PRESENTATION TO PORTFOLIO COMMITTEE ON DEFENCE ON DOD ANNUAL REPORT FY2005/06 12 September 2006

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DOD ANNUAL REPORT FY2005/06

PRESENTATION TO PORTFOLIO COMMITTEE ON DEFENCE ON


12 September 2006

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Scope• Introduction

• Changes to reporting format

• Annual Report performance against plan

• Report of the Auditor General FY2005/06

• Discussion

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Introduction• Emphasis of presentation is on outputs, actual performance and challenges

• Presentation contains both programme performance and the Report of the Auditor General

• Presentation on Annual Report performance

• Chapter 1 - Strategic direction

• Chapter 2 - Organisational Structure and Human Resources Management

• Chapters 3 to 11- Programme performance

• Presentation on Report of the Auditor General

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Introduction (continued)

• Inputs from the Ministry and Portfolio Committee on Defence during the period under review incorporated into Annual Report

• Performance Information and Financial Regularity Audit related inputs from Office of Auditor-General also incorporated into Annual Report

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Changes to Format of Report• Reporting on “output details” changed from essay format to table format in line with DOD Strategic Business Plan

• Further changes have been effected in Quarterly Report

• Integrated report with both financial and non-financial information

• Alignment of Programmes articulated in ENE and DOD Strategic Business Plan FY2006/07 mandate and core business

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Performance Report Reporting per Programme

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OutputsPolicy Advice; Strategic Planning; Reports, general Ministerial services, and specific operational

outputs for Services and Divisions in the DepartmentDepartmental DirectionAchievements• Management related responsibilities have been carried out through out the period under

review.• This includes the following:

- inputs to the cabinet makgotla - Internal strategic advice and support - Defence Budget Vote - Representativeness of Military Legal Practitioners and within DOD

SANDF Command and controlAchievements• Achieved objectives and targets• Readiness of military capabilities maintained ito guidelines• Operations successfully conducted • Detail in Chapters 3 – 10

Chapter 3: Programme 1: Defence Administration

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Policy and Planning Achievements• Piloting of the Balanced Score Card• Defence Policy such as the White Paper on Peace-keeping Missions, Review of the regulation of Foreign Military Assistance Act, Progress report on Defence Update• Management of Cluster communication activities• DOD Planning Framework• DODW (restructuring)• Bi/Multilateral Agreements and memoranda of understanding (Defence Diplomacy)• Readiness of military capabilitiesFinancial ServicesAchievements• Corporate Budget management, • Accounting and control • Preparation of financial statements

Chapter 3: Programme 1: Defence Administration (continued)

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Aqcuisition Services Achievements• DOD’s Acquisition and Procurement in conjunction with Armscor was instrumental in concluding disposal contracts• Management of Readiness of military capabilities• The procurement of goods and services: Payments to the value of RM872 was made in favour of Government orders Inspection ServicesAchievements• The DOD audit process and the effective feedback to customers has improved. • The quality certification in terms of SABS ISO 9001: 2000 received from external auditors justifies the fact. • Amongst others, the DOD contributed and participated in the following:

• South African and African Union task team to review 25 articles in the UN

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Equal Opportunities and Affirmative Action Achievements• Participation in the revision of the United Nations Comprehensive and Integral International Convention on the Protection and Promotion of the Rights and Dignity of Persons with Disability• Launching and induction of the New Partnership for Africa’s Development (NEPAD) Gender Task Force • Hosting of African’s Women’s Peace Table Seminar to engender AU/NEPAD peace Agenda• Support rendered towards the Celebration of the International Day of Disabled Persons (IDDP)• Participation in profiling and creating visibility of the 16 Days of the Campaign on No Violence Against Women and Children

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Government Information Technology OfficerAchievements• Departmental Enterprise Information System (DEIS) Framework was completed and promulgated • Towards the Defence Information System Architecture (DISA), the following were

completed: • Strategic studies in terms of MS Operating System vs. other Alternative and Advanced Encryption standards• Defence Information and Communication Technology Architecture• The DOD has registered with GARTNER for research regarding Information Systems• The first draft of CMIS Regulatory Framework was completed

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CORPORATE STAFF DIVISION

Strategy and PlanningAchievements• Capacity building in accordance with Government’s Plan of Action, Cluster objectives, military cooperation activities in Region, African Standby Force, SADCBRIG• Participation in planning, reporting and budgeting process • Implementation of new planning enabler tool (GEJIMA)Military Legal ServiceAchievements• Improvement of representativeness in Military Legal Service appointed 3 black senior judges • Senior Military Judges for 1st court case in DRC and the Sudan appointed• Training of Military Legal Practitioners improvedChallenges and Interventions• Inadequate structures – to be addressed as part of DODW process• Lack of capacity and a loss of skills – utilise Reserve Force members, awaiting appointments of new members


