTargets
Target Exceeded Target Achieved Targets NotAchieved
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o 53.33% of measures have been met or exceed the year-end target o 46.66% of measures were not achieved at the end of this financial year.
The performance results for the organizational priorities can be summarized as follows:
Colour Coded Status 2017/2018 Performance
Blue – Exceeded target 21.66%
Green – Met target 31.66%
Amber – Missed target by up to 5%
0%
Red – Missed Target by more than 5 %
46.66%
7.1 Sound Corporative Governance and Administration
The achievement of this KPA is at 22.22% as a result of not having proper systems and procedures in place which is a consequence of not having an Organogram that directly translate the entity’s strategic goals. This, as it may be, shall be addressed during the development and approval of an Organogram reflecting capacity required by the entity in the next financial year.
7.2 Reliable Quality Services and Stakeholder Focus:
The KPA has notably performed well by achieving a 60% in the current financial year. The entity conducted a customer satisfaction survey on the quality of its produce and 80% of the customers were satisfied with the quality of the produce. However, the entity will continue to strive for a 100% satisfaction in the near future.
7.3 Broaden Market Access and Supply:
The overall score achieved for this KPA is 75% which is an exceptional performance considering that this KPA is the core function of the business. There were 67 small-scale farmers trained in production and marketing of produce which far exceeded the targeted number of 20 farmers. This was also attributed by the strategic partnerships that the entity has secured in the current financial year. The number of farmers accessing the market has considerably increased in this financial year.
7.4 Financial Viability and Sustainability:
The overall score for the KPA is 42.85% for the 2017/2018 financial year. The entity has experienced challenges in terms of revenue collections as well as debt collections in the current financial year. Furthermore, the entity had a challenge to source produce directly from farmers hence produce was therefore sourced from suppliers at higher prices. This has led to challenges with the creditors’ book. In the absence of the Chief Financial Officer the entity had could not develop sound financial systems and procedures which played a detrimental role in the non-achievement of this KPA. The entity has commenced with the process of recruiting a suitably qualified candidate to head the Financial Services Department. Revenue collected from customers during the 2017/2018 financial year was
KCFPM Annual Performance Report 2017/2018 11 | P a g e
R 22, 502 406.
7.5 Good Governance and Public Participation:
The achievement for this KPA is at 50% in 2017/2/018 financial year. Three strategic partnerships were secured in 2017/2018 which contributed to the achievement of this KPA through other programmes being implemented and support provided to small-scale farmers within the district.
7.6 Agrarian Socio-Economic Development: This KPA achieved an overwhelming 100% in 2017/2018 financial year which denotes commitment of the entity to develop its local community more particularly in the upliftment of Youth and Women operating farming enterprises.
Further to this, the entity has created 4656 job opportunities in 2017/2018 which far exceeded the targeted figure of 1392.
NON ACHIEVEMENTS FOR THE 2017/2018 FINANCIAL YEAR
The organisation achieved 32 targets out of a total of 60 targets; which means that out of 60 targets 28 targets were not achieved. The table below provides an analysis of targets which were not achieved inclusive of reasons for non-achievements and measure for improvement:
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Key Performance Area 1: Sound Corporative Governance and Administration:
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To improve institutional systems and organisational design
1.1.1 Date of the approval of the Organogram by the Board by 30 June 2018
31 March 2018
None Corporate Services
Reasons for non-achievement: Resignation of Senior Management (CEO & CFO) and lack of capacity of remaining staff
Measures for improvement: To include policy reviews in the Management scorecards for 2018/2019 financial year
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To improve institutional systems and organisational design
1.1.2 Date of the 2017/18 Work Place Skills Plan (WSP) developed and approved by the Board by 30 June 2018
30 June 2018
None Corporate Services
Reasons for non-achievement: Non-existence of corporate services department and experienced HR officials.
Measures for improvement: Ensure establishment of the Corporate services department and allocate budget for WPS for 2018/2019
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To improve institutional systems and organisational design
1.1.3 Number of Minimum Competency Requirements (MCR) developed after each quarter and submits to the
4 None Corporate Services
KCFPM Annual Performance Report 2017/2018 13 | P a g e
parent Municipality.
Reasons for non-achievement: Non-existence of corporate services department and experienced HR officials.
Measures for improvement: Ensure establishment of the Corporate services department and allocate budget for WPS for 2018/2019
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To provide innovative administrative, corporate memory and ICT
1.2.1 Number of policies reviewed and approved by the Board by 30 June 2018
7 1 Corporate Services
Reasons for non-achievement: Resignation of Senior Management (CEO & CFO) and lack of capacity of remaining staff
Measures for improvement: To include policy reviews in the Management scorecards
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To provide innovative administrative, corporate memory and ICT
1.2.3 Date of the development of an outbound agrological system compliant with food safety requirements by 30 June 2018
30 June 2018
None Corporate Services
Reasons for non-achievement: Budget Constraints and lack of capacity
Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to conduct this study.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To provide innovative administrative, corporate memory and ICT
1.2.5 Number of training or workshop conducted on OHS to all staff by 30 June 2018.
2 1 Corporate Services
Reasons for non-achievement: Measures for improvement:
KCFPM Annual Performance Report 2017/2018 14 | P a g e
OHS training and workshop are conducted by the District according to their annual plan. Hence this is beyond the entity's control.
To align the entity’s OHS plan with the district's OHS annual plan for training and workshops in 2018/2019
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporative Governance and Administration
To provide innovative administrative, corporate memory and ICT
1.2.6 Date for the registration of the KCFPM as an accredited food supply and food handling institution by 30 June 2018
30 June 2018
None Corporate Services
Reasons for non-achievement: There is a sewer pipe that runs across the market hall where the produce is kept.
Measures for improvement: Engage with the local municipality on the rerouting of the sewer pipe that runs across the market hall floor.
Key Performance Area 2: Reliable Quality Services and Stakeholder Focus:
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Reliable Quality Services and Stakeholder Focus
To ensure efficient operations management
2.1.2 Percentage of supply and distribution of produce to clients in line with service level agreements (SLA)
90% 78% Operations
Reasons for non-achievement: Shortage of produce from the targeted farmers within the district as well the cost of fruits.
