Immovable Asset Register Enhancement Programme Presentation to Select Committee on Public Services 12 November 2013
Jan 03, 2016
Immovable Asset Register Enhancement Programme
Presentation to Select Committee on Public Services
12 November 2013
Page 2
Outline of the Presentation
1. National DPW Immovable Asset Register (IAR) programme progress
2. Vesting Status
3. National Treasury Sector Specific Guide – 2013 and beyond
4. iE-Works readiness (IAR)
5. Action Plan on IAR (National & Provincial Public Works)
6. Allocation of Custodianship
7. Extension Principles of GIAMA to Local Government
8. Outcome of 2012/13 audit
1. National DPW Immovable Asset Register (IAR) programme progress
Page 4
Overview of DPW IAR Programme
► Progress made from inception of Programme to 31 March 2013
► Deeds download, desktop cleansing for registered land parcels and portfolio of evidence completed
► Reconciliation of Provincial DPW’s and Human Settlements completed
► Linking of structures to land parcels significantly completed
► Sourcing of other information sources, User Asset Management Plans (UAMP’s), external databases, etc
► Created repository in iE-Works for cleansed IAR data to be placed
► Procured physical verification tool and software
► Formulated Custodian Framework for National, Capitalisation Policy
► Global State Land reconciliation completed
Page 5
Overview of DPW IAR programme
► Plan from 1 April 2013 to March 2014
►On-going deeds refresher for registered land parcels
►Build IAR for surveyed and unregistered land
►Build IAR for (State Domestic Facilities) SDF’s (properties not on state land)
►Conduct physical verification of all DPW properties
►Draft and implement IAR policies
►Commence capitalisation with effect from 1 April 2013
►Apply fair value based on 2013 municipal valuations rolls
►Audit of rates and linkage to IAR
►Implement interim operating model
►Design final operating model
►Initiate Operation Amnesty (Bring-Back)
►Prepare 2013/14 Annual Financial Statements (AFS) Notes and narrative
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Overview of DPW IAR programme
Operation Bring-Back
Ongoing deed refresh/ update & tracking of registered land parcels.
Implement tracking tools for monitoring at National DPW.
Mar 13 Mar 15
Deeds download, desktop cleanse & portfolio of evidence for National land
Mar 16
Other work to future-proof IAR (2019 plan)
Global state land recon
Stabilisation
Completeness of registered properties substantially
addressed in DPW family IARs
IAR complete & accurate with final FV +
snag list for follow up
Efficiency management
IAR complete integrated with DPW
business with remaining snag list
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IAR complete & acurate for registered land & substantially
complete for unregistered + first round FV applied
Nov 11
PMTE migration &
GRAP 17 effective
Reconciliation of Provincial DPW and Human Settlements land parcels
Linking structures to land parcels
Sourcing other information sourcesUAMPs, external databases etc
Created repository in iEWorks for cleansed IAR data to be placed & procured tool for physical
inventory
Formulating custodian framework, cap policy, operating model, FV model , wider
requirements going forward etc
Build IARs for surveyed not registered and un-surveyed land & relevant tracking tools/ integration .
Map state land custodianship - GIS
IAR project achievements to date
based on modified cash framework include;
Conduct fieldwork given requirements to componentise, account for infrastructure & heritage
assets – use of SSP
Impairmenttest
Impairmenttest
Impairmenttest
Policies & processes for GRAP application
Apply FV based on 2009 & 2013 valuation rolls & other methods
Fine tune FV application process & other valuation
methods
Migrate IAR to basic acctg system with
linkage to detail IARDesign & Implement new “ARM” opmodel
required
Commence capitalisation and depreciation w.e.f 1.4.2013
Global state land recon
Global state land recon
Global state land recon
Revised vesting process with 2016 as target date for completion
Audit of rates and correct linkages on IAR
Audit of rental stock & define correct treatment i.t.o GRAP 16
Integrate UAMPs & IAR
Clean audit requirements
Integration with FSP and other turnaround projects
Ongoing deed refresh/ update & tracking of registered land parcels. Implement tracking tools for monitoring
at National DPW.
Build IARs for surveyed not registered and un-surveyed land & relevant tracking tools/ integration .
