cidb
Presentation of Annual Report
2011/12
October 2012
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Presentation Layout
• Mandate
– Legislative framework & Mandate
• Priorities and challenges in 2011/12
• Annual Performance Summary
• Financial Performance/A-G Report
– Financial Performance
– Report of the A-G
– Corrective Action Plan
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cidb Mandate
The mandate of the cidb is to:
 Provide strategic leadership to construction
industry stakeholders;
 Promote sustainable growth of the
construction industry and the participation of Transformation Growth
the emerging sector in the industry;
 Promote improved performance and best
practice of public and private sector clients,
contractors and other participants in the
Common
construction delivery process;
Focus
 Promote uniform application of policy
Delivery
Capability
throughout all spheres of government and
promote uniform and ethical standards,
construction procurement reform, and
improved procurement and delivery
Performance
management – including a code of conduct;
 Monitoring and regulating the performance
of the industry and its stakeholders, including
the registration of projects and
contractors.
Highlights for 2011/12
– Contractor Development and Training/ support
– Quality services at Contact Construction
Centres
– Monitoring Industry Performance
– Industry Skills delivery
– Development of Best Practice standards
– Implementation of Infrastructure Delivery
Management Toolkit
– Compliance and regulations enforcement
– Efficient registration services
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Challenges for 2011/12
– Delay in submitting frameworks (including
Standards) for the Best Practice i.e
Project Assessment Scheme and the Best
Practice Project Contractor Recognition
Scheme to the Board for approval due to
delays in stakeholder consultation
– Delay in finalising regulations amendments
– Delay in new CRM system and EDMS
implementation
– Delay in finalising the Framework for
Municipal Toolkit
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Annual
Performance Summary
and impact
2011/12
Growth and Contractor Development
Enterprise Development
– National Contractor Development ProgrammeNCDP ( Framework) updated, communicated and
published.
– Client Capacitation completed at all provinces.
– Provincial contractor training in all 9 provinces
completed including 7 catalytic projects
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Growth and Contractor Development
Quality services at cidb provincial Offices
(Construction Contact Centres – CCC’s)
Annual average of 93.8% on compliance was achieved on
the accuracy of data captured (90% target).
– Annual average of 96,6% on compliance with over the
counter 48 hour registration turnaround time was
achieved (95% target).
– Annual average of 92.3% registration compliant
documents produced (90% target).
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Construction Industry Performance
Monitoring industry performance
– Construction Industry Indicators (CIIs) published
communicated and applied (low rate and depth of
transformation, economic conditions and slow rate of public
sector spend…)
– Quarterly Monitor published, communicated and applied
(State of industry development)
– SME survey published communicated and applied
– Quarterly provincial outreach communication sessions held
in 4 provinces
Infrastructure skill delivery
– cidb Post Graduate Conference held.
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Procurement and Delivery Management
Support on procurement reform
– Public sector clients training sessions
conducted in all provinces.
Compliance and regulations enforcement
– Case law reports published quarterly.
– Anti-corruption strategy developed.
– Hearings on non-compliance
conducted (Audit blitz conducted)
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Procurement and Delivery Management
Infrastructure Delivery Improvement
– Evaluation of the impact of the cidb Toolkit
achieved.
– IDMT training completed in all provinces.
– Evaluation of the impact of pilot programme on
cidb Gateway process completed
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Construction Registers Service
Efficient registration service
– The 21 working day turnaround time was achieved
for compliant Grade 2-9 applications, including
the processing of annual updates.
– Queries administered within the stipulated
turnaround time of 48 hours.
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Financial Performance/AG Report 2011/12
OVERVIEW
• Financial Performance
– Actual vs. Budget
– Annual Financial Statements
• Report of the Auditor-General
– Opinion
– Emphasis of matter: Irregular expenditure
• Corrective Action Plan
• Fruitless and wasteful expenditure
Financial Performance (Actual vs. Budget)
Budget (R'000)
Actual (R'000)
Variance (R'000)
2011/12
Revenue
Register Revenue
41,252
47,737
6,485
2,662
4,600
1,938
65,959
65,959
-
Other Income
-
165
165
Total Revenue
109,873
118,461
8,588
27,613
32,977
-5,364
500
3431
-2,931
Personnel Expenditure
54,158
61,064
-6,906
Professional Expenditure
27,602
14,920
12,682
109,873
112,392
-2,519
Interest Income
Transfer payments from DPW
Thank You
Thank You
Expenditure
Administrative Expenditure
Capital / other
Total Expenditure
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Financial Performance (Annual Financial Statements)
• Revenue
– Revenue from government increased by 3,6%
from R63,665m in the previous year to R65,959m.