Measures for improvement: To commission a study on the available produce and farmers within the district in order to develop a production and distribution plan for 2018/2019.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Reliable Quality Services and Stakeholder Focus
To ensure food safety and improved quality of produce
2.2.2 Percentage of customer satisfaction by conducting customer satisfaction survey on delivery time frames
70% 60% Operations
Reasons for non-achievement: Measures for improvement:
KCFPM Annual Performance Report 2017/2018 15 | P a g e
Shortage of produce from the farmers and cash flow challenges. Inability to provide fruits on weekly basis as the fruit purchase price is high.
To develop and support farmers with inputs and to negotiate with DoE on the revised rate per learner to be able to supply fruits.
Key Performance Area 3: Broaden Market Access and Supply:
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Reliable Quality Services and Stakeholder Focus
To increase the number of farmers accessing the market and diversified product offering
3.3.3 Date of the approval of the agro-processing business plan by 31 December 2017
31 December 2017
None Operations
Reasons for non-achievement: The Board took a resolution to remove this indicator due to lack of resources.
Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to develop the plan.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Reliable Quality Services and Stakeholder Focus
To increase the number of farmers accessing the market and diversified product offering
3.3.5 Number of report submitted on the feasibility study conducted on Commission Market within the Northern KZN
1 None Operations
Reasons for non-achievement: Not achieved due to budgetary constraints
Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to conduct the feasibility study on Commission Market.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Reliable Quality Services and Stakeholder Focus
To increase the number of farmers accessing the market and diversified product offering
3.3.6 Date of submission of the business plan for the nursery funding by 30 June 2018
31 March 2018
None Operations
Reasons for non-achievement: Not achieved due to budgetary constraints
Measures for improvement:
KCFPM Annual Performance Report 2017/2018 16 | P a g e
To be removed in 2018/2019 scorecard as the entity does not have the resources to develop a business plan for the nursery.
Key Performance Area 4: Financial Viability and Sustainability:
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
Ensure efficient and effective budget management
4.2.3 Percentage of all internal audit queries responded to within five working days
100% 80% Finance Services
Reasons for non-achievement: There was no system to manage received queries and submitted responses hence requests were responded to manually therefore cannot clearly determine the percentage of achievement.
Measures for improvement: To ensure that a proper recording of requests and responses is kept.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
To Obtain a clean audit 2016/2017
4.3 Unqualified Audit opinion
Unqualified Audit opinion
Qualified Audit opinion
Finance Services
Reasons for non-achievement: AG identified fraud indicators in the Audit report which led to a qualified opinion
Measures for improvement: Fraud and Prevention Policy was developed for the entity to ensure that staff is aware of fraudulent transaction and transgression.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
To implement an effective and efficient Supply Chain Management
4.4.2 Percentage reduction on WUIF expenditure by 5% of the annual budget by 30 June 2018
Unqualified Audit opinion
Qualified Audit opinion
Finance Services
Reasons for non-achievement: Due to there being no procurement plan in place the entity had to purchase its produce from well-established suppliers at high prices.
Measures for improvement: To ensure that procurement plan is prepared and adhered to.
KCFPM Annual Performance Report 2017/2018 17 | P a g e
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
Ensure efficient control of all Entity assets including revenue
4.5 100% GRAP Compliance on all assets of the entity
100% 60% Finance Services
Reasons for non-achievement: Lack of skill and capacity of finance employees.
Measures for improvement: Ensure that responsible staff member is capacitated and regular review is conducted on a quarterly basis.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
Ensure effective Revenue enhancement and Expenditure Management
4.6.1 Percentage of revenue collected by 30 June 2018
95% 88% Finance Services
Reasons for non-achievement: Scarcity of produce led to under revenue collection as a result of short deliveries.
Measures for improvement: Engage stakeholders to ensure farmer development in order to alleviate shortages on the supply of fresh produce.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
Ensure effective Revenue enhancement and Expenditure Management
4.6.2 Number of days for the payment of creditors
30 Days 120+ Days Finance Services
Reasons for non-achievement: Not achieved due to cash flow challenges that the entity is faced with.
Measures for improvement: To put pressure on DoE to pay their debt on timeously and regularly as they are the only client that the entity has currently and source for more clients in 2018/2019.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Financial Viability and Sustainability
Ensure effective Revenue enhancement and Expenditure Management
4.6.3 Number of days to collect debts
30 Days 60 Days Finance Services
Reasons for non-achievement: There are challenges with DoE as they are the entity's sole client and delays payments
Measures for improvement: To put pressure on DoE to pay their debt timeously and regularly as they are the only client that the entity has currently
Key Performance Area 5: Sound Corporate Governance and Administration:
KCFPM Annual Performance Report 2017/2018 18 | P a g e
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To improve corporate image and communication with all entity stakeholders
5.2 Date of the approval of the Communication and Marketing Strategy
30 June 2018
None Communication and Marketing
Reasons for non-achievement: Budget Constraints and lack of capacity.
Measures for improvement: To be developed in 2018/2019.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To strengthen corporate governance structures and responsibilities
5.3.1 100% Compliance with Companies Act
100% 70% CEO
Reasons for non-achievement: Due to there being no Company Secretary, the entity has been challenged with issues of compliance with the Companies Act.
Measures for improvement: To develop a Compliance Risk Management Plan as well as the Compliance Monitoring Plan
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To improve the Board's accountability and sustainable reporting
5.4.3 Percentage of Board resolutions implemented quarterly
100% 28% CEO
Reasons for non-achievement: No monitoring of the resolutions since there had been no Company Secretary appointed.
Measures for improvement: Appointment of the Company Secretary and development of a resolution track schedule that will be a standing item at Board Meetings to provide progress to the Board on resolutions take previously.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
KCFPM Annual Performance Report 2017/2018 19 | P a g e
Sound Corporate Governance and Administration
To ensure full and effective oversight in all corporate affairs
5.5.2 Percentage achievement of the entity strategic goals and objectives
80% 52% CEO
Reasons for non-achievement: There was no in-year monitoring of predetermined objectives nor quarterly reviews conducted to ensure that the strategic goals and objectives as set out in the OPMS are achieved.
