DEPARTMENT OF PUBLIC
WORKS
Portfolio Committee Presentation
10th October 2012
Parliament of the Republic
of South Africa
1
Purpose
Purpose of the Presentation by the Department of Public Works
- To reflect on the achievements and challenges of the Department of Public Works
during the financial year 2011/12 based on the 2011 State of the Nation Address
theme of JOB CREATION.
Objective of the Portfolio Committee on Public Works
- To consider the achievements and challenges of the Department of Public Works as
reflected in the Annual Report.
2
Extracts from the 2011/12 SONA:
… ‘To address the concerns facing the country, we have declared 2011 a year of job
creation through meaningful economic transformation and inclusive growth…’
Outcome 4: Decent employment through inclusive economic growth.
Implications for DPW:
•
… ‘Other departments have launched their own initiatives, for example the Re Ya
Patala (We Pay) initiative of the Department of Public Works…’
•
… ‘Our Expanded Public Works Programme aims to create 4, 5 million work
opportunities, and more than a million opportunities have been created already
since the beginning of Phase 2.Part of the programme focuses on repairing our
roads networks…’
3
Operation Re Ya Patala
Background
•
Support government stated intention of decent job creation by ensuring service providers are paid on time;
•
Central point to deal with backlog of unpaid invoices;
•
Targets unpaid invoices older than 30 days;
•
Feedback on progress provided within seven working days;
•
Interfacing with calls logged from Presidential hotline and SEDA’s SMME;
Successes for financial year 2011/2012
•
•
745 calls logged;
R17 million value of calls logged and resolved;
Challenges
•
•
•
•
•
•
Majority of calls relate to day-to-day and construction;
Lack of feedback by PM to service providers when invoice is queried or lack of supporting document;
Manual system of Operation Re Ya Patala;
Lack of awareness of existence of Operation Re Ya Patala;
Lack of monitoring system to track calls received until payments is effected;
Service providers not having relevant documents for appointment, e.g. Order Number or appointment letter;
Programme Analysis
Programmes are assessed based on their
contribution to the following:
1. Job Creation – 2011/12 SONA Theme
Government’s Outcomes
1. Improved quality of basic education.
2. A long and healthy life for all South Africans.
3. All people in South Africa are and feel safe.
2. Service Delivery
3. National Policies (NGP, PICC)
4. Decent employment through inclusive economic growth.
5. A skilled and capable workforce to support an inclusive growth path.
6. An efficient, competitive and responsive economic infrastructure network.
4. International Policies and Treaties
(MDGs)
7. Vibrant, equitable and sustainable rural communities with food security for all.
8. Sustainable human settlements and improved quality of household life.
9. A responsive, accountable, effective and efficient local government system.
10. Environmental assets and natural resources that are well protected and
continually enhanced.
11. Create a better South Africa and contribute to a better and safer Africa and
World.
12. An efficient, effective and development oriented public service and an
empowered, fair and inclusive citizenship.
5
PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT
Programme: Asset Register Management
Performance indicator
Contributions
Indicator: Percentage of Asset DPW appointed 21 graduates through Human
Register information fields
populated with essential data
out of the present 108 562
Challenges
Change of strategy to enhance IAR.
Capital Investment (HCI) Programme to verify IAR Lack of interface between Property Maintenance
information against Deeds records and conduct Information System (PMIS) and Works Control System
(WCS)
investigation on identified discrepancies.
properties.
Target: 90% populated
97 705 properties
Actual: 86% (93692 out of 108
562 properties)
6
PROGRAMME 2 : IMMOVABLE ASSET INVESTMENT MANAGEMENT
Programme: Asset Register Management
Performance indicator
Indicator: Vested State land
Target: 70%
25 022 land parcels
Contributions
Confirmed the ownership of land parcels under
the correct sphere of government to address
political and social government objectives.
Challenges
Un-surveyed land parcels
Lack of documentation to validate ownership as at 27
April 1994
Actual: 13 116 Item 28(1)
certificates issued (DRDLR)
37% out of 35 562 land parcels
7
Programme: Asset Register Management
Overall Assessment
•
DPW initiated the change of strategy to enhance the IAR, as a result the Service Provider was
appointed in October 2011 to programme manage the Immovable Asset Register Enhancement
Programme to ensure completeness and accuracy of IAR by 31 March 2014.
•
An analysis of the IAR was conducted to determine the Term of Reference for the appointment
of Service Provider(s) to conduct physical verification.
•
DPW is continuously engaging Department of Rural and Land Reform (DRDLR) and provinces to
fast track the process of issuing Item 28 (1) Certificates.
8
PROGRAMME 2: Immovable Asset Investment Management
Sub Programme: Strategic Asset Investment Analysis
Performance indicator
Indicator: Approved C-AMP
Contribution
C-AMP
completed
to
Challenges
contribute
towards C-AMP
completed
document addressing User and improved service delivery by enhancing planning assessments
custodian objectives
and
without
U-AMPs,
performance
condition
assessments
and budgeting for efficient management of state standards as required by GIAMA. This results in non
immovable assets.
alignment of User Department’s requirements and
Target: 80% CAMP completed
Custodians plans.