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CORPORATE STAFF DIVISION (continued)

Religious ServicesAchievements• Support to deployed members and families. • Programmes in Burundi, DRC, the Sudan. • HIV programme within SANDF, training of SADC chaplains

Defence Corporate CommunicationAchievements• Alignment with national communication strategy. • Facilitation of management of stakeholder relationships. • Met growing demand for communication services and products. • “SA Soldier” magazine won Government communication award


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CORPORATE STAFF DIVISION (continued)Defence Corporate Communication(continued)Challenges and Interventions• Inadequate structures – addressed through the DODW process• Lack of capacity and a loss of skills awaiting appointment of new membersDefence Foreign RelationsAchievements• Placement of Defence Advisor at UN• 27 Defence Advisors at 24 Missions• Involvement in binational and multinational meetings Challenges and Interventions• Inadequate structures – addressed through the departmental restructuring process• Lack of capacity and a loss of skills- awaiting appointment of new members


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CORPORATE STAFF DIVISION (continued)

Reserve Force OfficeAchievements• Implementation of Res F Strategy. • Actively engaged in facilitating Project PHOENIX with Services and Divisions Challenges and Interventions• Council for the Support of National Defence inactive – discussions with Chairperson of the Council and Chief of the SANDF


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Outputs Operational direction; Special Operations; Regional Security; Support to the People; Defence Capability

Achievements• All primary force employment commitments were met • Promote Peace, Security and Stability in the Region and Continent

– Continued to provide forces for peace missions mandated by UN and AU• SANDF forces deployed in DRC, Burundi, Ethiopia/Eritrea, Ivory Coast and

Comoros with and expanded role of SANDF in the Sudan deployment• More than 3000 members deployed externally

– Expertise of SANDF commended by MONUC Headquarters in DRC• Support the People of South Africa

– Continued disengagement from internal operations– Missions in support of SAPS

• Borderline control• Rural safeguarding - Army Territorial Reserves continue to support during period

of transfer to SAPS– Support to Depts of Home Affairs and Agriculture

Chapter 4: Programme 8: Force Employment (Joint Operations)

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Achievements• To Enhance and Maintain Comprehensive Defence Capabilities

– Conventional force preparation activity– Joint exercise INDLOVU, command post and field training exercises. – Multinational exercises DESEX, OXIDE, THOKGAMA

• Special Operations– Special Forces maintained its capability to react rapidly with flexibility

Challenges and Interventions• Health } Rejuvenation - Military Skills Development System• Lack of junior leaders } • Sustainment of long-term Peace Support Operations due to lack of qualified

personnel – Utilise Reserve Force members, rejuvenation through

Chapter 4: Programme 8: Force Employment (Joint Operations) (continued)

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Chapter 4: Programme 8: Force Employment(Joint Operations) (continued)

Mission No of Troops Mandays No of Rotations/Log Runs

Average Cost of Operation

DRCOp MISTRALOp TEUTONIC IOp TEUTONIC IIOp TEUTONIC III

1 326 56 70

2

482 16520 44025 550

144

2 per year2 per year

4 log runs pm

Rm342Rm8

Rm49,6R507 000

Burundi Op FIBRE 940 342 635 2 per year Rm316

EritreaEthiopia Op ESPRESSO

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1 825365

1 per year R600 661R122 000

Liberia Op MONTEGO 2 365 1 per year R153 600

The Sudan Op CORDITE 395 365 1 per year Rm70

Ivory Coast Op PRISTINE 45 16 425 2 per year Rm13

Comoros Op TRITON 372 5 475 Duration of election

Rm13

External Force Employment Achievements 2005/06

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OutputsCapabilities in infantry; armour; artillery; air defence artillery engineer; operational intelligence; general

training; command and controlAchievements• Project VISION 2020• Rejuvenation of SA Army – Military Skills Development System• Met Short-term Force Employment requirements• Provided 2 Reserve Force companies for deployment in DRCChallenges and Interventions• Affordablility of SA Army – reprioritise vs operating budget increase – Will table a paper in 2006

indicating the requirement for additional funds/reprioritisation• State of facilities – DOD/PWD repair and maintenance programme (RAMP) to be executed• Prime mission equipment –Investigation in terms of priority needs underway• Ammunition - Investigation underway to revitalise Defence Related Industry support • Revitalisation of SA Army’s Technical Support Corps capability – Utilise Reserve Force members and

considering allowances and incentives still to be approved• Outflow of skilled personnel - Engineer Corps – Utilise Reserve Force members and considering

allowances and incentives still to be approved

Chapter 5: Programme 2: Landward Defence

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OutputsOperational direction; Helicopter capability; Air transport and maritime capability; Air combat capability;