Measures for improvement: Performance Management Framework will be adhered to ensure that systems of monitoring performance are put in place and quarterly reviews are conducted as prescribed.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To monitor financial management controls and compliance with all applicable legislation and legislations and policies
5.6.1 Percentage of all audit conducted as per the approved 2017/2018 Audit Plan
70% 42% CEO
Reasons for non-achievement: The appointment of the Internal Auditors was in February 2018.
Measures for improvement: The appointment is for a 3 year period from 2017/2018 to ensure that the audits as per the audit plan are conducted timeously.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To improve monitoring of strategic and operational risks of the organisation
5.7.1 Date of the approval of the Risk Management Strategy
30 June 2018
None CEO
Reasons for non-achievement: Lack of Capacity in the Management function within the entity.
Measures for improvement: To develop the Risk Management Strategy by 31 March 2019
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance
To coordinate, manage and
5.8.1 Number of performance
3 None CEO
KCFPM Annual Performance Report 2017/2018 20 | P a g e
and Administration
monitor corporate and individual performance
agreements signed
Reasons for non-achievement: Not achieved due to lack of capacity to assist with Performance Management.
Measures for improvement: To source the services of a skilled Performance Management personnel.
Strategic Goal of KCFPM
Objective Strategy Performance Indicator
Annual Target
Actual Achievement
Responsible Department
Sound Corporate Governance and Administration
To coordinate, manage and monitor corporate and individual performance
5.8.2 Number of quarterly reviews conducted per quarter
4 1 CEO
Reasons for non-achievement: The Performance Evaluation Committee did not sit due to there being no performance plans in place.
Measures for improvement: Ensure quarterly sittings of the Performance Evaluation Committee by drafting meeting schedule annually.
The following table reflects the organisational performance targets and achievements as reflected in the Annual Performance Plan.
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4
1.1.1 Date of the approval of the organogram by the
Board by 30 June 2018 Date N/A N/A 31-Mar-18 31-Mar-18 Not Achieved
Resignation of Senior Management
(CEO & CFO) and lack of capacity of
remaining staff
To include policy reviews in the
Management scorecards for
2018/2019 financial year
1.1.2
Date of the 2017/18 Work Place
Skills Plan (WSP) developed and approved b the
Board by 30 June 2018 Date N/A N/A 30-Jun-18 30-Jun-18 Not Achieved
Non existence of corporate services
department and experienced HR
officials.
Ensure establishment of the
Corporate services department and
allocate budget for WPS for
2018/2019
1.1.3
Number of Minimum Competency Requirements
(MCR) developed after each quarter and submit to
the parent Municipality.Number N/A N/A 4 1 1 1 1 Not Achieved
Non existence of corporate services
department and experienced HR
official/s.
Ensure establishment of the
Corporate services department and
allocate budget for WPS for
2018/2019
1.2.1Number of policies reviewed and approved by the
Board by 30 June 2018Number N/A N/A 7 1 2 2 2 1 Not Achieved
Resignation of Senior Management
(CEO & CFO) and lack of capacity of
remaining staffTo include policy reviews in the
Managemnet scorecards
1.2.2 Number of new policies approved by the Board by
30 June 2018Number N/A N/A 2 2 0 Not Achieved
Policies were prepared and
submitted to Human Resource and
Remuneration Committee, however
they were not approved by the
Board
Submit the new policies to the Board
for approval
1.2.3
Date of the development of an outbound
agrological system compliant with food safety
requirements by 30 June 2018
Date N/A N/A 30-Jun-18 30-Jun-18 Not AchievedBudget Constraints and lack of
capacity
To be removed in 2018/2019
scorecard as the entity does no have
the resources to conduct this study.
1.2.4Number of accredited training conducted on food
safety and food handling for operations staff. Number N/A N/A 1 1 1 Achieved
1.2.5Number of training or worshop conducted on
OHS to all staff by 30 June 2018. Date N/A N/A 2 1 1 0 1 0 Not Achieved
OHS training and workshop are
conducted by the District according
to their annual plan. Hence this is
beyond the entity's control
To align the entity's OHS plan with
the district's OHS annual plan for
training and workshops in 2018/2019
1.2.6
Date for the registration of the KCFPM as a an
accredited food supply and food handling
institution by 30 June 2018
Date N/A N/A 30-Jun-18 30-Jun-18 Not Achieved
There is a sewer pipe that runs
across the market hall where the
produce is kept.
Engage with the local municipality
on the rerouting of the sewer pipe
that runs across the market hall
floor.
2.1.1
Number of Standard
Operating Procedures Developed by 30 June
2018Number N/A N/A 3 1 1 1 1 1 1 Achieved
2.1.2
Percentage of supply and distribution of produce
to clients in line with service level agreements
(SLA)Percentage N/A N/A 90% 90% 83% 90% 86% 90% 86% 90% 57% Not Achieved
Shortage of produce from the
targeted farmers within the district
as well the cost of fruits.
To commision a study on the
available produce and farmers within
the district in order to develop a
production and distribution plan for
2018/2019.
2.2.1 Percentage of customer satisfaction by conducting
customer satisfaction survey on produce qualityPercentage N/A N/A 80% 50% 0 80% 36% Not Achieved
Customers were not satisfied with
the quality of the produce by the
market
To improve on the quality of the
produce by the market
2.2.2Percentage of customer satisfaction by conducting
customer satisfaction survey on delivery time
frames
Percentage N/A N/A 70% 50% 0 70% 60% Not Achieved
Shortage of produce from the
farmers and cashflow challenges.
Inability to provide fruits on weekly
basis as the fruit purchase prise is
high.
To develop and support farmers with
inputs and to negotiate with DoE on
the revised rate per learner to be
able to supply fruits.
