Analysis of Department of Home Affairs 2010/11 Annual Report: briefings by Parliamentary Research Unit & Office of the Auditor-General of South Africa

Home Affairs

10 October 2011
Chairperson: Ms M Maunye (ANC)
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Meeting Summary

The Committee’s Researcher presented an analysis of the Department of Home Affairs 2010/2011 Annual Report. The Department’s three main strategic outcomes were: 1) secured South Africa citizenship and identity 2) immigration managed effectively and securely in the national interest including economic, social and cultural development 3) a service that was efficient and corruption free. These outcomes were reflected in the three main programmes of the Department namely; Citizen Services, Immigration Services and Administration. The three outcomes were divided into twelve indicators, which the Department measured itself against. Achievement of the targets had improved from previous years, particularly in comparing the strategic plan with the annual report.

Programme 1 related to Administration, the Department achieved nine out of the 20 performance indicators set out in this programme. Three of the targets not achieved related to internal procurement and finding suitable service providers. Two of the delayed targets related to an asset register only being finalised towards the end of the financial year. Programme 2 related to Services to Citizens. This programme had 19 indicators and 21 targets. Of the 21 targets, 11 were achieved. Three of the targets not achieved were in part attributed to the prolonged public service strike and a further two targets were contingent on other entities or lack of funding for procurement. A notable target that was exceeded was 2.2 million IDS being issued over the target of 1.99 million. Programme 3 related to immigration services. There were 16 indicators set for immigration in the mentioned four outcomes. Of these, only three were fully achieved. Of the targets not achieved, seven were attributed to no measuring tool being in place. Three of the targets related to immigration policy legislation and regulations were contingent on parliamentary processes and the establishment of the Border Management Agency was contingent on the Justice, Crime Preventions and Security government Cluster (JCPS).
The Department could be commended for achieving an unqualified report, however the report did not indicate qualitative improvement in service delivery. This was a concern given the significant over-spending by the Department.

Members raised questions of the timeline of the receipt of the report and the classification of the R1.2 billion over-spend as minor. It was agreed that these questions would be more appropriate if raised during direct engagement with Department at a future meeting.

The Office of the Auditor-General also provided an analysis of the Department’s annual report. There was strong commitment from the leadership and management of the Department to get a clean audit by 2014. The leadership had shown the right attitude to getting towards a clean administration of audit outcomes. After 16 years of qualified audits, 2010/11 was a milestone for the Department to achieve an unqualified audit. Regarding oversight, it was important to engage with the Department to discuss what monitoring mechanisms would be put in place and what timeline the Department would be working with. A lot of work needed to be done but the first hurdle of an unqualified audit had been cleared. A clean administration was needed so that entities could focus energy on service delivery. This built confidence in the entity. Audit outcomes for the Department revealed an unqualified outcome. In the engagements the question had to be asked, did the Department put processes in place to ensure sustainability and stability for years to come? Concerning the report on predetermined objectives, there were findings on the measurability. The oversight should ask what plans were being put in place to ensure that predetermined objectives could be measured and what timeframe the Department was working with to achieve this goal. There was non-compliance with the Public Finance Management Act, the Public Service Regulations and Treasury Regulations. Oversight was concerned with how was the Department addressing this, what were the processes being put into place, what time frame would this be achieved in and how best to ensure sustainability moving forward. The Department corrected material misstatements. The movement from 2009/10 had improved in terms of moving from a qualified to an unqualified audit opinion.

Members asked about extent to which the AGSA had audited service delivery, what was meant by visibility of leadership as an oversight focus and what the best approach was- was it better to over-spend or under-spend

Meeting report

Analysis of the Department of Home Affairs 2010/2011 Annual Report
Mr Adam Salmon, Researcher, Parliamentary Research Unit presented an analysis of the Department of Home Affairs (DHA) Annual Report.

The 2010 State of the Nation Address outlined the following key priorities that had an impact on Department of Home Affairs:

•Improving services when applying for identity documents
•Intensifying efforts against identity theft
•Improving public service performance and monitoring
•Continuing effort against corruption, including those in procurement and tender processes
•Ensuring the infrastructure and logistics for the 2010 Fédération Internationale de Football Association (FIFA) World Cup
•Regional integration.

