Communications portfolio: input by Auditor-General & Public Service Commission; Minister & entities responses

Meeting report

The Chairperson explained that the Committee would receive briefings from the Auditor-General on the 2013/14 audit outcomes of the Department of Communications and its entities, and the Public Service Commission (PSC) on its report. There would then be responses from the Minister of Communications and the entities reporting to the Department of Communications. Apologies from the Deputy Minister were noted.

Auditor-General of South Africa (AGSA) briefing on Department of Communications (DoC) audit
Mr Jacques van Rensburg, AGSA Senior Manager, said he aimed to provide information and guidance on the audit outcomes to enable the Portfolio Committee to effectively execute its oversight function on the outcomes, looking at root causes and the assurance provided by the key role players of the DoC and its six entities: Independent Communications Authority of South Africa (ICASA), Government Communication and Information System (GCIS), Brand South Africa (BSA), Film & Publication Board (FPB), South African Broadcasting Corporation (SABC), and the Media Development and Diversity Agency (MDDA).

He explained the different audit opinions: Unqualified with no findings meant that there were no findings in the financial statements, in the predetermined objectives and in compliance. Unqualified with findings meant that there were findings either on financial statements, predetermined objectives and/or compliance. They others were: Qualified with findings, then Adverse and finally Disclaimed with findings.

The Independent Communications Authority of South Africa (ICASA), Government Communication and Information System (GCIS), Brand SA,  Film & Publication Board (FPB) the obvious concern was that they were stagnant in the middle block in terms of findings on compliance and predetermined objectives - there had been no improvement on their Unqualified with findings audit outcomes. The SABC received a qualified opinion with findings. The SABC had improved from a disclaimer to a qualified opinion. Looking at improvement in overall audit outcomes over the past three years, in 2011/12 ICASA and SABC received a qualified audit report. In 2012/13, the SABC received a disclaimer with findings and in 2013/14 it improved to a qualified audit opinion. On the quality of submitted financial statements, entities should avoid qualifications by correcting material misstatements during the audit process. The SABC moved from disclaimer to qualification with the correction of material misstatements in 2013/14.

The most common material findings were on usefulness and reliability of performance indicators. On the quality of the annual performance reports, three entities (GCIS, Brand SA & FPB) the indicators were useful and reliable with no findings. The SABC and ICASA indicators had findings in terms of usefulness (targets were not well-defined, SMART or where there was inconsistency in the reported targets against those in the annual performance plan). The SABC also had findings on reliability of the information provided (material adjustment was made to annual performance report during the audit).
 
On the status of compliance with legislation, five entities (ICASA, GCIS, SABC, Brand SA & FPB) had significant  non-compliance with legislation. The most common areas of non-compliance were: procurement and contract management, expenditure management and quality of financial statements submitted for audit.

On the matter of fruitless and wasteful expenditure, there was an increase from R55m in 2013/14 as opposed to the R20m in 2012/13. Irregular expenditure ballooned from R100 m in 2012/13 to  SABC being the main driver with R3.390 billion. Non-compliance with supply chain management (SCM) legislation caused the bulk of irregular expenditure. Main areas of non-compliance: required number of quotations were not obtained; awards were made to suppliers that did not submit valid tax clearance certificate; there was a lack of supporting documentation.

This expenditure included payment for vehicles and services not provided, impairment of foreign content, cancellation of busses, medical aids and late payment of monies to SARS, and expenses on tenders withdrawn.

Mr van Rensburg emphasised that drivers of internal controls should improve. Common areas were stable, effective leadership, human resource controls. ICT governance and controls, audit action plans, proper record keeping, daily and monthly controls and review and monitor compliance.

He concluded that the root causes that needed to be addressed included instability or vacancies in key positions, capacity and skills constraints, an inadequate internal controls framework (policies and procedures), and the lack of consequences for poor performance and transgressions.

Discussion
Mr G Davis (DA) said that the DOC presentation document congratulates the MDDA for achieving a clean audit as well as the GCIS and the FPB. He asked for clarity - are these really clean audits or are unqualified audits with findings?