Reasons for non-achievement Measures for Improvement Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
IMP
LE
ME
NT
ED
DIF
FE
RE
NT
IAT
ED
AP
PR
OA
CH
TO
FIN
AN
CIA
L P
LA
NN
ING
AN
D S
UP
PO
RT
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4Reasons for non-achievement Measures for Improvement
Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
2.2.3
Number of reports submitted to the Operations
Committee on the quality of produce (including
condemned products) Number N/A N/A 4 1 1 1 1 1 0 1 0 Not Achieved
3,1
Number of small-scale farmers and emerging
producers trained in the production and marketing
of produce by 30 June 2018
Number N/A N/A 20 5 26 5 41 5 0 5 0 Exceeded
3.2.1
Number of engagement meetings held with
potential clients by 30 June 2018 Number N/A N/A 8 2 0 2 2 2 0 2 1 Not Achieved
3.2.2
Number of engagement meetings held with
farmers within local municipalities by 30 June
2018Number N/A N/A 4 1 2 1 3 1 0 1 2 Exceeded
3.2.3
Number of farmer/producer database developed
in five local municipalities by 30 June 2018 Number N/A N/A 20 75 29 75 29 75 29 75 29 Exceeded
3.2.4
Number of farmers/producers profiled by 30 June
2018 Number N/A N/A 20 5 10 5 8 5 6 5 1 Exceeded
3.3.1
Percentage of new farmers accessing the
services of the market by 30 June 2018 Percentage N/A N/A 20 5 10 5 8 5 6 5 1 Exceeded
3.3.2Number of open day market weeks conducted by
30 June 2018Number N/A N/A 1 1 1 Achieved
3.3.3Date of the approval of the agro-processing
business plan by 31 December 2017Date N/A N/A 31-Dec-17 31-Dec-17 0 Not Achieved
The Board took a resolution to
remove this indicator due to lack of
resources
To be removed in 2018/2019
scorecard as the entity does not
have the resources to develop the
plan.
3.3.4Number of supply agreements concluded by 30
June 2018Number N/A N/A 1 1 1 Achieved
3.3.5
Number of report submitted on the fasibility study
conducted on Commission Market within the
Northern KZN
Number N/A N/A 1 1 0 Not AchievedNot achieved due to budgetary
constraints
To be removed in 2018/2019
scorecard as the entity does not
have the resources to conduct the
feasibility study on Commision
Market.
IMP
LE
ME
NT
ED
CO
MM
UN
ITY
WO
RK
PR
OG
RA
MM
E A
ND
CO
OP
ER
AT
IVE
S S
UP
PO
RT
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4Reasons for non-achievement Measures for Improvement
Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
3.3.6Date of submission of the business plan for the
nursery funding by 30 June 2018Date N/A N/A 31-Mar-18 31-Mar-18 Not Achieved
Not achieved due to budgetary
constraints
To be removed in 2018/2019
scorecard as the entity does not
have the resources to develop a
business plan for the nursery.
3.4.1 Percentage of produce sourced from local farmers Percentage N/A N/A 60% 60% 62% 60% 62% 60% 68% 60% 99% Exceeded
4.1.1Number of financial reports submitted to parent
municipality Number N/A N/A 4 1 1 1 1 1 1 1 1 Achieved
4.1.2
Date of submission of the Mid-Year Adjusted
Budget and the Mid-Year Performance
Assessment reports parent municipality by 20
January 2018
Date N/A N/A 20-Jan-18 20-Jan-18 20-Jan-18 Achieved
4.1.3
Date of submissino of the 2016/2017 Annual
Financial Statements to parent municipality and
Auditor-General by 31 August 2017
Date N/A N/A 31-Aug-17 31-Aug-17 31-Aug-17 Achieved
4.1.4
Date of submission of the 2016/2017 Annual
Report to parent municipality by 31 December
2017
Date N/A N/A 31-Dec-17 31-Dec-17 Not Achieved
4.2.1Date of approval of the 2018/2019 Budget by the
BoardDate N/A N/A 31-May-18 31-May-18 31-May-18 Achieved
4.2.2Percentage of quarterly spending against
approved 2017/2018 budgetPercentage N/A N/A 100% 15% 3% 15% 2% 70% 6% 100% 108% Achieved
4.2.3Percentage of all internal audit queries responded
to within five working daysPercentage N/A N/A 100% 100% 80% 100% 80% 100% 80% 100% 80% Not achieved
There was no system to manage
received queries and submitted
responses hence requests were
responded to manually therefore
cannot clearly determine the
percentage of achievement.
To ensure that a proper recording of
requests and responses is kept.
4,3 Unqualified Audit opinion AG Opinion N/A N/AUnqualified
Opinion
Unqualified
Opinion
Qualified
OpinionNot achieved
AG identified fraud indicators in the
Audit report which led to a qualified
opinion
Fraud and Prevetion Policy was
developed for the entity to ensure
that staff are aware of fraudulent
transaction and transgression.
4.4.1Percentage of produce procured from black
owned businessesPercentage N/A N/A 80% 20% 20% 20% 20% 20% 20% 20% 20% Achieved
4.4.2Percentage reduction on WUIF expenditure by
5% of the annual budget by 30 June 2018Percentage N/A N/A 5% 5% 0% 5% 0% 5% 0% 5% 0% Not achieved
Due to there being no procurement
plan in place the entity had to
purchase its produce from well-
established suppliers at high prices.
To ensure that procurement plan is
prepared and adhered to.
4,5100% GRAP Compliance on all assets of the
entityPercentage N/A N/A 100% 100% 60% 100% 60% 100% 60% 100% 60% Not achieved
Lack of skill and capacity of finance
employees.
Ensure that responsible staff
member is capacited and regular
review is conducted on a quarterly
basis.
4.6.1 Percentage of revenue collected by 30 June 2018 Percentage N/A N/A 95% 95% 100% 95% 100% 95% 76% 95% 75,85% Not achieved
Scarcity of produce led to under
revenue collection as a result of
short deliveries.
Engage stakeholders to ensure
farmer development in order to
alleviate shortages on the supply of
fresh produce.