Operational support and intelligence; Command and control capability; Command post; Base support capability; Education, training and development capability; and Technical support services capability

Achievements• Met majority of Short-term Force Employment requirements• HR transformation - increased numbers of black candidates for training, MSDS• Participated in silver anniversary of Zimbabwean Air ForceChallenges and Interventions• Deteriorating aircraft systems – knock on effect - reduced flying – reduced training, motivations for

additional funding• Critical skills and experience shortages – incentive schemes for technical personnel instituted• Significant levels of under-funding – Applied for additional funding• Impact of delay in A109 and temporary withdrawal of Hawk – Extended use of Alouette helicopters • SAAF force preparation and force employment funded at cost of longer term needs – air base

maintenance, aircraft spares purchases, vehicle renewal, infrastructure maintenance – Applied for additional funding, Internal repriotising of funds, consideration of outsourcing basic helicopter training

Chapter 6: Programme 3: Air Defence

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OutputsCapabilities in Maritime combat; Maritime Logistic Support; Maritime Training;

and Maritime Base SupportAchievements • Met Short-term Force Employment requirements• Received 1st frigate SAS AMATOLA • Operational Boat Squadron prepared to become Naval Reaction Force• Integration of Strategic Defence Packages progressing well• SA Navy unique codification capability – interim measureChallenges and Interventions• Current funding level - maintained only facilities required for force

preparation – In process of upgrading facilities• Loss of technical skills and expertise, (SAN Dockyard) – Recruitment of

personnel

Chapter 7: Programme 4: Maritime Defence

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OutputsMilitary Health Support; Specialist/tertiary Health Service; Product Support

capability; Product and Base Support capabilities; Military Health Training capability

Achievements• Surgeon General’s intent gave new direction• Met most of Short-term Force Employment requirements• Supported all operations (402) and exercises• 1 Military Hospital for UN/AU and VIPs• Improvements: Internal patient care and treatment. Reduced referrals to

private sector. Use of Essential drug list, reduced costs• Execise WAYSIDE Chemical, Biological Radiation defence exercise with

Tshwane Emergency Service

CHAPTER 8: PROGRAMME 5: MILITARY HEALTH SERVICE

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Challenges and Interventions• Lack of health care professionals on all levels, particularly operational

emergency care practitioners – recruitment of professionals, MSDS• Institute for Aviation Medicine – funding for health equipment –

Centrifuse addressed with assistance of SA Air Force, replacement being addressed

CHAPTER 8: PROGRAMME 5: MILITARY HEALTH SERVICE

(continued)

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OutputsDefence intelligence and counter intelligenceAchievements• Achieved objectives and targets as planned• Publication of Defence Intelligence Estimate as a major input to National

Intelligence Estimate• Positive feedback from national clients – Defence Intelligence supports

national intiatives on African continent, level of assessment – national benchmark

• Support to SANDF operations/exercises as required

Challenges and Interventions– Lack of personnel – recruitment within the SANDF– Defence Intelligence Headquarters facility – Discussions with Chief of

Logistics

CHAPTER 9: PROGRAMME 6: DEFENCE INTELLIGENCE

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OutputsJoint Logistic Service; Command and Management information Systems; Human

Resource Support Centre; Joint Training; Military Police; Service Corps; British Peace Support Training Team

Joint Support OfficeOffice converted to Chief of Human Resources OfficeCommand and management Information Systems

Achievements• Met Short-term Force Employment requirements• Participation in joint/multinational exercises, Exercise Combined ENDEAVOUR• 2 Signals Regiment maintained HF radios donated to Mozambique and SwazilandChallenges and Interventions• Changing organisation – Part of DOD restructuring exercise (DODW)• ICT obsolescence and new legislation with inadequate funds • Lack of funds to replace and sustain operational ICT capability

CHAPTER 10: PROGRAMME 7: JOINT SUPPORT

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DOD Logistic Agency

Achievements• Good progress with migration of fragmented log info systems to OSIS• Training of MSDS members in all logistic related fields• Land claims - Walmansthal and Boschoek land returned• 600 tons unserviceable ammo demolished at Vastrap Weapon Range• Good progress with capturing of assets in register• Succesful purchasing of material handling equipment• Successful verification of handing and taking over process between old/new SA contingents in DRC