Ongoing capitalisation processes
Mar 14
Supplementary field work requirements (in-house)
Migration to final (ERP) system
3 year phase –in of GRAP requirements but final IAR values
required for 2014Preparation of AFS between March and 31 July 2016
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Progress on Immovable Asset Register – from 2011/2012 to 2013/2014 financial year end
AFS disclosure 2011/2012 2012/2013 2013/2014 Dependencies
List A - Registered land parcels 21 448 34 731 35 001 Deeds analysis
List D - Surveyed Unregistered land parcels 3 127 3 127 Physical verification
List B – Provinces registered 15 878 13 703 N/AN/A – new sector specific guide
List E – Provinces surveyed unregistered 4 125 N/AN/A – new sector specific guide
Improvements 73 398 73 435 73 435Physical verification and other sources
Audit Opinion Disclaimer Qualified TBA
Satis-factory
Good progress
Concern Risk
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State land reconciliation as at October 2013(includes Registered, Unregistered and Sec 42 land parcels)
Analysis of registered land parcels by custodian
Total NDPW DRDLR Other Custodians
Human Settlements
9Provinces
Total State Land 182,345 45,150 25,258 85,503 26,434
Adjustments for:
Not considered to be state land -3,379 -2,593 -786
Subsequent deeds download and other 5,045 1,298 -56 167 3,636
Deemed provincial properties -10,743 10,743
Revised Total – Deemed State Land 184,011 33,112 25,202 167 85,503 40,027
Allocation of custodianship in progress- thus disclosed by National
1,459 -1,459
Total deemed State Land 184,011 34,571 25,202 167 85,503 38,568
Unregistered Land - National DPW 3,127 - - - -
Deemed provincial land (Unvested) – disclosed by National
13,703 - - - -13,703
Deemed provincial land (Surveyed not Registered) – disclosed by National
4,125 - - - -
Amounts to be disclosed in the Annual Financial Statement ending 31 March 2013
55,526 25,202 188 85,503 24,865
NDPW is currently busy resolving
New deeds download has been requested. Some anomalies have been found on the download. NDPW will distribute deeds data to Provinces on receipt
Section 42 transfers from National to Provinces for 2014 AFS
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Position with Provincial DPW’s as at October 2013 (AFS submission) (includes Registered, Unregistered and Sec 42 land parcels)
Land parcels EC FS GP KZN LP MP NC NW WC Total
Total state land (download 1) 40 5,123 682 4,286 943 2,571 1,180 2,612 8,997 26,434
Less adjustments for:
Not state land -185 -361 -1 -21 -26 -4 - -61 -127 -786
Other
Deemed provincial properties 3,038 1,166 5,428 3,201 3,019 -306 275 746 -2,188 14,379
Revised total: Deemed state land 2,893 5,928 6,109 7,466 3,936 2,261 1,455 3,297 6,682 40,027
Final custodianship to be confirmed (Work in progress) -40 -6 -69 -878 -2 -9 -220 -50 -185 -1,459
Confirmed and final amounts to be disclosed by custodians as at 31 march 2013 - registered
2,853 5,922 6,040 6,588 3,934 2,252 1,235 3,247 6,497 38,568
Deemed provincial land (Surveyed not Registered) – disclosed by National
-1,333 -1,245 -4,266 -3,687 -573 -691 -164 -666 -1078 -13,703
Confirmed and final amounts to be disclosed by custodians as at 31 March 2013 - total
1,520 4,677 1,774 2,901 3,361 1,561 1,071 2,581 5,419 24,865
NDPW is currently busy resolving S42 from National to Provinces Inconsistent numbers as per 2012/13 Sector Guide
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Progress on Properties Devolved to Provinces as at October 2013
Land parcelsEC FS GP KZN LP MP NC NW WC Total
Total initially devolved by National 5,076 3,500 10,020 11,929 3,035 3,004 1,363 6,469 5,968 50,364
Duplicates/not found/consolidations 1 - 0 193 21 1 - 5 0 221
Confirmed National 1,087 310 1,064 219 502 293 16 579 173 4,243
Confirmed Provincial incl .in IAR 1,577 1,501 7,545 6,353 1,123 1,856 772 1,342 1,604 23,673
Confirmed Provincial as vested 1,013 1,510 1,132 1,986 265 439 468 961 3,044 10,818
Confirmed as DRDLR 16 132 160 1,295 33 91 3 120 0 1,850
Confirmed Municipalities 177 8 0 325 68 0 3 1,155 79 1,815
Confirmed Human Settlements - - 0 43 0 0 3 575 9 630
Parastatal & Private* 911 31 14 995 1,023 323 80 1,719 788 5,884
Remainder
Further investigations required* 294 8 105 520 0 1 18 13 271 1,230
Sign-off’s received from some provinces for properties confirmed (FS,WC,MP,KZN,LP and GP)
Physical verification in KZN, WC, NW, and EC is underway being conducted by Provinces and DPW project managers.Investigations on devolved properties must be completed on or before 30 October 2013.Section 42 transfers to Provinces including supporting documents to be completed by 30 October 2013.