4.6.2 Number of days for the payment of crediotrs Number N/A N/A 30 days 30 days 120+ 30 days 120+ 30 days 120+ 30 days 120+ Not achieved
Not achieved due to cashflow
challenges that the entity is faced
with.
To put pressure on DoE to pay their
debt on timeously and regularly as
they are the only client that the
entity has currently. Source for more
clients in 2018/2019.
IMP
LE
ME
NT
ED
CO
MM
UN
ITY
WO
RK
PR
OG
RA
MM
E A
ND
CO
OP
ER
AT
IVE
S S
UP
PO
RT
IMP
RO
VE
D F
INA
NC
IAL
AN
D A
DM
INIS
TR
AT
IVE
CA
PA
CIT
Y
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4Reasons for non-achievement Measures for Improvement
Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
4.6.3 Number of days to collect debts Number N/A N/A 30 days 30 days 43 days 30 days 43 days 30 days 45 days 30 days 60 days Not achieved
There are challenges with DoE as
they are the entity's sole client and
delays payments.
To put pressure on DoE to pay their
debt timeously and regularly as they
are the only client that the entity has
currently.
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4Reasons for non-achievement Measures for Improvement
Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
5.1.1Number of strategic partnership agreement signed
by 30 June 2018Number N/A N/A 1 3 1 1 Exceeded
5.1.2
Quarterly reports on existing strategic partnership
programmes implemented Number N/A N/A 4 1 1 1 1 1 1 1 1 Achieved
5.1.3
Number of funding secured by 30 June 2018 for
KCFPM future Development Plans Number N/A N/A 1 1 1 Achieved
5,2
Date of the approval of the Communication and
Marketing Strategy Date N/A N/A 30-Jun-18 N/A N/A N/A 30-Jun-18 Not Achieved Budget Constraints and lack of
capacityTo be developed in 2018/2019
5.3.1
100% Compliance
with Companies Act Percentage N/A N/A 100% 100% 100% 100% 100% Not Achieved
Due to there being no Company
Secretary, the entity has been
challenged with issues of
compliance with the Companies Act
To develop a Compliance Risk
Management Plan as well as the
Compliance Monitoring Plan
5.3.2 Date of annual returns submission Date N/A N/A 30-Sep-17 30-Sep-17 01-Sep-17 Achieved
5.4.1Number of Board Meetings held during the
2017/2018 financial yearNumber N/A N/A 4 1 6 1 4 1 4 1 2 Exceeded
5.4.2Number of Board Committee meetings held during
2017/2018 financial yearNumber N/A N/A 4 1 1 1 1 1 1 1 1 Achieved
5.4.3Percentage of Board resolutions implemented
quarterlyPercentage N/A N/A 100% 100% 25% 100% 36% 100% 52% 100% Not Achieved
No monitoring of the resolutions
since there had been no Company
Secretary appointed
Appointment of the Company
Secretary and develop a track
schedule that will be a standing item
at Board Meetings to provide
progress to the Board on
resolutions take previously.
5.5.1
Percentage of compliance on the submission of
compliance reports to parent muncipality and the
Boars
Percentage N/A N/A 100% 100% 100% 100% 100% 100% 100% 100% 100% Achieved
5.5.2
Percentage achievement of the entity strategic
goals and objectives Percentage N/A N/A 80% 80% 80% 80% 80% 53% Not Achieved
There was no in-year monitoring of
predetermined objectives nor
quarterly reviews conducted to
ensure that the strategic goals and
objectives as set out in the OPMS
are achieved.
Performance Management
Framework will be adhered to
ensure that systems of monitoring
performance are put in place and
quarterly reviews are conducted as
prescribed.
5.6.1Percentage of all audit conducted as per the
approved 2017/2018 Audit Plan Percentage N/A N/A 70% 70% 85% 70% 85% 70% 70% Not Achieved
The appointment of the Internal
Auditors was in February 2018.
The appointment is for a 3 year
period from 2017/2018 to ensure that
the audits as per the audit plan are
conducted timeously.
GO
OD
GO
VE
RN
AN
CE
AN
D P
UB
LIC
PA
RT
ICIP
AT
ION
Demand BaselineAnnual
Target
Target
Quarter 1
Actual
Quarter 1
Target
Quarter 2
Actual Quarter
2
Target
Quarter 3
Actual
Quarter3
Target
Quarter 4
Actual
Quarter 4Reasons for non-achievement Measures for Improvement
Annual
AchievementFinancial Implication
OP
MS
Ind
icat
or
No
.
Ou
tco
me
9
Performance Indicator Unit of MeasureResponsible
Department
5.7.1Date of the approval of the Risk Managemnet
StrategyDate N/A N/A 30-Jun-18 30-Jun-18 Not Achieved
Lack of capacity in the Management
function within the entity
To develop the Risk Management
Strategy by 31 March 2019
5.7.2Number of Risk Management Reviews conducted
in 2017/2018 financial yearNumber N/A N/A 2 1 1 1 Not Achieved
5.8.1Number of performance agreements signed
Number N/A N/A 3 3 Not Achieved
Not achieved due to lack of capacity
to assist with Performance
Management
To source the services of a skilled
Performance Management
personnel.
