Departmental Strategic Plan expectations: Auditor-General South Africa briefing

Tourism

11 March 2016
Chairperson: Ms B Ngcobo (ANC)
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Meeting Summary

The Office of the Auditor-General of SA briefed the Committee on the Draft 2016/17 Annual Performance Plan of the National Department of Tourism.

The purpose of the briefing was to provide the Committee with audit insights on the interim review of the National Department of Tourism’s Draft Annual Performance Plan in order to add value to oversight. The Committee was provided with a schematic overview on the steps in the process in reviewing the Annual Performance Plan. The Framework for Managing Programme Performance Information had criteria that the performance indicator should be reliable, well defined, verifiable, cost-effective, appropriate and relevant. The Framework for Managing Programme Performance Information also required targets to be Specific, Measurable, Achievable, Relevant and Time-bound. Two practical examples were provided to Members on how indicators and targets should be reflected in Annual Performance Plans. The Committee was also provided with a comparison of the Department’s budget for 2015/16 and 2016/17. The total budget for the NDT had increased by roughly 12% from R1.79bn in 2015/16 to R2.0bn in 2016/17. Members were also given a breakdown of the budget as per economic classification.

The Office of the Auditor General provided Members with performance information on Programme 2 – Policy and Knowledge Services to illustrate shortcomings. Under the Programme an indicator was to have a number of attractions supported to enhance destination competitiveness. The target set was to have three initiatives for the implementation of enhancement/development plans. The three initiatives were the establishment of an access gate at Shogoni, the Phalaborwa Wildlife Activity Hub and thirdly the establishment of a tourism interpretation centre at the National Heritage Museum. The comments by the Office of the Auditor General were that the target was not specific in that nothing was said about what would be done at Phalaborwa Wildlife Activity Hub. Furthermore the Office of the Auditor General said no explanation was given on what a tourism interpretation centre was and whether it would be built within the Museum. Another indicator was to have a number of priority areas incentivised to facilitate sustainable tourism growth and development. The target set for the indicator was to have three priority areas supported during the pilot phase i.e. market access, tourism grading and energy efficiency. The Office of the Auditor General commented that the target was not specific in that it was not clear what “supported” meant. The target needed to be specific in terms of actions to be taken, plans to be rolled out and on how success would be measured. The conclusion reached by the Office of the Auditor General was that the root cause of the problem lay with the Department’s leadership. The Office of the Auditor General had previously made recommendations to leadership but there had been a slow response from them. The recommendation made by the Office of the Auditor General was that detailed reviews should be performed by those tasked with the responsibility for these functions within the National Department of Tourism against the applicable Framework for Man Specific, Measurable, Achievable, Relevant and Time-bound criteria. Consequence management should be implemented within the Department to take action against officials that did not comply with requirements of the Framework for Managing Programme Performance Information. The Office of the Auditor General was pleased that issues had been resolved.

Members appreciated the briefing by the Office of the Auditor General but felt that greater elaboration would have been useful. The Office of the Auditor General was asked what it had done about the Expanded Public Works Programme since it used up much of the Department’s budget. Members asked whether the Office of the Auditor General had engaged with the Department on the shortcomings identified in the Annual Performance Plans. The Office of the Auditor General was asked what its findings were on the failure of the National Department of Tourism’s management to oversee the building of affordable resorts. There had been poor management and taxpayers’ money had been wasted. For example contractors in the Eastern Cape had absconded after funds had been paid out to them. Members were pleased with the Office of the Auditor General’s review of the Department’s Annual Performance Plans, as the Committee would not simply rubberstamp it. Members asked whether the Annual Performance Plans that would come before them would be an improved version given the inputs that had been made by the Office of the Auditor General. The Office of the Auditor General was asked whether there was a uniform way in which targets should be set. Members asked about the situation where targets were exceeded due to incorrect targets being set in the first place. Members requested that the Office of the Auditor General provide the Committee with an example of how an Annual Performance Plans should look like. It would allow members to compare the Department’s Annual Performance Plans with the template provided by the Office of the Auditor General. The Chairperson informed the Committee that the Department’s Annual Performance Plans had been tabled in Parliament the very day. Members also asked the Office of the Auditor General to provide the Committee with a full report on its findings on all the Department’s indicators as reflected in its Annual Performance Plans. The Office of the Auditor General agreed to furnish the Committee with the report.