Actual: 100% C-AMP
completed
Indicator: Rehabilitated
Rehabilitated
buildings
ensure
that
User
buildings
Departments are accommodated in functional
Target: 20 Buildings identified buildings which contributes to improved service
for the implementation of
delivery and reduction of leased accommodation.
rehabilitation programme
within MTEF
Actual: 11 buildings
rehabilitated in the first year of
the MTEF
9
PROGRAMME2: Immovable Asset Investment Management
Performance indicator
Contribution
Challenges
Indicator: Accessible buildings State buildings made accessible contributes to
improved service delivery for easy access to all
to people with disability
people to government services.
Delays in procurement processes due to non
Target: 110 buildings
problem of non responsive tenders, the tenders will
identified and made accessible
be extended to contractors with a higher CIDB
Actual: 51 buildings made
grading.
accessible
Indicator: MOUs signed with Release in addressing outcome 8 of national
RD&LR, Human Settlement,
policy priorities.
Agriculture,
* List of properties sent to
relevant Departments
*Signed agreements to release
land
responsive tenders. In an effort to address the
Land is released upon receipt of request from
relevant stakeholders.
Target: 2000 hectares of land
parcels for human settlements
Actual: 1,6272 hectares
released
10
Sub Programme: Strategic Asset Investment Analysis
Overall Assessment
•
GIAMA requires that Custodians on an annual basis compile a Custodian Asset Management Plan
(C-AMP) that addresses User Departments needs as indicated in their respective User Asset
Management Plans (U-AMPs). The Chief Directorate has completed 2013/14 CAMP and will
submit to National Treasury. However, this was achieved in the absence of key elements; viz.
UAMPs, condition assessments and performance assessments standards; required for a
comprehensive and compliant C-AMP. The outcomes of the C-AMP will be shared with relevant
User Departments so that it informs planning going forward.
•
Planning for projects; both planned maintenance and DPW capital; to be implemented in
2012/13 was concluded with all relevant stakeholders. Going forward, planning will be aligned to
IDIP. Delays with procurement processes contributed to accessibility projects not being
implemented on time. As part of national priorities to reduce energy and water consumption 8
025 752 kilowatts and 4 324 210 kilolitres was saved during the financial year. Improvements
with monitoring and verification of savings for energy consumption will be done in conjunction
with the Department of Energy
•
Progress with regard to release of land to address socio economic development is hampered by
requests that are not supported by detailed developmental plans aligned to municipal IDIPs,
hence the target was not achieved.
11
PROGRAMME 2: Immovable Asset Management
Programme: Key Account Management
Performance indicator
Indicator:
Approved
Contributions
Challenges
In enhancing service delivery Capital Works The annual deadline of end-February for submission
and
implementation
signed-off Implementation
Programs
(CWIP)
were of approved Implementation Programs by User
programs approved by each of nine User Departments for Departments does not allow adequate time for
(CWIP and PMIP).
execution in 2012/13.
planning process ahead of the commencement of
the next financial year.
Target:
In line with its custodial responsibility, the
100% approved and signed-off
Department signed off its Planned Maintenance As a Turnaround initiative, the KAM Branch will
Implementation Program (PMIP) for execution ensure affected User Departments submit approved
Actual:
100%.
in 2012/13.
Implementation Programs by the end of September
each year commencing in 2013 and will ensure the
inter-departmental SLA’s are amended accordingly.
12
PROGRAMME 2: Immovable Asset Management
Programme: Key Account Management
Performance indicator
Indicator:
Populated templates for 26
National Departments and 7
entities
Target:
90% complete
Contributions
As a result of general non-compliance with
GIAMA:
Inadequate capacity and resources within User
Departments
• DPW continues to work in an unplanned,
reactive mode,
• DPW continues to be lambasted for its
inability
to
render
appropriate
accommodation services,
• User Departments remain frustrated at the
time it takes for accommodation to be
provided,
Actual:
• Under-expenditure and belated delivery of
required accommodation as a result of poor
75.7% UAMP templates were
forward planning, which further frustrates
completed for 25 National
Users in their ability to deliver essential line
function services.
Departments
and
Public
Entities
Challenges
and
DPW
to
implement
the
requirements of GIAMA leading to non-compliance.
Allocation
of
funds
to
User
Department
accommodation infrastructure programs in the
absence of UAMP’s and without the necessary
forward planning.
Remedial
measures
include
appropriate
capacitation to implement GIAMA and strategic
agreement with National Treasury in enforcing
GIAMA compliance.
• Continuous allocation of funding without
UAMP’s subverts the need for User
compliance with GIAMA
13
Programme: Key Account Management
Overall Assessment:
The Key Account Management (KAM) program, as the Department’s front office
servicing the accommodation needs of its significant client base remains a key priority.
In the year under review, there was a degree of improvement in the following areas:
1. Enhanced client relations resulted in an additional 6 SLA’s being signed,
2. All nine User Departments for whom DPW procures Capital Works submitted their
approved Capital Works Implementation Programs (CWIP) in accordance with
prescribed timeframes,
3. Increased Executive support for the key role of KAM as the Department's front office
to User Departments and the need for heightened responsiveness by officials,
4. Commence to refocus the Department into a client-driven mode with KAM
spearheading the delivery of all User Department accommodation requirements
across the entire value-chain.
14
Programme: Key Account Management
Overall Assessment:
The focus moving forwards, in support of the Department’s Turnaround, will include:
1. Ensuring a strong customer-focussed orientation in the Department in order to
define, and deliver against, the needs of clients.
