Workshop with Office of Auditor-General, Financial & Fiscal Commission & Department of Performance Monitoring & Evaluation in preparation for BRRR process

Meeting report

Office of Auditor General SA (AGSA)

The AGSA delegation comprised of Mr Lourens van Vuuren, Business Executive: AGSA, Mr Siyanda Saki, Senior Manager: AGSA, Ms Dipallo Shea, Senior Manager: AGSA and Ms Galaletsang Mosethle Trainee Auditor: AGSA. The briefing was undertaken by Mr Lourens and Ms Shea. Mr Lourens said the purpose of the workshop was so that the Committee could be capacitated to perform its oversight function better.

Ms Shea said that on audit report coverage, with respect to annual reports, the entire annual report was not audited. The AGSA was governed legislatively by the Constitution (Chapter 9, Section 188) and by the Public Audit Act No 25 of 2004, Section 20. Departments/entities were governed by the Public Finance Management Act No 1 OF 1999, Treasury Regulations, and the Framework for Managing Programme Performance Information (FMPPI) and Public Service Regulations (PSR).

The Regulatory Audit was a mandatory annual audit, and was done to verify that there was no omitted information in financial statements. It consisted of financial, compliance, predetermined objectives and internal control. It entailed the full application of international auditing standards. Regulatory audits were supported by an information systems audit which was mandatory and, if needed, performance audits, investigations and special audits, which were discretionary. Members were given insight into the regulatory audit process, which involved a risk assessment, a risk response and finally reporting.

AGSA audits also entailed undertaking value-added processes like, for example, a performance audit. The performance audit was an independent auditing process to evaluate the measures instituted by management to ensure that resources had been procured economically and were used efficiently and effectively. Emphasis was placed on the three Es ie Economy, Efficiency and Effectiveness.

The Committee was provided with a breakdown of timelines of the audit cycle. 31 March was the financial year end for auditees. On 31 May there was the submission of financial statements by auditees. By 31 July, the AGSA audit had to be completed. On 30 September, there was the submission of annual reports by auditees to Parliament. Finally, in the last quarter of the current year or the first quarter of the following year, general Public Finance Management Act (PFMA) reports were published.

Detail was provided on the four types of financial audit opinions that could be given by the AGSA. The first was an unqualified audit opinion with findings on compliance and predetermined objectives, which meant that financial statements gave a true and fair view in accordance with the applicable financial reporting framework. Secondly, there was a qualified audit opinion, which showed that there were departures from the financial reporting framework or limitation on scope which was not so material and pervasive. The third type of audit opinion was a disclaimer, which meant that the auditor was not able to obtain sufficient appropriate audit evidence to form an opinion. The fourth and final audit opinion was an adverse audit opinion, which essentially meant that the auditor disagreed with the representations made by management in the financial statements to the extent of confirming that it was not a fair reflection of the financial position, performance and cash flow.

Insight into the overall oversight model was provided to the Committee. There were, however, certain budgeting/review considerations that Members were encouraged to take into consideration. For example, they had to understand the mandate of the entity, as well as whether there was adequate budget and human resources to deliver on the said mandate. The AGSA also elaborated upon its contribution to oversight. The Auditor General’s Office provided briefings to committees on audit reports before the portfolio committees compiled their Budget Review Recommendations Reports (BRRRs).

A combined assurance model, which covered different levels of assurance was elaborated upon. The first level of assurance covered management’s assurance role. The second level of assurance was oversight assurance by National Treasury, internal audits and audit committees. The third level of assurance was independent assurance, which involved oversight by portfolio committees like the present Committee.

In conclusion, Members were provided with insight into the actual briefing process. The process started with reporting by departments and their entities to Parliament. It was stressed that oversight committees like the Committee needed to understand mandates of entities and annual reports should be studied prior to briefings. The next step was that the AGSA would elaborate on the root causes of audit outcomes and make recommendations to oversight committees to address deficiencies reported. Oversight committees would issue their findings, and had to make recommendations to address deficiencies. These recommendation reports should be sent to executives for implementation. Entities had to come up with action plans to address the deficiencies, and the progress should be monitored by oversight committees.