Mr Davis asked whether it was correct that the irregular expenditure from SABC had increased from R100m to R3.3bn. If the SABC total expenditure was R6.8bn did that mean nearly half of its expenditure was irregular?

Mr van Rensburg responded that in terms of MDDA he could not comment since the audit opinion of the entity was not yet public knowledge. Mr Davis was correct. The other two entities had received unqualified opinions with findings, as there were findings on compliance and their predetermined objectives. He said that it was correct R3.3bn was irregular expenditure.

Public Service Commission (PSC) briefing
Prof Richard Levin, PSC Director-General, spoke on the PSC evaluation of values and principles governing public administration in the Department of Communication and selected entities. The PSC was requested to provide a high-level evaluation of the extent to which the values and principles governing public administration, contained in Chapter 10 of the Constitution, were complied with in selected departments and entities.

The Departments/entities included the Department of Communications  (now Telecommunications and Postal Services), the Government Communications and Information System (now Communications), Brand SA, Media Development and Diversity Agency (MDDA), South African Broadcasting Corporation (SABC), Independent Communications Authority of South Africa (ICASA), and the Film and Publication Board (FPB)

Prof Levin said that section 196(4) of the Constitution sets out the powers and functions of the PSC. Read with the PSC Act, 1997, it stipulated that the PSC’s mandate shall apply in respect of the public service, and in particular the administration in the national and provincial spheres of government. The PSC’s mandate does therefore not extend to constitutional institutions and public entities. Although Parliament had resolved that the PSC should report on the implementation of section 195(1) of the Constitution by the administration of all spheres of government, organs of state and public enterprises, the necessary legislative amendments have not been effected to implement Parliament’s decision. The initial draft of the Public Administration Management Bill included the extension of the PSC’s mandate to the local sphere of government. However, the clause was removed from the Bill passed in the National Assembly in March 2014. The PSC therefore does not have information on the public entities reporting to the Portfolio Committee, however, where available information on public entities has been included in this presentation. The data used in the presentation comprises the 2012/13 and 2013/14 Annual Reports and other data available, such as. PSC tools, Vulindlela, DPME and National Treasury. The Annual Report for the MDDA for 2013/14 is not yet available.

Prof Levin said that in terms of financial disclosure framework all members of the Senior Management Service were required to disclose the particulars of all their registered interests (such as companies and properties) to their respective Executive Authorities (EAs) by not later than 30 April each year. Overall in the public service, the compliance rate by the due date of 31 May each year has improved. Only 100% compliance is acceptable. There should be management of potential conflicts that senior managers might have between their private business interests and their official responsibilities. The GCIS financial disclosure forms were being scrutinized. The Annual Reports for 2013/14 of the Brand South Africa, ICASA and the SABC reflected that processes were in place to minimize and manage conflicts of interest.

Prof Levin said that the National Anti-Corruption Hotline (NACH) (0800 701 701) was established in September 2004 for reporting corruption in the Public Service and is managed by the PSC. Cases received by the NACH since its inception up to 15 September 2014: No complaints have been lodged with the NACH in respect of the entities covered in this presentation. The FPB subscribed to the hotline. The SABC has a whistle blowing mechanism, as well as a hotline. In terms of financial misconduct the Public Finance Management Act (PFMA), read with the Treasury Regulations, require national and provincial departments to report on finalised financial misconduct cases to the PSC. In the case of public entities, such cases were reported to the Executive Authority, Auditor-General and the relevant treasury. PSC provided the financial misconduct cases for the past three years for DoC and GCIS.

In terms of fraud prevention Prof Levin said that the Treasury Regulations required public entities to put in place a risk management strategy, which must include a fraud prevention plan, to direct internal audit effort.
An analysis of the 2013/14 Annual Reports indicated the DOC and its other entities had fraud prevention mechanisms were in place. The PSC generally found that in management of precautionary suspensions, discipline was not managed effectively, due to inadequate capacity to chair disciplinary hearings and represent departments. This resulted in long periods of precautionary suspension. Public entities were not required to report on suspensions.

