Department of Home Affairs Annual Report 2015/16: Auditor-General and Department's briefings: Minister and Deputy Minister present

Meeting report

Chairperson's opening remarks
The Chairperson noted that the Department of Home Affairs had managed to submit its Annual Report the day prior to the meeting, but unfortunately the Committee did not have a quorum. He welcomed the Deputy Minister of Home Affairs, Ms Fatima Chohan and the Minister, Mr Malusi Gigaba.

Department of Home Affairs Audit report 2015/16: Auditor-General South Africa (AGSA) briefing
Mr Kimi Makwetu, Auditor-General, briefed the Committee on the Department of Home Affairs (DHA) audit outcomes 2015/16. He noted that there was a regression in audit outcomes over the last three years. Appropriate and timely monitoring and oversight processes remained of concern, and still needed to be properly addressed. He noted that there was no consistent trend in the compliance issues over the years, except that in the current year, inadequate monitoring on supply chain matters meant that there had not been compliance with the legal requirements. The reliability of the information in the annual performance report was still an issue for both the Independent Electoral Commission (IEC) and for the DHA, but Government Printing Works was acceptable. Overall he stressed that  oversight and monitoring needed to be strengthened, to ensure that reported performance is supported by valid, accurate and complete records.

Mr Makwetu noted that the quality of that Annual Performance Plan (APP) had slightly regressed and the quality of submitted annual performance reports had similarly slightly regressed. There were no material findings reports, to prove the usefulness of the set objectives or planned programmes of the DHA, GPW and the IEC. He also noted a regression in compliance with legislation, but a slight improvement with the quality of financial statements was noted, too.

In the 2015/16 financial year, there was fruitless and wasteful expenditure of R0.1 million and irregular expenditure of R13 million, for the DHA. The GPW and IEC together incurred irregular expenditure of R72 million. Investigations to determine root cause of unauthorised, irregular and fruitless and wasteful expenditure were conducted, and disciplinary consequences were enforced. It was identified that the top three root causes were slow response by the accounting officer and senior management, inadequate management oversight, and lack of consequences for poor performance and transgressions. The DHA audit outcomes highlighted the need for consequence management in the department. Leadership oversight and timely interventions were still an issue.

He suggested that the root causes should be addressed by honouring of the Minister's key commitments and implementation of the Committee's proposals. He noted that the Minister was not accountable for the IEC and GPW.

Discussion
The Chairperson sought clarity on whether the Auditor-General had engaged with the DHA and, if so, what the responses of the DHA were.

Mr Makwetu said that there would be a workshop shortly in which the DHA would be advised of the findings, and given recommendations – which were as contained in the AG's report.

Ms T Kenye (ANC) sought clarity on what advice the Auditor-General could give to the accounting officer.

Ms D Raphuti (ANC) asked for clarity on the graphs set out on slide 13, concerning management of procurement and/or contract, and exactly what the Auditor-General would like to see being done. She felt that the current arrangements on foreign property were cumbersome for the DHA and also for the Department of International Relations and Cooperation (DIRCO) and felt that the Auditor General could perhaps do more to assist them to address the challenges.

Ms D Ndongeni (ANC) sought clarity on slide 15 and said she did not understand the figures on irregular expenditure, which spoke of figures of R13 million, R2 million and R1 million for 2015/16, 2014/2015 and 2013/2014 financial years respectively. She felt that the DHA should provide an explanation.

The Chairperson agreed. He said that the DHA would explain irregular expenditure of R13 million.  He said that in the past the Committee tried to devise interim measures to assist the DHA, but one of the major issues was always ensuring that these measures were properly implemented. He sought clarity on whether the Auditor-General South Africa (AGSA) was able to help the DHA to implement those interim or mid-term measures.

The Chairperson also sought clarity on the performance of the IEC. He noted that the late submission of the Annual Report made it difficult for the AGSA to advise the DHA on technical matters. It also made it difficult for AGSA to engage with the report in time to respond fully to some of the more complex questions.

The Chairperson noted the AGSA recommendation, on page 9, that the DHA needed to be incubated in terms of leadership, financial and performance management and governance, because these areas were still of concern, but that there was some indication of improvement and he asked for further clarity on that point.

Mr Makwetu responded that there were control deficiencies related to non-compliance with legislation. The DHA needed to take accountability for taking control of those deficiencies. He confirmed that the detail of the questions on irregular expenditure would be responded to by the DHA. Irregular expenditure of R13 million arose from non-compliance with key legislation. AGSA had conducted an interim audit, which usually looked at performance of the department for the period of six months, and the balances in this time were not audited, because they were yet to be used. In some interactions, the deficiencies were discussed. He clarified that when looking at overall internal controls there had been  some improvements. The status of key controls was based on three areas: leadership, finance and performance management, and governance. However, in all these areas the DHA needed interventions as well as oversight for strengthening the internal control. It was suggested that the status of key controls should be reported on quarterly.

He clarified that there remained some challenges in auditing the financial performance information because some of the relevant information relating to foreign activities was not available. Immigration revenue was sent to the National Revenue Fund. There was also a need to reconcile the balances with those of the DIRCO. The actual record of balance was addressed.

Department of Home Affairs on its Annual Report 2015/16
Deputy Minister Fatima Chohan remarked that the presentation would respond to some of the concerns of the AGSA.

Mr Mkhuseli Apleni, Director-General, Department of Home Affairs, took the Committee through the presentation. He noted that the MTSF priorities and DHA commitments supported the 2014-2019 Medium Term Strategic Framework (MTSF), which was based on the electoral mandate, and thus addressed issues of decent work and sustainable livelihoods; education, health; rural development, food, security and land reform; and fight against crime and corruption. Out of the 36 targets in this year, the DHA achieved 29, or 81% achievement, with seven (19%) not achieved. A significant improvement in the organisation had been realised over the last three financial years. The main reasons for the improvement in organisational performance over the last three financial years. reasons included improved governance, planning, implementation and monitoring practices and improved internal controls around management practices. He went through the 2015-2016 highlights in terms of achieved and non-achieved targets (see attachment).

