South African Police Service (SAPS) Audit Committee

Meeting report

Committee Business

The Chairperson indicated that today’s meeting with the SA Police Service (SAPS) was a follow up on the detailed action plan to address the findings of the Auditor-General of SA (AG) – the Committee already had fruitful interaction with the SAPS audit committee but the aim of today was to hear the revised action plan which included more detailed information the Committee requested.

Tomorrow, the Committee would meet with the Private Security Industry Regulatory Authority (PSIRA) and its audit committee on the action plan to address the AG’s findings for 2015/16. Next week Wednesday, the Committee would meet with the DNA Board. There were also a number of administrative matters for the Committee to deal with including petitions received during the course of the term.

Apologies were noted from Ms L Mabija (ANC), who had experienced a bereavement in the family, Mr P Mhlongo (EFF) who was ill, Mr A M Shaik Emam (NFP) and Mr M Redelinghuis (DA).

Mr Z Mbhele (DA) wanted to know if the Committee would hear presentations on the adjustment appropriation budget votes. There were only three weeks of the term left.

The Chairperson said the accounting officers were written to and the Committee would monitor when the matter would be before the House but it would probably be dealt with next week Wednesday.

In terms of today’s meeting, the Chairperson highlighted the interaction between the AG and all Committee Chairpersons where there was a briefing on the general state of finance management in government. Some of the points raised by the AG in general included:

• Key positions filled with competent people
• Sow response by accounting officers and senior management to recommendations of the AG
• Vacancies in key positions remained high and significantly above the target of 10%
• Little improvement in overall level in getting the basics right
• No improvement in audit opinion on financial statements
• Auditees continued to reply on auditors to identify material statements and correct it
• Small improvement in the quality of performance reports
• Non-compliance remained high
• Increased focus on supply chain management
• Concern that some audit committees championed the view of management against the AG without fully interrogating the facts

The approach of the Committee was to ensure the entire police portfolio moved towards a clean audit outcome and to especially deal with recurring matters. The nature of the interaction was to strengthen this process.

Briefing by SAPS: Action Plan to Address the AGSA’s Findings 2015/16

Brig. Craig Mitchell, SAPS Strategic Management, took Members through the detailed and comprehensive presentation beginning with the matters affecting the AG’s report for 2015/16 and resulted in material findings. The matters related to programme two, Visible Policing (VISPOL), and programme three, detective service. Key rectification drivers underpinning the AG’s findings action plan included:

-Layered approach to data anomaly detection

-Coordinated, comprehensive compliance inspections, targeting stations visited by the AG and stations at which data anomalies had been detected and corrected

-Prioritisation of stations by the AG during 2015/16 by key internal assurance providers

-Consequence management

-Identification, analysis and review of all relevant organisational controls

-Review of all related business processes and the relevant Technical Indicator Descriptions (TDIs)

-Monthly monitoring of the implementation of the AG findings action plan by strategic management and the relevant divisions and quarterly monitoring by the National Management Forum

-AG findings action plan will extend until the end of the third quarter of 2017 and will be updated to include the AG’s 2016/17 Interim Management Letter

Brig. Mitchell then turned to look at the AG finding in more detail, primary organisational control, root causes of the finding, AG recommendations, key actions, area of responsibility and emerging issues for programme two, VISPOL, for the following indicators:

-Quantity of illicit drugs and volume of liquor confiscated as a result of police action

-Percentage stolen/lost firearms/ state-owned firearms recovered

-Number of schools linked to police stations

In terms of the AG finding in more detail, primary organisational control, root causes of the finding, AG recommendations, key actions, area of responsibility and emerging issues for programme three, Detective Service, the following indicators were covered:

-Anti-corruption task team

-Commercial crime

-Forensic science laboratory

Actions to be addressed in support of the rectification of all nine findings:

1.Assess all stations audited by the AG during 2015/16 to determine the impact of a layered approach to inspections in respect of all findings and ensure accountability through the application of consequence management

2.Conduct an assessment of all the relevant TDI’s to determine their relevance, appropriateness and viability

3.Ensure all provinces, clusters and stations receive the approved TDIs and all relevant directives relating to the performance indicators

4.Identify and analyse relevant organisational controls to the AG findings

5.Ensure an integrated approach to the conducting of visits by internal assurance providers

Brig. Mitchell then provided an overview of the SAPS’s combined assurance process in terms of lines of defence and the combined assurance dashboard.