In comparing expenditure with performance, DoC spent 99.9% in 2013/14 but did not achieve more than 60% of their targets which is of concern. This year, there was a slight improvement in the achievement of targets in the DoC. The reliability and usefulness of performance information improved. The reliability and usefulness of performance information improved. The GCIS budget allocation increased by R40.5m during the Adjusted Estimates of National Expenditure (AENE), yet it had incurred overspending. In terms of expenditure trends in 2014/15, overspending had increased in the DoC, and it was 8.7% above the norm in August 2014. The GCIS had an overspending at the end of 2013/14. Spending trends showed that as at 31 August 2014 it was overspending by 6%. On invoices over 30 days that had not been paid, the PFMA, read with the Treasury Regulations, stipulated that “unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice”. He provided a record of the 30-day payment of creditors which is an important area to tighten up (for SMME development) by DOC as GCIS had improved.

Prof Levin said that there was an overall challenge as there were audit findings. On filling of agreements by SMS members the DoC indicated that – no valid reasons were received for late or non-submission of PAs; and disciplinary steps were not taken against non-compliance in 2013/14. In the DoC no performance assessments of SMS members were finalised. There is a big question around consequence management as raised by the AG in the first report The GCIS paid performance rewards to 28.6% of SMS members, amounting to R500 000.

Prof Levin looked at several other indicators before concluding. He said that although there were continued signs that the global economic outlook was improving, the forecast for South Africa’s budget deficit was of concern. Greater accountability was required to manage the scarce resources of government. The audit outcomes showed that financial management has generally been sound. Although the SABC received a qualified audit opinion, its Annual Report displays that active steps were being taken to address shortcomings. Spending trends in the DoC and GCIS in the current financial year should be addressed to curb the possibility of overspending. This analysis showed that the departments and entities have the necessary mechanisms in place to address governance issues. However, governance is essentially about effective leadership. Efforts to build and maintain strong and stable leadership is therefore essential.

South African Broadcasting Corporation (SABC) Chief Financial Officer briefing
Mr James Aguma, Acting Chief Financial Officer, gave an analysis of financial results, profit and loss, financial position, cash flows, audit opinion, analysis of audit opinions, table and analysis of qualifications paragraphs, and the summary of action plan to deal with audit findings. 

Profit for the year and total comprehensive income for the year improved by over 523% mainly due to the increasing revenues outstripping expenses. This was driven by both Radio and Television advertising revenue. The 7% growth in expenses was driven mainly by the growth in employee compensation and benefits.

Mr Aguma said that in terms revenue analysis the advertising revenues improved despite declining audiences by 8% due to successful initiatives to regain advertiser confidence, innovative trading mechanisms in Television and strong audiences in Radio. The sponsorship revenues improved by 22% due to a more flexible sponsorship policy and improved performance by the sales team. TV Licence revenue was under pressure due to reduced sales of television sets as consumers were under financial strain. Other income was mainly from the supply of services at special broadcast events (once off) resulting in a 186% improvement. In terms of the five-year trend there has been impressive revenue growth from 2010 to 2014 mainly due to sustained growth in classic advertising revenue relative to other revenue streams. The advertising revenues were currently making up 73% of the total revenue in 2014 compared to 66% in 2010. The licence fee revenue only made 7% of the revenue compared to 9% in 2010. This was particularly due to SABC’s mandate on content delivery. 

Mr  Aguma said that the in terms of results year on year, the operating expenses have increased by 4% year on year. The 17% increase in employee compensation and benefit expenses was largely off-set by reductions in broadcast costs and amortization of programme, film and sports rights. The operating expenses had a dramatic upward trajectory in the past 5 years.  This had been driven largely by rising employee compensation and benefits relative to other expenditure particularly amortisation of content. 

Mr Aguma said that in terms of the financial capital, the working position of SABC was that the SABC `was able to meet its short term obligations comfortably.  This is subsequent to repaying the Nedbank Loan which was obtained with the Government Guarantee in 2010 over the past 5 financial periods.

