DEPARTMENT OF PUBLIC WORKS DEPARTMENT OF PUBLIC WORKS P P RESENTATION OF 2010/11 ANNUAL REPORT RESENTATION OF 2010/11 ANNUAL REPORT TO THE SELECT COMMITTEE ON TO THE SELECT COMMITTEE ON PUBLIC SERVICES PUBLIC SERVICES 22 NOVEMBER 2011 22 NOVEMBER 2011 PCMS GEN: 383698 1
DEPARTMENT OF PUBLIC WORKS P RESENTATION OF 2010/11 ANNUAL REPORT TO THE SELECT COMMITTEE ON PUBLIC SERVICES 22 NOVEMBER 2011. OUTLINE OF THE PRESENTATION. Minister’s Foreword Accounting Officer’s Overview Achievement per Programme/ Sub-Programme - PowerPoint PPT Presentation
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DEPARTMENT OF PUBLIC WORKSDEPARTMENT OF PUBLIC WORKS
PPRESENTATION OF 2010/11 ANNUAL REPORT RESENTATION OF 2010/11 ANNUAL REPORT TO THE SELECT COMMITTEE ON TO THE SELECT COMMITTEE ON
PUBLIC SERVICESPUBLIC SERVICES
22 NOVEMBER 2011 22 NOVEMBER 2011
PCMS GEN: 3836981
OUTLINE OF THE PRESENTATIONOUTLINE OF THE PRESENTATION
• Minister’s Foreword• Accounting Officer’s Overview• Achievement per Programme/ Sub-Programme• Financial Performance and Audit Reports for the year
ended 31 March 2011• Update on the process to address asset register
challenges• Update on the audit of land for human settlement
purposes
PCMS GEN: 3836982
MINISTER’S FOREWORD
Planning for the fiscal year 2010/11 was guided by the following government policy priorities:
• Poverty alleviation and addressing unemployment• Building the state’s capacity to implement programmes and policies of
government• Investment in productive infrastructure• Implementation of government-priority projects
Critical attention was paid to the following flagship programmes:• Up-scaling of Expanded Public Works Programme • Enhancement of the Immovable Asset Register• Energy Efficiency • Implementation of the Government Immovable Asset Management Act
(GIAMA) • Improvement to the Land Ports of Entry
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MINISTER’S FOREWORD cont…
The Annual Report of the Department of Public Works articulates the enormity of the task that confronted the Department in the financial year 2010/11:
• Reconfiguring the Department to address the ten priority areas of Government
• Strengthening institutional pillars and guidelines for implementation of the Government Immovable Asset Management Act (GIAMA) of 2007.
• The Department has made progressive attempts to manage assets of the State (a complex portfolio indeed) evident through – development of Asset Management Plans,– the enhancement of the data integrity of the Asset Register, – the acceleration of unutilized property disposals.
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Despite the global economic downturn, the Department managed to deliver the following infrastructure projects:
• Completion of a significant number of police stations and magistrates courts;• Completed construction of Golela Land Port of Entry and upgraded Vioolsdrif
(Namibia) Lebombo (Mozambique) ahead of the country hosting the 2010 FIFA World Cup tournament.
• Embassy residences were completed and handed-over in Nigeria, Ethiopia and Lesotho while the Oliver Reginald Tambo Military Development Academy was officially opened and handed over by President Jacob Zuma to the people of Uganda
• Foundations were laid for memorial structures at Matola in Mozambique as well as in Angola.
• In collaboration with the Department of Defence, the Department accelerated the construction of community bridges.
• The eradication of inappropriate school structures across the rural landscape of South Africa.
MINISTER’S FOREWORD cont…
PCMS GEN: 3836985
ACCOUNTING OFFICER’S OVERVIEW In support of Government national goals, the Department continued to enhance it’s legislative environment through the review of the Expropriation Act, the Built Environment Professions Act s and the process of establishing Agrément South Africa as a juristic person.
