Audit Outcomes of Department of Higher Education and Training: AGSA briefing

Higher Education, Science and Innovation

14 October 2014
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The meeting focused on the audit outcomes of the Department of Higher Education and Training (DHET) and its entities for the 2013/2014 financial year.  Members were told that the purpose of the presentation was to give them an insight into the audit outcomes in order to understand what had given rise to the Auditor General’s (AG’s) findings, as this would enable them to exercise their oversight function with the Department.

AGSA said Members could use the internal control dashboard as a key tool in exercising their oversight function, because internal controls formed the basis of any department in executing its mandate. There were several objectives of internal controls in the public sector, such as accountability and reporting, compliance with laws and regulations, operational objectives, safeguarding resources against loss, misuse and damage. Thus, the goal for the departments was to strive for good internal control systems to drive the entities’ strategic plans which would, in turn, impact the audit outcomes.

For the DHET and its 26 entities, the audit outcomes for the current financial year had not changed and were similar to those of the past three years. The auditors had identified several material mistakes in the entities’ financial statements which would have been rectified if the organisation’s internal audit control mechanisms were functioning adequately. The root causes of the audit outcomes were the slow response of management to address AGSA’s findings, instability of vacancies in key positions of the organisation, and lack of consequences for poor performance and transgressions of the employees.

AGSA meets with the Minister several times a year to give him an update on the performance of the Department and its entities which he uses to introduce solutions to address areas of concern highlighted in the Department’s audit report. This year the Minister had issued regulations for supply chain management and reporting on performance information for both universities and the FET colleges. The Minister had also committed to appointing and monitoring the services delivered by the administrators of those universities where it had been found that there was maladministration.

Members were told that the AGSA, in conjunction with the DHET had adopted a four-year phased plan to bring all the FET colleges under the audit mandate of the AGSA by 2017. The transfer of the audit process could not be done at once because the AGSA lacked the necessary structures to take on the audit function of the 15 FET colleges all at the same time.

During discussion, Members sought clarity on factors that would assist them in performing a meaningful oversight role.  They expressed concern over the lack of internal controls, the slow response of management to audit findings, and urged the Department to speed up the filling of critical vacancies, and to take action to make officials responsible for poor performance.

Meeting report

Opening Remarks

The Chairperson then welcomed Members back to Parliament from their constituency work period. She also welcomed the Auditor-General’s office (AGSA) and the delegation from the Department of Higher Education and Training (DHET). She asked Members to feel free to have robust engagements during the meeting because it was out of robust engagements that they would get quality outputs. The Committee was preparing for the budget review process, so it was necessary to meet with its key stakeholders to assist them with thorough preparation. The budget review process was aimed at looking at the financial and non-financial performance as well as identifying the strengths, weaknesses and identifying opportunities of the Department for further strengthening its service delivery in the form of quality education. They wanted to get AGSA’s perspective on the financial and non-financial performance of the Department, as well as their recommendations, to assist the Department to achieve its mandate. The Committee was also looking forward to receiving information on the Department’s entities, because they had received money from government and had to account for the funds they received.

The Chairperson called for the apologies of Members who were absent from the meeting. The Committee Secretary said that Mr M Tshishonga (AGANG) had sent his apologies, but would join the meeting at a later stage.

DHET audit outcomes: AGSA briefing.

Ms Michelle Pillay, Senior Manager, (AGSA) said that AGSA’s mandate was to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector through building public confidence, and this was the basis of its engagement with the Committee. The purpose of the presentation was to give Members insight into the audit outcomes of the 2013/2014 financial year in order to understand what gave rise to the outcomes, to enable the Committee to exercise its oversight going forward, and also to inform concerned stakeholders of the expectations of the Portfolio. From a previous engagement, there was a question from the Committee on the tools that could be used in assisting the Committee to exercise its oversight function. The key tool is the Internal Control Dashboard. Internal controls form the basis of any department in executing its mandate. Departments have mandates comprising of strategic plans and the annual performance plan, whose execution depends on the internal controls being put inplace. Internal controls are the processes or mechanisms that the accounting authorities will put in place to provide information on whether the department’s finances are being spent in the way that they are supposed to be; ensure that service delivery is actually taking place; and ensure that compliance with laws and regulations is happening, all of which are the overall purpose of the internal controls. Thus, internal controls are an aspect of public entities that are encountered on a day to day basis and should not be encountered only at the year-end in the annual financial statements, or with the annual performance reports, which should be reviewed on a weekly or monthly basis.

Internal controls assist with the implementation of the internal objectives of the departments. There are several objectives of internal controls in the public sector; covering accountability and reporting. These objectives require every individual in the department to be held responsible and accountable for their actions in the performance of their mandate, since all individuals ultimately play a role in achieving the objectives of the department. Therefore, the internal controls are not only the responsibility of the accounting officer to implement, but also the responsibility of senior management and staff, so it is important for every individual to be held accountable for internal controls.

There is also need for compliance with laws and regulations, since the public sector operates on public funds. The use of public funds needs to be governed by legislation to ensure that the money is used for the intended purposes. The operational objective ensures that the department and its entities execute their mandate in an orderly, ethical, economical, efficient and effective manner. Ethical principles link to the moral principles and underlie the operations of the departments and their entities to ensure that the public resources are used in the most economical way. It is important to determine whether the accounting officers and the accounting office set out the ethical values of the Department, and every staff member needs to abide by them. Thus, the question is to determine whether things are happening in an organised manner within the department -- that is why the internal controls are important.

Departments also have policies and procedures which give more information about the internal controls, their purpose, how they have to be applied and who should take accountability and what happens when the internal controls are not functioning as they are supposed to be, and the consequences of not providing the accounting officer with the correct information. Economical controls help determine whether resources were used to provide goods and services, to determine what was actually purchased in terms of quantity at the best price and the quality of the goods. The efficiency control relates to the input of executing the department’s mandate, to determine the staff required to do the type of work. It also helps determine the quantities of items required for procurement and also relates to the resources that are used to achieve the ultimate mandate of the organisation. The effective control determines whether the mechanisms used help to produce the desired impact, so if the processes used are not achieving the desired outcomes, the entities should review these processes.

Another objective of internal controls is the safeguarding of resources against loss, misuse and damage. This again links to public funds which are used to acquire the goods and services of the department. For example, the assets of the organization need to be safeguarded to prevent them from being misused or lost. Additionally, accounting records like invoices equally need to be safeguarded, because the accounting documents give information on what the money of the organisation is being used for.