2. The development of a Client Value Proposition that is responsive to accommodation
needs of individual clients across the DPW value chain,
3. Appropriate capacitation and resourcing of the KAM Branch to drive the customer
focus approach throughout the organization.
15
PROGRAMME 2: PROFESSIONAL SERVICES
Programme: Projects and Professional Services
Performance indicator
Contributions
the fact that
Challenges
Indicator:
Owing to
Inner City The prolonged conclusion of the town
Precincts development in Pretoria,
Regeneration joint project with City of planning guidelines for Salvokop has an
and other prioritized rural towns
Tshwane in developing town planning impact on bulk infrastructure planning and
Target:
guidelines for Inner City Precinct, the development of the Site.
Bulk infrastructure development of
only project possible for implementation
precincts including Salvokop,
at Salvokop was the fencing project The Bulk Infrastructure Planning will resume
Church Square and others
which is to be completed in 2012/13.
Actual:
in 2013/14 performance year when the town
planning guidelines are completed.
• Salvokop site fully fencing Project The construction of the security fence
Commenced
introduces control access measures into
Salvokop as well as eliminating problem
of illegal dumping of construction waste
on the Government land.
16
PROGRAMME 2:
Purpose:
Programme: 2 Projects and Professional Services
Performance indicator
Contributions
Challenges
Indicator:
The Department has completed 237 Project During the 2011/12 fewer than planned
Effective and efficient response to
(Capital and Maintenance), while 660 Projects projects where awarded which
customer varying needs
continues into 2012/13 performance year.
Target:
impacted negatively on expending
funds allocated for construction phases
Monthly reports on progress,
The overall expenditure achieved is as of the projects.
challenges experienced in
follows:
Under DPW capital a total amount of R
delivering their projects
DPW Capital: 66%
238 584 894, was not allocated to any
Actual:
DPW Maintenance: 89%
project. Efforts to utilize the funds to
The overall performance of
Clients Capital: 77%
Purchase Land and Buildings or
expenditure for infrastructure
Purchase Capital Equipment's for
budget is 79% on all building
Workshops was unsuccessful. The
programs
funds were not spend.
17
Programme: 2 Projects and Professional Services
Overall Assessment
•
key projects were concluded and these projects enabled the security cluster Departments to provide the
much needed services to the communities around these completed facilities.
•
Other completed Projects included:
•
•
•
•
•
Forensic Laboratory in Parow (for SAPS)
New Generation Correctional Facilities in Kimberly and Brandvlei for DCS
Supreme Court of Appeal in Bloemfontein
Pietermaritzburg Magistrate Building
Pietermaritzburg Colonial Building for the Department of Justice.
•
The Department has completed and commissioned the printing Web Machines for the Government Printing
Warehouse. The operation of this printing warehouse enables the Government of South to have printing
capacity for identity documents for South African and other countries that require such assistance from South
Africa.
•
For South Africa to be on par with the first world in academia and various research fields, its researchers
require world class facilities for their research work. For that reason the Department of Public Works has
upgraded the Marion Island Research Station, which complies with the standard on environmental
sustainability parameters.
18
PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME
Performance indicator
Indicator: The creation of EPWP •
work opportunities and full-time
equivalents
•
Target: 868,000 work opportunities
and 361,739 full time equivalents
•
Contributions
97% of the work opportunity •
target was achieved.
69%
of
the
full-time
equivalent
target
was •
achieved
Contributed to Outcome 4 in •
terms of government priorities
Challenges
296 projects were excluded due to
poor data quality based on data
validation procedures
Lack of capacity in public bodies to
implement projects labour intensively
Poor
and
under-reporting
by
implementing public bodies
Over-achieved on the target •
for women participating in the
programme
Over-achieved on the target
for youth participating in the
programme
Persons with disability target
was not met
The nature of many Expanded Public
Works Programme (EPWP) projects
limits the participation of people with
disabilities. This includes occupational
health and safety issues
Actual: 843, 459 work opportunities
251,127 full time equivalents
Indicator: Annual EPWP Designated •
Group Participation Targets
Target:
55% women
•
40% youth
2% people with disabilities (PWD)
Actual:
•
60% Women
50% Youth
0.19% PWD
19
PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME
Performance indicator
Contributions
Indicator:
Percentage of wage 63% of the integrated incentive for the •
incentive disbursed
Infrastructure and Environment and
Target: 65% disbursement across all Culture Sectors had been disbursed.
sectors
Actual: 69% of the wage incentive 100% of the Social Sector Expanded Public
was
disbursed
across
the Works Programme (EPWP) Incentive Grant
Infrastructure,
Social
and for Provinces had been disbursed by the
Environment and Culture Sectors
Department of Public Works.
Challenges
The disbursement of the
incentive is dependent on
eligible bodies to meet their
annual threshold and report
their data properly
This means that 69% of the wage incentive
was disbursed across the Infrastructure,
Social and Environment and Culture
Sectors.
20
Programme: EXPANDED PUBLIC WORKS PROGRAMME
Overall Assessment :
• The EPWP achieved 97% of its 2011/12 work opportunity targets. To ensure that the
Programme achieved it annual targets, intensive engagements were undertaken with
public bodies to ensure their participation in the Programme.
