Office of Auditor General on 2015/16 Annual Performance Plan (APP) assessment of Department of Human Settlements

Meeting report

Election of Acting Chairperson and Apologies

Ms Kholiswa Phasiya, Committee Secretary, announced that the Chairperson of the Committee, Ms N Mafu (ANC) was away on an official trip and would not be joining the Committee for this meeting. She asked the Committee to nominate an acting chairperson as per the rules of the National Assembly.

Mr L Khoarai (ANC) nominated Ms L Mnganga-Gcabashe (ANC) to be the chairperson of the meeting. The nomination was seconded by the Committee.

Ms Phasiya read an apology for the Mr K Sithole (IFP) who was attending another Portfolio Committee meeting.

Annual Performance Plans 2014/15 and 2015/16

Ms Narisha Ragoonanthun, Senior Manager in the Auditor General’s office, led the presentation on the Auditor General’s (AG) assessment of the Department of Human Settlement’s Annual Performance Plan (APP)

2014/15 Annual Performance Plan (APP)

The AG noted inconsistencies between the planned indicators and targets per the APP and the indicators and targets reported in the quarterly performance reports. Technical indicator descriptions to support the indicators in the APP were not in all instances compliant with National Treasury’s Framework.

2015/16 Draft Annual Performance Plan (APP)

There were inconsistencies between the planned indicators and targets in the APP and the strategic plan. Technical indicator descriptions were prepared and submitted on 6 March 2015 and there were non-compliances with National Treasury’s Framework.  The number of planned targets did not meet the “SMART” criteria as required by National Treasury’s Framework for Strategic Plans and Annual Performance Plans.

Other concerns were that there were repeat findings recurring from the previous years due to a lack of understanding of National Treasury’s Framework for Strategic Plans and Annual Performance Plans. There were a number of vacancies in key positions in the strategic planning unit, for example, the Deputy Director-General (DDG): Strategy and Planning position was vacant for longer than 12 months, but was filled on 01 April 2015. The final draft 2015/16 APP was not submitted within the agreed upon timeframes. The technical indicator descriptions were submitted on 06 March 2015 and the draft APPs were not submitted to National Treasury and the Department of Planning, Monitoring and Evaluation (DPME) within the required timeframes.

There were also concerns noted on the provincial audits. The final draft APPs were submitted too late for audit or not submitted at all; technical indicator descriptions were not always submitted with the plans; and there was pushback from provincial departments to allow the AGSA to assist with the early review.

Customized Indicators

The primary objective of customized indicators was to ensure consistent service delivery by all provincial departments within the sector.  The absence thereof could have a negative impact on the delivery of key services in the provinces as well as in the sector. Customized indicators were successfully developed and rolled out in consultation with National Treasury and the DPME for the 2014/15 year. However, there were no customised indicators developed and rolled out for the 2015/16 financial year.

Discussion
Mr M Gana (DA) wished that the presentation had more examples to substantiate some of the statements made regarding inconsistencies, repetitions and issues with the National Development Plan (NDP). The APP was not a thin document and it was difficult to follow which areas these issues were speaking to. He added that the presentation made mention that planned targets were not meeting the SMART criteria as required by National Treasury, and requested an example of these targets that the AG was referring to.

Ms Corné Myburgh, Business Manager in the Auditor General’s office, said that examples could be provided during the meeting, but also proposed to prepare a document for the Committee for more comprehensive details and specific findings.

Ms Ragoonanthun read from Programme 2, Programme 3 and Programme 4 where a strategic objective on the APP was not included in the Strategic Plan. These were examples of the inconsistencies. When this was brought up with the Department, management did note the issues. With regards to SMART targets, she suggested preparing a document (or forwarding the findings that the AG made) as this was a lengthy subject.

Mr N Capa (ANC) asked about the extent and impact of the inconsistencies for 2014/15 and what the response of the Department was when the AG interacted with them. Would there be an indication to correct them within manageable time?

Ms Myburgh said the review by the office of the AG was done before the APP and Strategic Plan were approved in order to identify the inconsistencies so that there was an opportunity to correct them before they were tabled. Since that process was concluded, they would have to be audited and make an assessment of the impact. However, there would not be an opportunity to correct the issues being raised now as the year was completed.

Ms Ragoonanthun said where there had been inconsistencies for the 2014/15 year between the APP and quarterly reports, the reason the AG also went to review those was to highlight that there was an internal control deficiency. With the control in place to prepare the quarterly reports, there was a clear deficiency to check that the two documents were aligned; the reason to highlight this at this stage was that before the annual report was prepared management needed to assess where the deficiency was to ensure that there were inconsistencies between the annual report and the APP. If these were material then it would result in a qualification of the audit.

Ms V Bam-Mugwanya (ANC) inquired what had transpired after having identified the inconsistencies, what the office of the AG had done and the response of the Department to that action. The presentation also referred to a lack of understanding of National Treasury’s Framework – how was this remedied after it was identified? Furthermore, did the office of the AG find out why targets were not met?

Ms Myburgh said the normal process, and for the AG to add value, was to receive the APP before it was approved in order to identify the inconsistencies and if the targets were SMART so that the Department would have an opportunity to correct those. For the 2014/15 financial year there was no opportunity to review the APP before it was approved, so the inconsistencies were only identified during the interim audit. For 2015/16 the process was followed, issues were identified and communicated with the Department to correct them before the APP was approved. However, the AG’s office still needed to confirm the extent to which these were addressed.

