doj & cd
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Portfolio Committee Briefing by CFO 18 November 2009. DOJ & CD. Table of Contents 2008/09 BUDGET AND EXPENDITURE OUTCOME 2008/09 AUDIT OUTCOMES 2009/10 AUDIT ACTION PLANS. 2. Department of Justice and Constitutional Development – Excluding NPA. 2008/09 2007/08 2006/07 - PowerPoint PPT PresentationTRANSCRIPT
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DOJ & CD Portfolio Committee Briefing
by CFO18 November 2009
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Table of Contents
2008/09 BUDGET AND EXPENDITURE OUTCOME
2008/09 AUDIT OUTCOMES
2009/10 AUDIT ACTION PLANS
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2008/09 2007/08 2006/07
Final Budget 6,403,716 5,677,401 4,893,562
Less
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%
Department of Justice and Constitutional Development – Excluding NPA
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Expenditure outcome per Programme: DOJ&CD
Budget Expenditure % Expenditure
'000 '000
934,862 930,693 99.6%
3,373,424 3,348,402 99.3%
526,080 525,272 99.8%
1,569,350 1,557,809 99.3%
46,193 46,193 100.0%
838,120 838,120 100.0%
86,475 86,473 100.0%
60,603 60,603 100.0%
116,297 116,297 100.0%
6,403,716 6,362,176 99.4%
Budget Expenditure % Expenditure
370,315 504,775 136.3%
1,019,014 1,096,316 107.6%
1,389,329 1,601,091 115.2%
Special Inv estigating Unit
Of which:
South African Human Rights Commission
Total Direct Charges
Magistrates' salaries
Judges' salaries
Total Vote
Commission on Gender Equality
Legal Aid Board
Public Protector
5. Auxiliary and Associated Services
3. State Legal Services
2. Court Services
1. Administration
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Expenditure per Economic Classification
Budget R'000
Expenditure R'000
Percentage Actual Spend
Available Funds R'000
BUDGET
Current payments
Compensation of employ ees 2,320,576 2,320,574 100.0% 2
Financial transactions in Assets & Liabilities 3,421 3,420 100.0% 1
Interest and rent on land 3,804 3,804 100.0% 0
Goods and serv ices 2,309,311 2,297,785 99.5% 11,526
Total current payments 4,637,112 4,625,583 99.8% 11,529
Transfers and subsidies to:
Depart. Agencies & accounts/Municipalities 1,240,302 1,238,887 99.9% 1,415
Foreign Gov and International Organisations 5,086 5,085 100.0% 1
Households 12,761 12,760 100.0% 1
Total Transfers and Subsidies 1,258,149 1,256,732 99.9% 1,417
Payments for capital assets
Buildings and other fix ed structures 423,188 416,824 98.5% 6,364
Machinery , Equipment and Motor Vehicles 85,121 62,891 73.9% 22,230
Softw are and other intangible assets 146 146 100.0% 0
Total payments for capital assets 508,455 479,861 94.4% 28,594
6,403,716 6,362,176 99.4% 41,540
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Expenditure: Year-on-year comparison
DOJ & CD
314,794
587,024
518,357
439,634
545,010
989,866
444,993
565,756
412,103426,149
515,018
396,491396,069
877,829
551,810
591,038
692,538
400,812
493,289645,838
563,562
484,643494,381
1,032,780
723,608
817,626
711,130
758,555
751,778
842,110
711,921
755,813745,963
641,943
509,777
463,927
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1 2 3 4 5 6 7 8 9 10 11 12
2006/07 2007/08 2008/09
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• Improved departmental spending – expenditure increased from 97.8 % in 2007/08 to 99,4% in 2008/09
• Under spending decreased with R83 million from R163,9 million in 2007/08 to R41,4 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 (R280,0 million), Guarding Services and Cash in Transit (R20 million), Masters (R38 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
Key Observations: 2008/09 Financial year
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AUDIT OUTCOMES 2008/09
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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
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Vote Account – QualificationsFinance 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
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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
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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 1st time during 2008/09 * 80 % of Departments qualified on Asset Management as per AG General Report
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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 Audit Action Plans – Compiled per Financial Statement
Component – National Office Champions responsible for actions Task team/s visiting Regions to follow-up on Leases etc. Task team/s dealing with the problems experienced with AFS
Disclosure Notes Monthly Financial Statements wef September 2009 (October
2009) Enhanced National Operations Centre (NOC) tool Used as pointers for training and other interventions
• TPF - Implementation of MMT PPP (TPF) - Timelines in slide 15
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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 Re-engineering 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
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Third Party Funds (TPF) PPP High-level timelines
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Finalise negotiations: By end of November 2009
Obtain acting DG and NT TA3 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
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Audit Action plans2009/2010
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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:
Expenditure Management Performance Information Revenue Management Stock Management Assets Cash & Cash Equivalents Compensation of Employees Disclosure Notes to Annual Financial Statements
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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-in-progress – 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
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Assets Inventory
Expendi-ture
Cash & Cash Equivalents
Revenue
Compensation of Employees
Performance information
Gauteng 20% 100% 100% 100% 100%
91% ACTION
PLAN
WORK
IN
PROGRESS
AT THE
TIME OF
THIS
REPORT
WC 41% n/a 100% N/A 100%
100%
NC 35% n/a 70% 100% N/A 66%
EC 6% 73% 15% N/A 80% 51%
KZN 28% 100% 50% N/A N/A 100%
Mpumalanga 44% 63% 35% 70% 70% 76%
Limpopo 18% n/a 35% 50% N/A 100%
Free State 25% 79% 90% 87% 75%
59%
North West 43% 65% 90% 88% 91% 74%
National Office 29% 29% 40% 70% 100%
40%
Overall progress
28% 73% 60% 80% 88% 76%
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Irregular expenditure
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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)
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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
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Fruitless expenditure
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• 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 R1.4 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 DoJ&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 R1, 4 m also submitted a bid for the DOJCD UAMP with a total costing of R22 million
• The Department is in the process to appoint an independent evaluator/assessor to assess and report on the contract awarded by DOJCD
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Questions?
Thank you