• In November 2011, DPW hosted the 2nd annual EPWP Municipal Summit. The Summit
resolved that EPWP institutional arrangements would be strengthened through the
continued formation of EPWP District Steering Committees and the development of
EPWP municipal policies. In 2011/12, eight (8) new EPWP District Steering
Committees were created, in addition to the eleven (11) District Steering Committees
that were already operational .
• Furthermore, by the end of the financial year, 271 municipalities signed protocol
agreements, committing them to achieving specific EPWP targets.
21
Programme: EXPANDED PUBLIC WORKS PROGRAMME
Overall Assessment :
• 69% of the wage incentives were disbursed across the Infrastructure, Social and
Environment and Culture Sectors.
To ensure an improved draw-down of the incentive in subsequent financial years, the
incentive grant model was revised. The model would ensure that especially rural
municipalities have easier access in order to intensify employment-intensive
programmes and projects. The revised model would be implemented as from the
12/13 financial year.
22
PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION
Performance indicator
Contributions
Challenges
Indicator:
Immovable asset life cycle management
The purpose of this guideline is to
Policy options and areas of particular concern
guideline for national and provincial users and provide national and provincial
(identified during interaction with national and
custodians covering:
custodians with a user-friendly tool to
provincial custodians and users) require further
• Planning;
assist them in better understanding the internal engagement before the guideline can be
• Acquisition;
(a) custodian mandate in terms of
• Management;
GIAMA and related legislation; and (b)
• Maintenance; and
roles and responsibilities of users and
• Disposal.
custodians as it relates to the
Target:
management of immovable assets.
submitted for approval.
Guideline developed and approved.
Actual:
Draft Immovable Asset Life Cycle Management
Guideline developed.
23
PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION
Purpose:
To regulate and promote growth and transformation in the construction and property industries
To promote uniformity and best practice in the construction sector and in the immovable asset management
in the public sector
Performance indicator
Contributions
Challenges
Indicator:
Review of Built Environment approved by
The review of the Built Environment
The submission of the review was delayed to
Minister.
Professions will lead to a synergised
allow for enhancement of the options analysis.
sector focused on its growth and
Target:
development whilst contributing to
Upon finalization, the options analysis report will
Review completed
government’s development objectives. be submitted for approval
Actual:
Review completed.
24
PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION
Purpose:
To regulate and promote growth and transformation in the construction and property industries
To promote uniformity and best practice in the construction sector and in the immovable asset management
in the public sector
Performance indicator
Contributions
Challenges
Indicator:
Enactment and successful implementation The new Expropriation Act will
The Draft Expropriation Bill is undergoing
of revised Expropriation Act.
further consultation with internal and
introduce consistency and
uniformity in the procedure followed selected external stakeholders.
Target:
by expropriating authorities in all
Promulgation of Expropriation Act, 2011.
spheres of government, to expedite
delivery of essential services and the
Actual:
acquisition of property in the public
Draft Regulatory Impact Assessment (RIA)
interest.
developed.
Comprehensive presentations made to
relevant internal authorities. Expropriation
Bill (Draft 7) released to DRDLR for
comment (Feb 2012).
25
PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION
Purpose:
To regulate and promote growth and transformation in the construction and property industries
To promote uniformity and best practice in the construction sector and in the immovable asset management
in the public sector
Performance indicator
Contributions
Challenges
Indicator:
Agrément SA (ASA) listed as a public entity in terms The Agrément SA Act will serve as a
Business Case withdrawn to remove
of the PFMA.
proposed regulatory responsibility to allow
national policy instrument to support
innovation in the construction industry for further consultation with relevant
Target:
and accelerate delivery of social and
Table draft Agrément SA Bill in Parliament.
economic infrastructure.
stakeholders.
The process has started with the
Actual:
development of a revised Business Case
Revised Business Case routed in November 2011
and upon approval, the prescribed
for internal approval for submission to National
legislative process will be followed.
Treasury.
Business Case subsequently withdrawn in January
2012 and currently being further revised to remove
regulatory role of ASA.
26
PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION
Overall Assessment:
Programme
What to be done in 2012/13
Contribution to Government’s socioeconomic priorities
Review of Expropriation
Act, 1975
Finalise Regulatory Impact
Assessment and draft Bill for
submission to Cabinet for
approval to commence public
consultation.
Consistency and uniformity in the procedure
followed by expropriating authorities in all
spheres of government, to expedite delivery
of services and the acquisition of property in
the public interest.
Establishment of
Agrément SA as a public
entity
Finalise Business Case for
approval. Commence prescribed
legislative process.
Support for innovation in the construction
industry and accelerated delivery of social and
economic infrastructure.