Regarding the lack of understanding, the AG noted that the DDG position for strategic operations was vacant for quite some time. Leadership should set the tone, provide guidance and direction to be given by the person in the position of the DDG. With this position now filled, there would be a person to give such guidance and ensure that the understanding was developed going forward to fill that gap.

Ms Ragoonanthun added that in a service delivery department, especially one of this magnitude, to have a vacancy in strategic planning was detrimental. The requirements in terms of the framework were substantial; this was what the lack of understanding was based on. The office of the AG was very happy that the position was filled as there would be someone to provide leadership and guidance.

Mr M Shelembe (NFP) asked about the customized indicators and the willingness and cooperation of the Department and response to the AG. It was clear that there was no delivery in provinces, was there willingness and cooperation – seeing that there were no customized indicators for 2015/16 available?

Ms Ragoonanthun said both the office of the AG and the office of DPME could not identify the root cause of the lack of customized indicators. Both offices knew that the Department did not have them, but no one at the Department could actually provide a clear cut answer as to why they were not developed and who was responsible for giving the decision.

Ms T Baker (DA) asked for clarity on customized indicators; this was obviously a top-down process from national to provincial and directly negatively impacted on service delivery. This was obviously not a new process, with this gap from national to provinces – what impact did this have on the ability of the provinces to plan accordingly. 

Ms Ragoonanthun said the customized indicators came from the national Department to the provincial departments to give them guidance. The national Department and the provincial departments sat in a room and agreed what the customized indicators would be. Every year the targets were different in terms of the Medium Term Strategic Framework (MTSF), with consultation with Treasury and the DPME on the customized indicators per sector. Once there was agreement on these, the indicators would be rolled down to provinces. With regards to the impact on provinces, the AG would look into each provinces reporting differently on the same item – there was no real guidance or alignment on what to report on and there was no clear path forward.

Mr Khoarai enquired about the root cause of noncompliance with the national Treasury framework. He also asked the reporting process of the office of the AG and DPME, did they go to the Department before they came to Parliament or vice versa? Because it seemed as though the Committee was asking the AG questions they were supposed to be asking the Department.

Ms Ragoonanthun said the noncompliance noted by the AG were specific to technical indicator descriptions that were not complete. The national Treasury framework states that the description should meet a certain criteria, have a definition, a source that was clearly documented, a method of calculation and a timeframe and how to report (whether annually or quarterly) so that everyone who looked at the APP knew exactly how an indicator would be achieved. The current APP would have an indicator and a definition but did not show the method of calculating - it just showed a percentage. That created ambiguity on reporting. The current framework of Treasury aimed to ensure that there was accurate and complete reporting on predetermined objectives, at the moment there was a misalignment.

Ms Myburgh said there was no legal requirement for customized indicators, perhaps the sector needed to look into the bigger purpose and intent for customized indicators, government should not look back in 10 years and see provinces were going in different directions and did not achieve what the country wanted to achieve for the portfolio and the sector.

Ms Bam-Mugwanya asked if there was template given to the Department of what was supposed to be done in order for the Department to follow what was expected of them. She also asked how the AG could label people as “not understanding” when there was no principal in the post to show them what was expected. When there was no educator on the job it could not be expected that the student would know. 

Ms Ragoonanthun said the framework was accompanied by a number of Annexures that detailed guidelines on how to perform each activity. Also, DPME issued guidance on how to develop the APPs and did an early review in August to November to assist departments to draft their APPs. There was also an initiative from the AG to do early reviews to assist departments.

If there was no educator, the student would not know and the AG was not blaming the student – the statement was only intended to flag a concern. This was a good example of the effect in the Department of a vacant post.

Mr Capa asked if after the AG communicated these issues with the Department, management indicated that they understood these and would be able to correct them.

Ms Ragoonanthun said they appreciated that when they did make a finding, management of the Department did make an effort to make corrections and follow up to make reports back. There was a good working relationship between the AG and the Department, and the AG’s office did understand that there were capacity constraints.

The Chairperson said the Committee had noted the concerns of the AG and the reservations they had alluded to, she hoped the Department was noting them and would respond to them in the next Portfolio Committee meeting.

Mr Mbulelo Tshangana, Chief Operations Officer (COO) of the Department of Human Settlements, said the Department would respond to most of the issues raised in the next meeting. There had been a series of meetings with the AG, there were areas that the Department took full responsibility for and there were also areas that they did not agree with.

The Department was looking at three documents, not just two; the APP, the Strategic Plan and the Medium Term Strategic Framework (MTSF). All the 65 indicators in the APP were a reflection of what was in the MTSF; the problem during the drafting stage was aligning the three documents. The alignment problem was perhaps between the two documents (i.e. the APP and the Strategic Plan). The Department would also respond to the structural issues within the Department, with regard to managing the vacancies. The vacant position of the DDG was a line function position and this position should not be driving corporate targets; the Department may have had a problem with how the Department was aligned in the last five year term of government but that had been corrected.

The biggest challenge over the years was that the Department had focused on business plans, which were on Programme 3 of the APP. The Department had focused a lot on the programme that the grants bought and did not focus as much on the other four programmes; the Department took full responsibility for this approach.

The Chairperson said the current setup was challenging as the AG and the Department would not be in the same meeting to make their briefings and provide clarity. Perhaps in future, both parties could be in the same meeting to provide clarity in attendance of the parties and also hear the input from the Committee.

The Chairperson thanked both the AG’s office and the Department for their presence.

The Meeting was adjourned to discuss Committee business.