In terms of cash flow statement which was abridged, the SABC has R1.4bn in cash and cash equivalents which is a 32% improvement on the prior period where the entity had repaid the government guaranteed loan. The entity has been able to generate in excess of R500m from its operations in the past two financial periods in order to fund its investing activities. These were expected to rise in the upcoming financial periods.  The entity will be able to continue trading as a going concern for the foreseeable period.

Mr Aguma said that audit opinion for 2013/14 was qualified. This is an improvement on the disclaimer for the 2012/13 financial period.  The positive aspect however is that Programme, Film and Sports Rights which resulted in the audit opinions of 2011 and 2012 was no longer on the audit qualifications. 

Mr Aguma concluded that the audit turnaround dependencies noted that the board and its committees should continue to meet frequently to ensure that action plans were implemented. The Audit Committee should meet monthly and the Risk Committee should at least meet quarterly. The risk management, internal audit and compliance functions have been adequately staffed. There were now policies and procedures for key activities. The entity should recruit experienced professional accountants so as to embed performance on management.
 
Discussion
Mr M Kekana (ANC) welcomed the reports and hoped that what the presenters knew was what they were telling the Committee. He said that the Minister should note that what was presented was what used to be presented, and what they were told had been done, had not been done in the past. They were talking about two issues, namely, human resources and finances which were very important. The Minister should show leadership by leading, and if someone was inappropriate that person should be out of their ship. She could not come before the Committee and be told yet the same thing about filling vacancies which was an easy thing. Mr Kekana asked where did “that money” go to because it was budgeted for the vacant positions. This would lead to irregular expenditure.

Mr Kekana said that the Department and its entities should stop using consultants which was something they were told many times and was becoming a national anthem. If there was irregular expenditure, the Chief Executive Officer should tell them. They would check if the CEO had enough capacity and the staff was well developed or their qualifications were in doubt and those were HR matters. The Minister should note that all her senior managers should be vetted by January next year in terms of their qualifications.

Mr Kekana said that disciplinary cases should not take more than 60 days when they have a legal qualified person to assist them. Most of the cases in the department took more than 150 days which was not acceptable.

Mr Kekana was happy that the SABC moved from a danger point to a warm one, i.e. from a disclaimer to a qualified audit opinion from the Auditor-General. It was not enough – the broadcaster should come up with a strategy for the collection of television licence fees. They should not collect less than R500m or R1bn because if there were more than 15 million TV sets in South Africa, it meant that close to R4bn could be collected in licence fees at the rate of R250 per set. They could do it manually, door to door collection or do it technologically in terms of a device like DSTV does.

Mr Kekana said all senior managers that did not meet the requirements should not get bonuses.

Mr Kekana said that they did not want to monopolise things or micro-manage the Minister but he was worried about the filling of posts at the SABC - they should rather leave it until they dealt with the issue of the board chairperson.

Mr G Davis (DA) thanked the department and the entities for their presentations. But it should be noted that there was not enough time to interrogate all of those annual reports because there was so much information in them. In future they needed to spread that session over few days so as to analyse all that had been presented for each entity.

Mr Davis thanked the Minister for the strongly worded letter to the MDDA and hoped they would call the MDDA to account for not tabling its annual report. The Committee should put that onto the agenda and take it very seriously as the Minister had stated that it was their job to hold the entity to account for the failure to table the report.

Mr Davis asked the Minster what role Ms Pumla Williams, the Acting GCIS CEO, would be playing or was the new DG replacing Ms Williams.

Mr Davis noted that the AG found instability in key leadership positions which was one of the key drivers for failing to get clean audits. It was a welcome development that they would be appointing a CEO and CFO at SABC in November. He asked why that process was taking so long. It was stated that it will be done in three months but now it was about six months, and he found it strange that it took them 24 hours to appoint Hlaudi Motsoeneng once the board had recommended him.

