Department of Transport on its 2014/15 Annual Report; Audit outcomes by Auditor-General

Meeting report

Transport Portfolio Audit Outcomes for 2014/15: briefing by Auditor-General South Africa (AGSA)
Mr Solly Sekgooa, AGSA Corporate Executive: Audit, said that the purpose of the presentation was to reflect on the audit work performed to assist the Portfolio Committee in its oversight role in assessing the performance of the department taking into consideration the objective of the Committee to produce the Budget Review and Recommendations Report (BRRR) which expressed the Committee’s view on the budget of the department for recommendation to the National Treasury ahead of the following year’s budget period.

The presentation focused on the transport portfolio structure, overall audit outcomes for the transport portfolio, AG’s six key focus areas, unauthorised/irregular/fruitless and wasteful expenditure, combined assurance and assessment of assurance providers, drivers of key controls for portfolio, root causes and recommendations, and Minister’s commitment to address root causes.

Mr Sekgooa said that the transport portfolio structure is made up of road, rail, air and maritime transport. The overall audit outcomes for the transport portfolio for 2014/15, 23% of department entities were unqualified with no findings and 77% were unqualified with findings.

AGSA’s six key focus areas are compliance with legislation (38% complied, 38% required intervention and 24% were concerning); quality of submitted statements (31% were good and 69% required intervention); quality of submitted financial performance reports (60% were good and 38% required intervention). In terms of IT 38% were good, 54% concerning and 8% required intervention. In human resource 62% were good, 30% concerning and 8% required intervention and on the financial health management 46% good, 23% concerning and 31% required intervention.

Mr Sekgooa said that in terms of the combined assurance senior management should take immediate action to address specific recommendations and adhere to financial management and internal control systems. Accounting officers/ authority should hold officials accountable on implementation of internal controls and report progress quarterly and annually. Executive Authority should monitor the progress of performance and enforce accountability and consequences. National Treasury and the DPSA should monitor compliance with laws and regulations and enforce appropriate action. Internal audit should follow up on management’s actions to address specific recommendations and conduct its own audits on the key focus areas in the internal control environment and report on quarterly progress. Audit Committee should monitor risks and the implementation of commitments on corrective action made by management as well as quarterly progress on the action plans. Oversight (portfolio committees) should review and monitor quarterly progress on the implementation of action plans to address deficiencies. Public Accounts Committee should exercise specific oversight on a regular basis on any report which it may deem necessary. And the National Assembly should provide independent oversight on the reliability, accuracy and credibility of national and provincial government.

Mr Sekgooa said in terms of the root causes that should be addressed on the instability on vacancies that the positions such as Chief Financial Officer, General Manager and other key management were vacant during the year or in acting positions for longer than the prescribed period at several entities (DLCA, PRACA, and RTMC). There was instability in key positions as the board at PRASA took office during the year. SAMSA board members resigned and where not timeously replaced. There was no alternative method put in place to ensure leadership during the absence of the board.

With regard to the lack of competencies Supply Chain Management officials were not adequately trained on the implementation of the SCM policy and the relevant laws and regulations. Annual financial statements were not adequately reviewed to ensure compliance with the reporting framework before submission for audit. In terms of the slow response by management in addressing root causes of poor audit outcomes that management developed action plans however the actions taken were not effective to ensure that the prior year audit findings could be resolved. Management did not provide commitments to address internal control deficiencies highlighted in the dashboard.

Mr Sekgooa concluded with recommendations that included DOT should ensure that vacancies in key positions were filled with appropriate skilled and competent people in a timely manner to address instability in leadership; Ensure that key officials involved in preparing financial statement and reports receive adequate training on the relevant applicable legislation and standards; Monitor that key commitments made by management to address the root causes identified were implemented in a timely manner to prevent a recurrence of matters that gave rise to unfavourable audit outcomes.