Discussion

Ms L Mjobo (ANC) felt that the presentation was too general and not specific enough. She had been under the impression that the Auditor General’s Office was to workshop the Committee on issues pertaining specifically to the Department of Public Works.

Mr S Masango (DA) asked what the difference between the terms ‘relevance’ and ‘realistic’ was. He said that it was usual practise for departments to present their strategic plans to Parliament. He was under the impression that strategic plans were based on budgets. Departments always complained that they did not have sufficient budgets. He pointed out that only four types of audits were explained in the presentation. Why was a clean audit not explained? Given that the Auditor General’s Office performed audits on a sample basis, were there not instances where things were missed and picked up only later?

Mr Van Vuuren, explaining the difference between ‘relevance’ and ‘realistic’, said that relevance was about relevance to the mandate of the entity. ‘Realistic’ was about targets needing to be realistic. He pointed out that the process started with strategic plans. Each entity had its own strategic plan. Strategic plans would then proceed through review processes to assess whether objectives set in strategic plans and annual performance plans were being met. Budgets needed to be set for strategic plans and annual performance plans. There was a link between budgets, strategic plans and annual performance plans. Strategic plans could not be unfunded. The Committee had to ensure that activities were adequately funded. Shifts in budgets were possible by a margin of 8% per programme. However, in November each year, major budget shifts were possible. Members needed to check if there were major changes in strategy and whether the changes were in line with budgets. He explained that the Auditor General’s Office followed a risk-based audit approach. Each and every transaction could not be audited. He confirmed that audits were done on a sample basis. He also conceded that there were instances where things were missed. If there was an error, it was checked whether it was material and if it impacted upon the user of financial statements.

Mr K Mubu (DA) referred to the part of the presentation where the Auditor General’s Office spoke about things which they did not do. One of the things that the Auditor General’s Office did not do was to guarantee the completeness and accuracy of all information. He asked what the point was, if this was not guaranteed by the Auditor General’s Office. If it was not the Auditor Generals’ Office, then who provided the guarantee? There was also no assurance provided that all applicable laws and regulations had been complied with. The Auditor General’s Office furthermore did not identify fraud, nor did it provide assurances that service delivery had been achieved. He said that the Auditor General’s Office should be keeping track of where funds were spent or misspent.

Mr Van Vuuren, referring to what AGSA does not do, said that guidance was taken from international standards of auditing. It gave credibility to the auditing process. An audit process provided reasonable assurances and not absolute assurances. He emphasised that the accuracy and completeness of statements was the responsibility the relevant accounting officer. On the compliance with laws and regulations, he said that the Auditor General’s Office focussed only on key pieces of legislation, as it would be impractical to check every piece of legislation. Supply chain legislation had recently become important in regard to irregular expenditure. Human resource regulations had also become more prominent of late. It was not the responsibility of the Auditor-General’s Office to detect fraud. If fraud was detected by the Auditor General’s Office, it was dealt with in the appropriate manner. On performance information and service delivery, it was the responsibility of the entity to check its performance against the predetermined objectives and targets that it had set. The Auditor General’s Office checked if targets that had been set, had been met. There was not necessarily always a link with service delivery. In some instances, there could or could not be a link with service delivery, even if targets were met.

Mr F Adams (ANC) stated that in the past, the Auditor General’s Office had made assurances that departments would be assisted by them. The reality was the departments were still underperforming. Did the Auditor General’s Office have mechanisms in place to assist departments and especially municipalities? He asked whether Chief Financial Officers were also assisted. What was a clean audit? He managed to pick up on only two “E’s” during the presentation. What was the third “E”?