Discussion

The Chairperson welcomed the comprehensive presentation and appreciated that the responsible managers were included in the report as the Committee requested. On the combined assurance dashboard, the AG indicated that only some assurance was provided – in terms of the new SAPS structure and appointments, he asked if the assurance would be increased. This was especially in terms of management intervention – would the process have a positive effect on the next audit? Would the Intervention result in serious change to be seen by the Committee? He asked if SAPS Management Intervention would also affect the Directorate for Priority Crime Investigation (DPCI) environment or would the Directorate have a separate Management Intervention in terms of audit queries specific to it. In his view, success on the turnaround of SAPS was dependent on stations, as the basic unit and station/cluster commanders – if performance was not improved on these primary levels, repeat findings would occur.  Interaction between Committee and stations, over two years of oversight visits showed that there were stations where the commander was well aware of what was going on, the station was well run, processes were in order while there were other stations where it was immediately evident that things were not on that level.  Audits could only be improved if those problem stations were turned around – in terms of Management Intervention, was major intervention envisaged in terms of staff or was it too early to say with these problem stations? For audit findings to change positively, effective leadership at that level was required.

Lt. Gen. Khomotso Phahlane, Acting National Commissioner of Police, echoed the sentiments of the Chairperson and commended the SAPS strategic management team for putting together a comprehensive response to the audit findings which enabled holding those responsible accountable – repeat findings where nothing got done could not be seen. The action plan enabled tracking and tracing of issues to take stock of the environments affected by the findings. With the structure and new appointments, the intention was to used appointees in order to turnaround the picture to move towards a cleaner audit. Management Intervention did not only identify problems but also intervened to fix those problems and build capacity to be able to sustain what was corrected so that the same problems were not repeated. People who were very knowledgeable and competent where deployed in the Management Intervention environment. Management Intervention was divided into three regions which did not only cluster the provinces but the regions were also informed by the problematic programmes. The emphasis was on experiencing a turnaround with the hope of quickly progressing to a cleaner audit outcome. DPCI had no police stations but its dockets from the Directorate environment were recorded at station level on the SAPS systems. Apart from investigations, the Accounting Officer was not limited in managing the DPCI so Management Intervention was not prohibited from looking at the DPCI environment if there were issues to be dealt with from a management perspective. In terms of new appointments, some of the appointments were yielding results while with other appointments this was not the case. Flags were raised by the AG particularly in the space of finances and serious issues were being dealt with in this regard. The opinion of the audit committee would also assist in addressing challenges experienced in this space.

Lt. Gen. Berning Ntlemeza, National Head of the DPCI, added that processes were currently underway for Management Intervention in the Directorate. This would cover systems and the movement of cases within the DPCI. Col. Smith was appointed to go around and check systems in terms of incoming dockets, docket allocation, signing-off on dockets and completion to take dockets back to station – this work was progress well. There would also be a quality assurance post to ensure quality was checked even at provincial level. A management meeting to be held this week would address all the findings and how they would be dealt with.

The Chairperson reiterated the importance of leadership at the stations which were under-performing – was the sense that a breakthrough was being made in terms of changing the approach of station commanders?

Lt. Gen. Phahlane answered that the review and placement of people at national and provincial level was done including clusters which was where the emphasis was placed. As far as personnel at station were concerned, not too many changes were made but there were people brought in from national and provincial level. The focus was more on ensuring all stations had commanders, that key positions in the stations were filled such as head of detectives, head of VISPOL and support, and to make appointments where there were gaps. Reports from Management Intervention would indicate where the challenges were to be addressed as well as with those areas identified by the Committee on oversight visits. An example was the oversight visit to the Eastern Cape where a particular station had a detective’s commander which was not entirely up to scratch. To redeploy people who were not performing to other environments was not actually dealing with the problem – it was merely shifting the problem. One of the matters looked at in the recent national management forum meeting were the stations contributing to crime categories – Provincial Commissioners needed to isolate these specific stations to become primary focus areas. Last week during the progress review of programme three, poor performing stations were isolated for specific programmes. There were some stations which had been on the priority list for a long time such as Booysens, Honeydew and Jo’burg Central – attention was now being paid to the relocation of some station commanders but this was work in progress.