Discussion
Mr C Hunsinger (DA) referred to the material misstatements in the financial statements of many entities and that key officials lacked appropriate competencies. He asked if the lack of appropriate competencies was related to the demands of the functions or was it a result of skills, and how it should be improved and what the reason for the appointment if there was inability to deliver in terms of the functions required for that position.

Mr Sekgooa said that with regard to the lack of competencies it was important to note that in the area of financial statement management, DOT entities can avoid qualification simply by correction of the material mistakes. The other area AGSA has indicated lack of appropriate competencies is supply chain management.

Mr Hunsinger noted that page 17 stated about information technology controls that the portfolio had designed IT controls but has not yet implemented them which it had committed to doing in the previous cycle. He asked what the reason for the delay in implementation was because it was crucial to have that system in place.

Mr M Maswangayi (ANC) asked for clarity in terms of the regulations where AGSA indicated the top three, which were the top three entities?

Mr L Ramatlakane (ANC) asked for clarity with regard to the turnaround plans of four of the DOT entities which were expected to be noted by the AG once they are completed, what was the turnaround strategy?

Mr M De Freitas (DA) asked in terms of the duplication if it was appropriate to monitor such repeat issues.

Mr M Sibande (ANC) referred to slide 19 where AGSA indicated regression in the drivers of key controls which noted the Department of Transport required intervention in terms of its oversight responsibility, amongst other findings. These findings should have been highlighted and formed part of the recommendations. He asked how often the AG interacted with internal auditors of the department and its entities because if they had done that the picture would have been different, and perhaps they should have made guidelines in that regard.

The Chairperson asked in terms of the lack of consequences what the indicators are.

Mr Sibande referred to slide 18 that assessed the performance of assurance providers where AGSA stated the Portfolio Committee had regressed. AGSA has indicated that the Transport Portfolio Committee’s performance had regressed since the previous financial year. He asked since when did the AG evaluate the performance of the Portfolio Committee.

The Chairperson said that Mr Sekgooa should withdraw that statement from the report because what AGSA had indicated in terms of the evaluation of the Committee was not true and that report was a public document which would send a wrong message to the public.

Mr Sekgooa said that they would withdraw the statement as they were referring to the Transport Portfolio not the Portfolio Committee.

The Chairperson said that the Portfolio Committee on Transport welcomed the Auditor-General’s retraction of the statement that “the Committee’s performance had regressed in the past financial year”. The Committee also accepted the statement as a genuine oversight on the part of the AG when the presentation was prepared. The Committee does not deal with money and financial statements.

The Chairperson said that the AG’s scope of work as reflected in the Constitution and any other piece of information does not include evaluating the Committee. The Committee appreciated the work done by the Office of the Auditor-General which helped Members to reflect on the performance of the department.

The Chairperson said that the AG’s office erroneously claimed it evaluated Committees of Parliament and that the Transport Portfolio Committee was not doing well. The statement has now been retracted. As much as the Committee would welcome any evaluation of its work, it would have been unfortunate to be evaluated without prior knowledge and such assumption would not have been justifiable in law.

The Chairperson said that the AG had briefed the Committee on its audit outcomes of the Department of Transport for 2014/15 financial year. The Committee accepted the findings and the recommendations of the AG on the department. “The Transport Portfolio (DoT) is an essential driver of SA’s economy, and any attempts to improve its governance, management and finances are a welcome relief.

The Chairperson thanked the delegation from the Office of the AGSA. Due to time constraints the AG’s office should come back next week and respond to the remaining questions raised by Members.

Department of Transport briefing on its 2014/15 Annual Report
Mr Pule Selepe, DOT Director General, said that the presentation will focus on DoT Overall Performance, Performance per Programme including notable achievements, Human Resource Management, Human Resource Development, DoT Equity Statistics, Governance, Areas for Improvement, Best Practices, and Financial Statements 2014/15.