27
Financial Performance
1. DPW …………………..30
2. PMTE…………………..44
28
Financial Performance Report 2011/12
2010/11
2011/12
Budget
Expenditure
Exp %
Budget
Expenditure
Exp %
R'000
R'000
%
R'000
R'000
%
819,135
837,119
102%
679,455
679,455
100%
Prog 2. Immovable asset
management
5,426,628
5,001,749
92%
5,203,722
4,968,520
96%
Prog 3. Expanded public
works programme
1,520,508
1,163,015
76%
1,415,783
914,940
65%
32,108
34,353
107%
39,021
28,029
72%
31,365
25,201
80%
26,816
24,139
90%
7,829,744
7,061,437
90%
Prog 1. Administration
Prog 4. Property and
construction industry policy
regulation
Prog 5. Auxiliary and
associated services
Subtotal
7,364,797
6,615,083
90%
29
Financial Performance – Economic Classification
Current Financial Year
(2011/12)
Economic
Classification
Final Budget
Allocated
Expenditure
R’000
R’000
% Spent
Previous Financial Year
(2010/11)
Variance
Final Budget
Allocated
Expenditure
R`000
R`000
R’000
%
Spent
Compensation
of Employees
1,252,469
1,269,579
101.4%
(17,110)
1,112 ,717
1,089 ,693
98%
Goods &
Services
Interest and
Rent on land
Payments for
Financial Assets
1,034,900
1,032,905
99.8%
1,995
883,003
818,595
92%
1,586
1,567
98.8%
19
8,848
8,848
100%
2,025
2,025
100.0%
54,836
54,836
100%
Transfers &
Subsidies
Payment for
Capital Assets
4,010,396
3,656,222
91%
354,174
3,788,130
3,302,542
87%
1,528,368
1,099,139
72%
429,229
1,517,263
1,340,569
88%
TOTAL
7,829,744
7,061,437
90%
768,307
7,364,797
6,615,083
90%
30
Analysis of the over-spending
Compensation of employees:
•
Expenditure for compensation of employees was R1.270 billion which amounted to 101%
against the budgeted allocation. The Department has overspent compensation of employees
by R17.110 million and overspending is in both programme one and two. The overspending on
compensation of employees is classified as unauthorised expenditure.
Goods & Services:
•
Expenditure for goods and services was. R1.033 billion and expenditure is equivalent to 100%
of the allocation. Programme two had overspending in the amount of R4 million on goods and
services mainly due to the energy efficiency project where funding allocated was not
sufficient to cover the commitment. Overspending is due to advance being made to the
Independent Development Trust (IDT) during 2010/11 financial year with the roll over not
being approved by National Treasury. With the project continuing in 2011/12 financial year
this gave rise to over spending. This overspending has been classified as unauthorised
expenditure.
31
Analysis of the under-spending
Transfers & Subsidies:
• Expenditure under transfers and subsidies for the year ended is R3.656 billion and expenditure is
equivalent to 91% of the total allocation. Under-spending in the amount of R357 million in transfers
and subsidies related to the Expanded Public Works Programme (EPWP) incentives to provinces and
municipalities. Programme four resulted in overspending on transfers and subsidies and the
overspending has been classified under unauthorised expenditure.
Capital and Infrastructure:
• Expenditure for infrastructure is R1.011 billion and expenditure is equivalent to 70% of the total
allocation. Under-spending in infrastructure is equal to R425 million.
• Under spending on payments for capital assets relate to infrastructure with the budget of R425
million not being spent at the end of the financial year.
Machinery & Equipment:
• Expenditure under machinery and equipment (including software) is R87.7 million and expenditure
is equivalent to 96% of the total allocation. Under spending in machinery and equipment is equal to
R3.9 million.
32
Reasons for under expenditure of budget
•
National Treasury Policy Instruction: For the period from May 2011 to July 2011, tender process was interrupted by
the NT Circular requesting projects procurement information for concurrence. Three month was lost while awaiting
concurrence to advertised.
•
Planning and registering projects while having money on hand remain problematic. Ideally the building program
must be completed prior to requesting funds from National Treasury.
•
Program Approved (Workshops, Water Operators Program, Horticulture Program at Port of Entries) were not
allocated funds from DPW Capital - Suspension of Programs.
•
Low Expenditure of Allocation by IDT (School Program) affects transfer of Funds
•
Late issuing of Procurement Instructions in particular for Accessibility Program. Funded PI where confirmed in
September 2011 for implementation in same year.
•
Instability of project leadership at Regional Offices were head of Projects Positions cannot be filled (Pretoria,
Mmabatho, and Polokwane) due to lower classification of the Post and Strict Criteria of OSD.
33
Virements
Compensation of employees
Goods and services
Capital assets
Financial assets
Total
Prog 1
Prog 2
Prog 3
Prog 4
Prog 5
Total
R’000
R’000
9 997
R’000
(7 205)
R’000
(2 792)
R’000
R’000
18 716
22 898
44 793
(38 707)
(48 094)
609
41 614
16 083
(54 690)
(215)
(2 792)
15 200
(15 200)
(215)
•
Programme 1
was increased by R41.614 million from programme 2 and 3 to offset the over
spending on goods and services and payment for capital assets.
•
Programme 2
was increased by R16.083 million to offset current payments (compensation of
employees and goods and services). The amount of R16.083 million is the net
effect of R51.998 million virement of current payments from programme 3,
R2.792 million for compensation of employees from programme 3, and
R23.508 million to programme 1 and 3 for machinery and equipment.
The virement also includes an amount of R15.200 million approved by Treasury to move funds
from payment for capital asset to goods and services.
34
Virements cont.
•
Programme 3
was reduced by the net effect of R54.690 million to offset goods and services
in programme 1 and 2. The R54.690 million is the net effect of current
payment of R55.2 million to programme 1 and 2 and R609 000 from
programme 2 machinery and equipment.
•
Programme 4
was reduced R2.792 million for compensation of employees to programme 2.