The Department’s three main strategic outcomes, which related to the programmes in the budget were: 1) secured South Africa citizenship and identity 2) immigration managed effectively and securely in the national interest including economic, social and cultural development 3) a service that was efficient and corruption free. These outcomes were reflected in the three main programmes of the Department namely; Citizen Services, Immigration Services and Administration. These outcomes were also reflected in the Minister’s Performance Agreement. The Department had also attempted to translate these outcomes into the performance agreements of all employees. The three outcomes were divided into twelve indicators, which the Department measured itself against. The first outcome related to secured South African citizenship and identity had four measurable indicators: 1) to ensure that registration at birth was the only entry point for South Africans to the National Population Registrar 2) to issue identity documents to all citizens 16 yeas of age and above 3) to secure processes and systems to combat fraud and corruption 4) to integrate key systems and upgrade IT infrastructure for improved security and data integrity. The second outcome related to immigration managed effectively and securely and had four measurable indicators: 1) effectively contributing to the successful hosting of the 2010 FIFA World Cup 2) to implement an integrated immigration management system 3) to participate an contribute towards the establishment and functioning of a Border Management Agency 4) to review the policy and regulatory framework to manage economic migration. The third outcome related to efficient, accessible and corruption-free service and had four measurable indicators: 1) to improve leadership capacity and capability, 2) to ensure ethical conduct and a zero tolerance approach to corruption 3) to obtain a clean audit report and 4) to ensure effective, efficient and accessible service delivery to clients. Achievement of the targets had improved from previous years, particularly in comparing the strategic plan with the annual report.

Programme 1 related to Administration, and had six sub-programmes, namely Minister, Deputy Minister, Management, Corporate Services and Property Management. The Department achieved nine out of the 20 performance indicators set out for this programme. Three of the targets not achieved related to internal procurement and finding suitable service providers. Two of the delayed targets related to an asset register only being finalised towards the end of the financial year. The Department managed to exceed three of its indicators related to training and refreshing of IT equipment, as well as the notable achievement of its first unqualified report in 16 years. The strategic plan however only mentioned 17 indicators for the administration programme, one of which was not relevant for 2010/11. The Department over-spent its budget allocation by 11.6% amounting to R176 million, which was attributed to the settlement of debts with regard to consultancy services, information services, legal services and leases. In addition, a virement total of R37.2 million was shifted from Administration to other programmes. The Department was allowed to shift up to 8% of its programme allocation from one programme to another and it did not exceed that amount. Some general questions in the analysis of the Administration programme performance included the following: What were the reasons for the problems in the internal procurement procedures which led to not achieving some indicators? What were the reasons for the delay in the finalisation of the asset register? What led to the variance in the number of indicators in the strategic plan(17) and the annual report (20)? What was the justification for over-spending in and shifting funds from, the administration programme when so many indicators were not achieved? What if any had been the results of counter corruption strategies established by the Department?

Programme 2 related to Services to Citizens. The purpose of Programme 2 was to secure efficient and accessible services and documents for citizens and lawful residents. There were six sub-programmes, namely, Management, Status Services, Identification, Home Affairs National Identification System (HANIS), Civic Channel Management and Provincial Civic Services. This programme had 19 indicators and 21 targets. Of the 21 targets, 11 were achieved. Three of the targets not achieved were in part attributed to the prolonged public service strike and a further two targets were contingent on other entities or lack of funding for procurement. The targets for the late registration of birth (LRB) and issuing IDs to those 16 and older were stated in the strategic plan as percentages (95%), however the performance that was given as achieved was in numbers, which could not be evaluated since the total number of citizens for these target was not mentioned. A notable target that was exceeded was 2.2 million IDS being issued over the target of 1.99 million. This was attributed to the Department’s campaigns prior to the Local Government Elections. Targets that significantly underachieved were the time to issue unabridged birth, death and marriage certificates being issued in six to eight weeks as opposed to three to four week and 24 days for the issue of manual passports as opposed to 10 days. These failing were attributed to the dispute relating to the Who Am I Online project and problems with quality of newly implemented digital photographs as well as cable theft power outages. The Department over-spent its R1.51 billion allocation for citizen services by 16.8% or R258.3 million. In addition, an amount of R56.6 million was shifted from citizen services to other programmes. Over-expenditure was mainly due to increased printing costs of passports and the overhaul of HANIS. Some general questions in the analysis of the Services to Citizens programme performance included the following: Why were targets for LRB (1.1.2.1) and issuing of IDs to persons 16 and older (1.3.1.1) reported in numbers, whereas the indicators were measured in percentages? No total amounts for the relevant population groups were mentioned. Given the significant over-spending virement associated with the citizen services programme, why were just under half of all targets achieved? What amount was over-spent on the overhauling of HANIS and what if any positive outcome had resulted from this? Had delays to the turnaround time performance for delivering all passports been resolved and what was the current average service time versus the target of 10 days?