Mr Selepe said that the targets were guided by the outcomes-based approach (Outcome 4, 6, 7 & 10). Implementation of programmes was directed by the National Development Plan (NDP), New Growth Path (NGP), Industrial Policy Action Plan (IPAP) and the National Infrastructure Plan (NIP). The NDP emphasized the necessity of sound economic infrastructure as a pre-condition for economic growth. DOT’s Annual Performance Plan (APP) highlighted the DoT’s commitment to address major social and economic challenges through interventions aimed at accelerating service delivery, increasing job opportunities, rural development and skills development. This report emphasized the DoT’s continued restatement of the need for increased investments in public transport infrastructure, restructuring of current subsidies to promote integrated settlements and transport infrastructure projects to improve access to opportunities for the urban and rural poor.

Of a total of 77 targets, DoT achieved 56 targets (73%). Achievement per programme was: Administration 72% of 13 targets, Integrated Transport Planning (ITP) 67% of 8 targets. Rail 100% of 5 targets. Road 90% of 9 targets, Civil Aviation 75% of 9 targets, Maritime 22% of 2 targets, and Public Transport 90% of 10 targets.

Mr Selepe then discussed the target achievements and non-achievements for each of the DOT programmes:
▪ To ensure an integrated and seamless movement of freight across supply chains for all transport modes, progress on the following interventions was recorded during period under review: - The Final Study Report on the impact of freight accidents on SA roads was developed. The study entailed investigations into the causes and consequences of freight accidents in SA as well as recommendations towards curbing these crashes. A draft Freight Logistics Strategy Review Report was developed. The report was based on the review of the NFLS 2005 and details a re-focused strategic framework for sector institutional review and industrial restructuring for a more efficient freight system that allows greater access to service providers and cargo owners, while also creating space for private sector participation.

▪ To improve economic regulations in the Transport Sector: The DoT developed a draft Position Paper and fourth draft of the Single Transport Economic Regulator (STER) Bill. The Bill is being routed to Cabinet for consideration and approval. The medium term target is to establish the STER through promulgation of legislation by December 2016. Once established, the STER will: - enhance private sector investments in areas that were exclusively state sectors; manage relations between infrastructure owners and operators in a transparent manner on how tariffs are set; open up competition in a regulated way; and also provide opportunities for market access and competition.

▪ To increase sector economic transformation and performance in 2014/15, DoT launched the Transport BBBEE Charter Council. The Charter business plan was developed. The Council will fast-track the uptake of transformation in the transport sector and supported the industry in reaching its targets. It conducted a field survey on the Rural Accessibility / Multi Deprivation Index in eight provinces. A survey report was subsequently generated and submitted for approval. The Index is a key transport headline indicator and was established to focus on the critical role of access and mobility in the reduction of poverty in the country.

▪ To increase sector contribution to environmental protection, the DoT produced a draft report on the Energy Consumption Reduction Study and circulated it for external consultations. The study aims to recommend how the sector may reduce GHG emissions. NATMAP 2050 was not submitted to Cabinet due to delays in consultations with the Presidential Infrastructure Coordinating Commission (PICC). Consultations with PICC will be prioritised for 2015/16 and the Plan will then be submitted to Cabinet; the Tier 2 GHG Inventory Report was not finalised due to lack of existence of the Maritime Database. The development of the Maritime Database will be prioritised for 2015/16 and the Inventory Report will be subsequently finalised.

▪ To improve efficiency, capacity and competitiveness of rail transport , DoT reported the following progress in 2014/15: - Extensive stakeholder consultations were conducted on the Green Paper on Rail Transport Policy. The Green Paper was then revised. This is a key step towards formulation of a policy that will address challenges facing the rail sector. A first draft White Paper was also drafted. Strategic Branch lines were defined and identified; and a draft Branch line Strategy was developed. The strategy provides a vehicle to shape how these strategic branch lines can contribute to increased volumes of freight, improve efficiencies and safety in the railway sector.