(Op MONUC/MISTRAL)Challenges and Interventions• Maintenance backlog of facilities – addressing backlog with available funds• Asset accounting management system not fully compliant with GRAP – working towards compliance• Backlog in disposal of redundant and unserviceable ammo, disposal plant – dispose as current

facilities can manage• Training Insitutions – non-alligment with SAQA, lack of competent ETD practitioners, deteriorating

facilities – Alignment of training and registering in process• DOD Air Supply Unit – deteriorating facilities and lack of equipment – Unit to be transferred to the SA

Army • DOD restructuring process – DODW process to finalise matter of Materiel/Logistics

CHAPTER 10: PROGRAMME 7: JOINT SUPPORT (continued)

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Land Restitution by the DOD FY2005/06

Land restored 104 657 hectares

Land to be restored 53 578 hectaresClaimants requested alternative compensation 413 hectaresClaimants accepted alternative land 5 485 hectaresCourt ruled that land should not be restored 158 000 hectaresInformation on new claims 3 705 hectares

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Human Resources Support Centre

Achievements• Administration of MEM candidates• Recruitment of 14 548 candidates for 6 MSDS intakes• Administration to transfer 146 SANDF members to SAPS • NSF pension project : 11 558 application forms forwarded to GEPF, Administration of Military Veterans:

5 000 names verifiedChallenges and Interventions Departmental restructuring – DODW processJoint Training

Achievements• Compliance with SAQA• Skills Development Act progressing well in DOD• Youth Foundation – 243 learners with 98% pass rate. 238 learners employed in DOD• Training Institutions presented 118 programmes for 2 276 learners, 89% learners completed

– SA National Defence College – 72 learners from 75 – SA National War College – 96 learners from 100– Military Acadamy – 306 learners from 350


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Military Police Agency Achievements• Met Short-term Force Employment requirements• Establishment of a nodal point on Anti-criminalityChallenges and Interventions• Procurement of main equipment – Procurement process commenced Service Corps Achievements• MOD instruction halted migration of Svc Corps, awaiting final decision on mandate

and role• Assisted Project MILITARY VETERANS (national and regional level)• Centre for Advance Training facility. Accommodation built for 94 using German

Donor funding • Conversion training for SANDF members to transfer to SAPS


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Service Corps (continued) Challenges and Interventions• Termination of German donor funding and training assistance impact on techinal

training – Budget re-prioritisation for FY2006/07• Closing of Mankwe base and transfer to SAPS necessitate a regional office in

Potchefstroom – Investigation underway

British Peace Support Training Team Achievements• Support to Joint Operation Division/Joint Training• Mission ready training to all rotating forces• UK Funding of class room facilty at Mobilisation Centre and Peace Mission

Training Centre according to the Memorandum of Understanding


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CHAPTER 11: PROGRAMME 9: Special Defence Account

OutputsAcquisition, procurement and project Management; Armour systems;

Artillery systemsAchievements: - Successful participation and certification of 4 Rooikat armoured car

systems in operational tests and evaluation of systems - Successful handing over, naming and commissioning of SAS Amatola - Successful preparation for the handing over of: SAS Isandlwana; SAS

Spioenkop and SAS Mendi- Delivery of multi-purpose harbour tenders to the SA Navy- Timeous upgrade of 85% of the vehicles- Successful identification of preferred bidder and approval as well as

initiation of negotiations with regards to the acquisition plan for Tactical Intelligence Systems

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Challenges and Interventions• The problem experienced on the upgrade of C130 aircraft fleet had a

fundamental impact on the project EBB timescale • Revision of requirements at a late stage delayed closure of project

ENLACE

CHAPTER 11: PROGRAMME 9: Special Defence Account (continued)

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• Re-organising of programmes• Reporting format is currently undergoing some

improvements so as to further inculculate good corporate governance rooted in efficiency, effectiveness and value for money

Concluding Remarks

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QUESTIONS

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Annual Report FY2005/06 Report of the

Auditor-General

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Aim

Presentation onthe audit qualifications and emphasis of matter items on the annual report

for FY 2005/06

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ScopeFindings FY05/06: GDA: Qualifications.Findings FY05/06: GDA: Emphasis of Matter.Findings FY05/06: SDA: Emphasis of Matter.

Qualifications: Functional and User Breakdown.Emphasis of Matter: Functional and User Breakdown.

Root Causes.Clean Audit Strategy.Strategic Corrective Measures.Operational Corrective Measures.

Findings FY04/05: Action Plans.

