SRSA, SAIDS, Boxing SA on their 2014/15 Annual Reports; Audit outcomes by Auditor-General; Orlando East residents petition; Committee Reports

Meeting report

Opening Remarks
The Chairperson welcomed the Minister and Deputy Minister to the meeting.

Mr D Bergman (DA) suggested that unless the Minister was opposed to this, a photograph should be taken with the Members wearing the Springboks jersey, to show support for the national team’s successes during the 2015 Rugby World Cup.

The Chairperson allowed that to be done.

Audit Outcomes 2015 for Department of Sports and Recreation (SBSA) and entities: Office of the Auditor-General of SA (AGSA): 
Mr Lourens Van Vuuren, AGSA Business Executive, told the Members that the main objective of the Audit Outcomes presentation was to assist Committee oversight and to evaluate the performance of the Department of Sports and Recreation (SBSA or the Department). The purpose of the presentation was to reflect on the audit work performed to assist the Portfolio Committee in assessing the performance of the departments, taking into consideration the objective of the Committee to produce a Budgetary Review and Recommendations Report (BRRR).

He then outlined the meaning of a clean audit, which was given when the AGSA was satisfied that the financial statements were free from material mistakes; there were no material findings on the performance report and there were no material findings on the non-compliance with key legislation.

The SBSA had received a clean audit for the 2014/15 financial year, while SA Institute for Drug Free Sport (SAIDS) had some findings with regard to compliance, and Boxing SA (BSA) had some issues in respect of financial information, specifically receivables. This meant that there was space for improvement, and both SBSA and SAIDS could make strides to improve the procedures and running of the institutions. Effort needed to be made on the reviews necessary to ensure a more effective running of these institutions.

There were six key risk areas outlined in the main presentation. They were:
- Quality of submitted Financial Statements
- Quality of Submitted Performance Reports;
- Compliance with Legislation
- Financial Health
- Human Resource Management
-  Information Technology.

He went through each in turn. In relation to the quality of submitted financial statements he noted that BSA had, after correction of the previous year's reports, still been unable to obtain a clean audit.

In relation to quality of annual performance reports, SBSA and SAIDS had no adverse findings, but BSA did had findings. He strongly emphasised that that particular area needed attention and the entire entity needs to be monitored.

There were several instances where the entities being audited did not comply with legislation. He pointed to several instances of this in the handout but did not go through them in the meeting. He pointed in particular to examples of irregular spending. He noted the link between non-compliance and excess expenditure, and said that in many instances there was no review of compliance being done against the legislation. There had been non-compliance, for instance, with supply chain prescripts, and the expenditure could had been prevented.

In relation to key controls, Mr van Vuuren again referred to the detailed briefing document. He said that across the entities, leadership, financial and performance management and governance changes were illustrated. In some cases, there had been regression or they had remained stagnant.

He noted that the most common problem linked to any findings on non-compliance was slow response by management in addressing root causes of poor auditing outcomes. He recommended that management must develop action plans to address the causes of the poor audit, and these action plans in themselves would had to be monitored. In addition, it had been found that key officials lacked appropriate competencies. To resolve this, AGSA recommended that employees must show adequate qualifications, and undergo competency assessments and trainings on a continuous basis. There had been instability and vacancies in key positions. He urged strongly that the suspension of some officials must be brought to a conclusion with the proper disciplinary proceedings and that competent staff must be hired.

He repeated that more detailed information was contained in the notes (see attached documentation). The Minister had been committed to addressing the root causes. The AGSA had also recommended that Boxing SA must be empowered, and must had a performance plan that would drive key initiatives, as required by boxing regulation.

He finally summarised that, since AGSA had often been asked why it had not reported these matters earlier, the role of the AGSA was to be reactive because it could only report on these issues once they had become apparent from the financial statements, at the end of the financial year.

Discussion
The Chairperson noted that the Committee was concerned about the status of BSA. She asked how long it would be said that the current monitoring system needed to be improved.

Mr D Bergman (DA) said that Boxing SA had become “the thorn in South Africa’s side”. The sport should be profitable,and the Committee should be able to facilitate its success, because the Committee had been very patient in awaiting the results of these audit outcomes. Every year the Committee would hear promises from the Board. The strength of boxing and its reputation came from the entity's compliance. He said that after looking at the report BSA was still in the same position as it had always been. He wondered if perhaps the Ministry should not incorporate and regulate all of boxing under the SRSA itself. He pointed out that no matter how many meetings were held, real change would not be shown until issues of competencies and vacancies had been addressed. 