Mr Apleni noted that the DHA continued to experience capacity constraints in the areas of appeals and it intended to establish a dedicated unit for appeals within the Chief Directorate: Permits. Budget constraints remained a serious challenge and had the potential to seriously hamper operations and service delivery. Key cost drivers in that regard were the Advance Passenger Processing System, and peak period operations. The budget for the deportation of foreign nationals had been exhausted before the end of financial year, resulting in challenges relating to transfers of deportees from the Lindela Holding Facility and deportations to the countries of origin. The plan to address some of challenges was grounded in the 2014-2019 ministerial priorities.

Mr Apleni highlighted global challenges and legacy issues regarding foreign revenue, expenditure for employees posted abroad and their implications to the financial statements.

He noted that DHA had spent 100% of its allocated budget.  He also conceded that there was irregular expenditure and thus noted that there was a need to improve on some areas in moving forward.

Discussion
The Chairperson sought clarity on why the Annual Report was delayed and on what the status of personnel was. He further asked whether there was anything could be said about the Internal Audit Committee and Audit Committee and sought clarity on whether they existed.

Mr Apleni noted that there were some members who left in 2015 and other were appointed in February 2016, but the DHA had a full Audit Committee. He noted that the internal audit was not that big but its size fitted the need of the DHA, although the number of personnel was not sufficient.

The Chairperson noted that wherever an internal audit had insufficient staff, this would allow some officials to go astray without anyone recognising it and alerting management to what was happening.  If the internal audit was weak or did not have sufficient human resource capacity, this would affect the performance of the entire department. 

Ms Kenye sought clarity on the DHA’s leadership. The AG had said that leadership was lacking in some respects. However, the DHA was claiming that there was an improvement in the performance in 2015/16. She asked for an explanation and how these different perspectives had been arrived at. She also asked how the problem of leadership and human resources could be addressed.

Ms Mnisi sought clarity on why the Annual Report was delayed and whether there was a progress on the cases cited in that Report. She asked what engagement the DHA had with the Procurement Officer. She furthermore asked how challenges related to procurement and contracts could be addressed.

Ms Raphuti asked what type of progress the DHA was reporting on and on what the AGSA was expecting from the DHA.

Ms Ndongeni sought clarity on the relationship between the DHA and AG and sought clarity on the current leadership situation.

The Chairperson asked whether the DHA was aware of matters raised by AGSA, and what were the challenges that meant that the AGSA's previous suggestions had not been implemented. He felt that there was some important information that the DHA was not telling the Committee.

Mr Apleni responded that when the DHA said that it had improved, it was saying this in the context of improvement from one year to the next, and was not suggesting that it had improved in all respects. For instance, in the last financial year the DHA achieved 70% of targets and in this year it had achieved 81%. Last year, the AG raised questions around the percentages and in this year no such percentages were raised. This was largely due to the internal audit that went and checked whether the DHA was meeting its targets, on a quarterly basis. The ICT governance was still a challenge, and this was affecting the performance of the DHA. The budget cuts had directly affected the DHA because this meant that DHA was no longer able to appoint the person it had been intended to appoint to assist with the IT.  Added to this, other people had resigned from the DHA. On the issue of DIRCO, there was still a challenge. If AGSA was able to audit foreign revenue, the errors could be re-coded to DHA, but the audit errors actually arose in relation to DIRCO accounts. The AGSA noted material errors that would pose a problem to the financial statements of DHA.

He added that improvements had also been seen in visa regulations, where the number of tourists had increased. The DHA and AGSA had a good relationship and they were working towards reconciliation of accounts. The DHA was not receiving money directly from the foreign revenue account.

Mr Malusi Gigaba, Minister of Home Affairs, noted that the good news was that the performance of the DHA was “globally improved”. It should be understood that the DHA had shifted from a low level of  performance to a high level of performance. He spoke to the visa regulations, and noted that the only outstanding matter related to the minors travelling, and here, there was a need to establish the process out of the new immigration advisory report adopted. Letters from spouses allowing a minor to travel were required, and he said that an ex-spouse was not to be viewed as “a spouse”, especially since children were often brought into the fray of ongoing problems.

He also noted that the audit committee had been bolstered and new members had been brought on board. DHA was doing everything in its power to ensure  that it received a clean audit. The DHA was working hard, wanted everyone to come on board and work off the same page. He was ready to take the responsibility for financial performance. There had been a number of interactions at executive authority level between the DHA and AGSA, some at the request of AGSA, and he knew that, although he was not accountable to the AGSA, he was accountable to Parliament and to the Cabinet. They should all work to improve relationships and the DHA was not asking for favours. It would work to improve its performance.

The Minister said that he was still concerned with the Border Management Authority (BMA) Bill process and the DHA was still trying everything it could to move that process forward. Unless and until Cabinet changed it decision on the BMA, its initial decision on that was binding. The DHA was engaging with its counterparts to get them on board  and was resolving any misunderstanding in connection with the custom functions. He did, however, point out that since 2013, the Cabinet had been consistent on its decision as to the functions of the BMA.

The Chairperson appreciated the progress that was made through interactions and stated that there were more developments on the BMA . Members were awaiting the outcome of the DHA’s engagement with concerned departments in order to confirm what Members have agreed on.

Border Management Authority Bill [B9-2016]
Although there had been an agenda item for consideration of the A and B lists of the BMA Bill, this did not take place.

The meeting was adjourned.