The Department has prioritised the management of its immovable asset portfolio through:•Enhancement of the Asset Register and vesting of assets in collaboration with DRDLR and Provinces
The Department has intensified collaboration with other spheres of government for improved service delivery to communities. This includes:•release of 6327 hectares for land and 1031 hectares for human settlement,
•the bridge building project together with the Department of Defence for six bridges in the following areas:
– Nquqhu river crossing.
– Port St Johns Ntafutufu bridge
– Daluhlanga bridge in Umzimvubu Municipality
– Bailey bridge constructed across Lefukufuku river in Tsomo
– Macoza pedestrian bridge in King Sabata Dalindyebo Municipality in Umtata
– Cezu pedestrian bridge in King Sabata Dalindyebo Municipality in Umtata
PCMS GEN: 3836986
ACCOUNTING OFFICER’S OVERVIEW cont…
For the year under review the Department undertook many construction and maintenance projects amounting to approximately R5,7 billion. The building programme consists of minor projects (3 months) and major projects running over three years with various start and completion dates. Some examples of the projects completed and handed over were the following:•Free State: Newly constructed DPW Regional offices•Limpopo: Nylstroom Prison and Leshego Treatment Centre•North West: Joubertinah Police Station, Klerksdorp•Eastern Cape: Renovations & repairs for Home Affairs, Justice & Royal (Great) Place•Gauteng: Magistrate Courts in Tsakane & Thokoza•Mpumalanga: Magistrate Court in Ekangala•Northern Cape: New Generation Prison & Galeshewe Magistrate Court•KwaZulu – Natal: Renovations & repairs to Chatsworth Police Station
Facilities on behalf of Justice were recently completed and handed over at places as
diverse as Galeshewe (Kimberley), Colesburg, Pietermaritzburg and Butterworth, amongst others.
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ACHIEVEMENTS PER PROGRAMME /
SUB-PROGRAMME
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1. FINANCE AND SUPPLY CHAIN MANAGEMENT
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Create an efficient,competitiveand responsiveinfrastructurenetwork
Implementedaction plan forGAAP complianceon PMTE
Implementedaction plan
70% achievement 44% Target Achieved.Out of the 16 action outputson the PMTE action plan, only7 actions were achieved.
The outputs not achievedare due to the delays in theacquisition of the financialsystems.The system will be acquiredonce the PMTE data iscompleted.
Improvedrevenue & debtorsmanagement onthe PMTE
Reduced debtorsbook
50% reduction 62% Achieved. During theperiod under review on thereduction of the debtors book- (R1, 3billion of the R2 billion).
Collected Revenue 80% collection 97% Achieved. Revenuecollected on invoices issuedduring the period underreview.
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1. FINANCE AND SUPPLY CHAIN MANAGEMENT Cont..
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Create an efficient,competitiveand responsiveinfrastructurenetwork
Improved Internalfinancial controls
Developed policiesand procedures (7policies)
90%implementation
80% Achieved. During theperiod under review, Seven (7) policies developed/reviewed for implementation, namely:• Petty cash,• Irregular expenditure,•Unauthorized expenditure,•Fruitless expenditure,• Corporate Credit card,• Movable assets policy,• Travel & cellular phone• Logis user manualmanagement.
The Debt managementcompliance checklist, PFMAYear end process (accruals/commitments) drafted.
PCMS GEN: 38369810
1. FINANCE AND SUPPLY CHAIN MANAGEMENT Cont…
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Create an efficient,competitiveand responsiveinfrastructurenetwork
Improvedmanagement ofmovable assets
credible AssetRegister
90% compliance by31 March 2011
90% Achieved. The movableasset register is compliant
Improved Paymentsof invoices
Payment register 80% 66.7% Achieved. Non compliance and latesubmission of invoices
PCMS GEN: 38369811
1. FINANCE AND SUPPLY CHAIN MANAGEMENT Cont…
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Create an efficient,competitiveand responsiveinfrastructurenetwork
80% compliance 82.69% Achieved.(a) Number of contractsawarded to HDI (BEE)Companies = 1080. Valueof contracts awarded toHDIs = R471 432 657.35(b) Number of contractsawarded to Non HDIs =224. Value of contactsawarded to Non-HDIs =R131 336 941.25
80% compliance Credible DPW SuppliersAccredited 607 applicationforms of the 3749. Total of4330 suppliers receivedapplication forms.Total accreditation of suppliers= 16.19%.