Mr P Moteka (EFF) said that the Committee would be remiss if it were not to make mention of the improvements made and the good things that had been done. He highlighted that SAIDS and BSA both had irregular expenditure, but they had also increased as the years had progressed, as opposed to reducing after these had been pointed out in the audits each year. He wondered why those not complying with regulations were mostly the government entities. He strongly advocated for the firing of officials that were misusing the people’s money and said these entities must explain why they were unable to comply.  He emphasized that if boxing in Eastern Cape could not be regulated, it would be a sign of true failure.

Mr S Ralegoma (ANC) also expressed his disappointment in BSA, as previously the action plan was interrogated, and would like to hear if AGSA had been satisfied on that plan. He was happy with the hiring of the Chief Executive Officer (CEO), which was a sign of progress. The Portfolio Committee had a dashboard to help it ask relevant questions, to prevent this continuous regression of BSA issues of procurement, compliance, and human resource. He asked how then the Committee should use the action plan presented to hold officials accountable for performance. There was a difficulty, however, since it took a full year gather results and monitor these issues. He believed, as a relative newcomer to the Committee, that there should also be a separate report dealing with recommendations. He urged the Committee not to overlook the importance of a human resource plan, as well as evaluating the performance once these vacancies were filled.

Mr M Malatsi (DA) said that he felt administrative deficiencies were to blame for Boxing SA, and that the day to day management was not satisfactory. There was no adequate handover procedure from one regime to the next. In regard to the unauthorised spending, there needed to be continuous tracking as well as regular and proactive monitoring.

The Chairperson agreed that continuous monitoring of these entities, as well as oversight visit would be necessary if the Committee were to expect to see any changes. She strongly emphasised that if there was a problem at the national level it would eventually trickle down into the provinces. She then proceeded to recommend that rather than just reporting about fruitless expenditure, the main objective should be to advise how to prevent it.

Mr  Van Vuuren said that the recommendations from AGSA were were to interact, evaluate, and assess the action plan and give feedback before the end of the year, to facilitate oversight. He said that internal audit was a legal requirement, but that this body could also contribute to the analysis. In response to the Members' questions regarding human resource, he agreed that it was very important. He acknowledged that he did not go into fruitless expenditure in great detail because it was picked up by the SRSA internally. His only remark in that respect was that it should be prevented, disclosed, and eventually fixed.

Mr Alec Moemi, Director General, Department of Sport and Recreation, commented that context was very important when discussing fruitless expenses. He talked briefly about a pending dispute with the South African Revenue Services (SARS) in regard to the payment of interest for sums accrued through an agreement with Federation International de Football Association (FIFA), to get back value added tax (VAT) and taxes. He said there was a special Act implemented to exempt such payments, and the issue was whether they were liable to pay. At this stage it had been agreed that SRSA would pay what the Act did not cover. He informed the Committee of the decision of the disbanded the AU authority for sports, and the formation of a new entity. However South Africa had reserved its right to join the new entity. During this time SRSA was being charged by the African Union (AU) body for both the fee as well as interest.  He emphasised that this was an example where context explained that the fruitless expenditure was unavoidable, although he agreed that it was unacceptable in the strictest sense.

Mr Moemi then went on to address the matter of intervention in the hiring process. He said that all departments must depend on the State Security Agency to vet the individuals that were to hold these key positions. If the individuals failed to meet the required standards, this was because the agencies did not satisfactorily manage to counter check. This may be because of the pressure to quickly fill these positions, which then led to disaster. He said it was important to note that there were challenges and again the context was important. He said that it would be unfair to suggest that the SRSA was not acting appropriately

The Chairperson appreciated this explanation, which had been helpful, but said that Members would need to leave no stone unturned to get proper explanations. She encouraged the SRSA to keep up the pressure and close the gaps, using resources that were available to start making progress.

She noted that Boxing SA was present, not to make any presentations, and questions could be raised by its officials if they wished.

A member of the Boxing SA delegation spoke on behalf of the team, and said that at this time they had no additional questions or input.

Department of Sport and Recreation 2015 Annual Report briefing
Mr Alec Moemi, Director General, SRSA, proceeded to raise several other matters with the Members. He noted the fact that the Department had 25 objectives in the 2014/15 year, and had at least a 90% success rate in achieving them. These matters, which he read out to the Members (see attached reports) ranged from, a penalty schedule; implementation of the school’s sports programme, which he noted had been a problem, especially in rural areas; Municipal Infrastructure Grants and the building of sports facilities. He described the resolution of issues with National Treasury officials regarding the disbursement of grants. He also stated that there were steps taken to launch an intergovernmental suit against the National Treasury, which had now been referred to arbitration. He also highlighted the improvement of BSA regulations and governance.