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Findings: General Defence Account

Qualifications: FY05/06GDA 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06

Travel and Subsistence - - - - Q

Departmental Revenue EOM EOM Q Q Q

Housing Loan Guarantees - - - - Q

Rank Review Audit - - - EOM Q

Unqualified Audit Reports: FY99/00 , FY00/01 & FY01/02Qualified Audit Reports from FY02/03 to FY05/06{Refer Slides 4 & 5 for qualifications}

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Findings: General Defence AccountEmphasis of Matter (EoM): FY05/06

GDA 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06Personnel expenditure: Leave credits and administration

EOM EOM Q EOM EOM

Irregularities and losses - - Q Q EOMManagement of inventories, machinery and equipment

EOM Q EOM EOM EOM

Regional Services Council levies - - - - EOM

Land and buildings EOM EOM EOM EOM EOMGifts, donations and sponsorships - - EOM EOM EOM

Compensation of employees - Schedule Namelists

- - - - EOM

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Findings: General Defence AccountEoM (Continued)

GDA 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06

Personnel expenditure: Unrealistic Establishment - - - EOM EOM

IGDOD - No reliance on audit work - - - - EOM

Operating lease Commitments - - - EOM EOM

Prepayments and advances - Inadequate Controls

- - - - EOM

Local and foreign aid received in kind EOM EOM EOM EOM EOM

National Conventional Arms Control Committee - EOM EOM EOM EOM

Service Corps - EOM EOM EOM EOM

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Findings: General Defence AccountEoM (Continued)

GDA 01/02 02/03 03/04 04/05 05/06

Information systems audit

- - EOM EOM EOM

Intellectual property - - EOM EOM EOM

Personnel expenditure:Commuted overtime

EOM - EOM EOM -

Personnel expenditure:Employment equity

- - - EOM -

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Findings: Special Defence AccountEoM

SDA 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06

Suspension of Official - - - - EOMClassification of the SDA - - - EOM EOMCash and Bank Management Weaknesses - - - - EOM

Compliance Programme - No signed Constitution - - - - EOM

No controls for amendments to the supplier’s master file

- - - EOM EOM

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Findings: General Defence AccountQualifications: Functional &

User BreakdownGDA 05/06 System

OwnerSystem

UserNature of Finding

Travel and Subsistence

Q CFO Serv & Divs

System deficiency in the FMS

Departmental Revenue

Q CFO Serv & Divs

Insufficient reconciliation, review procedures and non-compliance with

policies and proceduresHousing Loan Guarantees

Q C HR Serv & Divs

Lack of independent management

reconciliation and reviewRank Review Audit

Q C HR Serv & Divs

Re-ranking was granted without the

predetermined criteria being met, leading to irregular expenditure

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DOD ANNUAL REPORT FY2005/06Findings: General Defence Account

EoM: Functional & User Breakdown

GDA 05/ 06 System Owner

System User Nature of Finding

Accruals D C Log Serv & Divs

Excluded goods and services received where an

invoice had not been received

Physical asset and software and other intangible asset movement schedules

D C Log Serv & Divs

Excluded the opening balance, additions,

disposals and closing balance not paid for

D = Deviations received from National Treasury

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EoM: Functional & User Breakdown



Expenditure on capital assets D C Log C Log

Comparative figures for capital expenditure on machinery and equipment have

not been disclosed

Receivables for departmental revenue

D CFO CFO

The accounting policy in respect of receivables do not address revenue

receivables

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Findings: General Defence AccountEoM: Functional & User Breakdown



Regional Services Council levies EOM CFO CFO

Understated by an amount of approx

R10 000 000

Land and buildings EOM C Log C LogInsufficient

reconciliation and review by

management

Gifts, donations and sponsorships EOM CPP Serv &

Divs

Lack of reconciliation and

review by management

Compensation of employees - Schedule Namelists

EOM C HR Serv & Divs

Insufficient reconciliation and

review by management

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Personnel expenditure: Unrealistic Establishment

EOM CPP Serv & Divs

The 2010 goal of 70 000 posts does not appear

to be realistic

IGDOD - No reliance on audit work EOM IGDOD IGDOD

No reliance could be placed on the audit

work of IGDOD

Operating lease Commitments EOM C Acq&

ProcServ & Divs

Insufficient reconciliation between

DOD and suppliers records

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Prepayments and Advances EOM CFO CFO

Inadequate controls over the

administration of advances

Local and foreign aid received in kind EOM CPP C Log

Lack of record keeping as required

by the policy National Conventional Arms Control Committee

EOM SecDef DCACNo approved

constitution, policy and procedures

Service Corps EOM CCS Serv& Divs

Information was not available to

complete the audit

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System User Detail of Finding

Information Systems audit EOM CCMIS Serv &

Divs

Little progress was made to address

weaknesses previously identified

Intellectual Property EOM C Acq & Proc

C Acq & Proc

The approved policy and procedures have

not yet been implemented

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Findings: Special Defence AccountEoM: Functional & User Breakdown

