Adoption of Resolutions on President's and Guardian's Fund;SARS Site Visit; SCOPA Annual Programme

Meeting report

PUBLIC ACCOUNTS PORTFOLIO COMMITTEE
18 September 2002
ADOPTION OF RESOLUTIONS ON PRESIDENT'S FUND AND GUARDIAN FUND; SARS SITE VISIT; SCOPA ANNUAL PROGRAMME

Chairperson: Mr F Beukman

Documents handed out
Draft Resolution on President's Fund (document awaited)
Draft Resolution on Guardian's Fund (Appendix 1)
Categories for reports (Appendix 2)
SARS Provisional Programme
SCOPA Programme (Appendix 3)

SUMMARY
The Committee agreed on the SARS site visit. The SCOPA annual programme for 2002/2003 was adopted except for the ICASA item. The President's Fund draft resolution was unanimously adopted. The draft resolution on the guardian fund was adopted with amendments.

MINUTES
South African Revenue Service Visits
The committee agreed that the visit to SARS site should resume at 15H30 and not at 09H30 as initially proposed. The committee unanimously agreed on the sites visit.

Groups' Report-back
Ms N Hlangwana (ANC) a member of Group 1 presented Group 1 report. She stated that from the meeting between the group and the Office of the Public Protector and ICASA, were of the opinion that the problems of ICASA were unnecessarily exaggerated. She said the group recommended that the committee monitor the processes. She also reported that there would be a meeting between the Department Justice and the group to discuss the case against TRC.

The committee accepted Ms Hlangwana's report.

Mr D Gumede (ANC) held that Group 2 was still in a process of finalising its plan and this would be presented on the next meeting. He noted that the group was concerned about the way in which the minutes were drawn. There should be better follow-up. When tasks were given, those tasks should remain part of the agenda until completed. He said only in this way could the committee make proper follow-ups on all its tasks.

Adoption of Programme for 2002/3
The committee adopted both the proposed programmes, but however deleted the item referring to ICASA.

Adoption of Resolutions
The President's Fund draft resolution was unanimously adopted.

Mr M Lowe (DP) noted that the Guardian Fund draft resolution only focussed on the year
ending 2002 and did not take account of the time frame given to the Auditor General.

Based on the above the committee effected the following amendments:
The report requested that item 2 on 'ineffective accounting systems' would now be submitted on the 15 January 2003
While the one requested that item three 'trained and skilled staff' would be submitted on the 14 February 2003.
The schedule requested item five on 'disciplinary action' would now be submitted on the 15 January 2003.

The draft resolution on the guardian fund was thereafter adopted with its amendments.

Meeting was adjourned.

Appendix 1
DRAFT RESOLUTION ON THE GUARDIAN FUND

Introduction:

The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Guardians' Fund for the year ended 31 March 2001[RP 165/2001], referred to it; as well as having considered the responses to SCOPA's queries by the Director General: the Department of Justice and Constitutional Development, and by the Managing Director:

Masters Business Unit, reports as follows:

1. Audit Opinion

The Committee notes with concern the Auditor-General's disclaimer of opinion on the financial audit, and the qualified opinion on the compliance audit.

The Committee recommends that serious attention be paid to all aspects to the disclaimer and the qualified opinion with the view to avoiding such negative audit opinions being expressed by the Auditor-General in future.

2. Ineffective Accounting Systems

The Committee notes with concern that the Auditor-General has again reported on the ineffective manual accounting system of the Guardians' Fund.

The Committee welcomes the urgent steps, which are being taken to ensure that the ineffective manual accounting system is phased out, and that the target date for the completion of the full computerization of the Guardians' Fund is December 2002.

The Committee recommends that the Department submits a report to SCOPA by 31 December 2002, confirming the full and successful computerization of the Guardians' Fund.

3. Trained and skilled staff

The Committee is concerned the Guardians Funds are experiencing a critical shortage of skilled and experienced staff.

The Committee notes that despite the increased workload, the staff complement could not be increased due to a lack of funds.

The Committee notes that the Department is giving priority to the appointment of trained and experienced accountants to head the

various funds, as well as to filling the post of Financial Director for the Masters National Office.

The Committee recommends that the above appointments be made urgently, and that a progress report on the matter be submitted to SCOPA by 30 November 2002.

4. Bank Reconciliations

The Committee is concerned that either no bank reconciliations or only limited reconciliations had been performed on the current accounts of the various Funds.

The Committee notes the reasons for the failure to do so; welcomes the steps taken to update the reconciliation statements of various Guardians' Funds; and notes that reconciliations have been brought up date at several offices.

The Committee recommends that a progress report be submitted to SCOPA by 30 November 2002, regarding those offices where bank reconciliations have not yet been brought up to date.

5. Disciplinary Action

The Committee notes that the Internal Audit section of the Department was requested to determine the functionality of the various offices; and that a request to conduct a Forensic Audit was made.

The Committee further notes that charges were laid with SAPS; that various criminal charges are being investigated; and that disciplinary action is being taken against those who are suspected of misconduct and of negligence in the execution of their duties.

The Committee recommends that the Department submits to SCOPA by 30 November 2002 a schedule of the various criminal charges which are being investigated, and the nature of disciplinary action taken, if any, against those who are suspected of misconduct and/or negligence.

6. Compliance

The Committee notes that due to the manual accounting system, it is difficult to comply with certain provisions of the Administration of Estates Act and the Income Tax Act

The Committee notes that the computerization of the Funds will in future ensure compliance with the above two Acts.

The Committee recommends that the Department include these compliance aspects in its formal report to SCOPA regarding the full and successful computerization of the Guardians' Act

7. Hearing

Having considered the various inputs, the Committee recommends that no Hearing be held on the Guardians' Fund this year.

Report to be considered.

Appendix 2
Report Categories
The three categories of priority for sifting of reports as taken from the SCAG report are as follows:

Category A: These are matters that always entail a hearing.

- This would be where the audit opinion on votes and public entities is adverse, disclaimed or qualified.

- Special reports of the Auditor-General.

- Highly inadequate tabled responses to SCOPA recommendations.

- Matters of serious public concern not reported on by the Auditor-General.

- Success stories - departments or public entities with dramatic improvements or progress.

Category B: These are matters that don't require a hearing but a standard resolution and letter.

- Unqualified audit opinions - votes only.

- Unsatisfactory responses to SCOPA recommendations.

Success stories - departments or public entities with dramatic improvements or progress.

Category C: These are matters that require no overt action by SCOPA.

Unqualified audit opinions - public entities. Satisfactory responses to SCOPA recommendations.

The above sifting of reports is considered a guideline from the Auditor-General's office that will be supported by the Researcher's notes detailing the departments past performance, related audit opinions and level of compliance with SCOPA recommendations for the previous two financial years.

The above guidelines will serve to inform SCOPA's programme for the year. However decisions on categories may not only be informed by the above guidelines but the membership of SCOPA may deem a hearing necessary due to public opinion, serious or recurring issues, material amounts in question, subsequent events or the political context at the time which all play an important role in determining effective oversight and accountability not only in terms of financial management but oversight in terms of accounting to constituencies and stakeholders affected by Departmental mismanagement. Regular feedback by SCOPA to the Auditor-General on focus areas from a SCOPA perspective for the next audit cycle must be provided for in time for incorporation in the next audit cycle.

Appendix 3
STANDING COMMITTEE ON PUBLIC ACCOUNTS
PROGRAMME: 2002