These are some of the reasons why the focus is directed towards internal controls, and if they are in place, functioning and being monitored and used to produce financial information, performance information and information on the compliance with laws and regulations, delivery of the Department’s mandate will also be taking place as a result of compliance with the internal controls. The presentation was basically going to be based on the root causes and the deficiencies in internal controls. If these areas are addressed, then going forward the organisation will be able to achieve its mandate, strategic plan and annual performance plan at the levels they would like to see them at, and this would also have an impact on the audit outcomes. Therefore, the goal is to strive to have a good internal control system in place to drive the organisation’s mandate and strategic plans, which will ultimately have an impact on the audit outcomes.

The internal controls environment is evaluated by “the drivers of internal controls,” contained in a document circulated to the all departments by AGSA. The document sets out the key drivers of the internal controls environment. These drivers include leadership, financial and performance management and governance. Under these key drivers, specification is made of the key drivers which need to be in place for the organisation to achieve its mandate. With leadership, the accounting officer needs to set the tone of accounting behaviour of the organization. There needs to be a code of conduct that everyone needs to abide by. The information presented to the requisite stakeholders, like the Committee and the Minister, must be trustworthy. Further, the accounting office has a role to play in terms of the oversight of the information being produced by the organization. There needs to be proper process for the production of this information so that whoever receives it can make a proper decision based on the information.

Effective human resources management is one of the key functions of internal controls, with regard to leadership. There is a need to determine whether the right people with the necessary skills, experience and competence are employed within the organization; whether there is a proper competent management system in place aligned to the strategic and the annual performance plan of the entities, and whether there are processes in place to capacitate the staff with skills and competencies that might be lacking, and if individuals are not performing their roles and functions, they must be held accountable. Policies and procedures direct senior management and staff on how things need to be done to achieve a certain outcome. It is important that this objective be documented and communicated to all members of the organisation to educate members on what needs to be done, how, by whom and when it needs to be done, to ensure that the mandate of the Department is achieved.

Action plans relate specifically to the plans that the organisation has in place to address the findings from the AGSA and its internal audits. This is a key element of internal control, which management needs to address by looking at the issued reports to identify what the internal controls need to be focused on and addressed going forward. If these reports are not considered, the entity will not perform to the expectation of the concerned stakeholders and as a result its audit outcome will remain unchanged. As we move towards a new era, information technology becomes key to the day-to-day operations. There is a focus on the Information Technology (IT) system to determine whether there are proper frameworks, policies and procedures in place, as well as the right people to do the job.

Financial and performance management, as a key driver of internal controls, relates to the actual day-to-day functions of the department and what specific individuals are responsible and accountable for. Its sub-components include proper record keeping, which relates to the safeguarding of information in terms of the documents in place, to give information on how the department’s funds are actually used and if the proper processes are being followed, which is vital in terms of record keeping and document management.

Departments and their entities have numerous activities happening each day in terms of accounting for how money is being spent, and performance according to the mandate. Thus there is a need for the daily processing of information -- it can not happen only at year end, during the compilation of the financial statements, to provide information how the organization’s money is being spent and what is happening in terms of monitoring the performance of their mandate, as well as the achievements of the organisation. This monitoring should happen on a daily basis to ensure that departments remain proactive and produce accurate information so that action can be taken early to ensure that whatever was set out as deliverables for the year, are actually achieved. This objective also relates to the objective of providing regular and accurate financial and performance reports, supported by reliable documents. It is important that at least once a month, the department’s financial statements are produced and monitored so that at the year end, there are no surprises. The review and monitoring compliance objective relates to the number of legislative requirements in the public sector which need to be checked to ensure that all the necessary legislation affecting the department are identified and are being complied with.

The public sector generally struggles with Information Technology, thus there is need for IT controls to be designed and implemented. The governance objective refers specifically to risk management processes that the department and entities have in place, and these look at the strategic and annual performance plan to determine what could prevent a department and the entities from achieving what is set out in the strategic plan and the annual performance plan, identifying the issues that they need to manage, and setting out measures that ensure they do not have an adverse impact on achieving their mandate. The other element of governance is internal audit, which is an independent assurance provider similar to the Portfolio Committee. It evaluates whether management has actually implemented the controls that they should have implemented, or are set to implement, to ensure that the financial information that is produced is accurate, and can be relied upon for decisions to be made. The audit committee plays the oversight role in ensuring that the internal controls are actually in place and are functioning. They rely on the internal audit function for this assurance, therefore monitoring their achievements towards the annual performance plan and achievements and evaluating compliance with legislation.

The above principles are relied upon to formulate the report of the AGSA and are key measures which the Committee can use in monitoring whether the DHET has actually progressed, and make recommendations on how to improve the audit outcome. The Committee can also use the key control’s checklist to understand the internal controls of the Department, and can ask questions on what has been established and what has not been established.

Briefing on assurance levels

Ms Pillay said that this is the key instrument for driving performance and clean audit outcomes. There are three levels of assurance.

The first level is management assurance, comprising the senior management, the accounting authority and the Minister. It is at this stage that the internal controls need to be implemented. This level needs to know what is being produced out of the system and whether the information is reliable. They need to be able to provide audit committees, internal audits, Portfolio Committees, the AG and any other public accounts committee, assurance that the information coming out of their systems can be relied upon.

The second level of assurance is the oversight assurance, comprising the internal audit unit, audit committee and the coordinating/monitoring institutions. The internal audit unit and audit committee play an independent role. The internal audit follows up on whether the internal controls and management are actually in place, and are producing accurate information. The audit committee then comes to evaluate and determine whether the internal audit and the AG’s report presented by management can be relied upon and other internal controls are functioning, and whether the organization is going to achieve its mandate. This level has a coordinating and monitoring institution similar to the National Treasury/Department of Public Service and Administration (DPSA), which sets out the legislation, regulations and circulars on how processes need to flow, and these need to be implemented by the Department.

The third level of assurance is the independent assurance, consisting of Portfolio Committees, public accounts committees, the National Assembly and the Office of the AGSA. The Portfolio Committees, public accounts committees and the National Assembly look at whether departments and entities are actually implementing what they said they would implement, to ensure that at the end of the day their mandate is achieved, as well as a clean audit outcome.

Audit outcomes for the DHET and its entities

Ms Pillay said that in terms of the opinion provided in the audit report, there were actually three areas that they reported on. The first area is the financial statement. The AGSA issues an opinion on the financial statement to indicate whether they are happy with the state of the financial statement. If there are no areas of inquiry identified, or if they identify areas from the audit which management goes ahead to correct, it results into an unqualified opinion. The auditors then consider specific areas of the financial statements and the audit opinion, since it is not preferable for these areas to be considered as a whole. For example, they may qualify the revenue contents of the financial statements to determine whether the contents are accurate or not. However, this does not affect the rest of the financial statement. Where the AG does not get access to documents of the entities to enable them to complete their work, they issue a disclaimer opinion.