SDA 05/ 06 System Owner

System User Detail of Finding

Suspension of Official EOM SecDef DCAC Suspended official was charged

Classification of the SDA EOM CFO CFO Accounting treatment and disclosure

Cash and Bank Management Weaknesses EOM CFO CFO No policy and

procedures

Compliance Programme - No signed Constitution EOM SecDef DCAC

Signed and approved constitution not

submittedNo controls for amendments to the supplier’s master file

EOM CFO CFONo controls to ensure that amendments are properly authorised

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Analysis:Root causes attributed to

the qualification- Non-compliance with policies and procedures

(internal controls).

- Lack of independent review and reconciliations (internal controls).

- Lack of skilled, competent and trained staff.

- The lack of an appropriate integrated computerized system, which if implemented, will enable the DOD to be more efficient in the management of the department. In addition, an integrated computerized system will ensure compliance with the requirements set by Treasury.

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Clean Audit Strategy

No Qualifications / Matters Emphasised

Clear Significant Findings Avoid Matters EmphasisedClear Matters Emphasised Avoid Qualifications

Effective Ineffective - Detects CONTROL - Discover - Prevent - Correct

Pro-Active Re-Active

- Risk Identified PROBLEM - Adverse Finding

- Strategy - Corrective Plan

END

WAYS

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Clean Audit StrategyMeasures

MEANS

Legally Enforceable Prescripts- Directives- Instructions- Publications

Supportive Information System- Enhance Legacy Modules- Integrate Legacy Modules- IFMS

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Clean Audit StrategyMeasures (Continued)

MEANSSupportive Capacity- Structure- Establishment- Delegations- TrainingCompliance / Accountability- Control System Reviews- Enforce Compliance*- Accountability Letters- Financial Misconduct Procedures

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Clean Audit StrategyMeasures (Continued)

* Audit Committee Focus on ICSInternal Audit Risks and Findings

MEANS

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Strategic Corrective Measures

Fin Pers Proc Log Info Servs/

ICS ICS ICS ICS ICS Divs

Prescripts

Info System

Capacity

Internal Control

Compliance

Accountability

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Operational Corrective Measures

- Detailed corrective measures per control system

- Detailed corrective measures per budget authority for compliance

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Findings: General Defence AccountQualifications:

Corrective MeasuresGDA 05/06 Responsibility Time Frame

(Months)Travel and Subsistence Q CFO 12

Departmental Revenue Q Serv & Divs 36

Housing Loan Guarantees

Q C HR 12 – 24

Rank Review Audit Q C HR 12

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DOD ANNUAL REPORT FY2005/06Findings: General Defence AccountEoM: Corrective

MeasuresGDA 05/06 Responsibility Time Frame

(Months)Regional Services Council levies

EoM CFO 12

Land and buildings EoM C Log 60Gifts, donations and sponsorships

EoM Serv & Divs 12 - 24

Compensation of employees – Schedule name lists

EoM Serv & Divs 12 - 24

Personnel expenditure: Unrealistic establishment

EoM C HR 60

IGDOD – No reliance on audit work

EoM IGDOD 36

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Findings: General Defence AccountEoM: Corrective Measures

(Continued)GDA 05/06 Responsibility Time Frame

(Months)

Operating lease commitments EoM C Acq & Proc 12 - 24

Prepayments and advances EoM CFO 12

Local and foreign aid received in kind

EoM CPP 12 -24

National Conventional Arms Control Committee

EoM SecDef (DCAC)

12

Service Corps EoM CCS 12

Information systems audit EoM CCMIS 60

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EoM: Corrective Measures (Continued)

GDA 05/06 Responsibility Time Frame(Months)

Operating lease commitments

EoM C Acq & Proc 12 - 24

Prepayments and advances

EoM CFO 12

Local and foreign aid received in kind

EoM CPP 12 -24

National Conventional Arms Control Committee

EoM SecDef (DCAC)

12

Service Corps EoM CCS 12

Information systems audit

EoM CCMIS 60

Intellectual Property EoM C Acq & Proc 60

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DOD ANNUAL REPORT FY2005/06Findings: Special Defence AccountEoM: Corrective

Measures SDA 05/06 Responsibility Time Frame

(Months)Classification of the SDA EoM CFO 12Cash and bank management weaknesses

EoM CFO 12

Compliance Programme – no signed constitution

EoM Sec Def(DCAC)

12

No control for amendments to the suppliers master file

EoM CFO 12

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Findings: GDA: FY04/05Qualification: Action Plans