•
Programme 5
was reduced by R215 000 to offset overspending of goods and services in
programme 2.
35
DPW: Basis for disclaimer of opinion
•
Immovable assets
– Immovable asset reconstruction still in progress.
– Could not verify completeness, validity and accuracy of the immovable asset register.
•
Receivables for departmental revenue
– The list of properties currently rented out could not be reconciled with the department’s
immovable asset register. Could not verify completeness.
•
Lease commitments: Operating lease revenue
– Supporting schedule compiled from PMIS and inability to supply the actual lease agreement
in all instances. Limitation of scope.
– Where lease agreements were provided, audit testing revealed an understatement of the
commitments.
– Absence of a complete and accurate immovable asset register thus unable to confirm
completeness.
•
Operating leases
– Could not supply sufficient appropriate audit evidence to substantiate operating lease
expenditure paid to PMTE.
36
DPW: Basis for disclaimer of opinion (continued)
•
Irregular expenditure
– The department did not have an adequate system for identifying and recognising all
irregular expenditure.
– Inability to supply documentation for unsuccessful bidders for awards amounting to R27
633 288, could not determine whether awards were regular or not.
•
Fruitless and wasteful expenditure
– The department did not have an adequate system for identifying and recognising all
fruitless and wasteful expenditure.
•
Commitments
– Could not substantiate contract price adjustment provisions (CPAP) amounting to R128
619 136.
•
Related party disclosure
– The department was unable to supply sufficient appropriate audit evidence in support of
the assumptions used to determine indirect costs incurred on behalf of the PMTE.
37
Report on other legal and regulatory requirements – Compliance
with laws and regulations
•
•
•
•
Annual financial statements, performance and annual report
– The financial statements submitted for auditing were not prepared in accordance with the
prescribed financial reporting framework and supported by full and proper records.
– Material misstatements identified by the auditors in the submitted financial statements were
subsequently corrected.
Asset management
– Proper control systems to safeguard and maintain assets were not implemented. Applicable to
immovable assets.
Budgets
– The budget for compensation of employees was exceeded.
– Transfers that were not originally budgeted for were made without the approval of national
treasury.
Human resources management
– Appointments were made in posts which were not funded..
– Funded vacant posts were not in all instances filled within 12 months.
– Persons in charge at pay points did not always certify that the employees receiving payment were
entitled thereto.
– The organisational structure was not in all instances aligned to the department's strategic plan
38
Compliance with laws and regulations (continued)
•
•
Revenue management
– The accounting officer did not take effective and appropriate steps to collect all money due.
– Immovable state property was sold at below mark-related values.
– Sufficient appropriate audit evidence could not be obtained that immovable state property was
let at market-related tariffs.
Procurement and contract management
– Goods and services with a transaction value below R500 000 were procured without obtaining
the required price quotations.
– Goods and services of a transaction value above R500 000 were procured without inviting
competitive bids. Deviations were approved by the accounting officer even though it was not
impractical to invite competitive bids.
– Contracts were awarded to bidders who did not submit a declaration of past supply chain
practices.
– Employees of the department performed remunerative work outside their employment in the
department without written permission from the relevant authority.
– Allegations of fraud, corruption, improper conduct and failure to comply with the supply chain
management system laid against officials and role players in the supply chain management
system were not in all instances investigated.
39
Compliance with laws and regulations (continued)
Procurement and contract management (continued)
– Appropriate action was not always taken against officials and role players in the supply
chain management system where investigations proved fraud and corruption and
improper conduct and failure to comply with the supply chain management system.
– Persons in service of the department whose close family members, partners or associates
had a private or business interest in contracts awarded by the department failed to
disclose such interest.
– The accounting officer did not in all instances report within 10 working days to the
Auditor-General all cases where goods and services above the value of R1 million (VAT
included) had been procured in terms of Treasury Regulation 16A6.4.
– Sufficient appropriate audit evidence could not be obtained that all contracts and
quotations were awarded in accordance with the legislative requirements as the entity did
not implement proper record keeping in a timely manner to ensure that complete,
relevant and accurate information was accessible and available to evaluate compliance.
– Sufficient appropriate audit evidence could not be obtained that contracts and quotations
were awarded to suppliers whose tax matters have been declared by the South African
Revenue Service.
40
Compliance with laws and regulations (continued)
Strategic planning
– The accounting officer did not ensure that the department had and maintained an
effective, efficient and transparent system of internal control regarding performance
management, which described and represented how the department's processes of
performance planning, monitoring, measurement, review and reporting were conducted,
organised and managed.
– The accounting officer of the Department of Public Works did not finalise and approve the
business case for running the trading entity and, consequently, did not formulate a policy
and reporting framework for the head of the trading entity.
– Banking and cash management
– The entity’s main bank account was overdrawn throughout the reporting period in
contravention of the requirements of Treasury Regulation 19.2.3.