For the DHET and its 26 entities, the audit outcomes have not changed over the last two to three financial years, so there was a stagnation of audit outcomes. In light of the financial statements, they were 24 entities’ financial statements with an unqualified opinion, and this resulted in the Department receiving an unqualified opinion. Three entities’ reports received qualified audit opinions, and there was one report that was still outstanding. This was the report from the National Institute for Higher Education. On compliance with legislation, the report only indicates significant non-compliances of the entities. Of the 27 audits that were completed, there were significant findings of compliance on 22 of the audits. The auditors identified a lot of errors in these financial statements but if the internal audit process was functioning as required, such errors would not be associated with the financial statements. Such errors indicate that the information produced during the year for the entities was also inaccurate. There was also a problem of non-compliance with the supply chain management process. This is one of the key reporting items under compliance and legislation. The other problem is irregular expenditure, which speaks directly to non-compliance with the supply chain management process. For the Department specifically, there were material findings with the financial statements which were corrected, and resulted into an unqualified opinion. The challenge of compliance with legislation remains with human resources, specifically at the stage of recruitment, where there is a need for proper vetting of academic and criminal records. There has been an improvement with compliance from the previous year, but compliance with legislation still remains a challenge.

AGSA does not expect a conclusion on the annual performance report at this stage, but just a report on the significant findings of the annual report. 27 reports were considered, and 16 entities’ reports had no significant findings on their annual performance report, which is a report against their strategic plan and their annual performance plan. 11 entities had findings in their reports. The Department also had findings in its annual performance report. The programmes that were selected for audit purposes were specifically the universities, Technical and Vocational Education and Training (TVET) and the skills development programme. The findings were mainly in the TVET and the skills development programme.

When the AGSA evaluates assurance levels from an audit perspective, they look at senior management, the accounting officer, the executive authority, internal audit, audit committee and Portfolio Committee. The first level of assurance, which comprises senior management, the accounting officer, the executive authority and the Minister, is evaluated on the basis of the internal control dashboard. If the internal controls have not been effectively introduced, it means that the information produced by this first level is not entirely reliable since there is no system in place, and as a result you cannot get reliable information. The second level of assurance is the internal audit and audit committee. Generally these two units are in place, functioning and understand their roles and responsibilities, but still have a few challenging areas relating to instances where the internal audit did not look at all the focus areas, financial statements, focus reports and compliance. The same relates to the audit committee, where they tend not to look at all the areas that require to be looked at, specifically performance and compliance, because often audit committees tend to focus more on the financial statements than performance and compliance. Evaluation of the third level of assurance, which is the Portfolio Committee, depends on the evaluation of the previous Committee.

The key controls of the document presentation provide a snap shot of the Department’s audit outcome. They look at the financial statements with unqualified opinions. Most of the financial statements had areas of error that were identified by the auditors, and management had to correct them. There were also findings on the annual performance plan, where some information did not comply with the “SMART” criteria, and some of the information in the annual report could not be validated and no explanation was provided to validate it. The ICT governance and controls, as an aspect of the audit area, raises extreme concern and requires the Committee’s focus because some of the entities of the Department lack the required manpower and some personnel lack the necessary skills. Additionally, focus needs to be directed to the human resource controls, because from the findings it has been discovered that the entities do not have the right people in terms of the skill, experience and the competency to run their operations. There is also a challenge with performance management, where there has been a failure to implement sound recommended policies and procedures. Related to this, there is the consequence management for non-performing staff members, whose performance results in similar results being achieved year after year. Attention also needed to be directed to daily and monthly controls as an important aspect of the audit areas. The daily disciplines for the entities were not happening. Equally she inquired whether the monthly controls -- for example, the reconciliation of the bank account -- were done on a monthly basis. Further, the entities needed to account for their assets to ensure that whatever they had purchased was still there. This area talks directly to whether monetary controls have been implemented or not.

There were certain risk areas that AGSA incorporates into their audit process every year. These have been identified as focus areas, because they are the high risk areas in the public sector. They include the quality of the financial statements. This speaks to the areas that the auditors identify when dealing with the financial statements. For example, 20 of the 27 financial statements submitted had errors which management had to rectify, and if they had not been corrected, the entities would have received worse opinions of their financial statements. The quality of the performance reports depends on the accuracy of the information reflected in them, and from the submitted financial statements, nine of the submitted reports had no errors while 18 had errors which were identified by the auditors and required correction from the management. 11 of the 27 entities did not have findings of supply chain management and the rest had findings, of which 11 were escalated in the audit report.

With regard to financial health, focus is directed to whether the Department and its entities are using their resources properly, and also to determine whether they have sufficient funds to deliver on their mandate. However, there were sufficient funds for the entities, so this should not be raised as an issue affecting service delivery. The challenge is with the Department, which has about 100 institutions and entities to monitor but does not have the capacity in terms of personnel or the necessary resources to perform that responsibility. Programmes were affected by National Treasury budget cuts, and this has impacted on the department’s performance resulted in findings in the performance report. For example, when the department needs information from the universities, it has to depend on the universities to provide them with that information -- a mechanism which may be ineffective. Thus, there needs to be a process in place to help with obtaining that information. Human resource management links to the recruitment of the right people for the right jobs. There is also a challenge of vacancies in key positions within the Department. Information technology remains as one of the key challenges of the Department. For example, concern has been raised on whether the computerised access controls are properly protected. The other area of concern is the disaster recovery plans -- for example, whether the entity has a recovery mechanism if it is affected by a disaster, such as a fire.

The root causes of the entity’s audit outcomes were:

  • The slow response by management to address the findings of the AG, which led to the regression of the 20 audited entities, including the Department;
  • Instability of vacancies in key positions. This affected seven entities, including the Department;
  • Lack of consequences for poor performance and transgressions. Although there has been an improvement, it is still an area of concern, where several people have not been held accountable for their irresponsibility.

She said that the AGSA meets with the Minister at least three to four times a year; where they give him feedback on how the Department and its entities are progressing against the previous year’s audit outcomes, internal controls, and the risk areas. At the end of the meeting, the Minister indicates to the AGSA the actions he will put in place to address some of the risks of the portfolio. This year the Minister issued key commitments. One was the issuing of regulations for supply chain management and reporting on performance information for both universities and Further Education and Training (FET) institutions. This remains a challenge, because the universities are not governed by National Treasury regulations. The Minister committed to issue regulations to some of the departments on what they expect of the some of the universities and entities when it comes to procuring goods and services. However, this has not been finalised but is a work in progress. The regulation for FETs to report on performance information was issued in June 2014 so going forward, starting in 2015, the FETs should be reporting on performance information, but currently they are not. The other commitment is to improving the performance and consequence management system, which is one of the root causes and challenges of the Department specifically. The Minister also committed to the appointment and monitoring of services delivered by administrators appointed at universities, FETs and entities. Where significant challenges are being experienced at FET’s and universities, or where there are signs of maladministration, the Minister can then appoint an administrator to have a look at what is going on and put processes in place.