Mr Van Vuuren responded that AGSA’s current strategy for providing assistance was to go into each and every environment that it audited, and to check on key controls on a quarterly basis. The focus was on whether there were day to day controls like, for instance, keeping the asset register regularly updated. The assessments made by the Auditor General’s Office were communicated to management, councillors and audit committees of organisations. AGSA also provided feedback to mayors and ministers. Recommendations were additionally also made by the Auditor General’s Office. The term “clean audit” was used where an entity had received an unqualified audit report with no findings. In other words, there were no material findings on the three categories that the Auditor General’s Office had to report on. The three “E’s” were ‘Economy’, which considered best price, ‘Efficiency’, which looked at input versus output and lastly ‘Effectiveness’, which looked at whether objectives had been achieved.

The Chairperson echoed the comments of Ms Mjobo, saying that the presentation was of a very general nature and not specifically about the Department of Public Works. The presentation spoke to generic principles. He noted that the Auditor General’s Office should sometime in the future do a presentation that was portfolio specific to the Department of Public Works. The Committee needed to be guided on what its role was, and how it should take forward matters that had been addressed or matters that had not been addressed by the Department of Public Works. He said that auditors in general honed in on a body of information. An audit was usually done on the basis of information provided. The entire organisation was not audited, but a sample was taken.  

Mr Van Vuuren noted the eagerness of Members to engage with AGSA on specific information pertaining to the Department of Public Works. On timeframes, he stated that entities had to table annual reports by 30 September 2014. As things were, the Department of Public Works had not tabled its annual report as yet. The Auditor General’s Office would return to brief the Committee on the Budget Review Recommendations Report (BRRR) in October. It would be a comprehensive briefing, and would be a historical account of the Department of Public Works. It would allow the Committee to see whether there had been a regression or improvement in audit outcomes. The Auditor General’s Office would also be making recommendations. The Committee would engage with the Department of Public Works, and could pass resolutions. The Department of Public Works could be requested to come up with a plan of action and they could be required to report to the Committee on a quarterly basis on progress made. There was a process to be followed, and today was just the introduction. In conclusion, he said that he looked forward to engaging with the Committee again in the near future.

The Chairperson agreed that such engagement was necessary, but that the Committee and the Auditor General’s Office would have to liaise with each other before its next meeting to agree upon what areas should be covered by AGSA in the briefing.

Financial Fiscal Commission (FFC)

The Financial Fiscal Commission briefed the Committee on its role and function, recommendations it made in relation to Public Works and its analysis of the Department of Public Works (DPW). The FFC delegation comprised of Mr Bongani Khumalo, Acting Chairperson and CE, Dr Ramos Mabugu, Research Director, Ms Sasha Peters, Manager, Budget Analysis Unit, and Mr Ghalieb Dawood Programme Manager. The briefing was shared amongst members of the delegation.

The FFC made recommendations to Parliament, provincial legislatures and any other organ of state determined by national legislation. The FFC’s focus was on the equitable division of nationally collected revenue amongst the three spheres of government, and on any other financial and fiscal matters. The FFC made recommendations to Parliament so that the legislature could examine the financial and fiscal decisions of government against the recommendations and understood why they had been accepted or rejected. Parliament was obliged to consider recommendations made by the FFC when it deliberated on money bills. Government was obliged through an act of Parliament to explain how it had taken the FFC’s recommendations into consideration in arriving at the division of revenue for any particular year.

The Committee was given insight into recommendations made by the FFC to the Department of Public Works, and how FFC work related to the Department. The FFC had welcomed the introduction of the Expanded Public Works Programme (EPWP) incentive grant for the social sector. The FFC had noted that there was a need to standardise the employment framework for the sector including conditions, wages and progression across provinces and municipalities. Concern was also raised by the FFC regarding difficulties that were being experienced with the transfer of the EPWP incentive grant to local and provincial governments. In 2009/10, certain provinces like the Western Cape had raised concern that they had received transfers outside the ambit of the Division of Revenue and could not spend the money because it had not been properly appropriated through the various legislatures.