GDAGDA 01/0201/02 02/0302/03 03/0403/04 04-0504-05Departmental revenue EOM EOM Q Q

Summary of FindingsSummary of Findings

Completeness of revenue could not be confirmed due to:• Insufficient independent management reconciliation / reviews • Non-compliance with policies & procedures

Action PlansAction Plans• Revenue Management Forum under control of Director Budgeting established

w.e.f. 1 Feb 05.• DOD busy benchmarking with National Treasury and other government

departments on tariff management. • Level 4 commanders are continuously trained to comply with the Revenue

Management DODI by FMD (CDAcc).• DOD is budgeting for revenue other than the vote, focusing currently on disposal

of equipment.• Improvement objective for 1 Apr 06 is to include all other income, e.g. flights

against Repayment.

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GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Receivables - - - Q


• Validity and accuracy of amount could not be confirmed • Original amounts of debtors were amended when new FMS: Debtors Subsystem

was implemented• Weaknesses in internal controls over management of receivables

Action PlansAction Plans

• Department in the process of addressing the system error and the adjustments will be followed up in the next audit cycle.

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GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Irregularities and losses - - Q Q

Summary of FindingsSummary of FindingsInconsistent application of policies and procedures resulting in:• Internal control weaknesses and• Inability to verify completeness & accuracy of the amount disclosed

Action PlansAction Plans• DOD Instruction is in the process of being reviewed to enhance accountability.• Monthly forum has been established for cash losses w.e.f. 1 Jan 05.• A computerized loss control process being investigated to ensure complete

reporting.• Staff visits are conducted by FMD and C Log to ensure that losses are properly

administrated.

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Findings: GDA: FY04/05Emphasis of Matter: Action Plans

GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Accruals EOM EOM Q D


• Understatement of Accruals according to approved NT policy.• Amount only included goods & services for which invoices were received but

were unpaid at year-end.Action PlansAction Plans

• DOD met with NT on 2005-07-14 to discuss matter• NT suggested Govt. Depts. have full time staff to deal with:

• Asset Management and • Conversion from cash to accrual basis of accounting

• Workshops to start end of August• Structure and plans should be in place by 2005-12-31

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DOD ANNUAL REPORT FY2005/06Findings: GDA: FY04/05

Emphasis of Matter: Action Plans

GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Physical asset and software and other intangible asset movement schedules

- EOM Q D


• Details were limited to additions .



•Asset Management and •Conversion from cash to accrual basis of accounting


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GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Goods & services - - - D


• This amount included capital expenditure iro machinery and equipment• Capital expenditure on machinery and equipment was not disclosed



•Asset Management and •Conversion from cash to accrual basis of accounting


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DOD ANNUAL REPORT FY2005/06Findings: GDA: FY04/05Emphasis of Matter: Action

PlansGDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Management of inventories, machinery and equipment

EOM Q EOM EOM

Summary of FindingsSummary of Findings• Internal control weaknesses as policies & procedures not adequately complied

with• Lack of supervision at operational and unit level• Failure to submit stock-taking certificates• Unapproved discrepancy vouchers• Disposal plans for excessive stock not on schedule• Deficient security & internal controls over administration of vehicles and weapons• Documents not submitted for audit as ASB Jhb. burnt down• Control weaknesses iro 5 foreign operations

Action PlansAction Plans• Responsibility and accountability for Asset Management in process of being

transferred back to the Service Chiefs.• C Log is currently negotiating the handing and taking over with Service Chiefs.• A Resource Management Programme has been implemented to properly train

Officers Commanding at level 4 regarding their responsibilities.

71



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Land and buildings EOM EOM EOM EOM


• Facility register incomplete• Deterioration of buildings• Uninhabitable buildings were occupied• Insufficient supporting documents

Action PlansAction Plans• Responsibility and accountability for Asset Management in process of being

transferred back to the Service Chiefs.• C Log is currently negotiating the handing and taking over with Service Chiefs.• A Resource Management Programme has been implemented to properly train

Officers Commanding at level 4 regarding their responsibilities.

72

DOD ANNUAL REPORT FY2005/06Findings: GDA: FY04/05Emphasis of Matter: Action

PlansGDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Gifts, donations and sponsorships

- - EOM EOM

Summary of FindingsSummary of Findings•Completeness of gifts /donations made/received in kind could not be verified.•Policies and procedures pertaining to these items were not followed

Action PlansAction Plans•DODI approved in Dec 04 for implementation on 1 Apr 05.•System Owners were tasked to ensure compliance.