Mr Davis asked how the SABC could implement the AG’s recommendations in terms of holding officials accountable, when very senior SABC officials like Mr Motsoeneng was found by the Public Protector to be responsible for irregularly raising the salaries of various staff members, increasing the salary bill by by R29 million.

Mr Kekana interjected by raising a point of order stating that the issue of Mr Motsoeneng was in the courts and should not be entertained in that meeting.

The Chairperson asked Mr Davis to leave that issue since it was still in court.

Mr Davis said that that the information was in the Public Protector’s report and it was about what the Public Protector had found.

Mr Davis continued and asked if they had someone in the SABC who was found by the Public Protector for being responsible for wasteful expenditure.

Mr Kekana objected that the issue that was in court was the issue that emanated from the Public Protector, and Mr Davis should stop all talk about that issue because it was in court.

The Chairperson ruled that it should be remembered that they had attempted to have the Minister present on that matter and it had been raised that they should rather deal with it via the court. Mr Kekana has also launched a complaint about it being sub judice and it should be dealt with at that level. She requested Mr Davis to move on to other matters.

Mr Davis asked how the Minister can expect entities to comply with the AG’s report when certain positions in certain entities were found guilty of doing certain things and were still in their positions. It was untenable and they could not deal with the problems across the board if they did not deal with the people at the top who were responsible.

Mr Davis noted that the SABC was going through a challenging time with regard to its board chairperson and allegations about her qualifications. He asked whether the Minister agreed that they needed a re-look at the way the members of the board were appointed, and how they can ensure they were appointing people of integrity, that they were appointed in terms of their ability, not their proximity to people in high places.

Mr Davis asked with regard to the AG’s call for stability and filling of key positions, why the Minister had revoked the 45 working day extension for four ICASA councillors because that will create unnecessary vacancies, and what right in law does she have to revoke this?

The Chairperson interjected that those issues as well have serious reservations because they have dealt with that matter.

Mr Davis said that they have not dealt with that matter. They have discussed the filling of vacancies, they have not discussed the Minister’s revoking of the 45 working day extension that the councillors were entitled to in law.

The Chairperson said that if the Minister wished to respond to that she could do so, but the matter had been raised with Parliament. The Speaker and the Minister were in communication on the matter and they were supposed to handle it and give feedback to the Committee.

Mr Davis said that there were two different issues and the one that the Chairperson was referring to was the appointment of four new councillors. The issue he was referring to was the unilateral decision of the Minister to revoke the 45 working day extension of the current four councillors.

The Chairperson said that if the Minister wanted to respond to that issue she could. On the issue of the MDDA Annual Report, this matter of non-compliance was with Parliament and was already in the Speaker’s Office, and they will be directed in terms of how they should handle it. It was not that they did not only comply with the Portfolio Committee, but above all, the MDDA did not comply with Parliament.

Mr Davis asked where the chairperson of the SABC Board was.

The Chairperson interjected that they did not dictate the delegation of entities and it was not fair to ask a particular person because entities themselves decided who should be part of the delegation.

Mr Davis said that the SABC chairperson directed the affairs of the SABC and it was strange she was not there.

The Chairperson said she had ruled on that matter and Mr Davis should move to other questions.

Mr Davis said that the biggest standout problem in that meeting was the R3.3bn worth of irregular expenditure at the SABC up from R100m. This was a staggering amount of money which was nearly half of the entity’s total expenditure. He asked how this happened, how can nearly half of the SABC expenditure be irregular? Who was responsible for that? What sections of law would be applied to those individuals that were responsible for that?

Mr Davis noted three points made by the AG in terms of governance failures at the SABC. The first was key positions that had not been filled and the high vacancy rate throughout the system. He asked what had been done to fill the key positions. The other problem was the lack of technical expertise in the CFO’s office and inadequate skills in the supply chain management. He asked what had been done to rectify that problem. Thirdly, there was no effective human resource management in place to ensure sufficiently skilled staff were in the right places. He asked what had been done to resolve the HR practices at the SABC.