The FFC continued with the Department of Public Works’ analysis. One of the aims of the DPW was to provide for and manage accommodation, housing, land and infrastructure needs of national departments. A point highlighted was that public works was a concurrent function between national and provincial spheres of government. The FFC pointed out that there were key challenges confronting the DPW. Due to the consistent trend of poor audit outcomes and generally poor performance, the DPW had implemented a turnaround project in November 2012. Areas identified for specific attention included the lack of controls in supply chain management, poor lease management, an inadequate immovable asset register and a lack of built environment and property management skills.

The Committee was provided with a breakdown of figures of the DPW’s budget as per programme. Real year on year growth in the budget showed a significant decline in 2013/14. Even though it was still declining in real terms in 2014/15, there were signs of some improvement. The DPW had under-spent in 2011/12 and in 2012/13. The situation appeared to be improving in 2013/14, as variances in monthly spending were not as large as what they were in 2012/13. On the performance of the DPW, it was not adequately meeting the targets that it had set. A number of targets were partially met, and the figures of those not met were high.

Audit outcomes for the Department of Public Works were:

-       2009/10: qualified with findings

-       2010/11: disclaimer

-       2011/12: disclaimer

-       2012/13: qualified with findings

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Key issues highlighted by the AGSA as needing addressing were the inadequate internal controls in areas of leadership, financial management, performance management and governance. Areas identified for specific attention through the turnaround project as outlined above were also mentioned.

Detail was provided on the public works activities in the provinces. Audit outcomes of provincial departments of public works had not considerably improved since 2003/04. Four out of nine provinces received a qualified opinion or disclaimer in 2012/13. Over a period of ten years (2003/04 – 2012/13), only three provincial departments of public works had received an unqualified audit opinion. The FFC was of the view that the DPW had to play a more active role through various intergovernmental forums, to provide the necessary support to its provincial departments.

The national DPW was the transferring agent for two EPWP conditional grants to provinces. Over a four year period (2009/10 – 2012/13), provinces had been unable to spend more than 80% of their allocation to the EPWP incentive grant in any given year. Except in 2011/12, where spending of both EPWP grants were below 60% of total, the EPWP social sector grant in general had performed better than the incentive grant. In many instances, provinces failed to comply with grant conditions stipulated in the Division of Revenue Act, resulting in funds being withheld thereby leaving funds unspent at the end of the year.

Key issues emanating from the FFC analysis of the DPW was that there was under-spending of the budget, and that targets had not been met. For the sector to turn around, the Department of Public Works needed to play a leadership role by providing provinces with the necessary support and to establish norms and standards to facilitate improvement in service delivery in the provinces. The DPW should also put in place proper systems to guide expenditure management, the setting of key performance indicators, and a plan to attract/retain skilled staff.

Discussion

Ms P Adams (ANC) referring to the immovable asset register of the Department, and asked whether the poor performance could not be attributed to the function of concurrency between the national and provincial departments. In the presentation, mention had been made that in 2012/13 the DPW had appointed service providers to support provinces and municipalities in the design of infrastructure projects and reporting methods. She asked whether there were timeframes set as to when the service providers should complete their work. Were the service providers assessed by the FFC? Was value for money obtained through the use of service providers? She also referred to the presentation’s indication of the expenditure of conditional grants, and noted that in 2012/13 the expenditure on the EPWP social sector grant was quite high, which was good. However, in 2011/12 there had been a huge dip in the expenditure. What was the cause?

Mr Khumalo confirmed that in respect of the immovable asset register, concurrency was part of the challenge. There was a need for improved inter-governmental relations. There were other challenges as well. The FFC did not assess service providers. Assessments should be done internally. He emphasised that the government needed to introduce reviews of independent service provider expenditure. It was known that the Department of Performance Monitoring and Evaluation would be doing it. Part of the issues raised by the Minister of Finance had been cost containment measures. He suggested that the Committee deal with these issues when it dealt with the Annual Performance Plan of the Department of Public Works.