41
PMTE: Statement of Financial Position
Assets
2012
2011
2010
R’000
R’000
R’000
Current Assets
Trade & Other Receivables
3 876 685
3 662 716
3 040 642
310 658
272 679
202 604
1 399
2 158
8 997
4 188 742
3 937 553
3 252 243
405 647
128 134
(60 472)
2 492 781
2 434 857
1 636 907
35 326
35 289
363
Bank Overdraft
1 254 988
1339 273
1 675 445
Total Accumulated Funds &
Liabilities
4 188 742
3 937 553
3 252 243
Prepayments
Cash & Cash Equivalents
Total Assets
Retrained Income/ (Accumulated
loss)
Liabilities
Current Liabilities
Trade & Other Payables
Provisions
42
Statement of Comprehensive Income
2012
R’000
Revenue
2011
R’000
6 450 852
4 437 990
Other Income
664 287
613 673
Total Revenue
7 115 139
5 051 663
Other operating expenses
(72 973)
(102 790)
Rent on land
(10 868)
(10 769)
(210 839)
76 192
Garden & Services
(77 136)
(61 642)
Cleaning Services
(62 733)
(129 312)
Property Maintenance
(2 199 760)
(847 834)
Lease Rentals on operating leases
(3 689 922)
(3 202 079)
(512 854)
(583 083)
(6 837 085)
(4 861 317)
(541)
(1 740)
277 513
188 606
Operating Expenses
Impairment reversal
Municipal Rates & Taxes
Total
Finance costs
Profit for the year
43
Revenue
2012
R’000
2011
R’000
Accommodation charges – State Owned
2 583 958
1 007 691
Accommodation charges – Private Leases
3 736 776
3 318 740
130 118
111 559
6 450 852
4 437 990
2 583 958
1 007 691
Management fees
Revenue
The amount included in revenue includes:
Income collected from immovable properties
which are disclosed under the Department of
Public Works
44
Trade & Other Receivables
Less than
1 year
Debt account and fruitless
expenditure
Claims recoverable – PACE
Claims recoverable – CA
Disallowances
Debtors operating lease
Accommodation debtors – State
owned
Accommodation debtors – Private
leases
Debtors – Municipal services
Municipal deposits
Provision for impairment
R’000
60 553
1 to 3
years
Older than Total
3 years
R’000
R’000
R’000
76
60 629
374 554
128 857
18 041
1 733 704
2 292
51 146
220 100
186 033
2 328
18 470
20 126
425 700
348 957
222 544
1 733 704
24 746
697 895
157 228
4 948
860 071
286 827
2 363
237 419
2 885
(285 616)
571 599
100 412
1 563
(145 519)
-
624 658
6 811
(431 135
3 876 685
3 305 086
45
PMTE: Basis for disclaimer of opinion
•
•
•
Irregular expenditure
– No adequate system for identifying and recognising all irregular expenditure.
Fruitless and wasteful expenditure
– No adequate system for identifying and recognising all fruitless and wasteful expenditure.
Trade and other receivables
– Reconstruction/reconciliation of the following receivables ongoing.
• Claims recoverable – PACE
• Claims recoverable – CA
• Accommodation debtors - Private leases
• Debtors - Municipal services
– Inability to supply audit evidence in support of all recorded transactions.
– Did not raise receivables for services rendered prior to year-end.
– Impairment not done on individual basis according to SA GAAP.
– Lack of audit evidence supporting statement that amortisation of debtors are immaterial.
– IAS 17 requires that lease income from operating leases shall be recognised in income on a
straight-line basis over the lease term. The calculation was performed
46
PMTE: Basis for disclaimer of opinion (continued)
incorrectly as it was based on information extracted from PMIS, which did not agree with
information per actual signed lease agreements and used the incorrect escalation rate.
•
•
•
•
Prepayments
– Based on estimate, not allowable in terms of SA GAAP.
Revenue
– Planned maintenance erroneously being offset against revenue.
Trade and other payables
– Insufficient evidence to support amounts recorded in advance account.
– Lack of audit evidence supporting statement that effect of amortisation is immaterial.
– Inability to confirm completeness of accruals and lack of audit evidence for accruals
raised.
– Straight-lining of leases performed incorrectly thus unable to verify fair presentation of
lease creditor (see receivables for detail).
Lease rentals on operating lease
– Inability to provide sufficient appropriate audit evidence (signed lease agreements) in all
instances.
– Incorrectly allocated refurbishment costs to lease expenditure.
47
PMTE: Basis for disclaimer of opinion (continued)
•
Municipal rates and taxes
– Lack of evidence to support municipal rates and taxes payments.
– Inability to reconcile between IE Works and PMIS.
•
Other commitments
– The entity could not provide sufficient appropriate audit evidence to support commitments to an
estimated value of R1 776 360 963.
– Commitments were overstated with an amount of R173 126 514 due to errors contained in the
schedules supporting the amount disclosed in the financial statements.
•
Operating lease commitments
– Inability to obtain sufficient appropriate audit evidence supporting operating lease commitments.
– Calculation of the operating lease commitment was based on the straight-line lease payments instead
of taking the minimum lease payments into account as per the requirements of IAS 17
•
Contingent assets
– Lack of evidence of probability assessment: requirement of IAS 37.
•
Related party disclosure
– Inability to conclude on fair presentation due to matters reported under trade and other receivables.
– The entity was unable to supply sufficient appropriate audit evidence in support of the assumptions
used to determine indirect costs incurred by DPW on behalf of the PMTE.
48
Compliance with laws and regulations (continued)
•
Expenditure management
– Effective steps were not taken to prevent irregular and fruitless and wasteful expenditure.
– Effective and appropriate disciplinary steps were not in all instances taken against officials who
made and permitted irregular expenditure.