Mr Davis noted that the AG had found that fruitless and wasteful expenditure had increased from R15m to R54m mainly due to payment of vehicles and services that were not provided for. He asked the SABC to clarify what happened there. Where did the money go, how many vehicles were paid for but were not received and what had been done to get the money back, and did they discipline the officials involved?

Mr Davis asked what had been done about the alleged purging of staff which resulted in golden handshakes of millions of rands and what was done to prevent that. 


Mr Davis noticed that in last year’s Annual Report there was a section on disciplinary processes and what would happen to board members who broke the SABC disciplinary code and what steps would be taken to recover any money they earned through fraudulent activities. This had been taken out of the Annual Report of 2013/14 financial year. He asked whether that had anything to do with the current charges against the chairperson of the SABC.

Afternoon session
Mr R Tseli (ANC) appreciated the overall improvement on audit outcomes of the entities that report to this Committee. He was disappointed by MDDA for its late submission of its Annual Report. He was concerned with targets which were not SMART which makes it difficult for the Auditor General to come up with an opinion. He was disappointed with ICASA underspending on its conditional grant of R93 million. He was concerned with ICASA’s increase in consultancy fees and its vacancy rate of 21% plus 75% of SABC’s targets which were not specific. He had been raising this issue with the Auditor General on why it accepts targets which were not specific and allow entities to continue with them. Only when it starts auditing the annual reports, then it says it could not come up with an opinion because the targets were not specific. He wanted progress on the Nedbank loan repayment from SABC. He asked why the Director General had not yet signed a performance agreement yet bonuses were awarded to people reporting to the Director General. It was unacceptable for entities to take more than eight months to fill vacancies.

Ms Clarinda Simpson, Chief Financial Officer: ICASA, said the R93 million conditional grant received was for postal and broadcasting monitoring equipment. This went through the procurement process and by the end of the financial year, a contract was signed for postal monitoring equipment. There were delays in the procurement process as the equipment had to be sourced overseas. There were commitments in place which managed it to retain the grant by the end of the financial year.

Mr Wellington Ngwepe, Chief Operating Officer: ICASA, said the increase in consultancy fees was because of the legal review process on mobile call termination regulation which resulted in a spike in legal fees when it defended the case.

Ms Busi Mtsweni, ICASA General Manager: Human Resources, said by the end of the financial year vacancies were 21% which had been reduced 14% through the filling of 25 positions including the critical position of the COO.

Ms Chichi Maponya, Chairperson: Brand South Africa, said it will be discussing with the Minister, Treasury and the Auditor General on the acceptable language which will carry the same message and it will keep the Committee updated. It was unable to fill all vacancies as it was implementing a turnaround strategy which needed three years as it will have had budgetary implications to be implemented in a year. It was engaging with the Minister to increase its budget to deal with the expanded mandate on local and international audiences. The filling of vacancies will be phased in over the next two financial years. Some of the vacancies advertised will be filled by the end of November.

Mr Anton Heunis, SABC Board Member, said the two senior positions had been advertised. SABC has human resources practices and policies for talent management and retention which was under review in consultation with organised labour.

Mr James Aguma, SABC Acting Chief Financial Officer, said it was true that SABC disclosed R3,3 billion irregular expenditure: R900 million incurred in the current year, R1, 6 billion in 2013, R1 billion in 2012. In the previous years, R100 million was disclosed. In 2013, the Auditor General cautioned the SABC for its disclosures of irregular expenditure were incomplete. In the financial year under review, this became part of the audit action plan and a team went into previous contracts and tenders trying to identify irregular expenditure. Members will realise that irregular expenditure and wasteful expenditure by its very nature is not something that is going to be disclosed openly because the Public Finance Management Act has a prescription that people who incur this expenditure may not be very comfortable with. The manager who was the first line of internal control in entities would have to discover irregular expenditure. Unfortunately, SABC historically did not have mechanisms to discover irregular expenditure thus the surge in wasteful expenditure. How did this happen? The first reason was because of the nature of the business. For example, SABC has a budget of R400 million on sports rights, but realises that it needs R900 million in total to show all sports of national interest. When the days on which the sports need to be broadcast arrive, SABC looks into its budget and squeezes some of the funds. Negotiations on sports rights take too long-- by the time games were broadcast, the contracts were not yet signed. This was the largest contributor to irregular expenditure.