5.8.2
Number of quarterly reviews conducted per
quarter Number N/A N/A 4 1 1 1 0 1 0 1 0 Not Achieved
The Performance Evaluation
Committee did not sit due to there
being no performance plans in
place
Ensure quarterly sittings of the
Performance Evaluation Committee
by drafting meeting schedule
annaully
6,1
Number of job opportunities created in 2017/2018
financial year Number N/A N/A 1392 348 1164 696 1164 1044 1164 1392 1164 Exceeded
6.2.1
Number of Youth operated farming enterprises
supported Number N/A N/A 8 2 2 2 2 22 Exceeded
6.2.2
Number of Woman operated farming enterprises
supported Number N/A N/A 8 2 2 2 6 2 31 Exceeded
6,3 Number of cooperatives supported Number N/A N/A 4 1 1 8 1 1 18 Exceeded
IMP
LE
ME
NT
ED
CO
MM
UN
ITY
WO
RK
PR
OG
RA
MM
E A
ND
CO
OP
ER
AT
IVE
S
SU
PP
OR
T
KING CETSHWAYO FRESH PRODUCE MARKET
AUDIT RESPONSE PLAN
FINANCIAL YEAR: 2017/18
A: BASIS FOR DISCLAIMER OF OPINION
Nature of Audit Query Audit QueryAudit Response (Quarter
1)
Audit Response
(Quarter 2)
Audit
Response
(Quarter 3)
Audit
Response
(Quarter 4)
Purchasing of Fresh Produce and Distribution Cost
Unable to obtain sufficient
appropriate audit evidence that
purchasing of produce and
distribution cost had been
properly accounted for, due to
poor status of accounting
records and non- submission
of information to support this
amount.
Audit action
Ensure that all accounts are
reconciled on a monthly
basis and filling system is
developed.
Responsible person: Acting
CFO
Target Date: 31 January
2019
In progress - An Acting
CFO from the parent
municipality has been
appointed, internal
controls are being
developed as well as the
filling systems to ensure
that records are kept in
an orderly manner.
Monthly reconciliation of
accounts will be
implemented
immediately.
Payables from exchange transactions
Unable to obtain sufficient
appropriate evidence that
payables from exchange
transactions had been properly
accounted for, due to the poor
status of the accounting
records.
Audit action
To ensure that all
invoices are delivered to
finance. The invoice be
captured in the system
upon receipt.
Responsible person:
Acting CFO
Target Date: Immediately
On going - For the Q3
commencing in January
2019 all invoices will only
be delivered to finance.
POD's will be delivered to
KCDM satellite offices.
An invoice register to
record invoices upon
receipt has been
developed. PODs will be
matched to invoices
before payment.
Property, Plan and Equipment
Unable to obtain sufficient
appropriate audit evidence that
management had properly
accounted for property, plant
and equipment due to the non-
submission of information to
support and adjustment made
during the year to property,
plant and equipment
amounting to R847 323.00
Audit action
To ensure that general
ledger is reconciled with
the fixed assets register
on a monthly basis to
ensure proper allocation.
Payments relating to the
purchase of assets to be
filed separately.
Responsible person:
Acting CEO
Target Date: 31 January
2019
In progress - Assets
verification has
commenced, thereafter
will be reconciled to the
ledger. Interim AFS will
be prepared and audited
by Internal Auditors.
General Expenses
Unable to account to obtain
sufficient appropriate audit
evidence that general
expenses had been properly
accounted for, due to poor
status of the accounting
records and non-submission of
information to support this
amount.
Audit action
Ensure that all accounts are
reconciled on a monthly
basis and filling system is
developed.
Responsible person: Acting
CEO
Target Date: 31 January
2019
In progress - An Acting
CFO from the parent
municipality has been
appointed, internal
controls are being
developed as well the
filling systems to ensure
that records are kept in a
safe place and orderly
manner. Furthermore
accruals will be done on
a monthly basis and
reconciliation thereon.
Progress will be reported
in a Q3. Interim AFS will
be prepared and audited
by IA.
Cash and Cash Equivalent
Unable to account and to
obtain sufficient appropriate
audit evidence that
management had properly
accounted for cash and cash
equivalent and to confirm cash
and cash equivalents by
alternative means.
Audit action
The matter raised in the
audit finding has already
been resolved in November
2017. In year 1718
monthly bank
reconciliations were
performed and the closing
balance for the bank
statement and the
cashbooks were in balance.
Responsible person: Acting
CEO
Target Date: Monthly
In progress. Bank
reconciliation are being
done on a monthly basis.
Value Added Tax Receivable
Unable to obtain sufficient
appropriate audit evidence that
VAT receivable had been
properly accounted for, due to
poor status of the accounting
records.
Audit action
To ensure that general
ledger and SARS
reconciliations are
performed on a monthly
basis and returns are
submitted in the respective
months.
Responsible person: Acting
CEO
Target Date: 25 February
2019
In progress- A
reconciliation of SARS
and ledger to be started
immediately and would
reported in a 3 Q.
Fruitless and Wasteful Expenditure
Unable to obtain sufficient
evidence that fruitless and
wasteful expenditure disclosed
in the financial statements had
been properly accounted for,
due to the status of the
accounting records and non-
submission of information.
Audit action
To ensure that fruitless
and wasteful expenditure
register is prepared,
reviewed, authorised and
reported on a monthly
basis.
Responsible person:
Acting CEO
Target Date: 31 January
2019
In progress - To review
the current registers to
ensure compliance of the
requirements of MFMA.
Monitoring and review to
begin in quarter three.
B: OTHER MATTERS
Annual Performance Report
Annual performance report of
the municipal entity was not
prepared as required by
section 46 of the MSA 32 of
2000. and s121(4)(d) of
MFMA.
Audit action
To ensure that performance
reviews are conducted on
quarterly basis.
Responsible person: Acting
CEO
Target Date: 28 February
2019
In progress - Parent
municipality has been
approached to assist with
this function as the entity
do not have the capacity.
To commence in the third
quarter.
Compliance with LegislationNon-compliance with specific
matters in key legislation.
Audit action
To prepare a checklist on
all legislation compliance
requirements and to
ensure that reviews are
performed on monthly
basis.
Responsible person:
Acting CEO
Target Date: 31 January
2019
In progress - Verification
of all compliance related
matter will be conducted
immediately in Q3 to
establish which periods
need to be updated.
Annual Financial Statements
Financial statements not
prepared in all material respect
in accordance with the
requirements of section122(1)
of the MFMA. Material
misstatements of non-current
assets/current assets/
liabilities/expenditure/disclosur
e items identified by the
auditors in the submitted
financial statements.
Audit action
To ensure compliance
with MFMA when
preparing financial
statements
Responsible person:
Acting CEO
Target Date: 31 March
2019
In progress - To ensure
that interim AFS are
prepared in accordance
with MFMA and audited
by Internal auditors.