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2. CORPORATE SERVICES
Outcome Output PerformanceIndicator
Target 2010/11
Progress Report Reasons for deviation
An efficient,effective andDevelopment-orientedpublicservice and anempowered, fairand inclusivecitizenship
Enabling IT systemsto support coreoperational areas
Functional ITsystems headlinedby:I-E Works
100%implementation
50% Achieved SCOA: The challenges arewith business rules governing matching fields per payment types. DATA MIGRATION: Thestructural differences between the two databases.
EPWP-Web BasedSystem
100% implementationachieved.
Virtual PrivateNetwork
VPN project is 100% complete and is in operation.
Video-Conferencing
100% implementationcomplete between AVN andCape Town.
BusinessIntelligence System(SAS)
100% implementation of BASand EPWP, 75% interface toIEWorks.
60% compliance 60% Achieved:•Enterprise Risk Management Strategy approved •All risk registers cleaned up in preparation for 2011/12 risk assessment•High risk registers have been reviewed and updated
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5. MONITORING & EVALUATION
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Skilled andcapable workforceto support aninclusive growthpath
M&E policyformulation andimplementation(guided by theimplementationof the M&E GreenPaper)M&E Framework/Policy
M&E Policy/Framework
Policy implementation
100%
30%
100% Achieved,:•M&E policy developed –currently undergoing internal consultation
Quarterly performance reports submitted to relevant structures.
Development andimplementation ofan M&E Framework
Compliance withM&E policy
80% 80% Achieved:Consultative workshops held to ensure:-(a) alignment to the reporting template(b) qualitative and quantitative verification (c) submission of Portfolio of Evidence (PoEs).
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6. INTERGOVERNMENTAL RELATIONS
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
The developmentof the precinct plan project for Pretoria Inner City, and the completion ofSalvokop precinct.
Precinct Master Plan in operational phasefollowing the signing of SLAwith the City of Tshwaneon the 2 February 2011 andsubsequent appointment ofa consortium by the City in collaboration with DPW.
Complex opentender adjudication processes.
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8. INNER CITY REGENERATION, PROJECT MANAGEMENT & PROFESSIONAL SERVICES Cont…
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
Maximise utilisationof State propertieswithin Major cities
Partnerships andMoU’s with Metro’sto improve or tofind alternativeutilisation ofidentified facilitiesin line with innercity rejuvenation.
Agreements with3 cities.
Not Achieved :•SLA & related Addendum between the Department & City of Tshwane signed by both parties on 2 Feb 2011 and 11 March 2011, respectively.
Focus on Tshwane Inner City as a pilot.
Construction ofCapital Projects.
Completionof capital andrefurbishmentprojects inaccordance with the Capital Works ImplementationProgram.
100% cumulative expenditure;29% completion ofmaintenance projects;298 projects on construction;119 projects completed.Final accounts for 15 projectscompleted.
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10. REGIONAL OPERATIONS MANAGEMENT Cont…
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report Reasons for deviation
To createan efficient,competitiveand responsiveeconomicinfrastructurenetwork
Procured leasedaccommodationand state ownedaccommodation.
Conclusion of new leases, renewalsand managementof existing leasesin accordancewith the leasingimplementationProgramme.
80% of leasesmanaged withintime, costs andPrescripts.
Total no. of leases= 2985 of 3029•44 terminated from the system).Renewals/management ofexisting leases:•507 expire in 18 months•818 expire beyond 18 months•813 expire in 6 months•702 expire in 12 months•145 expired by end March 2011Cumulative expenditure = R2729 373 689 (100%).
PCMS GEN: 38369832
10. REGIONAL OPERATIONS MANAGEMENT Cont…
Outcome Output PerformanceIndicator
Target 2010/11 Progress Report
Reasons for deviation
To createan efficient,competitiveand responsiveeconomicinfrastructurenetwork
Agrément SA andExpropriationBills submitted toParliament andExpropriation Act.