Mr P Groenewald (FF+) highlighted the example of Bothaville police station where the station commander was suspended pending an investigation but everything was now falling apart at the station because the commander was not there – what was the plan in place for those stations where there was no station commander, crime was increasing in the area and the station was falling apart?

Lt. Gen. Phahlane responded that in cases where the station commander was suspended, an acting station commander would need to be appointed. He would look into this specific case raised. The function of station commander would always need to be fulfilled.

Ms A Molebatsi (ANC) asked if in the shifting of personnel from national level to police stations, would a situation be seen where some police stations would be headed by Generals for instance? She requested that management check on the Pretoria Central police station which was in a terrible, dirty condition.

Lt. Gen. Phahlane clarified that one would not find any station headed by a General – the highest rank for a station commander was a Brigadier according to the structures. Generals would be found at cluster level and perhaps provincial level heads. He was aware of the situation at Pretoria Central and noted that there were some recent movements with the station commander – the station would however receive further attention.

Mr Groenewald was concerned about the issues relating to procedures and the lack of training – why were there people in certain positions while there was still a lack of training? What would be done specifically to ensure people were on the correct standard when it came to training? More detail on this specific training approach was required.

Lt. Gen. Phahlane replied that when new processes and standard operating procedures were introduced, training programmes were being developed. The Annual Report did indicate those competent or not and remedial training done. A review was done on the content of the training programmes, under the leadership of Lt. Gen. Nhlanhla Mkhwanazi – if no review was done, there was a risk that people could be trained on outdated programmes which would make it impossible for improvements to be realised on the ground. This work was ongoing – training was an ongoing process. With the high numbers it was not always possible for everyone to undergo the training one would have hoped to have them undergo in a year but there was scheduling through the training provision and plan in place.

Mr Z Mbhele (DA) found that the essence of the presentation came down to basic management – most of the root causes of the AG’s findings, in his analysis, came down to a lack of basic controls because most of the corrective actions came down to measures and processes he assumed would have been running already. His biggest concern was that these basic processes were not functioning optimally or were not in place at all in terms of basic administration and/or logistics such as with firearms and confiscated drugs. He used the example of Pick n Pay where a specific can of beans could be traced throughout the entire organisational chain – this proved it can be done as it spoke to having basic systems in place. Why was use not being made of findings of external bodies like the inspectorate (outside of line management function) – these bodies could be used as part of quality assurance to improve systemic management. With the error rates alluded to in the presentation, he was concerned some of the percentages raised questions around the accuracy and quality of the crime stats which was premised on that data. During the presentation of the crime stats, the Committee was assured of partnership with StatsSA for quality assurance – what exactly did the agreement with StatsSA cover and do in terms of quality checks? If his understanding of the agreement was correct, the findings of the AG in that regard should not have occurred. A point was made that many of the non-compliance issues were related to the functions not explicitly outlined in the PEP of the relevant line managers – was the function not additionally covered in a National Instruction, Standard Operating Procedure (SOP) or Standing Order? He would like to assume that a station commander would take as seriously what was in a SOP as what was laid out in their PEP or job description. Did this non-compliance suggest station commanders either did not properly understand what they should be doing, which spoke to competency, or that they just did not care?

Lt. Gen. Phahlane responded that similarly, in the forensic science laboratory environment, one would be able to track and trace all exhibits just as Pick n Pay could do. This was where the further roll-out of PCEM to stations played a part. The reason outside line management capacity was not used because capacity within the line function needed to be built – it was the responsibility of line managers to ensure systems and processes were in place so that what was supposed to be done occurred. Discrepancies picked up by the AG with the volume of liquor confiscated for example, came down to incorrect capturing of quantities and incorrect calculations – this resulted in anomalies between what was psychically confiscated and what was on the system. This highlighted the need to build capacity and having SOPs to correct the situation and avoid repeat findings. In terms of the error rate, this was only in respect of the specific findings and did not mean that overall the situation was bad. An example was the crime awareness campaigns where there was a lack of evidence that the campaign was actually carried out and this was picked up by the AG. This was in no way related to the crime stats – the crime stats dealt solely with crime reported. SAPS continued to work with StatsSA on the crime statistics.