Expenditure Management
Reasonable steps not taken to
ensure that the municipality
implements and maintains an
effective system of
expenditure control as required
by section 99(2)(a) of the
MFMA.
Audit action
To develop expenditure
management system
according to the
requirements of MFMA.
Responsible person: Acting
CEO
Target Date: 31 January
2019
In progress - All invoices
to have relevant
supporting documents, all
payment certificates to
be authorised and
captured in the system
before payment and be
paid within 30 days. Filing
system to be
documented and
improved, single person
be appointed who will be
responsible for document
management and a
register for documents to
be developed.
Asset Management
Effective system of internal
control for assets was not in
place as required by section
96(2)(b) of the MFMA.
Audit action
To develop asset
management control
system in accordance with
MFMA.
Responsible person: Acting
CEO
Target Date: 31 January
2019
In progress - Verification
of all compliance related
matter will be conducted
immediately in third
quarter to establish which
periods need to be
updated.
Strategic and Performance Management
The entity's performance for
the financial period under
review was not reported
against any measurable
performance objectives set in
terms of the service delivery
agreement or other agreement
with the parent municipality as
required by 121(4)(d) of the
MFMA.
Audit action
To ensure that service level
agreement with set
objectives by the parent
municipality is entered into
and to develop an annual
performance plan for 2019.
Responsible person: Acting
CEO
Target Date: 31 January
2019
In progress - Parent
municipality has been
approached to assist with
this function as the entity
does not have the
capacity. To commenced
in third quarter.
Procurement and Contract Management
Sufficient appropriate evidence
could not be obtained that
contracts were awarded only
to bidders who submitted a
declaration on whether they
were employed by the state or
connected to any person
employed by the state as
required by SCM regulation
13(c ).
Audit action
To ensure that all bidders
and suppliers sign
declaration forms.
Responsible person: Acting
CEO
Target Date: Immediately
In progress - A checklist
will be developed to
ensure that SCM officials
verify that the forms are
completed in full. This will
commence in quarter
three. The database will
be advertised and all
suppliers documents will
be checked for
completeness.
Internal Control Deficiencies
Leadership failed to exercise
adequate oversight over the
compilation of credible and
reliable financial and
performance reporting
including the compliance with
key legislation relating to
expenditure management,
assets management,
consequence management,
strategic planning and
performance management as
well as procurement and
contract management.
Management did not have
proper record management
system to support collection,
collation, verification, storing
and reporting of credible and
reliable annual financial
statements, annual
performance report and
compliance with key supply
chain management legislation.
Audit action
Audit response plans be
monitored on a monthly
basis.
Farmers development plan
be developed to assist with
carrying out of activities as
proposed in the
development strategy.
Workshop be cordinated to
present a turnaround
strategy and Corporate
Governance.
Site visit to Fresh produce
market.
Strict monitoring plan be
implemented to ensure
systems control are taken
care of.
Responsible person: Acting
CEO
Target Date: Immediately
In progress - In third
quarter, the parent
Municipality has
appointed MM as an
administrator. An Acting
CFO from the parent
Municipality has been
appointed, internal
controls are being
developed as well as
standard procedures and
filling systems to ensure
that records are kept in
an orderly manner.
Monthly reconciliation of
accounts will be
implemented immediately
in third quarter. The
internal control must
cover : Fresh produce
order, Receipt, Dispatch,
Receipt at school, signed
POD, return to KCFPM,
bill, credit control, invoice,
receipt DOE payment.
2017/2018 AUDIT RESPONSE PLAN –AUDIT REPORT KING CETSHWAYO DISTRICT MUNICIPALITY Type of Opinion Current Year : Unqualified Type of Opinion Previous Year : Unqualified
Nature Of Audit Query
Audit Query Audit Response (Quarter 1)
Audit Response Progress (Quarter 2)
Audit Response Progress (Quarter 3)
Audit Response Progress (Quarter 4)
STRATEGIC PLANNING AND PERFORMANCE MANAGEMENT
The service delivery and budget implementation plan (SDBIP) for the year under review did include monthly revenue projections by source of collection and the monthly operational and capital expenditure by vote, as required by section 1 of the MFMA.
Audit action
The SDBIP will be amended and send to the Council for approval to include the monthly revenue projections by source of collection as part of the annexures of SDBIP item. Responsible Official
Mr. S. Gumede / Mr C Mmaratel Target Date
28 February 2019
Audit action
The SDBIP was updated to include the monthly revenue projections by source of collection and monthly operational and capital expenditure by vote as required by section 1 of the MFMA and was submitted to Performance Audit Committee on the 19 December 2018. Responsible Official
Mr. S. Gumede / Mr C Mmaratel Target Date
28 February 2019
Audit action Report Progress on action at the end of quarter 3 Responsible Official Target Date
Audit action Report Progress on action at the end of quarter 4 Confirm resolution of query [100% resolution or not] Responsible Official Target Date
Report of the Performance Audit
Committee for the 2017/2018
Financial Year
Report of the Performance Audit Committee for the 2017/2018 Financial Year.
King Cetshwayo District Municipality established the Performance Audit Committee in terms of
the provisions of the regulation 14(2) (c) of the Local Government: Municipal Planning and
Performance Regulations. The Performance Audit Committee main function is to assist Council
and the accounting officer in fulfilling oversight responsibilities concerning the integrity control and
accounting functions.
1. Composition of the Performance Audit Committee (PAC)
i. Regulation 14 (2) (c) states that the Performance Audit Committee must be
constituted and appointed by Council and be constituted by at least two
independent members who are not associated with the municipality and by a
Councillor;
ii. The regulations further states that one of the members of the performance audit
committee must be an expert on performance management issues;
iii. King Cetshwayo District Municipality Performance Audit Committee comprises of
the following members;
Member Qualification Designation
Mr Z Mzimela Chartered Accountant ( SA) Chairperson
Prof. JLW de Clercq PhD in Philosophy Member
Cllr DJ Ndimande Certificate in Management Development Member
2. Role and Objectives
2.1 The Performance Audit Committee is an independent advisory committee appointed by
the Council established to create an extended channel of communication in support to the
Executive Committee between Council, management and the auditors, both internal and
external. It provides a forum for discussing organisational performance in terms of the
IDPs as well as for Section 54/56 employees. This committee has a reporting
responsibility directly to the Accounting Officer and to Council via the Executive
Committee.