Programme 3 related to immigration services. The purpose of Programme 3 was to facilitate and regulate the secure movement of people into and out of the Republic of South Africa through ports of entry, to determine the status of asylum seekers and to regulate refugee affairs. There were six sub-programmes for immigration services, namely, management, admissions, immigration control, provincial immigration control, foreign missions and refugee affairs. There were 16 indicators set for immigration in the mentioned four outcomes. Of these, only three were fully achieved. Of the targets not achieved, seven were attributed to no measuring tool being in place. Three of the targets related to immigration policy legislation and regulations were contingent on parliamentary processes and the establishment of the Border Management Agency was contingent on the Justice, Crime Preventions and Security government Cluster (JCPS). This indicated a significant lack of planning and management in this programme. When considered against the immigration achievements prioritised for the FIFA World Cup, the lack of monitoring measures for temporary and permanent residence was a considerable security risk. This was in part reflected in the reported target achieved of establishment of a risk based framework for immigration. Key achievements under the immigration programme included establishing and appointing a Chief Director of Asylum Seeker Management to provide strategic leadership of the asylum seeker and refugee processes. A chairperson of the Refugee Appeal Board was also appointed. Strengthening the human resources capacity within the sub-programme was also identified as a priority and a number of vacant posts were filled. Refugee Affairs also developed and managed the implementation of a framework to guide those Zimbabwean nationals who wanted to voluntarily forgo their application for asylum in support of the Documentation of Zimbabweans Project. A project team was established to deal with the backlog of applications, and this team was relatively successful. The team also implemented a Track and Trace system, which was rolled out to all offices. An inspectorate tracing unit was set up during the FIFA World Cup to monitor the incoming and outgoing traffic. This unit collaborated with foreign missions and the police. The programme over-spent its final allocation by 21% amounting to R253 million for a total of R1.28 billion. This was attributed to providing services abroad through the Department of International Relations and Cooperation (DIRCO) for foreign allowances and operational expenditures. DIRCO issues passports, IDs and visas in foreign countries and the DHA had to pay them back. In the past the Department had not paid them back and this was one of the reasons that led to a qualified audit in the past and was the main reason for the significant over-spend. In addition, the Department received an overall virement of R103 million transferred from other programmes. Some general questions in the analysis of the Immigration Services programme performance included the following: Why were there no measuring tools in place for seven of the uncompleted targets for Immigrations? Given the already poor performance for refugee and immigration targets, would the implementation of a risk based framework for immigration not have a further negative effect on Human Rights and Skills import requirements? What were the measures put in place to ensure that DIRCO was paid on time for its service DHA? The target for the establishment of the Border Management Agency was still outstanding almost two years after the target was set. What were the reasons for delays in the JCPS or elsewhere?

On human resources (HR), the organisation structure was aligned to municipal boundaries as per Chapter 3 Act No. 108 of the Constitution, which should provide for better integration of governance and intergovernmental relations at the provincial level. There was a review of the whole HR structure, which included leave management, exit management, staffing management and payroll management this review was aimed at improving efficiency and effectiveness. The Department identified and funded 417 positions for this financial year. Of the 417 positions, 178 posts were filled. The Department indicated only 7.4% vacancy rate, which was significantly lower than previous years. The Department recruited and trained a lot of immigration staff, particularly around the World Cup. An absentee management programme was implemented which reduced the absenteeism rate to 0.12% from almost 6%. This was better than the national average. The Department also developed a performance management system, which linked the organisational performance toe individual performance contracts. The Department established a learning academy and was developing a national certification for Home Affairs Services. On gender analysis, the Department comprised 53% women (4933 out of 9259) but only around 40% percent of professional and higher employees. Some general questions in the analysis of the Human Resources performance included the following: The Department indicated that it had a national vacancy rate of 7.4%, however during oversight to the provinces, Parliament had witnessed vacancy rates of up to 45%. And the DHA indicates a 33% resignation rate. How could this be explained? Given the high rate of resignation at the DHA, what retention strategies had been implemented? The Department indicated a number of 3452 terminations and 139 disciplinary actions. Why were terminations so high and why such relatively low amounts of disciplinary action taken?