Mr Masango asked at which stage of the budget process the FFC should be consulted. He referred to the presentation, which stated that government was obligated through an act of Parliament to explain how it had taken recommendations of the FFC into consideration in arriving at the division of revenue for any particular year. He asked whether the same applied to the legislature. He asked for clarity on the slide which spoke about the FFC’s response to the Medium Term Budget Policy Statement (MTBPS) for 2011.Clarity was needed over the punitive and incentive elements of grants. He spoke about incentives, and noted that if funds were being dispersed to provinces, not in terms of the Division of Revenue Act, what remedy did the FFC suggest? What was the proper way to give incentives to provinces?

Mr Khumalo responded that the first stage of the process was when the Executive decided to prepare legislation. The FFC would then advise the Minister of Finance. Parliament, in processing legislation, would consider what the FFC had proposed. If something was bypassed, then the FFC would bring legislation back to Parliament. There were instances where legislation had already been passed, or was in its final stages. Sometimes there was a need to phase things in. He noted that government did not respond to the FFC, but to Parliament. Recommendations made by the FFC were to Parliament. If Parliament differed with the government, then the issue could be discussed between the FFC, government and Parliament. The Minister of Finance had to respond to recommendations made by Parliament in BRRRs. There was no requirement that Parliament had to communicate its thoughts to the FFC.

On the punitive and incentive elements of grants, he said that if a department motivated for a grant, they were responsible for the design of the grant. The responsible persons were the accounting officers of the department, or the accounting officer of the province. There was a grant framework in place. If it was known that funds would not be spent, then there was no need to transfer the funds. The issue was about how grants were designed.

Mr Mubu, referring to the fiscal policy of SA, asked whether the FFC had consultations with National Treasury. What was the FFC’s role in setting up fiscal policy?

Mr Khumalo stated that the FFC did not have a role in the development of fiscal policy. The FFC’s role was to assist in the matter of how government policy was to be funded. The FFC considered government policy as it was given.

Ms N Sonti (EFF) referred to the key challenges of the DPW, as outlined in the presentation. There was apparently a lack of control in supply chain management, which had led to the Department of Public Works’ capacity to process tenders being eroded. It was an issue of concern. She also referred to provincial audit outcomes. She asked for clarity on the statement made, that over a period of ten years, from 2003/04 to 2012/13, only three provincial departments of the DPW had received an unqualified audit opinion.

Mr Khumalo said that the issue was not just about tenders, it was about the whole supply chain process. Tenders were only one part of the process. There were also issues of inefficiency.

Mr Dawood said that three provincial departments had received unqualified audit opinions. From 2004/5 up until before 2012/13, provincial departments had received unqualified audit outcomes, with findings. It was only in 2012/13 that provincial departments had received unqualified audit outcomes with no findings. On the issue of EPWP conditional grants to provinces, he noted that spending on the social sector grant was 70%. Part of the reason for the under-expenditure was that there were delays in approving business plans and incentive agreements.

Department of Planning, Performance Monitoring and Evaluation (DPME)

Mr Clement Madale, Director, DPME, indicated that the importance of planning had been highlighted by the former President Nelson Mandela in 1997, when he claimed that “significant progress is always possible if we ourselves plan every detail and allow intervention of fate only on our own terms; preparing a master plan and applying it are two different things”. Following on this, in 2012 the Cabinet approved the National Development Plan (NDP) as a long-term vision that would serve as a basis for partnerships across society to attain the future that every South African aspired to. The broad acceptance of the NDP by South Africans was itself an indication that there was a need for a master plan that would deal carefully with the pressing challenges facing the country. The NDP started with the diagnosis of the challenges and at the centre of the plan was a need to address unemployment, inequality and poverty. The plan came about to take the country to Vision 2030, where everyone would be able enjoy prosperity and equity, with the major focus on economic growth and quality education.

Government had prioritised the implementation of the NDP over the next five years, which were the first five years of the building block towards Vision 2030. The initial challenge was to find a strategy to get all 150+ national and provincial departments and 250+ municipalities moving in the same direction and consistently implementing the NDP and the election manifesto. The DPME had responded to this challenge by ensuring that all national and provincial departments and municipalities by law would have to produce five-year and annual plans and report on these to Parliament, while their performance against them is audited by the Auditor-General (AG). The Department also designed the 2014-2019 Medium Term Strategic Framework (MTSF) to be the mechanism through which to get all of these plans aligned and pulling in the same direction. The Treasury Regulations had been changed so that all departments have to submit their draft plans to the DPME. This is to ensure they incorporate all the targets from the MTSF.