Previously there was a challenge with the strategic plans of the entities, which were always approved after the commencement of the financial year. This problem has now been resolved by approving the strategic plans on time. There was also a problem of the amendment of the legislation to allow the AGSA to be the auditors of the entity. This was resolved and the grant regulations of the Skills Development Act have been amended for more stringent control on how individuals use their funding. Some of the new commitments by the Minister resulting from the 2013/2014 audit outcomes include the rotation of auditors at universities every five years. This stems from the challenge where the audit firms of some of the universities have been there since their inception. From a good governance perspective it is better for the sake of independence and objectivity to rotate auditors of the universities.

The other new objective applies specifically to the Department, and relates to performance reporting. It should be noted that one of the deficiencies that led to findings in the report of the Department is the capacity to verify information from the institutions and other entities. This means that the Department needs to work on the policies and procedures associated with acquiring information from the institutions and entities, verifying it, putting it together and producing a report. There was also a challenge on the remuneration of board members for the Department. The Minister had issued a circular addressing this problem, but it was not applied. This should be operationalised to solve the problem.


Mr C Kekana (ANC) requested clarity on the terms used to refer to the audit outcomes of the Department and its entities. He said that one good principle of performance management is to have implementable actions for those that default. However, are solutions first applied before one can be penalized, so that if action is to be taken, one can safely say that one tried everything -- like counseling, mentoring, training -- all of which are good principles of performance management? However, if the person refused to change did the Department resort to punishment, because people have a negative attitude towards punishment which, when imposed, makes them uncooperative? He therefore wanted to know whether alternative methods of holding people accountable for their actions had been adopted, other than allegations being made that people were not being held accountable for their actions. He asked why the administrator’s appointed to help in solving the problems of the FETs did not know their mandate, yet their role was to deal with the administrative problems, like helping to appoint principals, establishing human resource departments, or appointing a chief financial officer who should be a chartered accountant for two years to transfer skills. He said that these were specific objectives which he thought they knew in order to help with the FET colleges. Why were they appointed if they did not know what to do?

Dr B Bozzoli (DA) thanked the AGSA for their presentation. She asked what was happening with the audit of the institute of higher education that had not been done at all.

Ms J Kilian asked how the AG monitored whether employed officials -- for example, in the FET colleges -- actually reported for duty. She wondered whether this type of monitoring had been taking place. She said that if the organisation dealt with consequence management, they had to ensure that those that receive a salary from the public service are in fact there, and report for duty.

Mr Y Cassim (DA) asked for more information and clarity on the extent of the regression with regard to the most common root causes, such as the slow responses by management and the filling of the vacant positions within the entities, in comparison to previous financial years.

AGSA’s response

Ms Pillay said that the audit report for the DHET was an unqualified audit opinion, and there were findings on compliance and performance. The portfolio as a whole had three entities with qualified opinions. Five entities received unqualified opinions with no findings and their compliance and performance reports were clean. She said that performance management did not relate to individuals being held accountable for their actions. There were very good processes, policies and procedures in place with regard to performance management. However, there were challenges in terms of their implementation. There were instances where proper guidance and coaching is given in terms of developing staff, to ensure that they adjust to the key performance objectives. The AGSA had identified the internal control deficiencies and realised that these problems were actually not being addressed. They do not become part of the individual performance contracts, they are never monitored and as a result, year in year out, similar findings are made. Based on this, they recommended that responsibility for the internal controls of the department or the entity need to be incorporated in each individual’s performance contract. Findings indicate that these provisions have been incorporated in the performance contracts of staff. However, they do not implement these internal control provisions. This problem does not exist only at the lower level, but starts at the top with the senior management, which also relates to the slow responses from the senior management.

She said that there were gaps in the process of appointing administrators to assist with the administration problems at the FET colleges and universities. This had resulted in the establishment of additional matters, to which the administrators had to adjust, which was not part of their original mandate. The administrators are appointed under a gazette. This gazette is very broad in the way that it gives the administrator all the powers they require for the performance of their functions. The Department’s biggest challenge remains with the terms of the administrators’ specific contracts and their transfers.

Mr Simbongile Manzi, Senior Manager, AGSA said that the Northern Institute for Higher Education (NIHS) audit had not been concluded because the NIHS had submitted their documentation for auditing very late. However, the AG’s office in the Northern Cape was currently dealing with the audit and results would be availed at the end of October.

Ms Pillay said that AGSA usually tested on a sample basis whether the appointed personnel actually performed their function. They had a methodology on how they select the names and the numbers of the personnel to consider in the sample. In this way, they actually verify whether these people exist within the entity and actually perform their function. In some places, they have interviews with the people to find out if they are actually the person that is supposed to be there.

Briefing on audit of FET colleges

Ms Dineo Mamashela, Senior Manager, AGSA, said that in agreement with the Department, AGSA had adopted a four-year phase approach, indicating that by 2017 all the FET colleges will be audited by the AGSA. For the financial year ending 31 March 2013, 15 of the FET colleges were audited by AGSA. With regard to their financial statements, three of the 15 colleges had outstanding audit reports, six colleges got a disclaimer opinion, six colleges had a qualified audit opinion and one college had an unqualified audit opinion with findings.

There was a regression in the audit outcomes of the specified colleges, compared to their previous financial years, like the year ending 2012. The main contributing factor to this regression is that the AGSA’s audit focus is on a lot of areas, yet they have not increased their audit coverage of the sample sizes as compared to the auditors who were dealing with this matter in the previous financial years. On compliance with the legislation at all the 13 FET colleges with finalized audits, they all had material non-compliance with the FET Act. This ranged from instances where there were no adequate internal control processes in place and as a result, this was a material finding -- a mistake which was noted on the final financial statements submitted for audit. In some instances, some colleges were found without an internal audit function or risk management unit, which was required by the FET Act. There were also instances where they did not have a council in place, as required by the FET Act, and there were other instances where some of the colleges had entered into overdraft facilities without the approval of the Minister.

On the overall audit outcomes, primarily when the AGSA reports on the audit outcomes, they focus on three areas -- the financial statement, compliance with legislation and performance information. For the FET colleges in the 2013/2014 financial year, focus has not been directed on the performance information, because at the time of the audit the FET colleges were not obliged to report on their performance information. However, going forward this will be an area reported on for the benefit of the Committee. The defined assurance levels of the FETs include senior management at the first level, with the second level being the council and the internal audit unit. She said that this was the first year when the AGSA had taken on the FET colleges, thus they lacked some material information, but in future they would have to assess the involvement of the Portfolio Committee when it comes to providing assurances for the FET colleges.