The financial information reflected that the Department had an unqualified audit report. The significant uncertainties were related to the Gijima contract and the various pending legal claims, which amounted to R1.2 billion. These pending claims could have a significant knock-on effect. The material losses amounted to R28.5 million for debt that were written off this related to employees and foreign expenses. Material losses of R38.2 million were the results of adjustments made to tangible capital asset balance. Additional matters of importance were concerning the usefulness of information, as 33% of indicators were not quantifiably measurable as well as the procurement and contract management, where senior managers did not disclose their business interests. Some general questions in the analysis of the financial information included the following:  What financial impacts would the settlement of the Gijima dispute have on budget requirements in coming years? What would be done to remedy the significant lack of measurable targets in the Immigration programme? What was the nature of the R32 million debts that we written off? What was the current state of the procurement policy in the Department and what were some of the measures used to ensure its enforcement, if any?

In conclusion the DHA could be commended for achieving an unqualified report; however the report did not indicate qualitative improvement in service delivery. This was a concern given the significant over-spending by the Department.

Discussion
The Chairperson opened the floor to discussion

Mr G Macintosh (COPE) asked whether the reports were delivered within the one month after the accounting officer for the Department received the audit report.

Mr Salmon replied that the reports were indeed received within the one month timeline.

Ms A Lovemore (DA) asked why the pending legal claims that amounted to R1.2 billion were referred to by Mr Salmon as minor when the claims were listed by the Auditor General as a significant uncertainty? Why did the researcher not highlight the fact that the audit commission was deficient, as the accounting officer did not prevent unauthorised and fruitless expenditure? There were numerous emphasis matters that were not highlighted.

Mr Macintosh stated on a point of order that Mr Salmon was a researcher, not a politician, nor a member of the opposition, nor the government. The Committee should handle him more gently than Ms Lovemore did.

The Chairperson agreed with Mr Macintosh and stated that there was no need to interrogate him as he was the Committee’s researcher.

Mr M Mnqasela (DA) stated that the work done by the researcher was commendable and without quality research the Committee would be unable to function properly. He reiterated Ms Lovemore’s question on the audit commission. Why was it taking the Department so long to put structures into place in dealing with the movable and immovable assets? He referred to the Committee’s oversight visit to Maseru as an example of the uncertain structures. The Committee needed more information in dealing with asset management.

The Chairperson stated that Mr Mnqaselas questions were valid, but they were directed to the wrong person.

Mr Mnqasela stated that he was highlighting questions to be raised when the Committee engaged with the Department.

Ms S Rwexana (COPE) stated that the researcher should not respond to the questions, as the Committee was preparing for engagement with the Department in a future meeting.

The Chairperson stated that Mr Salmon should respond to the issues raised if he could

Mr Salmon agreed that the Department would be the most appropriate authority to answer the questions raised, but it was important that Members had clarity on the issues. The reason why the Auditor General did not classify the legal costs as significant was because the Department had not incurred the expense yet. The legal case was finalised after the end of the financial year and thus did not deter from the unqualified report. One question that could be asked would be the lack of service delivery as a result of the legal case. The fact that the case was not implemented had a significant impact on the Department. 

There were only three matters of emphasis: the significant uncertainty, material losses and additional matters. The audit commission was an ongoing concern from previous years. The Auditor General’s report was mainly concerned with significant underperformance, miscalculations and errata. This audit approach did not necessarily speak to whether the Department performed well or not in terms of service delivery.

Mr G Macintosh (COPE): asked about the distinction between an unqualified audit and a clean audit.

The Chairperson stated that the Auditor General’s Office would be able to answer that question in the next presentation. The Chairperson thanked Mr Salmon for his research and invited Mr Kevish Lachman to make his presentation.