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Progress made on physical verification for week ending 25/10/2013
2. Vesting status
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National Vesting Report September 2013 – per province
NATIONAL EC FS GP KZN LP MP NC NW WC Total
TOTAL LAND PARCELS IN IAR * 2,986 2,786 5,902 9,437 4,474 2,908 2,776 3,124 5,419 39,812
LAND PARCELS VESTED SINCE 27 APRIL 1994
1,358 2,410 2,689 1,918 649 1,395 1754 429 2,430 15,032
NUMBER OF LAND PARCELS STILL TO BE VESTED
1,628 376 3,213 7,519 3,825 1,513 1,022 2,695 2,989 24,780
* TOTAL LAND PARCELS IN IAR = Total land parcels in DPW IAR 2013 as provided to SSP in August 2013 for physical verification.
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Vesting Report September 2013 – per province (National and Provinces)
Custodian – statistics according to LAW
EC FS GP KZN LP MP NC NW WC Total
National DPW 1,358 2,410 2,689 1,918 649 1,395 1,754 429 2,430 15,032
DRDLR 2,114 654 128 635 3,061 1,685 436 1105 0 9,818
Provincial DPW/GDID 2,625 1,125 2,854 5,958 670 1,512 741 1515 3,358 20,358
Human Settlements/DLGH 405 46 438
Total 6,097 4,189 6,076 8,557 4,380 4,592 2,931 3,049 5,788 45,659
► Draft vesting business case provided to provinces to replicate National vesting business case;
► DRDLR finalised the vesting business case for their department.
► NDPW to coordinate vesting progress reports as well as targets for the year for provinces.
► Each custodian is required to reconcile the LAW statistics with own vesting records to ensure correct starting point.
3. National Treasury Sector Specific Guide 2013 and beyond
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Sector Specific Guide – requirements for 2013/14
► Un-surveyed land to be disclosed by Department of Rural Development and Land Reform (DRDLR)
► From 1/4/2013 onwards, once the custodian has confirmed that the registered land parcel is theirs the custodian will be required to reflect these in their IAR and AFS (vested or not vested)
► From 1/4/2013, once the custodian has received SG diagram from DRDLR (Chief Surveyor General -CSG), the custodian will be required to reflect these surveyed not registered land parcels in their IAR and AFS
► Where it is not clear or where SG diagram is received after 30 September each year, the land parcel will be disclosed by DRDLR in their IAR and AFS
► National: SDF’s All facilities used by the national government located on un-surveyed land or surveyed but unregistered land incl former TBVC States and Self Governing Territories and state land in the former RSA (pre April1994); or governed by KZN Ingonyama Trust Act; should now be disclosed by the National Department of Public Works.
► Provinces: SDF’s All facilities used by the provincial government located on un-surveyed land or land governed by the KwaZulu-Natal Ingonyama Trust Amendment Act (pre 24 April 1994)
► All properties where agreement of custodianship had been reached and a transfer in compliance with Section 42 (PFMA) had been received must be disclosed by the respective custodian.
► The Sector Specific Guide is in the process of being reviewed in conjunction with the provinces.
4. iE-Works readiness
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iE-Works readiness
► CFO Forum tasked DDG:AIM to confirm readiness and functionality of iE-Works for Provinces.
► Currently, DPW Information Systems (IS) unit is engaging with provincial custodians at operational level on iE-Works matters.
► Work session was convened with provinces on 28 October 2013 where Provinces were taken through the status of iE-Works to date
and recommendations were made, that:
► iE-Works be considered as a platform of choice by national and provincial public works custodians for uniformity;
► Business user sign off for provinces be at CFO level by 15 December 2013;► End user review of completed modules in the 1 Quarter of 2014/15;► Data templates be set up between DPW and provinces;► User acceptance test and training phase by DPW; and► Go-live pilot
Provinces will be migrated to iE-Works System as and when they have completed their data cleansing exercises and after submitting and verifying their own data.