Ms M Mmola (ANC) asked why trained members were moved in terms of the capturing, verification and authorisation of information on OPAM under the root causes for the quantity of illicit drugs and volume of illicit liquor confiscated as a result of police action. What steps were taken against members who were negligent with firearm administration? She then asked about the duties and job description of station and cluster commanders if they were not doing their job?

Lt. Gen. Phahlane explained the train members moved referred to members who were transferred or appointed to another environment. Because of career mobility, people trained could not be restricted from moving to other areas – whoever was appointed to replace the member was also supposed to be trained to be able to function effectively. Disciplinary action would have been taken against any negligence and non-compliance in respect of firearms. Cluster Commanders understood their job descriptions very well and were held accountable including by the Provincial Commissioners through the Provincial Crime Combating Forum where the Cluster Commanders accounted for operational policing matters. They were also subjected to performance reviews so if the Cluster Commanders were found not to be doing what was expected of them, action would be taken.

Ms Molebatsi wanted to know how long it took a SAPS member to lose the permission of using a firearm after losing it. She asked if the capturing of information on CAS discouraged members from using the e-docket. Which members would attend the forensic awareness workshop?

Lt. Gen. Phahlane said that with lost firearms, disciplinary and criminal processes immediately kicked in – the member would either be declared not fit to possess a firearm and then the firearm would be taken away from him/her. How long the firearm was taken away for depended on how long the disciplinary and criminal case took. Firearms were also immediately repossessed if there was a sense that a member was a bit unstable or under the influence. With the forensic awareness workshop, the members who would attend included all those doing case work and forensic analysis. This would be for current members and new appointees.

Brig. Mitchell clarified with the CAS system, the reference was in fact to CAS/ICDMS which members were required to use for capturing. E-docket referred to the actual capturing of content of the docket itself.

Mr Groenewald questioned what the position of the station commander was in the case the DFO was not present – in his personal experience of renewing his firearm licence, the DFO was on study leave and he was told to wait until the DFO was back at work because no one else could handle the documentation.

Lt. Gen. Phahlane responded that in the instance where the DFO was not on duty, the VISPOL commander or station commander should fulfil that function because they were capable of doing so as included in the job description. It was not acceptable for an applicant to be turned away because the DFO was not there. He acknowledged that there were not enough DFOs and more were to be deployed to avoid such situations as the Member experienced.

Annual Financial Statements

Lt. Gen. Stefan Schutte, SAPS Deputy National Commissioner: Asset and Legal Management, then took the Committee through the annual financial statements of the Service noting that in terms of end-year reporting, the emphasis was on:

-Keeping full and proper records of the financial affairs of the Department

-Preparing financial statements in accordance with generally recognised accounting practice

-Submitting financial statements within two months after the financial year (31 May)

-AG to audit and submit their report (31 July)

The annual financial statements were prepared on a modified cash basis in accordance with the formats/standards prescribed by National Treasury where only certain elements were recognised in the primary financial statements including:

• Appropriation statement
• Statement of financial performance (income statement)
• Statement of financial position (balance sheet)
• Statement of changes in net assets and cash flow statement

Primary financial information (notes) included revenue, expenses and assets and liabilities (supporting notes). Secondary financial information included that that had been recorded but did not qualify for recognition in the primary financial statements (additional notes).