▪ To ensure a sustainable transport infrastructure network, the DoT continued to implement the S’hamba Sonke Programme, which entails rehabilitation and maintenance of roads, re-sealing and patching of surfaced roads, blading and re-graveling of gravel roads. Through the programme 298 SMMEs were supported and 55 456 full-time equivalent jobs created. It also conducted a needs analysis and developed the Road Infrastructure Policy Framework. Stakeholder consultations were also conducted thereafter.

▪ To regulate and enhance road transport safety, the DoT conducted needs analysis and consultations with RTMC, RTIA, CBRTA and Gauteng Province on the draft Road Safety Policy, and successfully executed and monitored the implementation of the 365-Road Safety Programme. Only 55 456 full-time equivalent jobs were created during the period under review against a target of 60 100. This baseline will be reviewed based on the type of projects being implemented at provinces to inform targeting going forward.

▪ To enhance performance, efficiency and reliability of Civil Aviation, the DoT promulgated the 2015/16-2019/20 Permission for ACSA and ATNS levies in the Government Gazette. It gazetted the draft Amendment Bills for ACSA and ATNS Acts for public comment; conducted stakeholder consultations on the Civil Aviation Amendment Bill and submitted the Bill for consideration; conducted stakeholder consultations on the National Civil Aviation Policy and National Airports Development Plan; and held air service negotiations with Gabon, Namibia and Mozambique; and signed MoUs with South Sudan, Philippines to review air service arrangements.

▪ To regulate civil aviation safety and security, the DoT investigated aircraft accident and incidents and released reports with safety recommendations for each quarter. To create opportunities in the civil aviation sector DoT had awareness campaigns, career expos and exhibitions and 435 SA schools were exposed to aviation-related career choices. The Aviation Industry Transformation Letsema was not hosted for 2014 due to budgetary constraints. Regulations on the phasing out of Chapter 2 Aircraft were not approved due to prolonged stakeholder consultations. The process of verification will be fast-tracked to ensure approval in the new financial year.

▪ To regulate and enhance Maritime Transport safety the Cape Town Agreement (2012) on the implementation of the provisions of the Torremolinos Protocol (1993) was submitted to the ICTS Cluster for approval. The MARPOL IV & VI Conventions were approved in August 2014. And these conventions form part of the sector’s contribution to environmental protection. The African Maritime Charter was also submitted to the ICTS Cluster as part of the sector’s contribution to job creation. Finalisation of the Maritime Transport Policy was delayed by prolonged consultation process; Amended Maritime Security Regulations were not published due to prolonged stakeholder consultations; Maritime Labour Regulations were not finalised due to capacity constraints; the Salvage Strategy was not finalised due to prolonged internal processes. The HNS Fund and Bunkers Convention was not finalised due to prolonged stakeholder consultations.

▪ To provide quality rural and learner transport, the DoT finalised the National Learner Transport Policy and submitted it to Cabinet for approval. The Policy aims to improve the management of learner transport and ensure provision of quality public transport in rural areas. The DoT distributed 3 000 bicycles to provinces, finalised the review of the Rural Transport Strategy, and conducted stakeholder consultations on the Public Transport Stakeholder Relations Framework and developed a draft Framework.

▪ To improve Public Transport access and reliability; construction and/or operations of IPTNs were in progress in 11 municipalities. Mangaung was still completing the planning phase and Buffalo City progress halted by litigation processes.

▪ In terms of the Taxi Recapitalisation Programme 4 049 old taxi vehicles were scrapped against a revised target of 5 950 (target revised from 7 500 due to trends of the first two quarters). Fewer applications were received from operators hence the lower number scrapped.

