STANDING COMMITTEE ON APPROPRIATIONS BRIEFING 2011/12 EXPENDITURE Date: 29 August 2012 PRESENTATION OUTLINE 2 WHY DO WE FIND OURSELVES WHERE WE ARE WHAT COULD HAVE BEEN DONE DIFFERENTLY WHAT WE CANNOT CHANGE/UNAVOIDABLES OUR OWN FINDINGS INTERVENTIONS PUT IN PLACE TO MINIMISE RECURRENCE OVERALL EXPENDITURE ANALYSIS FOR 2011/12 WHY DO WE FIND OURSELVES WHERE WE ARE 3 Anomaly in the order of key planning processes: The 2011/12 ENE was prepared and submitted in December 2010, without a strategic plan as a basis. The strategy was only approved in February 2011, with 2 additional chief directorates. Therefore there was no alignment between the budget and the organogram. There was no sufficient provision for operational costs either It is assumed that the ENE was based on the allocation that was used for the programmes that were incubated at the Presidency. WHY DO WE FIND OURSELVES WHERE WE ARE, cont.. 4 There was therefore no provision for Corporate Services. The department had to relocate from the Presidency, and Corporate Services personnel had to be appointed. The department also had to take over some of the international body roles that were initially under DIRCO but related to Women, Children and People with disabilities, which were not provided for in the budget. There was pressure on the department to reduce the vacancy rate as this had a negative impact on the planned activities. WHAT COULD HAVE BEEN DONE DIFFERENTLY 5 In hind sight it is noted that the appointments could have been deferred to the following years when there was sufficient funding. The DIRCO programmes could have been taken on condition that the accompanying budget is transferred to the department. In-year monitoring could have been used to allow the department and national treasury to detect the problem much earlier. WHAT WE CANNOT CHANGE / UNAVOIDABLES 6 We cannot avoid remunerating the current employees regardless of them being appointed outside the allocated budget. We cannot avoid purchasing tools of trade for these employees despite the fact that they were not budgeted for. We are obligated to continue remunerating employees at higher notches as they were transferred from other departments. The MTEF process cannot be used to source the required funding as we have to do so within the current baseline allocation. OUR FINDINGS 7 There is no sufficient capacity within the finance unit to fully implement the PFMA and Regulations. The lack of internal controls both in finance and human resources contributed to the problem The lack of proper governance structures such as the internal audit function, risk committee and audit committee also contributed. The relocation from the Presidency was not well planned for and thus contributed to the problem. INTERVENTIONS PUT IN PLACE TO MINIMISE RECURRENCE 8 A turn-around plan has been developed in conjunction with National Treasury to ensure a clean audit. Arrangements have been made to second an acting CFO from National Treasury with effect from 1 September while the department recruits a CFO. Additional capacity has been sourced from Statistics South Africa on an adhoc basis to assist the finance, risk and human resource teams as these are critical areas. The position of asset manager and financial controller do not exist in the structure but need to be provided for. Quarterly financial reports are now produced in the Treasury template to enable accurate reporting. SUCCESSES 9 The department was successful in holding consultations with the sectors to assess their expectations from the department. In this regards we ensure an acceptable level of visibility where there was previously none. We also ensured meaningful participation and representation at international fora in relation to women, children and people with disabilities. Partnerships were also established with development agencies. A national action plan for children has been developed 2/25/ Overall expenditure analysis: April 2011 to March 2012 2/25/ Compensation expenditure analysis: April 2011 to March 2012 CompensationAllocation R000 Expenditure R000 Balance at 31 March 2011 R000 Spending % vs guideline of 100% Administration % WEGE % CRR % RPD % Total % 2/25/ Compensation expenditure analysis: April 2011 March 2012 2/25/ Goods & Services expenditure analysis: April 2011 to March 2012 Goods & Services Allocation R000 Expenditure R000 Balance at 31 March 2011 R000 Spending % vs guideline of 100% Administration % WEGE % CRR % RPD % Total % 2/25/ Goods & Services expenditure analysis: April 2011 to March 2012 Main cost drivers are: Advertising R Catering R Communication R Consultants / Contractors and Agency / outsourced services R Audit fees R Inventory R Travel & Subsistence R Venues & Facilities R /25/ Goods & Services expenditure analysis: April 2011 to March 2012 2/25/ Transfer Payment expenditure analysis: April 2011 to March 2012 Transfer payments Allocation R000 Expenditure R000 Balance at 31 March 2011 R000 Spending % vs guideline of 100% Administration % WEGE % CRR0000% RPD0000% Total % 2/25/ Transfer Payments expenditure analysis: April 2011 to March 2012 2/25/ Transfer Payments expenditure analysis: April 2011 to March 2012 The R payments made under programme 1 was for leave gratuity for the following staff: Leave gratuity amounting to R was paid out to TA Matsepe who was a permanent employee. Leave gratuity amounting to R was paid out to FDR Segwagwe who was a contract appointment. Leave gratuity amounting to R was paid out to OJ Mabena, husband of late Ms MN Mabena, DDG Corporate Services. Leave gratuity amounting to R9 445 was paid out to M Gqibane who was a permanent employee. Leave gratuity amounting to R1 369 was paid out to A van Niekerk who was a contract employee. Leave gratuity amounting to R200 was paid out to M Dzivhane who was contract employee. 2/25/ Machinery & Equipment expenditure analysis: April 2011 to March 2012 Capital Expenditure Allocation R000 Expenditure R000 Balance at 31 March 2011 R000 Spending % vs guideline of 100% Administration % WEGE0000% CRR % RPD0000% Total % 2/25/ Machinery & Equipment expenditure analysis: April 2011 to March 2012 2/25/ Machinery & Equipment expenditure analysis: April 2011 to March 2012 The main reason for under spending was an over estimation on the needs of the department as not all the posts were filled. This resulted in the suspension of procurement of office furniture and computer equipment. END THANK YOU 22