Lt. Gen. Schutte then outlined the process flow for month and year-end procedures noting that pre-month and year-end closure meetings were held 18 February 2016. Month end closures were done between 31 March and 8 April 2016.  Processes between 14 March and 8 April included:

-Final withdrawal of funds at the National Treasury

-Final payment of revenue raised during the financial year

-Finalisation of all ledger account transactions

-Ensure that all transactions were received from National treasury and captured on POLFIN

-Ensure all transactions were reconciled

Actions after year end closure from 9 – 10 April 2016 included roll-over of transactions to the 2016/17 financial year. Preparing annual financial statements included:

-Obtaining information to compile the Accounting Officers report

-Submission of information

-Management review and sign-off

-Revise and finalise the accounting policies

-Obtain information from responsible environments to prepare the appropriation statement, primary financial statements and notes, secondary notes and annexure

-Preparing secondary notes for commitments and accruals

-Signing off of annual financial statements by the Accounting Officer

-Submission of annual financial statements on 31 May 2016 to National Treasury

Overall action steps included intensifying review actions before sign-off and capacity in the specific environment to be strengthened. 

The report of the AG to Parliament showed that with the annual financial statements, the financial statements submitted for the audit were not supported by full and proper records. There were material misstatements of immovable tangible assets, operating lease commitments and contingent liabilities identified by the auditors in the submitted financial statements were subsequently corrected and the supporting documents were provided subsequently. With procurement and contract management, persons in service of the Department of Police who had private or business interest in contracts awarded by the Department of Police failed in certain instances to disclosure such interest – this was also connected to internal controls e.g. monitoring, record keeping etc. further findings were made on immovable capital assets where there was “incorrect classification of work in progress relating to the Telkom Towers building” – this finding concerned categorising immovable assets as ready for use. Action steps were taken in this regard. Other findings related to:

-Operating lease commitment for land and buildings

-Contingent liabilities (civil claims)

Lt. Gen. Schutte then outlined further findings made with procurement and contract management in terms of “adequate monitoring of controls to detect SAPS staff performing remunerative work without approval”. The policy in this regard was that:

-All employees of SAPS (level 1 – 5) who earn money or any income from a source other than their SAPS salary, must apply for authorisation in writing

-National Instruction 4 of 2012 regulated the performance of external remunerative work and stipulated certain types of work that were prohibited as remunerative work while a person was in the employ of SAPS

-In terms of the delegation of powers, only a Provincial Commissioner or Divisional Commissioner may approve applications to perform remunerative work

-The prescribed application form must be completed and submitted for consideration annually

-The relevant Provincial Commissioner or Divisional Commissioner recorded all information related to the applications received, authorisation granted and applications not approved on a database. The information was submitted to Head Office for consolidation of a national database.

Action steps taken in the above regard included:

-Two circulars were issued instructing Supply Chain Management practitioners in SAPS to verify the identity number(s) as provided by bidders against the Public Service Verification System which resided on the website of the Department of Public Service and Administration (if it was found that any of the directors/members/shareholders were employed by the state such written price quotation or bid will be disqualified)

-The SAPS had been implemented National Treasury’s Central Supplier Database (CSD) which came into effect on 1 July 2016. The CSD verified the status of directors and shareholders of bidders against various databases as part of compliance checks on state employees

-Importance of this matter was raised and reiterated at a recent National Procurement Forum which was held with all Section Heads in divisions and provinces

-Public service regulations published on 29 July 2016 also required that an employee shall not conduct business with any organ of state or be a director of a public or private compay conducting business with an organ of state unless such was in an official capacity as a director of a company listed in schedule 2 and 3 of the Public Finance Management Act (by 31 January 2017).

Discussion

The Chairperson found it was most important that the Committee get the necessary assurance through appropriate responses – one of the issues raised by the AG was the slow responses by Accounting Officers and senior management to recommendations. The AG also found that there was stagnation in the police portfolio – what was the game plan in terms of immediate steps to ensure there was movement towards a cleaner audit with respect to the financial division of SAPS. Was there any sense of urgency such through a weekly action plan from the finance unit to ensure all findings were addressed? Was there confidence that matters could be addressed before the new audit? This was the assurance the Committee needed.