Meeting report

Briefing by the Office of the Auditor-General of SA (AGSA) on the Draft 2016/17 Annual Performance Plan (APP) of the National Department of Tourism (NDT)

The delegation from the Office of the AGSA comprised of Mr Thami Zikode, Business Executive, and Mr Solly Segooa, Corporate Executive. Mr Zikode undertook the briefing.

The purpose of the briefing was to provide the Committee with audit insights on the interim review of the NDT’s Draft Annual Performance Plan (APP) in order to add value to oversight. The Committee was provided with a schematic overview on the steps in the process in reviewing the APP. The Framework for Managing Programme Performance Information (FMPPI) had criteria that the performance indicator should be reliable, well defined, verifiable, cost-effective, appropriate and relevant. The FMPPI also required targets to be Specific, Measurable, Achievable, Relevant and Time-bound (SMART). Two practical examples were provided to members on how indicators and targets should be reflected in APPs. The Committee was also provided with a comparison of the NDT’s budget for 2015/16 and 2016/17. The total budget for the NDT had increased by roughly 12% from R1.79bn in 2015/16 to R2.0bn in 2016/17. Members were also given a breakdown of the budget as per economic classification.

The AGSA provided members with performance information on Programme 2 – Policy and Knowledge Services to illustrate shortcomings. Under the Programme an indicator was to have a number of attractions supported to enhance destination competitiveness. The target set was to have three initiatives for the implementation of enhancement/development plans. The three initiatives were the establishment of an access gate at Shogoni, the Phalaborwa Wildlife Activity Hub and thirdly the establishment of a tourism interpretation centre at the National Heritage Museum. The comments by the AGSA were that the target was not specific in that nothing was said about what would be done at Phalaborwa Wildlife Activity Hub. Furthermore the AGSA said that there was no explanation given on what a tourism interpretation centre was and whether it would be built within the Museum. Another indicator was to have a number of priority areas incentivised to facilitate sustainable tourism growth and development. The target set for the indicator was to have three priority areas supported during the pilot phase i.e. market access, tourism grading and energy efficiency. The AGSA commented that the target was not specific in that it was not clear what “supported” meant. The target needed to be specific in terms of actions to be taken, plans to be rolled out and on how success would be measured. The conclusion reached by the AGSA was that the root cause of the problem lay with NDT’s leadership. The AGSA had previously made recommendations to leadership but there had been a slow response from them. The recommendation made by the AGSA was that detailed reviews should be performed by those tasked with the responsibility for these functions within the NDT against the applicable FMPPI issued by National Treasury to ensure that all indicators and targets met the SMART criteria. Consequence management should be implemented within the NDT to take action against officials that did not comply with requirements of the FMPPI. The AGSA was pleased that issues had been resolved.

Discussion

The Chairperson asked what was done on the Expanded Public Works Programme (EPWP).

Mr J Vos (DA) noted that the briefing allowed for good engagement by the Committee to identify where the shortfalls were on the APP of the NDT. The Committee considered the APP of the NDT each year. The AGSA had provided the Committee with two examples of problematic targets. The examples noted that indicators were vague. The NDT needed to be clearer in order to identify outcomes. The Committee needed actual detail in the APP. Had the AGSA engaged with the NDT on the problems identified? He asked whether the Committee would get concrete outcomes to indicators. He considered the examples given by the AGSA perhaps to be a drop in the ocean compared to the rest of the targets set in the APP that might be problematic. Many of the NDT’s indicators were vague. The Committee needed to hear about dialogues. On leadership in the NDT, the AGSA had said that there would be a detailed review of officials. He emphasised that the NDT had failed to build affordable resorts. It boiled down to poor management on the part of the NDT. For example on projects in the Eastern Cape contractors had absconded after funds had been paid out to them. The NDT was the lead agent and was dealing with taxpayers’ money. In total R52m had not been spent adequately. The AGSA was asked what its findings were over the issue.

Mr Zikode, on poor management of affordable resorts projects, noted that the AGSA had highlighted some of the investigations that had been carried out. He said that NDT management were required to implement recommendations that were made in this regard.

Ms S Xego (ANC) felt that the review of the APP by the AGSA had been done at the correct time as the APP was still in draft form. She said that the Committee would simply not rubberstamp the APP of the NDT. Members would consider the relevance of targets set. The Committee not only considered how funds were spent but also looked at the performance plan of the NDT.

Ms P Adams (ANC) felt that the presentation could have elaborated more. If the Committee now received the NDT’s APP would it be as it should be, given the inputs that the AGSA had made on it?  She noted that it was a matter of semantics. She also asked whether there was a uniform way in which targets should be set. How was measurement made? At times targets were achieved and not achieved. What about where targets were exceeded due to them not being set correctly? The AGSA was asked when it considered a thing well defined, measurable and variable.   