Mr Moemi then addressed the Members about two areas of legislation that required amendment – namely, the . Sports and Recreation Act, and the Drug Free Sports Act. He said there needed to be clarity of process and procedure in both Acts about who they applied to, hiring, and evaluating performance of key programmes. He also noted that while other professional bodies, such as the medical and legal professions, had regulatory bodies, the sports sector did not. As oversight official, the SRSA was responsible for regulating trainers, and coaches, to ensure that they were vetted, and this also included  so called rehabilitation specialists, and the licensing of such professionals. He said that there was a need to include marginalised sports teams, such as junior teams, women’s teams, and handicap teams, so as to have an all-inclusive sports industry, not just top tier teams, and all demographics must be represented.

Mr Moemi noted that there was a need for team transformation. He said that this meant more than just having two or three black players on an otherwise entirely white team; this was an issue of governance and oversight. He said there needed to be a combined assurance network. Lastly he re-emphasised the need to fill vacancies with qualified persons.

Mr Makoto Matlala, Chief Financial Officer, SRSA, presented the financial report for the year 2014/2015. The report had been handed out during the meeting and he said that he would give only a brief summary of what areas the Members should pay keen interest to, when they analysed it. This included areas that were not bringing in revenue, although Members should commend those areas where the SRSA managed to spend less than the yearly allocations, achieving savings, but was still able to distribute to provinces and organisations. He noted that there had been a lot of improvement.

Discussion
The Chairman said that the SRSA must achieve social cohesion. The main obstacles that it faced should not be people who hindered the ability of the Committee to deliver to the people of South Africa, and she emphasised the need to be stern and impose consequences where necessary.

Ms D Manana (ANC) said that she could attest to the return of boxing to television, in an attempt to reintegrate it into one of the sports that was well regulated again in this country. She however questioned the feasibility of providing schools with multipurpose sports centres, especially in rural areas.

Ms B Abrahams (ANC) referred directly to the report provided by Mr M Matlala, highlighting page 79 which discussed training of staff members internally and externally. She asked what would stop these newly trained professionals from leaving after acquiring these new skill sets. She also noted that there were few statistics that represented disabled employees.

Mr P Moteka (EFF) asks what new approach was being used to address the issue of transformation in sports, specifically rugby.

Mr Bergman emphasized that he was not willing to applaud Boxing SA yet, and that it would be best to be cautiously optimistic.

Mr S Ralegoma (ANC) said that he felt that SRSA had been making progress, but that it should put pressure on the relevant federations, and engage with the National Council of Provinces.

The Chairperson said that truthfully sport was yet to be transformed, but the Members did appreciate the changes made thus far. She would also like to see more implementation of the penalties schedule.

Mr Moemi answered, in regard to providing facilities at schools, that he was aware that there would be an extra challenge in respect of funding for rural area schools but the SRSA nonetheless did fully intend to roll out these facilities. In relation to the comment on the workplace skills, he asked Members to keep in mind that the SRSA could not match the salaries offered by other agencies with bigger HR budgets, so it was more concerned to try to meet the needs of the employees who received the training to try and retain them, through incentives, and canteens at the work places. He said that the SRSA was an equal opportunity employer even with respect to disabled employees.

Speaking to those Members that felt that BSA had yet to reach its full potential, he stressed that the regulation of boxing and boxers was very difficult, especially in terms of harmonising the regulations applying to weight and age of each competitor. He provided examples of the boxing industry in the United States and said that the matches were played in places where the regulations were not very strict. He concluded by asking the Members to remain aware that context was very important where sports was involved and that it must be applied to each of these issues.

The Chairperson noted the general consensus that Members would adopt the report.

Mr Malatsi did want to highlight some formatting and grammatical errors in the report, although he noted that they did not go to the subject of the report and could be corrected by the Committee Secretary. Other Members were happy to leave them to be corrected by the Committee Section.

Members decided that they needed more time before formally approving the report of the AGSA.

Committee minute adoption.
Members considered and approved the minutes of the following meetings: 8 September, 22 September and 23 September 2015.

Other Committee business
Members agreed that it would be a good idea for the Parliamentary Committee to receive the rugby team when they arrived back in South Africa after the 2015 Rugby World Cup, to demonstrate their support. It was agreed that the Chairperson would make the necessary applications.

The Members then discussed timelines for meetings before the adopting of the Budgetary Review and Recommendation Report before it was tabled in the House. A few other housekeeping matters were addressed, including dates for end of quarter meetings, in November.

The meeting was adjourned.