The first level of assurance, comprising the senior management, is currently at a concerning level, in that out of the 13 colleges whose audits have been finalised, 11 entities provided limited or no assurance information. At the management level, there was no sound financial management or adequate internal control processes in place to ensure that information that was contained in the financial statements is credible, reliable and is supported by credible documentation. There were no daily or monthly reconciliation of accounts to ensure that the financial statements received for audit were free of material mistakes. At the principal level, all the entities provided limited or no assurance levels in a sense that senior management did not hold the individuals accountable for the non-implementation of corrective controls to ensure that the financial statements that they provided for audit were free of material mistakes, as well as ensuring that there was compliance with laws and regulations that govern the FET colleges.

The second level of assurance colleges comprises aspects like the councils, which is also a concern that needs to be addressed. It should be noted that of the 13 colleges that were audited, there were two colleges without an interim council, which is required by the FET Act, and nine of the FET colleges had minimal or no assurances at a council level. Regarding the internal audit unit requirement, there were two FET colleges without an audit function, one which had an internal function but at the time of the audit there was a vacancy in that internal audit unit, and eight of the entities provided limited or no assurance on the internal audit unit. This means that they were not effective at all during the year, when their audit scope was not adequate to address core issues that might have pertained to the audit. AGSA also picked up on the fact that the internal audit was not independent, as the auditors were also performing other management issues. At the audit committee level, there were instances where two of the colleges did not have audit committees and those that had audit committees provided limited or no assurance levels stemming from the fact that there was no effective monitoring risks that were noted at the FET colleges, as well as implementation of the recommendations that they would have made to address the internal and external audit findings that might have been raised by the previous auditors.

The key drivers of internal controls at the FET colleges were effective leadership, human resource controls, ICT governance and controls, audit action plans, and proper record keeping. There was a lack of understanding of the natural accounting frameworks and as a result, the AG had picked up a number of non-compliances with the financial reporting standards related to the audited financial statements. In a number of the FET colleges, there were also vacancies in the Chief Financial Officer’s office, and as a result there were limited personnel controls in the finance unit to make sure that there were adequate controls relating to the financial environment, which would ensure that at the end of the day the financial statements were free of material mistakes. Some of the entities also lacked skilled personnel responsible for IT. ICT governance and controls was the biggest area of concern in the FET colleges, because of the 13 audited entities, 11 required urgent interventions in the sense that they lacked an IT security management policy, as well as user account management policies and procedures which would ensure that there was no unauthorized access to the IT systems that they had in place. They also lacked formally documented back-up plans, as well as disaster recovery plans. This ideally meant that if the buildings burnt down, then the FET colleges would lose all their records.

The AG’s office also made an assessment on the audit action plans to ensure that there were mechanisms which addressed the audit findings that were raised by the previous auditors as well as the internal audit -- if they had an internal audit unit. The findings indicated that there were entities that had an action plan and ensured that they were adequately implemented. However, seven of the colleges lacked an action plan and three had an action plan which was not adequately implemented to ensure that there was progress at the end of the financial year. AGSA also assessed the key control relating to proper record keeping and this was one of the areas that raised concern in the sense that if there were proper record management processes in place, information would easily be retrievable and available when requested to support the balances and the amounts disclosed in the financial statements at the end of the year. Most of the FET colleges that had disclaimers/adverse opinions were the ones that could not submit adequate supporting documentation or did not submit any documentation to support the amounts that they had disclosed in their financial statements at the end of the financial year; all of which highlighted the fact that they lacked proper record-keeping processes.

There was lack of daily and monthly reconciliations, particularly relating to bank account reconciliations, and debtor and creditor reconciliations. The AG indicated that the debtor and creditor reconciliations that were disclosed by some of the FET colleges were not identical to the information on the same subject matter disclosed in the financial statements. This was caused by the fact that there were no dedicated personnel who would ensure that on a monthly basis, reconciliations were performed and that the discrepancies were followed up in the following months. The key control relating to review and monitoring compliance with the laws and regulations was also assessed, and it was noted that the majority of the FET colleges lacked procedures to ensure that compliance with legislation was monitored on a monthly basis and in the case of non-compliance, corrective measures were employed. There was also concern on the key controls relating to policies and procedures, because most of the colleges did not have adequate policies and procedures in place which were aligned to their current business processes to support the understanding and implementation of the internal controls by staff members. Staff members were performing their functions on a daily basis without policies and procedures to guide their daily operations, resulting in mistakes in the financial statements. On the key control of reporting, of the 13 colleges that were audited, 11 required intervention with their reporting processes because they had several reporting problems, mainly relating to the contents of their financial statements, which indicated that the personnel lacked a clear understanding of the accounting framework. The reporting was also problematic because the some of the entities lacked CFO’s in their accounts offices.

Key risk areas was one of the driving aspects of AGSA’s audit process and for the FET colleges, they assessed their supply chain management, bursary management, human resource management, quality of the submitted financial statements, information technology and financial health. On supply chain management, the FET colleges are currently not regulated by the Treasury regulation requirements. However, the Department had issued a policy on supply chain management which was recommended for the FET colleges to implement during the 2013/2014 financial year, to ensure that internal controls on supply chain management were established which would provide a support mechanism for the regulations, if implemented in the future. The AG had made findings on supply chain management, but this was not included in the audit report because it was not required by legislation. Of the 13 audited colleges, supply chain management remains a critical area which requires urgent intervention. The FET colleges had a number of irregular expenditures that were noted during the audit. The AG’s office had noted that the individuals in charge of supply chain management were not trained or lacked the necessary skills to perform their duties. Some of the FET colleges lacked a supplier data base and procurements were done through any supplier with from whom a quotation had been obtained.

Bursary management as a key risk area of audit was done as a ‘value add’ assessment for the FETs’ audit process, because it was not required by legislation. The Department had introduced a bursary scheme to ensure that academically qualified students in need of financial help had access to education. The Department had then issued guidelines relating to bursary management at the FET colleges. There were several material findings made relating to bursary management. Some applications for bursaries lacked the proper documentation; there were no supporting documents relating to payments that had been made for bursary students’ accommodation, as well as transport; and the schedule of particulars for the issued bursaries were also found not to be signed by the students or the staff of FET colleges.

With regard to the human resource management, there were a number of key positions in the FET colleges that were not filled and needed to be filled to improve on the performance of these entities. For example, a number of the FET colleges lacked a CFO, as well as qualified personnel in their IT departments. With regard to the quality of submitted financial statements as a key risk area, the financial statements submitted by all the 13 audited FET colleges were not in a state that made auditing easy. There was often a need for engagement between the audit team and the management of the FET colleges to try and make sense of the contents of the financial statements as well as the supporting documentation to the financial statements. Only four colleges had what would be considered as better financial statements, but these still had material mistakes which were highlighted and corrected by the auditors. One of the colleges received an unqualified audit opinion with findings, and the findings related to the fact that the financial statements had to be adjusted because they initially bore material errors.