– The accounting officer did not ensure that effective internal controls were in place for payment
approval and processing.
•
Financial misconduct
– Investigations have not yet been conducted into all allegations of financial misconduct
committed by officials.
– Investigations into allegations of financial misconduct against officials were not in all instances
instituted within 30 days of discovery thereof.
– Disciplinary hearings were not in all instances held for financial misconduct committed by
officials.
49
Compliance with laws and regulations (continued)
•
Revenue management
– The accounting officer did not develop and implement appropriate processes that
provide for the identification, collection, recording, reconciliation and safeguarding of
information about revenue to ensure that all money due to the trading entity was
collected.
– The accounting officer did not take effective and appropriate steps to collect all money
due.
– Sufficient appropriate audit evidence could not be obtained that interest was charged on
debts.
•
Banking and cash management
– The entity’s main bank account was overdrawn throughout the reporting period in
contravention of the requirements of Treasury Regulation 19.2.3.
50
Compliance with laws and regulations (continued)
•
Procurement and contract management
– Goods and services with a transaction value below R500 000 were procured without obtaining
the required price quotations.
– Goods and services of a transaction value above R500 000 were procured without inviting
competitive bids. Deviations were approved by the accounting officer even though it was not
impractical to invite competitive bids.
– Invitations for competitive bidding were not always advertised in at least the government tender
bulletin.
– Sufficient audit evidence could not be obtained that invitations for competitive bidding were
advertised for a required minimum period of 21 days.
– Contracts were awarded to bidders who did not submit a declaration of past supply chain
practices.
– Person in service of trading entity who, had a private or business interest in contracts awarded
only to bidders who submitted a declaration on whether they are employed by the state or
connected to any person employed by the state, which is prescribed in order to comply with
Treasury Regulation 16A8.3
– Allegations of fraud, corruption, improper conduct and failure to comply with the supply chain
management system laid against officials and role players in the supply chain management
system were not in all instances investigated.
51
Compliance with laws and regulations (continued)
Procurement and contract management (continued)
•
•
•
•
•
Appropriate action was not always taken against officials and role players in the supply
chain management system where investigations proved fraud and corruption and improper
conduct and failure to comply with the supply chain management system.
The accounting officer did not in all instances report within 10 working days to the AuditorGeneral all cases where goods and services above the value of R1 million (VAT included) had
been procured in terms of Treasury Regulation 16A6.4.
Sufficient appropriate audit evidence could not be obtained that all contracts and
quotations were awarded in accordance with the legislative requirements as the entity did
not implement proper record keeping in a timely manner to ensure that complete, relevant
and accurate information was accessible and available to evaluate compliance.
Contracts and quotations were awarded to bidders based on points given for criteria that
differed from those stipulated in the original invitation for bidding and quotations.
Sufficient appropriate audit evidence could not be obtained that contracts and quotations
were awarded to suppliers based on preference points that were allocated and calculated in
accordance with the requirements of the Preferential Procurement Policy Framework Act
and its regulations.
52
Compliance with laws and regulations (continued)
•
•
•
Sufficient appropriate audit evidence could not be obtained that contracts and quotations
were awarded only to bidders who submitted a declaration on whether they are employed
by the state or connected to any person employed by the state.
Persons in service of the trading entity who, had a private or business interest in contracts
awarded by the trading entity, failed to disclose such interest.
Strategic planning
– The accounting officer did not ensure that the department had and maintained an
effective, efficient and transparent system of internal control regarding performance
management, which described and represented how the department's processes of
performance planning, monitoring, measurement, review and reporting were
conducted, organised and managed.
– The accounting officer of the Department of Public Works did not finalise and approve
the business case for running the trading entity and, consequently, did not formulate a
policy and reporting framework for the head of the trading entity.
53
Initiation of Turnaround
•
Conceptualization of the turnaround strategy started in November 2011 with the commissioning of a diagnostic
analysis by TAU of National Treasury.
•
Turnaround at operational level started in the current financial year 2012/13.
•
Turnaround could not impact on the 2011/12 audit outcome.
14 projects have been identified which are:
Project 1: Anti fraud and corruption campaign
Project 8: Re-opening of workshops and building of skills
Project 2: Clean Audit Interventions
Project 9: KAM and Professional Services
Project 3: Finance and SCM stabilisation Interventions
Project 10: Inner City Regeneration (ICR)
Project 4: Operationalisation of PMTE
Project 11: Prestige
Project 5: Compilation of Immovable Assets Register
Project 12: IT Systems (iE-Works, PMIS)
Project 6: Audit and review of Leases
Project 13: Governance and Performance Management
Project 7: Legislative Matters
Review
Project 14: Regional Support
54
Audit Action items
An analysis of the 2011/12 audit report has been undertaken and the following area’s
of intervention have been identified to be addressed as a priority.
1. Immovable asset register
2. Irregular expenditure
3. Leases
4. Performance information
5. Budget management
6. PMTE structure and business case
7. Finance policies and business processes
8. Commercial accounting and billing software procure
9. Clearing of trade receivables
10. Enhance Internal Audit capacity
55
National Department of Public Works (NDPW)
Head Office: Public Works
CGO Building
Cnr Bosman and Madiba
Pretoria Central
Private Bag
X65
Pretoria
0001
Website: http://www.publicworks.gov.za
THANK YOU
56