▪ In terms of Human Resource, 134 positions were filled during 2014/15 against a target of 80 positions. The vacancy rate decreased from 26.52% to 22.16%. There was over-performance due to improvement in the number of short-listings and interviews and a higher success rate of candidates accepting offers. In terms of youth skills development initiatives 803 students were registered in different transport disciplines at 11 institutions of higher learning (Universities and Universities of Technology). The Transport Research Activity Centre (TRAC) reached out to 638 675 learners across nine provinces and operated in 167 schools through fixed and mobile laboratories. 1 633 learners were registered for first year undergraduate qualifications at various tertiary institutions; 1 657 transport learners are currently registered in TVET colleges in Operations, Logistics and Economics, 58 DoT interns were recruited and 10 youth participated in Project Management Learnership.

▪ DOT’s employment equity profile: African – 91.35% (target – 79.5%); Coloured – 1.49% (target – 9%); Indian – 1.79% (target – 2.5%); and White – 5.37% (target – 9%); Male – 293 (44%) target = 54.20% and Female – 378 (56%) target = 45.80%. In senior management: Male – 64 (62%) and Female – 40 (38%) (Target = 50% female representation in SMS). People with disabilities: Male – 2 and Female – 10. DoT Disability Status – 1.78% (Target = 2%).

▪ To improve governance, DoT Risk Management Policy and Strategic Framework was reviewed to inform the Department’s future endeavour of risk identification, assessment and monitoring; Risk Management Plan (key controls and mitigation strategies) was developed and implemented; and risk assessments conducted quarterly; Progress on the implementation of risk mitigation plans were monitored and reported quarterly to EXCO and Audit Committee; and the DoT Risk Profile updated accordingly.

▪ On labour relations, there were 6 misconduct and disciplinary hearings, 5 final written warnings and 1 case withdrawn. There were 23 grievances lodged (15 resolved and 8 not resolved); disputes 3 lodged (3 upheld and 0 dismissed); strike action - no working days lost; precautionary suspensions - four people suspended.

▪ Financial Disclosure Framework – All Senior Management Staff (SMS) members sensitised to disclose financial interest so as to identify conflict of interest; Declaration of interest for all procurement as a measure to minimise conflict of interest in SCM (SBD 4 Form and SBD 9 Form). In terms of Code of Contact 100% of new appointees were inducted on the Code of Conduct. There was SMS training on disciplinary matters related to violation of Code of Conduct.

▪ Internal Control Action Plans to address audit findings for 2013/14 were developed and monitored on a quarterly basis; Progress reports on the implementation of action plans monitored on a quarterly basis and presented to Audit Committee meetings; Compliance reviews conducted on PFMA, Treasury Regulations, DoRA, Financial Policies, and SCM.

▪ In terms of internal audit and audit committees in 2014/15: the Internal Audit conducted 24 audits. Ten Audit Committee meetings were held. Audit Committee complied with its PFMA and Treasury Regulation responsibilities. The Audit Committee has adopted appropriate formal terms of reference and its Audit Committee Charter has regulated its affairs. The Audit Committee achived the following: Review of the effectiveness of Internal Control, Assessment of in-year Management and Monthly/Quarterly Reports, and Evaluation of Financial Statements.

Mr Selepe identified areas for improvement for DOT:
- Improve stakeholder engagement processes in policy development;
- Strengthen internal coordination processes;
- Improve skills and other related capacity constraints in the DoT;
- Enhance a structured and coordinated inter-sectoral planning and reporting mechanism;
- Oversight of Entities and Provincial Departments
- Strengthen performance evaluation in line the DPME National Evaluation Framework.

Mr Selepe identified DOT’s best practices:
- Regular and vigorous EXCO deliberations on performance information; carry-over deliverables and red flags;
- Adherence to technical indicator descriptions and pre-determination of evidence for quality reporting and performance analysis.
- Regular interactions between the SP&CC and Branches to discuss planning, monitoring and reporting issues affecting performance in the DoT based on reports, evidence and audit issues.
- Quarterly meetings conducted between Planning, Monitoring and Evaluation practitioners of DoT and Provinces to discuss sector planning, monitoring and reporting as guided by transversal indicators.

Mr Collins Letsoalo, DOT Chief Financial Officer (CFO), provided the financial report (see document).