Briefing by the Auditor General on the Annual Report 2010/11 of the Department of Home Affairs
Mr Kevish Lachman, Business Director for the Auditor General’s Office (AGSA) stated that the function for the Auditor General was to enable oversight and provide the Committee with the tools to help it carry out its functions. The goal of the AGSA was to contribute towards the clean administration of audit outcomes, and work towards a clean administration by 2014. In order for the AGSA to do this it must have no material misstatements, no audit findings on the report of predetermined objectives and no findings of non-compliance. If these were present it would lead to internal control deficiencies. If there was an unqualified audit opinion, that was only half the job, there must be clean administration as well.

There was strong commitment from the leadership and management of the Department to get a clean audit by 2014. The leadership had shown the right attitude to getting towards a clean administration of audit outcomes. After 16 years of qualified audits, 2010/11 was a milestone for the Department to achieve an unqualified audit. Regarding oversight, it was important to engage with the Department to discuss what monitoring mechanisms would be put in place and what timeline the Department would be working with. A lot of work needed to be done but the first hurdle of an unqualified audit had been cleared. A clean administration was needed so that entities could focus energy on service delivery. This built confidence in the entity.

There were three key areas for the oversight leadership for focus on, namely: 1) clarity and simplicity of reports, so that the messages were understood by stakeholders 2) visibility of leadership to guide, mentor and be involved in the processes and 3) the role of governance structures to facilitate good quality information so that the right decisions could be made.

Audit outcomes for the Department revealed an unqualified outcome. In the engagements the question had to be asked, did the Department put processes in place to ensure sustainability and stability for years to come? Concerning the report on predetermined objectives, there were findings on the measurability. The oversight should ask what plans were being put in place to ensure that predetermined objectives could be measured and what timeframe the Department was working with to achieve this goal. There was non-compliance with the Public Finance Management Act, the Public Service Regulations and Treasury Regulations. Oversight was concerned with how was the Department addressing this, what were the processes being put into place, what time frame would this be achieved in and how best to ensure sustainability moving forward. The Department corrected material misstatements. The movement from 2009/10 had improved in terms of moving from a qualified to an unqualified audit opinion.

In terms of the legislative requirements for predetermined objective, there were five documents that the AGSA had identified as critical in ensuring that performance information was reported in a manner that was required legislatively. These five documents included the Public Finance Management Act, Treasury Regulations, Framework for managing programme performance information, Framework for strategic plans and annual performance plans plan and National Treasury Instruction notes.

The three audit criteria were: 1) compliance with regulatory requirements, the sub-criteria were concerned with existence, timeliness and presentation 2) usefulness of information, the sub-criteria were concerned with measurability, relevance and consistency and 3) reliability, the sub-criteria were concerned with validity, accuracy and completeness of information. The AGSA looked at the report in terms of theses areas

Discussion
The Chairperson opened the floor to questions.

Ms Lovemore asked about extent to which the AGSA had audited service delivery. On the issue of reliability what degree of detail did the AGSA go into, for example the vacancy rate was 7.4% but did this number include un-funded positions?

Mr Lachman replied that the AGSA was in the process of migrating to provide a separate audit report and were looking at readiness of this report for next year. In reference to the section on predetermined objectives, paragraph 14 and 15 talked about the usefulness of information, these spoke to the question of service delivery performance and how it was reported in the annual report. The AGSA did not perform a full service delivery audit. The AGSA looked at the information that was reported and than reported it in terms of predetermined objectives. The engagement with the Department would likely provide more clarity on issues of service delivery. On the issue of reliability of the information concerning vacancies, the AGSA went in depth we do make sure that it was consistent.

Mr Macintosh asked for clarity on what Mr Lachman meant by visibility of leadership as an oversight focus area.

Mr Lachman replied that visibility of leadership referred to the ability of the leadership to be seen by the people that they lead so that they could influence the activities of the people that they were leading.  It was a question of internal and external visibility: being seen and getting involved in resolving issues. With Home Affairs it was commendable that the Director General and the Minister had gotten involved in the transformation of the Department.

Mr Mnqasela asked what the best approach was- was it better to over-spend or under-spend.

Mr Lachman responded that it was best to meet the budget (laughter). It was important to distinguish between an under-spending and a savings. The ideal situation would be one where you produce the same level of services that you required, but cost effectively in a manner through efficiencies that would produce a savings.

The Chairperson closed the meeting.


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