Mr Madale took the Committee through the implementation of the NDP since adoption. This included:

§  Parts of the NDP that did not require long lead times and additional funding were being implemented;

§  Legislation to prevent public servants from doing business with the state was introduced in Parliament in the past year;

§  The Employment Tax Incentive Act; aimed at helping young people enter the labour market, was passed by Parliament in 2013;

§  Proposals related to infrastructure development are at various stage of implementation;

§  Proposals regarding improving planning and implementation are also already being taken forward. The President recently launched Operation Phakisa, which is an innovative approach to achieving outcomes, involving detailed collaborative planning between stakeholders, including the private sector and civil society

§  The NDP proposal to establish an Office of the Chief Procurement Officer in National Treasury, in order to ensure value for money and to reduce corruption, has been implemented

There are a number of pilot projects underway to test new policies proposed in the NDP. The Mpumalanga land reform project is testing the new land reform model proposed in chapter six of the NDP. A partnership between the Department of Education and various stakeholders is under way, specifically focusing on improving learning outcomes under the auspices of the National Education Collaboration Trust. The Partnership for Urban Innovation between the Presidency and the Gauteng government is developing better urbanisation policies. The social dialogue initiative by the National Planning Commission is working on determining a decent standard of living, and how it will be achieved by all citizens, as proposed in the NDP.

Mr Madale indicated that the strategic plan of the Department was to focus on strategically important issues and should cover a five-year period aligned to the broader government strategies in the NDP and MTSF, and sector plans ideally aligned to the electoral cycle. It was important to note that this, ideally, should not be changed over the five-year period unless there are significant policy changes relating to the mandate or the service delivery environment. However, amendments can be made in two ways: a new plan can be tabled in the next tabling period, or through an annexure to the annual performance plan (APP). The strategic plans do not replace the need for long-term planning or other additional specific plans, as the MTSF should be used to prioritise and plan the progressive implementation of other plans.

The components of the strategic plan are comprised of Part A, B and C. Part A deals with the strategic overview, vision, mission and the strategic goals over a five-year period, Part B deals with strategic objectives, resources implications and the risks. Part C deals with links to other plans, like long-term infrastructure plans, conditional grants, a review of public entities and public-private partnerships (PPPs).

The APPs aims to link the plans, budgets and the performance of an institution and presenting programme performance indicators and targets so as to achieve goals and objectives over the Medium Term Expenditure Framework. The components of the APPs were also comprised of Part A, B and C. Part A focused on recent developments in the operational environment and link the budgets for achieving strategic goals and objectives. Part B focused on strategic objectives, performance indicators and targets for programmes and sub-programmes, and Part C deals with the budget for infrastructure projects, changes for conditional grants, public entities and PPPs. Quarterly performance reports will be expected, based on the quarterly targets set in the APPs, and will inform annual reports. There is a need to point out that medium-term and short-term planning of government is aligned to the NDP, and the MTSF needs to be the key mechanism for achieving this alignment.

Mr Madale stated that the MTSF is a five-year implementation plan for the NDP and the commitments in the governing party’s election manifesto, as it provides details for implementing the second phase of the democratic transition and clarifies the meaning of the concept of ‘radical economic transformation’, and how it will be achieved. It also incorporates targets and actions in other key government plans, such as the New Growth Path, National Infrastructure Plan and the Industrial Policy Action Plan (IPAP). There is also emphasises on improving service delivery, the performance of the public service and the efficiency and effectiveness of local government. The MTSF will be complemented by other measures to implement the NDP, such as mobilising business, labour and civil society.