Tabling ofAgrément SA Bill to Parliament
The business case for theestablishment of Agrèment SA as an National Public Entity in terms of the PFMA has been developed for submission to National Treasury for approval
Consultation withstakeholders took longer thananticipated
DPW’scontribution to thetransformation ofthe Constructionand PropertySectors
Plans to roll-outimplementation ofConstruction andProperty Chartersto other spheres of government
50% rolloutGazetting ofProperty Charteras a ‘code of goodpractice’.
Application to gazette theProperty Charter as a ‘codeof good practice’ (in terms ofsection 9 of the BBBEE Act,2003) submitted to Minister ofTrade & Industry for approval.
PCMS GEN: 383698 36
FINANCIAL PERFORMANCE AND AUDIT REPORTS FOR THE YEAR
Prog 4. Property and construction industry policy regulation
39,021
28,029 72%
38,031
25,996 68%
Prog 5. Auxiliary and associated services
26,816
24,139 90%
40,524
39,600 98%
Subtotal
7,364,797
6,615,534 90% 6,049,130
5,688,149 94%
PCMS GEN: 383698 39
Analysis of the under-spending
Compensation of employees:
•The under spending of R23,024 million is due to additional funds reprioritized for the filling of vacant posts. During the third quarter of the financial year the Department commenced with a high recruitment drive aimed at filling all the funded vacant posts.
•The lag period between the interviews, appointment letters and the assumption of duty usually averages two months. Consequently for some of the appointments made in February and March, assumption of duty took place in the new financial year.
Goods & Services:
•The savings of R63, 957 million under goods and services relates to commitments under the energy efficiency programme with the IDT. A roll over amount of R40, 9 million has been requested.
PCMS GEN: 383698 40
Analysis of the under-spending cont.
Capital and Infrastructure:•Under spending of R 120, 109 million for infrastructure relates to funds committed through the IDT as an implementing agent for the transformation of mud schools. A rollover amount has been requested for the committed amount.
Machinery & Equipment:•The under spending of R56 585 million largely relates to furniture and IT equipment which was planned for DPW’s new premises at the CGO building. Due to some incomplete construction work and interior design work, the move was deferred to the second quarter of the new financial year.
Transfers & Subsidies:•The under spending of R 485,588 million by EPWP is largely attributable to the slow reporting of EPWP work opportunities created by municipalities and provinces.
Payments for financial assets:•The expenditure of R 54.8 million relates to amounts written off against savings from current payments.
Programme 1 was increased by R50 million to offset over spending in goods and services, transfers and capital payments.
Programme 2 was increased by R4,2 million to offset current payments (goods and services). The amount of R4,2 million was the net effect of R 13,8 million virement of current payments from Programme 3 and R 9,8 million to Programme 1 and 3 for machinery and equipment and virement from Programme 5 for transfers and subsidies.
PCMS GEN: 383698 42
Virements cont.
• Programme Three was reduced by R63,3 million to offset goods and services in programme One and Two, and transfers and subsidies in programme Four.
The R63,3 million is the net effect of current payment of R 55,4 million,
R 8,9 million of transfers and subsidies to programme One and Five for
current payments and programme four for transfers and subsidies. R 1 million
virement for machinery and equipment from programme Two.
• Programme Four was increased by R 8,9 million to offset over spending under transfers and subsidies.
• Programme Five was reduced by R 51,000 to offset overspending of transfers and subsidies in programme One and Two. The R 51 000 is the net effect of R 2,017 million for current payments from programme Two and R2,068 million to programme One and Two.
PCMS GEN: 383698 43
DPW Audit Report
PCMS GEN: 383698 44
Basis of the disclaimer on the Audit Report
Immovable Asset Register
•I was unable to obtain sufficient and appropriate audit evidence to satisfy myself as to the completeness, existence, rights, valuation and allocation of properties recorded in the immovable asset register of the Department stated at R3 498 747 000 in note 34 to the financial statements.