Mr Zikode responded that the APP that would come before the Committee would now be more credible. The NDT had accepted the recommendations made by the AGSA and had made a commitment to implement them in the APP. He noted that the AGSA did not put into the APP anything that should be there. The AGSA would not set targets for the NDT. All that the AGSA did was to inform the NDT if their targets met the Specific, Measurable, Achievable, Relevant and Time-bound (SMART) criteria. Targets should be set according to the mandate of the NDT. The requirements of the framework had to be met. He referred to the example on page 7 which had an indicator, a target and comment on the target/indicator. The top portion of the example reflected how things should be set out. There was no vagueness. The bottom part of the example was how things should not be. There was vagueness as no figures were provided and no timeframes had been set. On where targets were achieved or not achieved he said in the event that targets were not achieved the framework required reasons to be given why targets were not achieved. It was not good enough to say that the target had not been achieved but the budget was nevertheless used. He stated that there was a thin line between what the NDT did and what the AGSA did. He explained that where there was overachievement of targets there could be various reasons. The first of which could be that the target had been set too low in order to guarantee that results would show targets were met. The second reason could be due to windfall gains that happened without having planned for it. For example where the NDT perhaps put an initiative in place to increase tourist numbers. It could be that tourist numbers increased not due to the initiative but due to the falling Rand as SA was a cheap destination. 

Ms E Masehela (ANC) appreciated the briefing. The AGSA was asked if it could provide the Committee with an example of how an APP should look like. It would allow the Committee to make comparisons when the NDT’s APP was considered.

The Chairperson once again asked for information on the EPWP as a huge part of the NDT’s budget went towards it. Members were now aware of how the NDT’s APP should be. She informed the Committee that the APP of the NDT had been tabled in Parliament the very day.  If the Committee had problems with the APP of the NDT then the NDT needed to have an addendum which the Minister of Tourism Mr Derek Hanekom was required to sign. She impressed upon the NDT to provide the Committee with quarterly reports.    

Mr Zikode said that the AGSA was grappling with one issue. The NDT stated how they would account on the EPWP. Whatever the NDT did was in terms of the modified cash standard. When the AGSA conducted its audit the AGSA looked at what the cash standard said and what the NDT did. The problem was when the cash standard needed to be beefed up. In the audit report, the AGSA would say that it audited in line with this framework. This determination had to be made by the Accountant General. The challenge at present was that the Accountant General had not been appointed as yet. The AGSA staff nevertheless conducted meetings to discuss matters and to have them finalised by the end of March 2016. Even if the Accountant General was not yet appointed there was an Acting-Accountant General that had to take charge.

The Chairperson stated that the Committee would be dealing with the Annual Report of the NDT in September 2016 or October 2016. She noted that some things did not speak to the Strategic Plan and the APP of the NDT.

Mr Zikode said that the AGSA tried to influence the process. He stressed that the AGSA should brief the Committee on what was found before the NDT came to the Committee. In this way the Committee would be better informed to probe issues with the NDT. The AGSA could also check if there were areas on which they could assist.

Ms Adams asked if the AGSA could provide the Committee with an example of an APP as it should be, perhaps one of an unknown department. It would assist members on how an APP should be. She suggested that perhaps the AGSA could even workshop members on APPs for a day.

Mr Zikode said that if a formal request was made for a workshop on the APP then it could be done.

Mr Vos asked if the Committee could get a full report on the findings on all the NDT’s indicators as reflected in the APP. He asked whether the AGSA also audited SA Tourism.

Mr Zikode on the provision of a full report to the Committee said he was sure that something could be provided to the Committee. At present the AGSA did not audit the NDT’s entities. The AGSA only audited departments. If there were benefits to be attained then entities could be audited in the future.

The Chairperson said that the NDT had previously encountered problems with its technology.

 Mr Zikode said that even if the NDT had technology problems the AGSA had other means to audit. The AGSA audited around computers and not through them.

Mr Segooa thanked the Committee for the opportunity to brief the Committee on the NDT’s APP. Comments and recommendations of members were noted. The AGSA would provide the report as requested by Mr Vos.

The Chairperson noted that there were some issues that the Committee was not too happy with on the quarterly reports of the NDT.

Committee Minutes

Minutes dated 19 February 2016 were adopted as amended.

The meeting was adjourned.

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