The current MTSF differs from the previous ones, in the sense that this is the first time that government has formulated its MTSF in the context of a long-term plan. This is critically important, as it enables continuity of planning, long-term considerations to be taken into account and the building blocks to be put in place towards the 2030 Vision.The MTSF is based on the outcomes system adopted by the 2009–2014 administration, and focuses on 14 priority outcomes. This again provides detailed, measurable targets and timeframes for implementation of key actions, to enable monitoring of implementation, as well as targets for key performance indicators to enable monitoring of results and impacts on society. The current MTSF is much more detailed than the previous versions, so that it can provide the link between the NDP and departmental plans. The indicators and targets in the MTSF should be reflected in departmental strategic and annual performance plans. The MTSF documentation on the DPME website includes a 36-page summary and 14 appendices containing the detailed plan for each outcome, which identify the actions needed to implement the NDP over the next five years, as well as measurable indicators with targets for these actions and clearly identified responsibilities and time-frames for implementation.

Mr Madale told the Committee that there are currently 14 priority outcomes for 2014-19 which cover the focus areas identified in the NDP. These are:

§  Education

§  Health

§  Reducing crime

§  Job creation

§  Skills development

§  Economic Infrastructure

§  Rural development

§  Sustainable human settlements

§  Responsive, accountable and efficient local government

§  Safe environment

§  A better South Africa, Africa and the world

§  An efficient, effective and development oriented public service

§  A comprehensive, responsive and sustainable social protection system

§  A diverse, social cohesive society and nation identity

Mr Madale emphasised that there was a need for links between the budget and the MTSF, as the development of the MTSF was informed by the government’s fiscal framework and fiscal boundaries. The MTSF should inform departmental budget submissions to national and provincial treasuries. The DPME was involved in budgeting structures of government, such as the Minister’s Committee on the Budget(MinComBud) to ensure that there is alignment between budgets and the priorities of the MTSF. Given continuity in the policy agenda since the last administration, most of the programmes contained in the MTSF have already been financed by spending plans announced in the budget.The Budget Review document links the spending programmes to the critical actions identified in the NDP. However, it is important to note that the MTSF does not cover all of Government’s work, but is aimed at ensuring that the key actions required to realise the NDP Vision are implemented.

The key MTSF priorities for the Department of Public Works (DPW) focused on the following:

§  Outcome 12: Public Service;

§  Sub-Outcome 4: Efficient and effective management and operations systems;

§  Providing reasonable, functional accommodation that facilitates the attainment of departments' service delivery objectives.

Mr Madale indicated that the Department conducts monitoring at three levels -- departmental, executive and parliamentary oversight. The Department is monitoring the 14 priority outcomes linked to the NDP and MTSF and the departmental plans, including sector plans, strategic plans and APP’s. The monitoring of implementation of the 14 priority outcomes through the MTSF, and delivery agreements, focused on the 2014-2019 MTSF. There was also a performance agreement with Ministers on the 14 priority outcomes. The implementation forums are using the existing structures (clusters and Minmecs, or their equivalents) for coordinating the development and implementation of the delivery agreements. The web-based programme of action reflects the MTSF and delivery agreements. There were quarterly Programme of Action (PoA) monitoring reports to Cabinet (traffic lights), highlighting progress made, challenges encountered and measures to address these challenges. The PoA reports also form the basis for performance monitoring meetings between the President and the relevant Minister in his/her outcome coordinating or supporting role.

The monitoring of implementation of sector plans, strategic plans and APPs pays particular attention to the purpose of the Quarterly Performance Reports, to report on overall progress made with the implementation of a department’s performance plan, both on a quarterly and an annual basis. Quarterly Performance Reporting can be an enabling mechanism that allows accounting officers to track progress against what has been planned and what is actually achieved with regard to service delivery outputs. The Treasury Regulation 5.3.1 clearly stipulates that quarterly results must be tabled with the Executive Authority each quarter and submitted to National Treasury, the DPME and Parliament, as this enables them to monitor progress against targets and budgets. The quarterly results lead to the annual results reflected in annual reports.