5. Action Plan on IAR
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Action Plan on IAR (National and Provincial Public Works)# ITEM/ ACTION TIMEFRAME RESPONSIBLE PERSONS STATUS/ PROGRESS
1. Address Management Assertions (completeness, existence, rights & obligations, accuracy & valuation, presentation & disclosure) and Reconciliation
31 March 2013 &31 March 2014Continuous
Ms F Rabada: CD ARMMr S Sokhela: D ARMProvincial Representatives
State land reconciliation completed for 2012/2013Provincial Tracking Templates developed
2. Capitalisation of State Immovable Assets
31 March 2014 Ms F Rabada: CD ARMMr S Sokhela: D ARMProvincial Representatives
DPW draft policy currently being reviewed by all stakeholders
3. Vesting of State land 31 March 2016 National Vesting Task Team (DRDLR, DPW and Provinces)
DPW Vesting Business Case developed and forwarded to Provinces
4. Surveying of State Land 31 March 2015 Mr R Salig: CD CSGNational Vesting Task team to monitor
CSG assisting custodians to survey SDF’s
5. Devolution of Immovable Assets to Provinces
31 March 2014 Mr S Sokhela: D ARMRegional Project CoordinatorsProvincial Representatives
90% completeProvinces to confirm custodianship
6. Compliance of IAR to relevant prescripts (PFMA, GIAMA, National Treasury guidelines)
31 March 2013 &31 March 2014Continuous
Mr S Sokhela: D ARMProvincial Representatives
Audit Action Plan for national and provinces to address compliance at each financial year end.
7. Custodians of State Immovable Assets – DPW Framework
31 March 2014 Ms F Rabada: CD ARMProvincial Representatives
Draft framework has been developed for national Provincial custodianship confirmed with the Premiers Framework for provinces to be developed
8. Operation Bring Back 31 March 2014, 31 March 2015 & 31 March 2016
Ms F Rabada: CD ARMProvincial Representatives
Work in Progress (Deeds Reconciliation and physical verification of properties).
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Provincial reporting template – sample extract
6. Allocation of Custodianship
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Custodian summary
# of user departments
# of users who are also custodians
Public Works or DID
Human Settlements/ Local Government & Housing
Office of the Premier
Eastern Cape 13 1
Free State 12 2
Gauteng 13 2
Kwa-Zulu Natal 16 1
Limpopo 12 1
Mpumalanga 12 1
North West 11 1
Northern Cape 13 1
Western Cape 14 2
National 52 6
Public Works Defence Endowment
Environmental & Water Affairs
Rural Development & Land Reform
Agriculture and Forestry
International Relations
National custodians
Provincial DPW – Cabinet resolution dated 13/06/2007Provincial Housing – Act 4 of 2001, Housing Amendment Act
** There is a need to define and confirm the accounting treatment (control) in each province given the current legislative environment
Letters to all provinces to confirm custodianship have been sent out. All the Provinces have responded
Confirmed Outstandin
g
7. Extension Principles of GIAMA to Local Government
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Fundamentals of GIAMA: National/Provincial vs. Local Government
GIAMA provides a framework of basic principles in accordance with which national and provincial departments must manage the immovable assets that they utilise or control in executing their mandates.
GIAMA is structured around the following building blocks –
A) Role-players involved in the acquisition, operation and disposal (custodians) and the utilisation (users) of the State’s immovable assets;
and
B) Management processes within government.
Whilst the management of all spheres of government stem from the same fundamental principles, the role-players involved in immovable asset management and the strategic management processes of local government differ significantly from national and provincial government.
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National/Provincial vs. Local Government
A) Role-players: National & Provincial Government
Users: Departments who utilise immovable assets in the performance of their functions.Required to compile annual user asset management plan (U-AMP).
Custodians: Departments who perform “caretaker” functions in relation to immovable assets.
Required to (1) provide information on immovable assets allocated to users, to inform compilation of U-AMPs; and (2) compile annual custodian asset management plan (C-AMP).
A) Role-players:Local Government
No standard institutional delineation between users and custodians of immovable assets.
No separate accounting officers in various departments within a Municipality.
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National/Provincial vs. Local Government (Contd…)
B) Management Processes: National & Provincial Government
National / Provincial Departments (both users and custodians) are obliged to compile annual immovable asset management plans as part of their annual strategic planning process.
User and Custodian Asset Management Plans must be submitted to relevant Treasury to inform annual budget allocations.
B) Management Processes: Local Government
In terms of Municipal Systems Act, 2000 a Municipality is obliged to develop an Integrated Development Plan (IDP) at least every 5 years, which serves as its principal “strategic management planning instrument”.
Municipalities are required to annually review their IDP and this should inform their annual budget.
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National/Provincial vs. Local Government (Contd…)
Municipalities are governed by specific body of legislation, of which the Local Government: Municipal Systems Act, 2000 (MSA) and the Municipal Finance Management Act, 2003 (MFMA) are most relevant to immovable asset management -
The principal strategic planning document of a Municipality is its Integrated Development Plan (IDP).
The MSA prescribes a specific process for the compilation of IDPs, which must also be aligned with provincial development plans and national priorities.
The MSA also prescribes comprehensive consultation requirements in relation to the compilation of IDPs.