•As disclosed in note 34 to the financial statements, the corresponding figure for immovable assets has been reduced by R6 091 920 000 in order to address a prior year misstatement. No supporting documentation was available for the restatement. Consequently, I was unable to obtain sufficient appropriate audit evidence to satisfy myself as to the existence, completeness, valuation and allocation of, and rights pertaining to, the restated immovable assets corresponding figure of R2 238 008 000.
PCMS GEN: 383698 45
Basis of the disclaimer on the Audit Report
• Management Response
The Department downloaded all construction projects which were completed between 1 April 1999 to 31 March 2011 from WCS system and the same was done for purchases for the same period. This information was captured on an excel template.
At the same time the regions continued to populate information on vested properties and also correcting the Title deeds numbers, Erf number, etc.
The exercise was completed after submission of the AFS including the population of information gathered into the PMIS. This led to the challenges of providing reconciliations to the AG and also validating the information captured by the regions.
We have now appointed a service provider who will assist the Department in conducting a more comprehensive analysis of the register and then determining the scope of work for completing of the asset register.
The appointed service provider will act as a Programme Manager for the comprehensive enhancement of the asset register.
PCMS GEN: 383698 46
Basis of the disclaimer on the Audit Report cont.
Irregular Expenditure (17,948 million)
•Payments amounting to R16 552 542 were made in contravention of the supply chain management requirements. The amount was not included in irregular expenditure relating to the current year, disclosed at R1 396 000 in note 26 to the financial statements, resulting in irregular expenditure being understated by an estimated R153 025 890.
Management Response •While the Department agreed with some of the findings, there are a number of cases where we are not in agreement with the findings of the AG. We are currently compiling a comprehensive report on each of the disputed amounts for further discussions with the Auditor General and National Treasury.
•Measures were put in place during the year to detect and proactively prevent the irregular expenditure however, some of the issues discovered by the AG which we are in agreement with shows that there was gross negligence and deliberate transgression of policies.
•All cases are currently being assessed to enable speedy identification of root causes and responsible
•people. We are now in a better position to deal with the responsible officials decisively as controls were put in place in the previous financial year.
PCMS GEN: 383698 47
Basis of the disclaimer on the Audit Report cont.
Other expenditureEstimated value = R154 648 753
•Documents supporting the above could not be accessed by the AG as they are still with the SIU. •This amount was then extrapolated to the total goods and services budget of R819 million and the capital budget of R1.3 billion.
Management Response:
•The Department disputes the manner in which it was raised to a disclaimer.
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Basis of the disclaimer on the Audit Report cont.
Lease Commitment
•The Department erroneously did not include operating lease commitments in the prior year financial statements, hence the corresponding figure for operating lease commitments has been restated by R115 039 000 in order to address the prior year misstatement. No supporting documentation was available for the restatement. Consequently, I was unable to obtain sufficient appropriate audit evidence to satisfy myself as to the obligation, valuation and classification of the operating lease commitments corresponding figure of R115 039 000 as disclosed in note 24.1 to the financial statements.
Management Response
•The schedule was available but not submitted on time to the AG. The CFO has issued a warning letter to the Director responsible for the error.
PCMS GEN: 383698 49
Basis of the disclaimer on the Audit Report cont.
Contingent liabilities & Assets•The Departmental Financial Reporting Framework Guide, Chapter 8, section 29.1 stipulates that civil claims against the state must be disclosed as contingent liabilities at the most likely amount that the court will settle on. The Department however did not perform any assessment as to the most likely settlement amounts, therefore the valuation of claims against the Department of R29 395 000, disclosed in note 20 to the financial statements, could not be confirmed. •Unconfirmed balances to the value of R3, 6 million were not included in the disclosure note resulting in the contingent liabilities being understated.
Management Response
We are currently developing systems and processes relating to
contingent liabilities. The circular will outline:• Validation of cases• Separation of contractual obligations• Methodology for assessing litigation cases• Reporting at Regional and Head Office level• Separation of PMTE and DPW cases
PCMS GEN: 383698 50
Basis of the disclaimer on the Audit Report cont.