2.2 The primary objective of the Performance Audit Committee is to advise Council, the
political office-bearers, the accounting officer and the management staff of the municipality
on matters relating to Organisational and Individual Performance.
.
3. Responsibilities
The Performance Audit Committee is responsible for performing the following activities:
• Review at least six monthly and annual performance reports;
• Review the municipality’s performance management system and make recommendations
to Council;
• Submit a performance audit report to Council at least twice during a financial year;
• Ensures focus on economy, efficiency, effectiveness and impact in so far as the key
performance indicators and performance targets are concerned;
• Assess whether the key performance indicators are sufficient;
• Assess the reliability of performance information reported;
• Commission in-depth performance investigations where there is continued poor
performance;
• Review the PMS in the context of economy, efficiency, effectiveness and impact of the
municipality’s key performance indicators and performance targets.
• Assess whether the performance measurement and reporting process is carried out in
accordance to the provisions contained in Chapter 3 of the Local Government: Municipal
Performance Regulations for Municipal Managers and Managers directly accountable to
Municipal Managers, 2006 dated 1 August 2006.
Effectiveness of the Performance Audit Committee
i. In terms of the Performance audit committee charter, the performance audit committee
must hold a meeting at least once a quarter to consider issues pertaining to the
performance affairs of the municipality; review and assess the qualitative aspects of
performance reports, the processes that manage performance management,
government and compliance within the applicable legislation.
During the 2017/2018 financial year there were five (5) regular meetings and two
(2) special meeting. The table below refers;
Members Attendance to Performance Audit Committee Meetings Special PAC Meetings
29/08/2017 06/10/2017 19/01/2018 15/03/2018 19/06/2018 02/02/2018 02/05/2018
Mr Z
Mzimela
X X X X X X X
Prof. JLW
de Clercq
X X X X X
Cllr DJ
Ndimande
X X X X X X X
ii. The chairperson of the performance audit committee also serves a member of the
municipality’s Performance Evaluation Committee whose task and responsibility is
to evaluate the performance of the Municipal Manager and the managers directly
reporting to the Municipal Manager (Section 54 and 56 Managers). The
performance evaluation committee holds its meeting once a quarter, the table
below comprises of meetings held in the 2017/2018 financial year;
Date Quarter under Review
23 February 2018
Quarter 1 Evaluation for the 2017/2018 financial year
Quarter 2 Evaluation for the 2017/2018 financial year
12 September 2018 Quarter 3 Evaluation for 2017/2018 financial year
Proposed date 19 December
2018
Final Assessments for 2017/2018 financial year
There has been a notable challenge in the sitting of the Performance Evaluation
Committee meetings due to the failure of the Performance Evaluation Committee
to meet on a quarterly basis in order to assess the performance of the Municipal
Manager and the managers directly reporting to the Municipal Manager (Section
54 and 56 Managers). In particular, evaluations for the 4th Quarter of the 2017/2018
financial year remains outstanding.
The Performance Audit Committee’s oversight function is hampered due to the
consequential effect resulting in the failure of the Performance Evaluation
Committee’s ability to meet on a regular basis to evaluate performance and make
recommendations on performance results within applicable timeframes. Failure to
organize quarterly meetings on time for the PAC is concerning and requires
improvement.
The internal auditors are responsible for auditing the performance of the Municipal
Manager and the managers directly reporting to the Municipal Manager (Section 54
and 56 Managers) on a quarterly basis, the reports emanating from the quarterly audits
are presented to PAC on a quarterly basis for deliberation and recommendation. We
note with concern that some of the issues raised by Auditor General were not brought
to our attention by the Internal Auditors during the auditing of the 2017/2018 financial
year as some of the issues could have been identified earlier in order to avoid
numerous findings.
iii. In the course of performing its function, the Performance Audit Committee
considered and reviewed reports issued by internal audit on the audit of
achievement regarding OPMS, SDBIP and IPMS.
iv. The Performance Audit Committee notes the progress and performance made by
the municipality towards the achievement of the predetermined objectives in the
2016/2017 financial year however there is room for improvement.
Effective Governance concerns
• Management reports requested by the Performance Audit Committee often do not
address the specific concerns raised by the Committee, with key challenges and /
or specific measurable actions not being included in reports submitted. The effective
turnaround time frame in addressing specific issues is noted and remains lengthy
especially in the Technical Services Department. The performance indicators for the
senior managers seem to be operational than strategic. This is a concern which
needs to be addressed in preparation for the new financial year.
The Supply Chain Management regarding the cancellations and the slow pace in
awarding of tenders remains a major challenge as it impacts the service delivery to
the communities that we serve. This contributed significantly to non-spending
especially from the Technical Services Department for the better part of the year.
A major concern of the committee which has been raised numerously is the
filling of key positions taking longer than reasonable time, thus affecting or
impacting service delivery. The vacancies at the Top management (Municipal
Manager, DMM Technical Services and DMM Planning& Economic Development) for
most part of the year under review were a serious concern for the Committee. Although
Council made it utmost best to fill these positions the better part of the year remained
vacant, however we do note and applaud that all vacant positions for Top Management
have been filled.
The viability / sustainability of the Fresh Produce Market (KCFPM) remains a major
concern where a detailed analysis of current operations together with a business plan
for the market remains outstanding.
Conclusion
The performance audit committee concurs and accepts the Auditor General’s conclusions on the
municipality’s compliance with legislation and achievement of predetermined objectives.
The performance audit committee further notes the matters highlighted by the Auditor General
and endeavours to rectify the material finding raised in relation to the Service Delivery Budget
and Implementation Plan and going forward will ensure stricter compliance.