Information technology as a key risk area needed urgent intervention because there were no policies and procedures in place relating to the user account management, as well as security management. The majority of the FET colleges lacked disaster recovery processes, as well as business continuity. The majority of the FET colleges had concerning financial health which, according to audit terms, was a key risk area. The FET colleges lacked an effective budget management system and as a result budgeted for a net loss at the end of the financial year. Their budgets were not adequately monitored on a month to month basis. The budgets were not being submitted to audit committees which would review the budgets and follow-up on the areas of concern. Further, some of the FET colleges were taking more than 30 days to pay their creditors and this put them at a risk, as creditors could charge them interest on the outstanding balances. There were instances where the FET took more than 60 days to collect fees from the students. There were also no proper procedures in writing off student debts, which caused losses for the FET colleges. It was worth noting that due to the lack of a proper system, the majority of student debts were actually written off at the year end because they were deemed to be irrecoverable.

Going forward, the root causes of non-performance at the FET colleges that might require oversight from the DHET, as well as the Committee, included the lack of record management on a daily and monthly basis; lack of an adequately skilled finance unit where there were key vacancies in 11 of the FET colleges; appropriate risk management activities were either not implemented or developed for all 13 FET colleges; a lack of adequately resourced and functioning internal audit units for 11 of the FET colleges; and there were also issues relating to the audit action plans that included timelines and responsibilities of actions that were either not developed or implemented. Currently the Department had engaged the FET colleges to start formulating an audit action plan to address the findings that had been raised by the audit team in the 2013/2014 financial year.


Dr Bozzoli said that it seemed that the Department had been given what is called a “hospital pass” in rugby, as the colleges were in a very bad state. She asked whether it was possible for the Committee to look at the actual audit reports of the 13 FET colleges for the 2013/2014 financial year. Given the very poor condition of the FET colleges, she wondered whether the Department had given any consideration to speeding up the transfer of the auditing function for the remaining 35 colleges instead following the initial transfer period mandated to be completed in 2017, which would affect the performance of these colleges.

Mr M Mbatha (EFF) inquired into the internal management environment. He said that the presentation showed that the internal controls lacked practical knowledge by the employees of what had to happen on a daily basis. It also seemed like various crucial mandates were non-existent, with a lack of proper authority and a lack of proper accounting processes, all of which seemed like a bombshell. He suggested that the Department take a “helicopter view” of what needed to happen. They had done a commendable job on the appointment of the financial officers, but the improvements needed not stop there - the grounding of the internal audit environment had to be taken into consideration. The entities needed to have an independent internal audit processes, with a senior member of management in the supply chain as well as in the ICT department, because these were the facets that would drive the growth and development of the organisation in the 21st century. For the Department to be told of these problems in the audit reports might not help them in the fulfillment of their vision, and in fact might create incapacity when they went to departments like the National Treasury and were asked questions about the problems at the FET colleges. The Department needed to re-establish an operational mechanism for these organisations, because the previous structures were out-dated.

Ms Mchunu asked why only 13 FET colleges were audited and was interested to know the specific audit outcomes for each college.

AGSA’s response

Ms Mamashela said that AGSA had agreed with the Department to do a four year phased process whereby all the 50 FET colleges will be audited by 2017. Currently the AGSA had taken over 15 of the FET colleges, but two colleges had outstanding audit outcomes because one of the colleges had requested an extension of time to submit their financial statements because when the audit started, they were not ready to submit. However, the audit was currently underway. The other college had problems with its supporting documents for the balances disclosed in the financial statements it had submitted, which had delayed the audit process. The audit was also delayed when management did not agree with some of the findings that were raised by the audit team, where they were requested to make more corrections to the financial statements. The audit was in the reporting stage and she was certain that it would be completed by the end of October. She said that the AGSA was willing to share the individual outcomes of the FET colleges with the Members of the Committee.

The department had engaged in a process of appointing council members for most of the colleges, and currently the majority of the FET colleges had operating councils and training for execution of their mandate had been done for the council members. During the audit process, the AGSA makes recommendations which need to be implemented to resolve the problems faced by the audited entities. For example, they had recommended that the entities need a fully capacitated internal audit. She said that the AGSA often offered its services to the entities where they needed help by providing best advice to make sure that the organisations were fully capacitated.

Ms Thandeka Zondi, Corporate Executive, AGSA, said that with the four year phased plan for the transfer of FET colleges, one of the challenges that the Department faced was building capacity to be able to take on all the entities at the same time. Many of these entities were previously audited by private companies, so to ensure that when they are brought under the mandate of the AGSA the audits are not sub-contracted out again, they were building the capacity within their organization. Despite the four year phase strategy, the AGSA was in a close contact with the Department to identify mechanisms on how to strengthen the “back to basics” approach. From the findings in the audit reports, several issues required a back to basics approach, so finding ways of doing the back to basics training was needed without necessarily auditing all the FETs at the same time. This would mean that by the time they got to the audit process, they would have been exposed to the back to basics approach.

The Chairperson asked for clarity on the response to this question.

Ms Zondi said she was answering the question of why the FET colleges were not all audited at the same time.

The Chairperson asked what was happening in instances where the council, internal audit unit and the audit committee had not been established.

Ms Mamashela said that reporting of the audit outcomes was done on 31 December 2013. In instances where there was no established council within an FET, the principal was given the role of the council, meaning that he acted as a council chairperson and member, as well as a principal at the same time. Some of the colleges had allowed previous council members to continue performing their council duties even though their terms of office had expired. In instances where the internal audit was not performed, this indicated that there was no internal audit unit within the given entity, thus no activities relating to internal audit were carried out. For the audit committee, it also meant that there was no audit committee in place for the particular financial year. The council might then have taken on the responsibility of what the audit committee would have done.

Mr Mbatha asked about the plans of the Department to capacitate the colleges with councils.  

The Chairperson said that the meeting was restricted to the reports from the AGSA which would enable them perform an effective oversight function when they meet the Department. She asked Mr Mbatha to save his question for when the Committee met with the Department.