– Revenue from registers increased by 5,9% from
R45,073m in the previous year to R47,737m.
• Total expenditure
– Total expenditure increased by less than 2%
compared to the previous year.
Financial Performance (Annual Financial Statements) cont.
• Finance income
– Interest income increased by 11% from R4,132m
in the previous year to R4,600m.
• The Deficit
– Surplus for the year is R6,068m inclusive of
R4,589m non cash items.
Financial Performance (Annual Financial Statements) cont.
• Cash & Cash Equivalents
– Cash & cash equivalents remained average when
compared between previous year and current year
with a minimal decrease of less than 1%.
• Accounts Payable & Income Received in advance
– Total Payables decreased by R1,249m from
R19,086m.
– Income Received in advance decreased by
R1,239m to R27,576m from R26,337m.
Report of the Auditor-General
Opinion
The cidb received an unqualified audit report in the
2011/12 financial year with the following matters:
Emphasis of Matter:
Thank You of corresponding figures: relating
• Restatement
to provision of debt impairment amounting to
R456k
• Irregular expenditure: relating to determining of
the full extent of irregularities amounting to
R11,781m (thus indicating an increase of R2,515m
when compared with that of the previous year)
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Report of the Auditor-General
Item 1: Restatement of corresponding figures
The corresponding figures for 31 March 2011 were
restated as a result of an erroneous disclosure of the
provision for debt impairment amounting to R456k
discovered during the 31 March 2012 audit in the
financial statements.
Thank You
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Report of the Auditor-General cont.
Item 2: Irregular expenditure (R11,781m)
Section A: details of irregular expenditure – not
recoverable (tot.: R3,929m):
i)
Five year lease not initially approved by the
National Treasury (since condoned): R478k
Thank You
You
ii) Thank
Transactions
where notice was not given to
Treasury and AG (warning issued, no losses):
R1,454m
iii)
Extension of contracts (relates to old tenders):
R1,997m
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Report of the Auditor-General cont.
Item 2: Irregular expenditure (R11,781m)
Section B: details of irregular expenditure – under
investigation (tot.: R7,852m):
i)
Transactions procured without following open
tender/procurement processes: R1,58m
Thank You
You
ii) Thank
Transactions
procured without obtaining original
and valid tax clearance certificate: R3,75m
iii)
Bids awarded with clerical errors: R2,522m
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AG Management Letter Report & Corrective Action Plan
The AG has raised a number of issues in the
management letter report for the 2011/12 financial
year. In response to these matters the cidb has
designed a Corrective Action Plan (CAP) monitoring
tool. The CAP sets down:
• Timelines
within which the issues will be resolved
Thank You
• Who the responsible official is, to resolve the issue
• The specific action to be taken to resolve the issue
Monitoring is performed by the CEO, Audit Committee
and the Board.
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A-G Management Letter Report & Corrective Action Plan
Over and above the Correction Action Plan, the AG has
developed a dashboard document which lists the key
control matters that the cidb must take care of during
the course of the new financial year (2012/13) in order
to avoid a qualification. Regular meetings between the
AG, CEO and CFO where progress is assessed, have
been arranged for this financial year.
Thank You
The cidb Internal Audit unit has also started with the
follow up audit on the matters raised by the AG in the
management letter report.
List available of all the detailed matters raised by the
AG in the management letter report and corrective
actions undertaken
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..….Thank you……
Discussion / responses to questions
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AG Management Letter Report & Corrective Action Plan
Listed below are the detailed matters raised by the AG in the management letter
report:
Audit Findings
Action Plan Description and Narrative
•
Cash and cash equivalents;
and investments
Presentation and Disclosure
•
Thank You
•
•
•
The authorised bank signatories on bank
accounts were not properly updated with the
banks – this has been corrected.
Continuous training is being undertaken to
improve the technical skills of the Finance
personnel.