Lt. Gen. Phahlane said that the process of doing periodic reviews in environments where there was under-performance, like detective services, was yielding results. VISPOL was also being taken on board for priority attention in the review process – the emphasis was to pick up on issues even before the AG picked up on them. Close attention would be made to commitments made in the action plan in terms of progress – there were key vacancies to be filled as well especially in the finance environment to ensure progress was made. The finance environment was a very serious one and would continue to be prioritised. These were just some of the measures taken to give assurance to the Committee. Late responses to findings were simply not an option – action plans in terms of findings were thus centralised in the strategic management environment to ensure there was consolidation of issues for resolving especially in terms of repeat findings. Part of the game plan was also to dismiss those individuals who were not cooperating to improve performance – one could not afford to take risks in this regard.

Lt. Gen. Schutte added with the slow responses this was not so much in terms of the annual financial statements per se except for the matters that went to Treasury. Nodal point meetings were held every second week and other meetings. With the biggest respect, the audit team also needed to learn the nature of the business – SAPS worked through segregation of duty so the supporting documents were also important. There was much less room for manoeuvre in the financial environment compared to other environments. There was discussion on having the lease matter attached to performance agreements – while 100% assurance could not be provided, there was fair confidence. There were discussions with the Component Heads for litigation, the lease environment and others in terms of actions and plans so there was confidence that these matters would not be repeated.

Mr Mbhele noted that reference was made to shortcomings with the functioning of the OPAM system – were the personnel working on OPAM purely Public Service Act (PSA) employees or were they also SAPS Act members? He then asked what the relative status of a National Instruction or SOP was in relation to the performance enhancement process.

Lt. Gen. Phahalane clarified that personnel working on the OPAM system were a combination of PSA and Police Act employees. The job descriptions were very clear on the functional responsibilities of members as well as the regulatory framework to be complied with in terms of policies, National Instructions, Standing Orders etc. so one could not say compliance was not in the job description – it was clear that functions to be carried out in terms of the job description were guided by the regulatory framework.

Ms Molebatsi asked what happened when it was picked up that SAPS members were involved with other business interests. She then asked what the status of the Sanlam building was.

Lt. Gen. Phahlane responded that members were required to disclose interests on an annual basis. With the new Act coming into effect, if a member was doing business, the member needed to apply to do so and to disclose the nature of the business etc. This would then be considered under National Instruction 7of 2002. The interests were not to conflict with any police work or compromise the members’ core police duties – there were some industries members were strictly prohibited from getting involved in like the liquor industry, taxi industry, firearms etc. This did not mean there were no members involved in these industries but where such cases occurred they were being dealt with disciplinarily or criminally.

Lt. Gen. Schutte added that with the Sanlam Building, SAPS was not a party to the civil proceedings.

The Chairperson noted that there were many other unsettled issues generally amongst departments like proof of documentation, submitting documentation etc. – at station level, was there emphasis placed on making documents available timeously especially in the firearms environment where there were repeat findings? These could be risk areas for the next audit.

Lt. Gen. Schutte said there were meetings held every second week and there were nodal point systems used also in the provinces. These issues were emphasised to ensure ducks were in row for the AG. To an extent this was also a coordinating effort.

Lt. Gen. Phahlane added the matter would enjoy priority attention and excuses for non-compliance would not be accepted regardless of how high or low the issue was. The nodal points were in place to facilitate coordination. At times there was a lack of knowledge of where matters were premised which resulted in delays. Relations in this regard would be worked on for improvement.

In closing the Chairperson thought the action plan presented was very comprehensive and was a good example for other departments to track and trace matters. Results would however only be seen in implementation. From the side of the Committee it was vital to ensure that everything was done to achieve a clean audit and to improve from the 2015/16 AG findings. Good controls needed to be implemented and the necessary staff needed to be in place to deal with the issues. It was vital for the Committee that departments in the police portfolio performed excellently in terms of financial and performance information. The Committee looked forward to the implementation of the action plans and would continue to monitor the environment. At the end of January/beginning of February 2017, the Committee would look at the responses of SAPS to the Committee’s Budgetary Review and Recommendation Report (BRRR) recommendations which would perhaps result in further improvement. The Committee also looked forward to improvement in the DPCI environment in terms of issues raised by the AG – the Committee hoped these issues would be dealt with going forward.

The meeting was adjourned.