Public Private Partnership
•The Departmental Financial Reporting Framework Guide, Chapter 8, section 39 stipulates that amongst others, the Department must disclose all current and capital expenditure relating to the PPP arrangement in the disclosure notes. Furthermore, the guidance states that Departments must take care to provide information about all obligations they might have in terms of these agreements.
•As disclosed in note 30 to the financial statements the Department is participating in a PPP for the lease of vehicles. However neither lease expenditure nor lease commitments has been included in the disclosure note.
Management Response
•The schedule was available but not submitted on time to the AG. The CFO has issued a warning letter to the Director responsible for the error.
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Emphasis of Matters
Material Losses
Amounts written off: R2,369 million
Duplicate Warrant Vouchers issued between the period 1996- 1999. The amounts were written off on the basis that the actual documents are missing and the debts are irrecoverable...\AUDIT 2011\JOBURG OFFICE WRITE OFFS OF WARRANT VOUCHERS.xls
Amount written off: R48,20 million
This amount relates to transactions which happened between the period 1999 - 2004. Extensive reconciliations were conducted with the support of the Sizwe Ntsaluba consultants. The Department used to have an account called “No Projects”. This account was used mainly for capital projects, and any other transaction that could not be accounted for properly. ..\AUDIT 2011\Copy of Consolidated Khathu-write off-No project.xls
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Report on other legal and Regulatory RequirementsPredetermined Objectives:Usefulness of information
•The reported performance information was deficient in respect of the following criteria:
– Consistency: The reported objectives, indicators and targets are not consistent with the approved strategic plan.
– Measurability: The indicators are not well defined and verifiable, and targets are not specific and measurable.
Reliability of information
•The reported performance information was deficient in respect of the following criteria:
– Validity: The reported performance did not occur and does not pertain to the entity.
– Accuracy: The amounts, numbers and other data relating to reported actual performance have not been recorded and reported appropriately.
– Completeness: All actual results and events that should have been recorded have not been included in the reported performance information
Management Action Plan:
1.Capacitation and refocusing of the M&E unit
2.Improved quarterly reporting
3.Enforcing Accountability and Responsibility
4.Enhance Internal Auditing of performance information
Income collected from immovable properties which are disclosed under the Department of Public Works
948 403 825 812
PCMS GEN: 383698 58
Audit Report
PCMS GEN: 383698 59
Basis of the disclaimer on the Audit Report
Irregular Expenditure•Payments amounting to R291 668 886 were made in contravention with supply chain management requirements. The amount was not included in irregular expenditure, disclosed in note 12 to the financial statements., resulting in irregular expenditure being understated.
Management Response•During the year under review internal controls around the irregular expenditure were significantly improved, however, it would seem the monitoring of those controls was inadequate. •We are currently analyzing each case reported with the aim of instituting disciplinary measures and also addressing the root causes. We have also acknowledged the challenges around document management. Most of the cases reported are as a result of missing tax clearance certificates and SDB documents. •The Department has already taken a decision of centralizing all contracts within the legal services. A project is currently undertaken to compile a list of all contracts currently running in the Department. This will enable the Department to proactively identify old transactions which are not complying with the prescripts.• The implementation of procurement plans will assist in reducing the number of urgent cases
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Breakdown of Irregular Expenditure
Nature of Irregularity AmountR’000
Bids not advertised through the open tender process
34 858
Tax Clearance not attached 20 025
Winning bids not advertised 33 858
Payment made without a contract (Leases) 10 456
Variation order not authorised by delegated official
181 515
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Fruitless Expenditure
Analysis of current Fruitless and wasteful expenditure
Agreed settlement on breach of contract & legal fees 118 326.00
Courts ruling 76 238.15
Interest Paid on Overdue Accounts 4 307 925.19
Rental payment- Non occupation of the building 2 268 581.73
Other 500.53
6 771 571.60
PCMS GEN: 383698 62
Basis of the disclaimer cont. Apart from the irregular expenditure reported under the PMTE, the basis of the disclaimer is largely attributable to the preparation of the Financial Statements for the PMTE.