Discussion
Mr M Mabika (NFP) thanked the department for the presentation. He asked why the department targeted to have more males (54%) than females (45%) in terms of its employment equity statistics.

Mr Mabika asked why they have not reduced irregular expenditure by 100%.

Mr Maswanganyi referred to the reported instability due to vacancies in key positions and noted the department had filled 134 positions in 2014/15 whereas the target was 80 positions. An AGSA recommendation was to ensure that vacancies in key positions are filled by people with appropriate competencies. Was DOT aware of this since the AG’s report noted that key positions were not filled in the department and DOT's response was not reflected in the presentation. The department should clearly capture that in its report. "Appropriate competencies" was identified even in slide 38 in terms of the areas for improvement which included improving skills and related capacity constraints in the department.

Mr Maswangayi referred to DOT's target achievement of 73% and asked what it was doing to ensure 100% achievement of targets. Which DOT divisions were not doing well in achieving targets as this would help the Committee concentrate its efforts on these divisions.

The Chairperson noted that what Mr Maswanganyi was saying was that DOT did not provide a response to the AG’s report recommendations so that the Committee could see where the gaps are in the department and how DOT is responding to them.

Ms S Xego (ANC) said that the AG’s report noted that there were key officials that lacked appropriate competencies which was a concern for the Committee. There should be a plan by DOT to counteract that because they could not have key officials lacking appropriate competencies.

Ms Xego said that the non achievement of targets due to "prolonged stakeholder engagement" equals to poor planning and non-performance.

Ms Xego noted that in terms of employment equity statistics the department has improved its target for women, but her advice was that they should also supervise the entities because the picture in the women’s conference they recently held was not good.

Ms Xego said that the CFO at the beginning of his presentation highlighted some achievements but they were not reflected in writing in the document so committee members could not verify that important information.

Mr Sibande said that a little background was necessary to see where they stand with the department. The 2013 State of the Nation Address (SONA) highlighted some of the strategic objectives pertaining to transport. Firstly, it was shifting the transportation of coal from road to rail transport in Mpumalanga which was very important for the country in terms of infrastructure. The other one was improving the movement of goods and economic integration through the Durban, Free State and Gauteng logistics and industrial corridor in terms of mining, and also the upgrading of the Mthatha Airport Runway and Terminal and construction of Nkosi Dalibhunga Mandela road. These were some of the strategic objectives of the department but the problem they have was the implementation part of it. For example, in North West some bridges washed away in 2008 and until today they have not been rebuilt which shows that implementation was lacking on the side of the department and compliance was not adhered to.

Mr Sibande asked how often the department interacted with other departments.

Mr Sibande asked when the taxi recapitalisation programme will be finalised because in slide 26 they have indicated that 4 049 taxi vehicle were scrapped against a target of 5 950.

Mr Sibande asked how DOT has monitored the Provincial Road Maintenance Grant because they have discovered that that grant did not go where it was supposed to go.

Mr Sibande referred to the employment equity statistics in slide 29 and asked if those women were employed for "cleaning and making tea". They should empower women in terms of senior positions, not add numbers for lower positions.

Mr Sibande asked how the department was going to make sure its internal controls were intact and compliance was followed in terms of the legislations such as the Public Finance Management Act (PFMA), Treasury regulations because if somebody failed to do his/her work the DG should do something about that individual.

Mr Sibande said that the overspending on the eNATIS was a concern for the Committee.

Mr Sibande asked how often the department interacted with the Department of International Relations and Cooperation (DIRCO) because of the cross border agreements signed between SADC countries and South Africa on road maintenance.

The Chairperson asked how far the department has gone with scholar transport because Equal Education has threaten to take Government into court as it has been four months since Cabinet had approved the policy on scholar transport.

The Chairperson said that the Bus Rapid Transit was a good policy but its execution varied from province to province. There was also no synergy between the BRT and the Taxi Recapitalisation programme which was a concern for the Committee.