The executive monitoring of implementation viewed the MTSF as a strategic document for Cabinet to use to monitor the implementation of the NDP. It did not contain everything included in departmental strategic plans and APPs, and the departmental strategic plans and APPs had to contain relevant MTSF commitments, but they would also contain other commitments and information not in the MTSF. There would be three reports per annum to the Cabinet by outcome-coordinating Ministers for the outcomes and DPME, focusing on progress against the targets in the MTSF. Progress reports will be made public through the Programme of Action website linked to the DPME website. There will be a separate monitoring process for non-government parts of the NDP.

Mr Madale concluded by indicating that the President will shortly enter into new performance agreements with each Minister.These will contain the key indicators and targets from the MTSF relevant to each Minister. The same indicators and targets will be put into the performance agreements of DGs and senior officials. Performance assessments of Ministers and senior officials will be based on the degree to which these targets have been achieved. Parliament has a critical role to play in monitoring the implementation of the NDP and MTSF. The Portfolio Committees should ensure that all legislation is in line with the NDP and MTSF, to ensure that strategic plans and APPs contain the relevant indicators and targets from the MTSF. The portfolio committees must monitor progress by departments in implementing the actions in the MTSF, sector plans, strategic plans and APPs, and hold departments accountable for implementation. The committees should use the quarterly implementation reports on the APP and PoA system and the results of monitoring and evaluation of progress, to inform their oversight work. The Department of Planning, Monitoring and Evaluation produces a range of monitoring and evaluation reports that should be used by Committees to inform their monitoring and oversight work.

Discussion

Ms Adams asked whether the target of 70% (by 2019) for leased accommodation (leased in) provided within the agreed time period sounded unrealistic, considering the poor lease management by the DPW.

Mr Madale responded that the challenge facing the DPW regarding leases was indeed enormous, but stated that the target was achievable and realistic. The DPME was currently working with the DPW in providing assistance (capacity) from external service providers to achieve this target. The target was reached after several discussions with the DPW and the department felt that this target was realistic, given the time-frame that was stipulated.        

Mr Adams wanted to ascertain whether the DPME was disseminating monitoring reports to the general public. He also asked whether there were reasons why the DPME had not briefed the Portfolio Committee on Public Works.

Mr Madale responded that the DPME was producing a variety of monitoring reports and the previous cycles of reports had been released around June 2014. The DPME did not address the Portfolio Committees uninvited, as they have to wait for an invitation. The department had been invited to various Committees and was willing to engage with the MPs on issues that required clarity, amendments and suggestions.

Ms Mjobo asked if there was a working relationship between the DPME and the procurement officer to ensure value for money and reduce corruption.

Mr Madale responded that the municipalities were under the oversight of municipalities was under the Department of Cooperative Governance and Traditional Affairs (DCoGTA) and the DPME was working closely with the DCoGTA to ensure that whatever plans they developed was aligned to the MTSF. The DPME was assisting local municipalities in terms of management practices and already developed a tool together with DCoGTA to ensure that municipalities are in a position to assess their strengths and weaknesses of their management practices and improvement plan on an annual basis. This initiative was still on pilot base and by the next 2 years, the DPME was hoping it would be fully rolled out to all municipalities.

Ms Adams asked whether there was working relationship between the DPME and the Procurement Officer to ensure value for money and reduce corruption.

Mr Madale responded that the DPME was not working with the Procurement Officer, as this was a Treasury function. However, in most of the projects the Department worked jointly with Treasury, but not to determine the agenda of the Office.       

Mr Adams commented that there was a need to regulate, monitor and evaluate the funds that were given to the municipalities, and this was possible through the implementation of the Public Administration Management (PAM) Bill

Mr Madale responded that the PAM Bill had not been signed into law, but he agreed that this Bill would ensure that there was alignment between the national, provincial and local spheres of government without any complication.

The Chairperson thanked the Department for its presentation and indicated that the role of the DPME was enormous, considering that the government was already in the first five years of the building block towards Vision 2030.

The meeting was closed.