SA GAAP COMPLIANCE
• Trade & Other receivables (IAS 39(AC 133)
• Revenue
• Related Parties
• Trade and other payables
During the preparation of the FS it became very clear that the only solution to correcting the debtors balances once and for all was to embark on a project of reconstructing all the debtors accounts from the date of inception of the PMTE, 2006.
• Municipal Services
• Private and State owned accommodation
• PACE( Project Accelerated Construction Expenditure)
• Current Account Capital Projects
While this was a sensible thing to do, it distorted the Trail Balance as the reconciliations were done outside the system, which meant some of the journals passed in the previous years could not be properly accounted for.
The reconciliation revealed a number of challenges including invoices which were not raised in the early years as result of system challenges.
These discrepancies impacted on the opening balances of the FS
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Status of the Billing and Accounting system
• The PMTE was implemented in 2006 without a system, structure and relevant skilled staff.
• All invoices are issued manually and recorded in Excel. Money received are recorded in the same fashion.
– Risk of understating Revenue and misstatement of Debtors– No functionality to calculate discounting of amounts reported
• All trial balance items to be converted manually to accrual basis at year end.
– Risk of error in calculations– Additional journals to process
• Age analysis done manually by consolidating individual reports– Risk of incorrect reporting
• All accounts were reconstructed as from 1 April 2006
PCMS GEN: 383698 64
Operationalization of the PMTE - Progress to date
• The structure has been approved and it is now 80 % filled by qualified
accountants.
• We have started with the sourcing of a financial management system
• Improvement of the monthly reconciliations
• Development of policies that are GAAP compliant
• Engagement with National Treasury on technical issues that could not be
resolved with the AG.
• Preparation of the interim FS which will require that we also lease the
CaseWare system.
• Fast tracking the iEWorks system to enable better management of leased
portfolio
PCMS GEN: 383698 65
Achievements to date
• Improved controls with regards to the authorization of journals• Reduced incorrect allocations resulting with lesser correction journals• Correct billing• Reconciliations of systems• Almost completing the exercise of validation of accommodation with user
Departments to enable itemized billing
• A new structure was approved during 2010/11 to make provision for Debt
management, etc.
• 80% of positions were filled. Three Accountant employed.
• The balance will be finalized before the end of the year
• This will strengthen the management (1 CD & 1 D increased to 2 CD’s and 4
Directors) and the functioning of the unit.
• Increased Client focus and debt management
• Transfer of skills
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UPDATE ON THE PROCESS TO ADDRESS ASSET REGISTER
CHALLENGES
Immovable Asset Register Programme- Objectives
– A complete and accurate immovable asset register – 2 year period• Compliance with GRAP, GIAMA, PFMA and NT sector specific guidelines
– Appoint a Programme Manager• Produce GAP1 – Reconciliation to produce a list of properties• Produce GAP2 – Compliance with accounting standards
– Appoint Secondary Service Provider (SSP) to collect information as required from GAP 1 – Reconciliation to produce a list of properties
– Address management assertions & ensure there is sufficient audit evidence:• Existence• Completeness• Rights and Obligations• Accuracy• Valuation and Allocation• Presentation and disclosure
– Address vesting of state-owned properties– Oversee the Amnesty Initiative (Operation Bring Back)– Assist with the 2011/12 year-end close – Working papers, Disclosure notes etc– Advise on future IAR processes/ systems
PCMS GEN: 383698 68
GAP 1 - Reconciliation process
Re
co
ncile
,
Co
llate, c
om
pa
re, a
gg
reg
ate
DPW’s Asset Register
(Head Office & Regions)(Category 1)
DRDLR’s Asset Register
(Category 2)
Provincial Asset Registers
(Category 3 –per province)
National &Provincial vesting list
(Category 4)
Comparison by parcel,
portion, town & registered
owner
Reconciliation of data from required sources
Consolidated list of all
public land Immovable
assets(Tagged to trace back to source)
Deeds web download for all
State Land Properties
PublandDatabase
Consolidated deemed
DPW IAR
Comparison by parcel,
portion, town & registered
owner.