The Chairperson was excited about the progress in the Moloto Corridor Bridge.

The Chairperson asked for clarity about the percentages reflected in the report for road maintenance.

The Chairperson said that next week DOT should come and report on the issues that were reflected in the Auditor-General’s report but not included in the annual report of the department.

The Director General said that one thing they needed to clarify was the AG’s report was for the Transport Portfolio as a whole, and does not relate only to the DoT. The findings and obviously recommendations applied to the DOT portfolio as a whole. As indicated in the AG’s report, the DG has a forum where he meets with the CEOs of entities and they have discussed the 2014/15 audit report and have taken it seriously. They have put measures in place to ensure that issues do not repeat themselves year in and year out without them being addressed.

The DG said that the second thing was that they were reporting only for 2014/15. A lot of the issues raised by the AG, have already been identified in their internal audit and they have put in place a programme to deal with them. DOT will provide report on this within the next 48 hours which will cover all those issues such as vacancies, leadership, management, organisational culture, team building, transformation, common purpose, and professionalism.

The DG said that he has agreed with the Minister and the Deputy Minister on a five year programme. The first part of the five year plan focussed on stabilisation so as to arrest the decline and make sure that they were on an equal footing. In the second year there is a process of professionalization going forward. There were a number of things they were doing in each one of the sub-phases, for instance, in the first phase of stabilisation they will complete the organisation of the department especially the Office of the DG, filling crucial positions. But they also wanted to deal with corruption and consequence management in the department. Once they have improved their communication as well they also wanted to deal with issues of team building so that they functioned as one unit in one direction. They were doing a skills audit to ensure they were pulling in the right direction. They were aware that there were weaknesses in other parts of the department in HR and Legal Services, IT, HR and Maritime, and were addressing those. They will issue the Committee a full report on this.

The DG said that with regard to transformation their wish was that the five vacant DDG positions if at all possible be filled by female candidates which they were trying to work towards. Fortunately, the department was led by two people that were very passionate about the empowerment of women, that is, both the Minister and the Deputy Minister. Therefore, they were taking this transformation agenda forward and were trying in whatever way to empower women but if people did not apply for those positions then they will sit with a burden.

On the achievements noted when he had spoken earlier but which were not in the written presentation, Mr Collins Letsoalo, DOT Chief Financial Officer, said that page 19 of the PC Briefing Note by the Auditor-General aligned with the calculations that he had noted: Unauthorised expenditure in 2014 was R768m and in 2015 it reduced to R392m. Fruitless and wasteful expenditure in 2014 was R1 294 000 and in 2015 it was reduced to R96 000. Irregular expenditure in 2014 was R1 121 695 000 and in 2015 it reduced to R102 339 000. The percentages he had mentioned were based on those reduced figures. In the next 48 hours they will present a comprehensive report which will explain those figures.

The CFO said that with regard to why irregular expenditure was not reduced by 100%, it certainly was a target to reduce it by 100% but it was not as easy as that because of compliance issue and once someone does not comply with regulations, such things happen. Now they have to make sure that there is consequence management and they have a process to ensure they implemented the AG recommendations including quarterly monitoring of the implementing those recommendations. There should be improvement in the monitoring of the implementation of action plans and consequence management going forward.

On the Provincial Road Maintenance Grant, the CFO said that there were people they have deployed to monitor whether the money is spent in the right areas. DOT Finance will ensure the money is spent in the right area going forward.

Ms Nokuthula Khuzwayo, DOT, replied about the taxi recapitalisation finalisation saying that the process was scheduled for seven years but with the engagement with the Cabinet they have agreed that the process of scrapping taxis will be indefinite until all old taxis are scrapped. In 2014/15, 4 049 old taxis had been scrapped against a target of 5 950. There were few applications received from taxi operators hence the lower number of vehicles scrapped.

The Chairperson thanked the DoT delegation for the presentation and was looking forward to their next engagement.

The meeting adjourned.