Briefing on Universities

Mr Manzi said that the AGSA was currently not involved in auditing the universities because of the concept of autonomy and independence, which meant that universities were not part of the public sector. However, in 2010 the AGSA clarified that the institutions of higher education do fall within the ambit of section 4(3) of the Public Audit Act (PAA) because the institutions receive money for a public purpose, thus the AGSA needs to get involved in aspects of their audits. The AGSA’s notice was issued in the gazette and all the institutions of higher learning had received the document. He said that the involvement of the AGSA in these institutions was limited to providing guidance to the auditors on the audit of compliance with legislation and predetermined objectives. The AGSA also has to attend the audit committees of the universities in an observer role, but could intervene only to provide information on issues like best practice principles to be followed during the audit process. Currently the universities appoint their own auditors in terms of the Public Audit Act and have to consult with the AGSA on an annual basis. He said that the legislative environment of the universities was quite thin, because the institutions were regulated only by the Higher Education Act. There was no law regulating procurement in the university environment.

There was an improvement in the regulatory environment because of the regulations that were issued in June 2014, which have more stringent reporting and planning requirements. These will enable the AGSA to increase the scope of its audit starting from the 2015 financial year because currently they were only assessing on what they were reporting and were not assessing the “SMART” criteria. There also new specific targets that the universities must include in their annual performance plans and the AGSA must also be able to audit those targets in what is referred to as a full audit, whereas previously the audit was on agreed upon procedures. He said that with regard to the financial statements, all the universities were financially unqualified -- an opinion similar to the previous financial year. 17 of the universities had no findings with compliance with legislation, and six universities had findings of compliance with legislation, which is a slight regression from the previous year. The Universities of Stellenbosch and Tshwane had improved audit outcomes; last year they had unqualified reports with findings on compliance, but had moved to unqualified with no findings on compliance with legislation. The Universities of Limpopo, UNISA and Walter Sisulu had findings of compliance with legislation, similar to the situation of their audit findings from the previous year. The Mangosuthu University of Technology, the University of Zululand and the Vaal University of Technology regressed -- where previously they did not have findings on compliance, they now had findings on compliance with legislation in the current financial year. The rest of the universities had unqualified reports with no findings. He said that if he considered the trend of the audit outcomes of the universities for the past five years, it could be seen that in 2010 there were quite a few qualifications, but the trend had been decreasing steadily since then and for the past two financial years, none of the universities had received qualified opinions.

However, there was regression with regard to compliance. With regards to the compliance findings, two universities had issues relating to the payment of Pay As You Earn, where it had not been deducted from the benefits that were provided to management level staff. One university had an issue where they undertook the construction of a permanent building without the prior approval of the council or the Minister, which is required in terms of the Higher Education Act. Two universities had VAT issues in terms of the VAT apportionment rate because the system of how universities claim VAT is not similar to other public sector entities because they make zero rated supplies and also make exempted supplies, which means that they do not apply the standard 14% that other public entities claim, and thus had issues with the rate to be claimed. Three universities had issues relating to conflict of interest where employees did not declare the interests they had in the supplies of the universities and they were contracted for services with the universities, which is in conflict with the Higher Education Act. There was one university with human resource related problems where there was an appointment of staff not being approved by the senate as well as the council.

The chairperson said that the universities being higher institutions of learning had led by example with their audit outcomes, by having 17 clean audits. She requested the Director General of the Department to write to the other entities on this performance so that it triggered a constructive competition with the other universities to also strive for a clean audit status.


Mr Kekana said that there was a report that had confirmed allegations of racism with the University of Potchefstroom. He wondered whether, from the performed audit, this University complied with the registration requirements of the regulations set by the Department, and what type of audit opinion it received.

Dr Bozzoli requested clarity on the specification of the universities that had findings regarding the tenders they had issued. as well as the scale of the tenders.

Mr Cassim asked for the name of the university which had constructed a building which had not been approved by council, and the nature of the building that had been constructed.

Mr Mbatha said he was interested in having more information about the Walter Sisulu University, which seemed to have had the longest administration. He requested a briefing on whether its financial situation had improved or if the Department was waiting for another financial explosion in order to address the matter.

Mr N Khubisa (NFP) requested clarity on the problem of PAYE and VAT. He wondered whether the institution’s problems of VAT and PAYE related to lack of capacity, resulting in defaulting.

The Chairperson asked whether there was a policy in the universities regulating matters of VAT and PAYE, and that where a regression existed, the AGSA would come in with an audit query.

AGSA’s response

Mr Manzi said that allegations of racism at the University of Potchefstroom were not an area that the audit would look into, because racism was an issue handled by the management of the university. The AGSA handled compliance on the legislative requirements as well as compliance in terms of the financial statements, and how they are prepared. From an external audit perspective, AGSA did not have the mandate to inquire into the registration requirements of the institutions of higher learning, because these were not legislated and it was the institutions that determined the procedures to be followed in terms of registration. The internal auditors were the ones mandated to look into whether the entities were following the prescribed processes. The institutions which were affected by the issue of conflict of interest were Mangosuthu University of Technology, the University of Zululand and the Vaal University of Technology.

He currently lacked specific information regarding the volume of the transactions but they were not big tenders, but rather smaller transactions. He was going to try and get the information for the Committee. The construction of a permanent building without the necessary approvals was at UNISA, and it was currently their administration block. The financial statements of the Walter Sisulu University had improved, but he was unable to disclose any information on its financial health because he did not have access to it. The challenge of VAT and PAYE was more a question of interpretation, rather than capacity, because the institutions had the staff in place to perform the said function, but did not have a clear understanding of the regulations and how they needed to be interpreted.

The challenges of the conflict of interest requirements resulted from the fact that the universities had not yet applied the conflict of interest requirements that were introduced two years ago, and thus lacked the right policies and procedures for the declaration of those procedures, hence failing to comply with this requirement.

Mr Cassim asked about the entity with an adverse audit finding, as well as the extent of the regression in terms of the slow response from management.

Ms Pillay said that the findings of the 2013/2014 financial reports had regressed from the previous year. There were actually several controls that needed to be put in place with regard to the performance reports that are produced by the Department at the end of the financial year. On the root causes of the regression, specifically the slow responses by management, in 2013/14 there were 20 auditee’s and in the previous year there had been ten. Instability in the key positions was the same as the previous year, but it was recorded as a regression because no movement had actually taken place.

Mr Mbatha requested clarity on the issue of a lack of responses and reporting on time by the Department. He wondered whether value had been attached to the amount of time that had been spent in waiting for the financial statements from the management, because he believed that every delay was costly.

Ms Pillay said that the slow responses were not related to the audit processes, but related to how management responds to the AGSA’s findings that are issued to correct problems that arise during the audit process.

The Chairperson asked whether the new reporting regulations for the universities were in operation.

Mr Manzi said that the new regulations would be effective from 2015.

The Chairperson suggested that a workshop should be held to educate the Committee and all the concerned stakeholders about the new regulations so that when they became operative, there would be no concern that some Members did not know about them.