He said the second problem was around polices. The SABC previously used to accept copies of tax clearance certificates. The officials believed they were complying with the law, yet there were not. The officials were not aware that a copy of a tax clearance certificate is null and void. Who was responsible was a very tough question. In terms of the PFMA, the accounting officer was responsible, but since it was historical, the accounting officers of that time were liable. At SABC, professional accounting skills were in short supply but it was reorganising the finance department to test whether it was able to present accurate information on business decision making and compliance with the law. The structure need to be changed. Skills of their own will not be enough because some of the defects were in the control environment---policies and procedures need to be changed and the structure need to be realigned for the new skills being injected. The state guaranteed loan for the Nedbank loan had been paid in full. The only liabilities to Nedbank were the acquisition of two high definition TV outside broadcasting (OB) vans. The interest rates for these were very low.

Mr Ronnie Lubisi, SABC Director, said money was paid to departing officials because, if not, such cases will drag on for years without the position filled. This was the reason some of the positions were not filled. The board had very good grounds for making such decisions. It was a pity that SABC was a public broadcaster and has to justify these things in public. The amount should not be read as a golden handshake as there was a lot of breakdown in it. SMART targets had significantly improved and next financial year will show great improvement. The audit committee had been instructed to audit the targets on a quarterly basis. It was going to have a workshop with the AG on the measurability of targets and instruments used to measure. It was a problem to the organisation also as failure to have targets meant failure to measure the performance of management whose performance must be married to the achievement of targets. Board members cannot discipline each other. The board members were appointed by the President and the disciplinary process follows the appointment process.

Ms Faith Muthambi, Minister of Communication, said the Director General who had not signed a performance agreement was now the DG for Telecommunications and Postal Service. When she took over the Ministry, it had to deal with realignment; this was the reason for the delay in filling the position of the executive officer of GCIS. That position was to be replaced by a Director General after realignment. It was unacceptable to have a position not filled within the acceptable time. In the previous financial year, no board members underwent a disciplinary hearing. The current one the Committee was dealing with will be reported on in the current financial year. It was a legislative requirement for entities to account. Even if it needs dismissal without warning, let it be done. Her wish was to ensure that departments function as expected. There was no communications entity that got a clean audit and 2014 had been declared the year of the clean audit. There was a need to go back and discuss with entities about the non negotiables. For any irregular and wasteful expenditure, there must be consequences. She had demanded reports on action taken against those responsible for fruitless and wasteful expenditure to be submitted to her by end of November.

The Chairperson thanked the entities for answering questions posed to them and asked for concluding remarks from the Auditor General and Public Service Commission.

The official from the Office of the Auditor General said the Auditor General will audit future plans and report on them before they get approved.

Prof Richard Levin, Director General, Public Service Commission, said 28,6% of senior management attained performance rewards which amounted to R500 000 in GCIS. There were two issues with regards to consequence management. The first involves taking action against fraud and corruption and the other was rewards for good performance management. The GCIS attained 92% of its targets which explain why its senior management were given performance rewards. In the public service system, the acceptable level was 1,5% of the total budget for performance rewards. The budget for GCIS performance rewards was high, even though not necessarily irregular. It also meant there was nothing that went to the level below senior management. This was something that heads of departments need to look into. The senior management was a minority and the compensation was very high.

Minister Muthambi said the councillors at ICASA knew that their terms were coming to an end and the remaining 45 days was a handover period. Section 38 of the PFMA says the efficient running of administration rests with the accounting officer who was accountable to the Committee. In working together, the entities will be taken forward. The input from the Committee was always taken to heart as this was in the best interests of the country. The entities will always be available to account for the Committee when needed.

The meeting was adjourned.