Update vesting status &
public land categories
PCMS GEN: 383698 69
VESTING PROCESS
►Ascertaining quantum & recon of National and Provincial DPWs, other?
Total number of records in Deeds File 68,457,997 Total number of Properties in Deeds File 7,545,715 No registered information on Deeds 703,796State Land (Category 1) 147,009 Parastatal (Category 2) 21,369 Municipality (Category 3) 893,474 Private (Category 5) 5,780,867
State Land as per DeedsTotal State Land 147,009 DRDLR 20.093Provincial DPW 84,468 Total Remainder of National Registered properties to be compared to the PMIS Immovable Asset register in order to identify properties on Deeds but not on PMIS - Unique land parcels to be added to PMIS list after Investigations. 42,448
Analysis of PMIS: Deemed DPW IAR Total land parcels per PMIS 86,237 Less: Devolved Land parcels matching to PMIS -39,408 = Total Deemed DPW land parcels (To be subjected To Desktop Team)This is the starting point for the project and the desktop team is verifying these properties 46,829
Land parcels for separate investigation (also considered as part of the Operation Bring Back)Land in PMIS and Provincial IAR's (Duplicated) 489 Land in PMIS and not in DEEDS 11,916 Land on devolved list but not in PMIS 417 Devolved Land not in Provincial IAR but still in PMIS 1,168 Land Parcels between Deeds and the DRDLR for Investigation with DRDLR 5,465
PCMS GEN: 383698 71
GAP 1 Way forward: Review of Devolved Properties and Vesting
• Review and analyse the devolved property list to provinces
• Identify National properties erroneously included on the devolved list
• Assist on the process to handover devolved provincial properties to provinces for vesting
• Fast Track Vesting
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Devolved Properties & NT Sector Specific Guide
• DPW has devolved +- 39,408 properties in 2005/6 • “Removed” from DPW IAR• Not consistently disclosed in Provinces IAR• Vesting process to 2014• Sector specific guide requires that DPW discloses in its
IAR– Provinces already “control” these properties
– If DPW can prove “control” lies with Provinces it would not make sense that DPW includes in its IAR
– DPW to incur expense to record property properly (in compliance) only to pass on to Province once vested?
• Suggest amendment to sector specific guide to incorporate control definition
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Programme Progress
Phase 1Phase 1 Phase 2Phase 2
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GAP 2 and Condition Assessment
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UPDATE ON THE AUDIT OF LAND FOR HUMAN SETTLEMENT
PURPOSES
Land Released to Municipalities
Province Municipality Property Description
Extent
Gauteng City of Johannesburg
Farm Zuurbult 240 IQ
754 hectares
Northern Cape Province
Kai-ma Erf 14 Pofadder 4 hectares
Kai-Garib Ptn 128 & Rem of farm Kousas 459 Gordonia
976 hectares
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Land Released to Municipalities….Cont.
Province Municipality Property Description
Extent
Northern Cape Province
Breede Valley Ptn 65 (Ptn of Ptn 33) of farm Roode Zandi No 82 known as Sand Outspan
40 hectares
Kgatelopele Erf 1130, 1131 & 1428 Dunnieskuil
30 hectares
North West Province
Kgetleng Ptn 25 of farm Rietfontein 372 JQ
77 hectares
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Land Released to Municipalities…. ….Cont
Province Municipality Property Description
Extent
Northern Cape Province
Breede Valley Ptn 65 (Ptn of Ptn 33) of farm Roode Zandi No 82 known as Sand Outspan
40 hectares
Western Cape Stellenbosch Erf 221 La Motte 11 hectares
North West Province
Kgetleng Ptn 25 of farm Rietfontein 372 JQ
77 hectares
Properties to be released
Province Municipality Property Description
Extent
Eastern Cape Province
Makana Ptn of farm Donkerhoek 276
161 hectares
Buffalo Rem of Ptn 1 of farm 871 Greydell
271 hectares
Gauteng Tshwane Rem of Ptn 153 of farm Elandsfontein