Mr Kekana requested more information about the risk management policies of the technical colleges. He said that when the Committee visited the colleges to perform its oversight function, there was one college that had been highly affected by a copper wire theft which was all over the national news, and was being resolved. He wondered whether this problem would be covered by the mentioned risk management policy and if so, how it would be covered, because the college was almost at a break down because of the theft. If there was a risk management system, would this problem be covered by it?

The Chairperson asked for the specific audit opinions for the Mangosuthu and Vaal universities, to determine the actual extent of the regression, as well as follow up on the action plans that were to cater for this regression. She asked why the AGSA had not followed up on the FET colleges that did not submit their action plans in response to the audit opinion, because she knew that the Auditor General makes follow-ups on issued audit opinions. This would ensure that they received the entities’ action plans, because it was requirement for them to receive the action plans and use them to monitor the progress of the institutions, unless this was impossible due to the fact that the internal audit and the audit committee did not do their work to ensure that the AGSA received the action plans. It was also the responsibility of the audit committee to make sure that the action plans were implemented.

Ms Zondi said risk management was an area that required real attention in the FET environment. On a general basis, the departments and entities had action plans -- the challenge was implementing the action plans in a timely basis and manner that resulted in actual implementation of the accounts being addressed, and this was evident by the slow response in the implementation of the action plans. She said that if the year’s findings were compared to the previous year’s statistics, it could be found that all the entities had action plans, but some entities were just slower in implementing their action plans. This problem had to be figured out between management, the governance structures, which include audit committees, and the PCs to establish how to start monitoring and focusing on the areas of the action plans that would result in turnarounds.

Mr Manzi said that the regression at the Universities of Vaal, Mangosuthu and Zululand resulted from the fact that in the previous year they did not have the audit finding they had in the current financial year, hence the regression. The practice is that they would have developed action plans and submitted them to their auditors, and during the course of the year their internal auditors would normally follow up on the implementation of the stated action plans and would pick up how far they had progressed during their audit committee meetings.

The Chairperson asked whether there were consequences for late submission of the audit information.

Ms Zondi said that there were consequences of late submission of audit information. One of the strategic plans of the AGSA was to lead by example and timeliness, so every entity that is late in their submissions will actually pay a penalty. They had to disclose in their documents the fact that they were late in making their submissions and it had to be disclosed publicly.

The Chairperson said that the engagement with the AGSA was constructive and meaningful and as a Committee, their key priority area was good governance. They had shared information on good governance, risk management, the internal audit where all the institutions needed to have an internal audit unit to also comply with the requirements of the PFMA, as well as the audit committees being in place to assist with the process of governance. The other area that needed to be prioritized was the financial and non-financial performance, and that the presentation had covered this area very well. The issue of leadership, especially at the universities, needed to be strengthened to avoid situations similar to what is happening at the University of Potchefstroom, because leadership had a key role to play in the management of the finances and performance. She said that the Committee had a role to play and was at the centre of the radical social economic transformation which hinges on skills development. She then thanked the AGSA for their presentation and asked them for the closing statements of their presentation.

Ms Pillay on behalf of the AGSA thanked the Committee for affording them the opportunity to engage with them and hoped that the exercise had been fruitful. She hoped that the engagement had helped the Committee understand the audit outcomes better as well as the internal control environment and driving clean audits, and looked forward to future engagements with the Committee.

Mr Qonde, the DHET Director General, said that the Department derived strength from such presentations and always sought to improve where there were shortcomings.

Consideration of Reports

The Chairperson requested a report on whether the minutes from the previous committee meetings had been submitted to members on time.

Mr Anele Kabingesi, Committee Secretary, responded that he had submitted the minutes in due time. The Committee also had reports which they needed to consider. There was the report of the Committee’s visit to the National Student Financial Aid Scheme (NSFAS), a report on all the meetings the Committee had had with the universities, and a report on the oversight visit to the North West University. The specific reports had been distributed to members the day before the meeting. He requested that the Members be given an opportunity to read through the reports and discuss them at another Committee meeting.

Mr Mbatha agreed with the proposal for Members to be given more time to familiarize themselves with the reports from their previous meetings, in order to better engage with them.

The Chairperson said that her concern was over the delays of the officials of the Committee executing their mandate after the Committee had finished with its work, because this results in delays in the Committee executing its functions, as after the consideration of the minutes, the minutes and reports must be submitted to the house for consideration. Delays in submitting the reports after the Committee’s oversight duties could not be tolerated. After the meetings, the reports needed to be produced the following day if possible, because any failures indicated that the Committee was not doing its work. She proposed a serious change in the production of the reports after the meetings, and also said that the Committee’s agenda was not to be decided by the Committee secretary. This right was reserved for the Committee Members who were mandated with executing the objectives of the Portfolio Committee. She proposed a radical change in the way events were being managed, as had been advocated by the President in the State of the Nation Address. The Committee wanted quality work in the reports produced by the Committee’s administration staff. It was pointless for Members to wait for so long for the Committee reports only to get sub-standard reports. The Committee could not advocate radical change at the entities over which it had oversight while its own internal organisational structure was incompetent. She also requested a proper recording and filing system for all transactions of the Committee meetings.

Consideration of Minutes

The Chairperson asked the Members to consider the minutes of 17 September 2014.

Ms Mchunu proposed their adoption. Ms Nkadimeng seconded. The minutes were adopted.

The Chairperson said that the Committee was organizing a workshop for Members on the oversight function so that they could be refreshed on the requirements for the execution of this mandate. They would have to ask the AGSA to present on their expectations of interrogation from the Committee, as well as understand the tool the AG’s office was using on oversight. The Committee needed to be schooled on areas of finance and financial reporting, and monitoring of the financial statements.

Mr Tshishonga asked whether the Committee would get any insight from the legal advisor on the laws that apply to financial management.

The Chairperson said that the request for insight on the legislation would be put forward for consideration because the Committee needed to understand what the provisions of the law were.

Mr Cassim requested that training on the review of legislation be added to the workshop’s agenda. This was part of their oversight function going forward, and the Minister had requested that during the current five year term, all the legislation of the concerned stakeholders be looked into for possibilities of amendment.

The Chairperson said that the issues of interest could not all be addressed in one workshop. She suggested that another workshop should be set up to address the matter. She then asked the members for some of the weaknesses of the Portfolio Committee.

Mr Cassim said that these would be some of the issues discussed during the workshop, but he wondered whether the Committee should play a more active role in addressing some of the challenges presented to them by the entities, because he felt that Committee only instructed the entities on what to do and not to do, without actively participating in trying to help them solve their problems.

The Chairperson said that this issue would also be addressed by the training workshop to enable them have an intensified oversight role. She thanked Members for their engagement and asked them to make use of the information they had received during their engagement with the Department.

The meeting was adjourned.

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