73



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Personnel expenditure: Leave credits and administration

EOM EOM Q EOM

Summary of FindingsSummary of FindingsInternal controls are inadequate• Conversion of leave credits from calendar days to working days on PERSOL for

SANDF members• Leave application forms not captured & filed timeously• Non-submission of leave files for audit purposes• Leave registers not kept as prescribed

Action PlansAction Plans• New computerised leave system was implemented for PSAP in 2004. New system

for DAP to be fully implemented by 1 Sep 05.• Leave credits will now be calculated programmatically, thus ensuring more

accurate figures.• Controls were built in to prevent members from exceeding their annual leave

entitlement.• Responsibilities and accountability for leave administration is in the process of

being handed back to Service Chiefs.

74



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Personnel expenditure: Commuted overtime

EOM - EOM EOM

Summary of FindingsSummary of Findings• Internal control weaknesses • Management policies and procedures not followed / adequate• Supporting documents not on file• Overtime incorrectly recorded in attendance registers

Action PlansAction Plans• CSANDF instructed SG in Mar 05 to comply with the prescripts.• DODI 66/2002 (revision) is at the Military Bargaining Council where after it will be

implemented.• DOD is considering implementing a non-pensionable allowance.

75


Findings: General Defence AccountEmphasis of MatterGDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Personnel expenditure: Employment equity

- - - EOM

Summary of FindingsSummary of Findings• Lower structure of the DOD is predominantly African• Senior and Middle Management and professional staff are predominantly White

Action PlansAction Plans• Each Service / Divisional Chief to adhere to Departmental plans

76


Findings: GDA: FY04/05Emphasis of Matter: Action

PlansGDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Personnel expenditure: Unrealistic Establishment

- - - EOM

Summary of FindingsSummary of Findings• Achievement of the HR Strategy 2010 goal of 70 000 employees is not realistic• There has been an increase of 1056 employees to 76 969 members

Action PlansAction Plans• MEM has been implemented effective July 2005

77



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Operating lease - - - EOM

Summary of FindingsSummary of Findings• Completeness of operating lease commitments could not be confirmed• Insufficient reconciliation between DOD registers and suppliers

Action PlansAction Plans• C Log to implement controls

78


Findings: GDA: FY04/05Emphasis of Matter: Action

PlansGDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05

Foreign aid received in kind EOM EOM EOM EOM


•No system for recording & collation of such assistance•Completeness & accuracy of AFS cannot be confirmed

Action PlansAction Plans•DODI on Donations approved, awaiting DODD to be signed.•DOD in process of implementing the control systems required by the policy.

79



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05National Conventional Arms Control Committee

- EOM EOM EOM

Summary of FindingsSummary of Findings• Uncertainty regarding access to third party information• No Constitution in place• No Inspectorate in place yet• DCAC on suspension pending an investigation• Unable to complete the compliance audit, placing a limitation of scope on the

audit

Action PlansAction Plans• Ex post facto delegation by Minister still outstanding.• No Constitution or Term of Reference in place yet – NCACC decided not to compile

a constitution or term of reference.• Act DCAC confirmed that they are in the process of establishing the Inspectorate.

80



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Service Corps - EOM EOM EOM

Summary of FindingsSummary of Findings• MOD reconsidering the intended migration of the Service Corps based on the

formulation of alternatives to be presented to the COD for approval• Conclusion of the issue is important as it has remained outstanding for 6 years.• SCOPA also raised a concern iro the progress

Action PlansAction Plans• Minister indicated that Service Corps. will not migrate

81



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Information systems audit - - EOM EOM

Summary of findingsSummary of findings• Lack of control over database administrators• No reliance placed on general controls iro CALMIS• Significant control weaknesses that could compromise data integrity were found• Inadequate process control design & non-adherence to approved procedure• Weaknesses iro the SLA between DOD and SITA due to lack of policies and

supporting documentsAction PlansAction Plans

• GITO confirmed that controls over and passwords for database administrators were implemented.

• Compliance by Services will be monitored.

82


Findings: GDA: FY04/05Emphasis of Matter: Action Plans

GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Intellectual property - - EOM EOM

Summary of FindingsSummary of Findings• DOD scrutinising the promulgated policy to determine process to be implemented • Until implementation of the processes, it is not possible to perform an audit in

this areaAction PlansAction Plans

• Policy was promulgated w.e.f. 1 Apr 05.• System will be audited by AG in 05/06 financial year.

83



GDAGDA 01/0201/02 02/0302/03 03/0403/04 04/0504/05Rank review audit - - - EOM

Summary of FindingsSummary of Findings• Unavailability of supporting documents led to the audit of the rank adjustment

process not being completedAction PlansAction Plans

• D Fac to respond to AG request for information