Irregular expenditure register has been
developed and it is currently being attended to
by the CFO. Furthermore, a circular has been
issued to all staff regarding management’s “zero
tolerance” approach to such expenditure
Commitment schedule will also be kept for
review by CFO on a regular basis.
Mock financials are also planned for the interim
audit.
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Action Plan Description and Narrative
Expenditure
Incorrect capturing identified in the accounting
system:
•Regular reconciliations are performed and
variance reports and analysis done by
supervisor(s).
•Continuous professional development for staff
responsible for information capturing.
Non-compliance with
applicable legislation
•
•
Irregular expenditure not prevented: review of
the SCM policy and the delegations of authority
currently underway, this will consequently lead
to the review of processes which will seek to
eradicate irregular expenditure going forward.
Audit committee appointment done during the
year not approved by the Accounting Authority:
delegations are currently under review for
finalisation by end of October.
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Non-compliance with
applicable legislation (cont…)
Action Plan Description and Narrative
•
•
Governance issues
Performance Information
•
No internal audit charter in place during the
year: draft for final sign-off by the Board.
No effective and appropriate steps taken to
ensure collection of all monies due: this matter
related to a backlog which was being phased
out over time.
Remuneration committee charter was not
approved during the year: in draft for finalisation
by November.
Information not well defined and at times not
consistently reported upon:
•Annual staff training to be provided during
strategic sessions
•IAU to conduct regular audit and highlight
shortcomings
•A quality review process to be effected by an
independent person prior to approval.
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Other administrative matters
Action Plan Description and Narrative
•
•
•
•
Capturing of journal reference number
incorrectly in the system: a numbering
sequence system has been developed, this
register will be checked prior to journals being
approved.
Instances where costs that should have been
capitalised
were
expensed:
Continuous
professional development for staff responsible
for information capturing
Information not timeously submitted to auditors:
in future, the management of all audit queries
will be centralised in the CFO’s office for
monitoring and follow-up.
Discrepancies w.r.t. assets on the floor and the
register: asset verification will be performed and
reconciliations timeously attended to prior to the
end of the financial year.
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Policies and procedures
Action Plan Description and Narrative
•
•
•
•
•
Non-compliance with revenue and debtors’
policies: due care is being exercised in adhering
to policies and write-offs will only be processed
once a year.
Non-compliance with cell phone policy: a review
of this policy is currently underway, this comes
with transferring of the risk to staff as opposed
to the Board.
Policy on intangible assets not updated: the
policy has since been reviewed accordingly.
Policies not appropriately signed-off: this is
being attended to in line with the review of the
delegations of authority.
Cell phone policy not approved by the delegated
official: this is being attended to in line with the
review of the delegations of authority.
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Information technology
Action Plan Description and Narrative
•
•
•
•
•
•
•
•
No formally approved governance framework:
motivation for adoption of framework being done
No formally approved IT strategic plan: since
approved by the IT Steering Committee
DR plan not approved on physical (PDF)
document: being attended to
No signed SLA for CRS support service
provider: since signed
No Information Security Officer or delegated
responsibilities: security review to be done in
the coming year and completed once in every 2
years
No formally documented and approved user
account management policy for CRS, Finance,
HR: policy to be developed and approved
No formally approved user account procedures
for CRS, Finance, HR: procedures to be
documented
No access request forms for CRS, Finance, HR:
request form to be developed
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AG Management Letter Report & Corrective Action Plan
Audit Findings
Action Plan Description and Narrative
Supply chain management
A number of matters were raised around SCM with
many resulting to irregular expenditure as well as
the following:
•Procurement need and economy:
•List of prospective suppliers:
•Quotations:
•Competitive bidding:
•IC deficiencies on policy and procedures:
•Compliance wit prescripts, regulations, PFMA and
PPPFA:
•Other procedural deviations:
•Stakeholder engagements:
A holistic approach in dealing with SCM matters is
being implemented. This includes a turnaround
strategy on SCM which has resulted in the
centralisation of this function within Financial
Management, the appointment of an SCM Manager
to provide a strategic focus and guidance, the
review of the policy and the delegations relating to
SCM, the review and training of all bid committees.
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Fruitless and Wasteful Expenditure (R63K)
A. An amount of R29k was paid for cellphone airtime
on a stolen phone that was not timeously reported.
B. An amount of R33k was incurred i.r.o. interest
penalty charged for early withdrawal of funds.
.
Thank You
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