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National/Provincial vs Local Government (Contd…)
An IDP is an inclusive strategic plan guiding all development within a Municipality. In terms of the existing regulatory framework, an IDP may, as part of its financial strategy, contain an asset management strategy.
The shortcomings in the existing IDP process, however, are that – it does not detail a specific immovable asset management planning
process; and it does not make immovable asset management mandatory, as is
the case in GIAMA.
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Current position: Extension of structured Immovable Asset Management to Municipalities
Due to key differences in the legal framework and organisational structure of local government compared to national and provincial government, it would be problematic to incorporate Local Government into the existing legislation (GIAMA) rendering it very convoluted.
DPW therefore holds the view that a different approach would be
advisable to extend the principles of GIAMA to local government -
Alternative 1:
The requirements for immovable asset management could be incorporated in (a) separate set of regulations issued in terms of the Municipal Systems Act; or (b) amendment to the existing Local Government: Municipal Planning and Performance Management Regulations, 2001 issued in terms of that Act.
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Current position: Extension of structured Immovable Asset Management to Municipalities (Contd…)
Alternative 2:
Specific legislation could be developed, based on the requirements, organisational structure and existing legal framework governing municipalities.
DPW has renewed discussions with the Department of Cooperative Governance regarding the optimal approach and timeline to extend the principles of GIAMA to local government. The objective is to reach agreement on specific objectives commencing in 2014/15.
8. Auditor General Response on National DPW IAR submission for the year ending
2012/2013
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AG Opinion on DPW IAR 2012/2013
Assertion Approach Comment
Completeness
(Main Focus for 31 March 2013)
-Use of deeds download in conjunction with DRDLR & extensive reconciliation of data with other state land custodians for all registered properties.-Deeds / Aktex is used as a basis and substantiated with other documents & Sources e.g. Copy Original Title deeds & SG diagrams-IAR fields checked against NT minimum requirementsCompliance with the Sector specific guidePosition with provinces confirmed (List A/B) to determine who discloses what.
Dependencies:-Extent of Un-surveyed land to be received from the CSG-Reliant on Deeds for the registration of unregistered land -Completion of Vesting process for National and Provincial properties-Provinces confirming properties supplied to the AG and Provincial Usage properties(List A/B)
Accuracy & Reliability
-Initial reference is made to the Aktex and substantiated by original title deeds and SG diagrams for accuracy.-Data cleansing performed and fieldwork to be performed
Dependencies:-Availability of original title deeds/ docs-Surveying of land
OwnershipRights & Obligations
-Ownership is confirmed as per Aktex / Title Deed-Vesting process is also confirming ownership-Surveying of state land to confirm ownership-Physical verification to prove property use & confirm custodian
Dependencies:-Surveying & Vesting process scheduled to be completed by 31 March 2016
Existence -Conducting physical verification and other desktop methodologies to prove existence and have photos, GPS Coordinates & SG diagrams as portfolio of evidence
-Desktop exercise performed to prove existence.-Physical verification to commence Jun 2013
Valuation -Fair Value model – (1) Municipal values (where Valuation Roll not qualified) and then (2) Sales Comparison Method (where there are no valuation rolls ) & (3) Depreciated Replacement Costs (where there are no valuation rolls) for specialised buildings.
-Intention is to use 2013 municipal values and this will be available for the 2015 year.
Presentation & Disclosure
Comply with the NT requirements and sector specific guide Reliant on other National Custodians and provinces providing their List A &B in order to identify what DPW must disclose.
Unqualified Qualified
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AG Opinion on DPW IAR 2012/2013…cont
► " The immovable asset disclosure note is not accurately valued to the effect that an amount of R664 million has been included – relating to renovation and refurbishment costs. The department was unable to establish which portion of the amount in question should have been capitalized and failed to allocate the R664 million to specific individual assets, thus resulting in the inability to verify the fair presentation with regards to valuation of immovable assets." AG
► DPW IAR has been qualified on work-in-progress (valuation).
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AG Opinion on DPW IAR 2012/2013…cont
► In order to address the valuation assertion in the DPW IAR for 2013/2014 the following will take place with the effect from 1 April 2014;
Fair Value model will be applied to all properties and components (as required by GRAP)
Capitalization policy will be applied to all work- in- progress amounts
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Audit opinion 2012/13 - Provinces
Province 2012/2013 AG audit opinion
Eastern Cape Disclaimer
Free State Qualified
Gauteng Unqualified
Kwa-Zulu Natal Unqualified
Limpopo Disclaimer
Mpumalanga Unqualified
North West Disclaimer
Northern Cape Unqualified
Western Cape Unqualified
The above information has been confirmed with the Provinces
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Thank you