Department of Basic Education on its Annual Performance Plan; AGSA input

Basic Education

02 May 2017
Chairperson: Ms N Gina (ANC)
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Meeting Summary

The Chairperson opened the meeting by asking the Director General of the Department of Basic Education (DBE) to brief the Committee on the unsettled situation that had taken place in Vuwani, Limpopo, and Bushbuckridge, Mpumalanga, where schools had been burnt down during protest action.

The DBE reported that in Vuwani, the community had wanted to return to the old municipality. There was no learning at all taking place there. The DBE was trying to make provisions for grade 12 learners to attend classes between Friday afternoons and Sundays so that the learners would be able to write their final year exams. An interim committee meeting would also be held, and the Minister would attend. On the other hand, the schools in Bushbuckridge were once again functioning. The Member of the Executive Committee (MEC) had managed to restore peace within the community and learning in schools had resumed. A catch-up programme during the volatile period would be required.

The Department was asked whether it would be ensuring that there was adequate transport to take learners to schools to attend the catch-up programmes at weekends. A Member who had recently been to Mpumalanga, felt that the situation in Bushbuckridge was still very volatile.

The briefing on the DBE’s draft annual performance plan (APP) by the Auditor General of South Africa (AGSA) became focused mainly on its earlier finding on a programme run by the Department, that about R44 million had been fruitless and wasteful expenditure. This had been a huge cause for concern within the Portfolio Committee. At another meeting after the initial presentation, the DBE had reported that quite a large amount of that R44 million had been cleared. The Portfolio Committee was pleased to hear that the amount had been cleared, but demanded clarity on the matter. The Members agreed that matter deserved scrutiny and had to be discussed in detail. Both AGSA and the DBE remained united in their explanation of the audit process that had taken place in order to eventually clear the R44 million, and a full report would be provided to the Portfolio Committee in July.

Meeting report

The Chairperson began asking Mr Hubert Mweli, Director General: Department of Basic Education (DBE) to briefly discuss an unsettled situation that had taken place in schools at Vuwani, Limpopo and Mpumalanga. A number of schools had been burnt down and the matter had affected the learners, as well as the programmes set in place by the DBE. She said it was important that the Portfolio Committee receive direct feedback, as well as possible resolutions to the problem at hand.

Department of Basic Education Annual Performance Plan, 2017/18: Briefing by AGSA

Mr Eugene de Haan, Senior Manager: AGSA, presented the review of the draft DBE 2017/18 annual performance plan (APP) and stressed that the findings relevant to the review would not have an impact on the audit conclusion on the usefulness or reliably of the selected programmes for the 2016/17 year. The AGSA had not reviewed consistency in the presentation. All findings from the review draft had been communicated to the DBE and the issues regarding the Medium Term Strategic Framework (MTSF) 2014-2019 were being corrected before being made final for the 2017/18 APP.

AGSA had found that several indicators in the MTSF targets had not been included in the APP with reference to outcome number one, which dealt with quality basic education. The percentage of learners in schools with at least one educator with specialist training was not included, as well as the number and percentage of Funza Lushaka bursary holders placed by June of the year after qualifying. This had raised the concern that if the indicators had not been included in the Department’s APP and not included in the Provinces; where were these indicators going to be included? Furthermore, there had been certain provincial education departments’ (PEDs’) APPs, where no set targets had been included for certain customised sector indicators due to a lack of funding.

The AGSA was interested in finding out what alternatives would be added in order to achieve the key sector deliverables. There were specific targets that the AGSA had felt needed to be implemented first by the National Department before the provinces could implement them. One of these was that principals had to sign performance agreements as an initiative by the National Department, which would then continue on to the provincial departments. Due to this prioritised order, the 2014-2019 MTSF indicator could not yet be implemented by the PEDs. The DBE was currently negotiating with the unions on this matter. The main concern was the poor alignment in the National Development Plan (NDP) and MTSF between the national and provincial Departments of Education not being translated into performance indicators.

Mr De Haan concluded by outlining considerations for the Portfolio Committee when reviewing the DBE’s 2017/18 APP.

Discussion

The Chairperson highlighted an issue for concern which she asked the AGSA to provide clarity on. In previous meetings, findings by the AGSA on a programme run by the Department had indicated that about R44 million had been declared fruitless and wasteful expenditure. This had been a huge cause for concern within the Portfolio Committee. At another meeting after the initial presentation, the DBE had reported that quite a large amount of that R44 million had been cleared. The Portfolio Committee was pleased to hear that the amount had been cleared, but she felt that the matter deserved scrutiny and had to be discussed in detail.

Mr De Haan said that the AGSA had performed the audit and identified that R44 million was regarded as fruitless and wasteful expenditure in terms of the procedure. The way in which this had been identified was by verifying identity document (ID) numbers. Unfortunately, for some districts, the auditors could not identify whether the ID numbers were valid. The AGSA had then concluded from the unidentified ID numbers that there was no way to verify whether training had taken place, therefore regarding it as fruitless and wasteful expenditure. On the date that the report was signed off, the Department could not produce the necessary supporting documents for the auditors to clear the finding. The Department had agreed with the findings during that period and the report was correct, and was therefore released on 31 July 2016. After the audit had taken place, the AGSA had received a subsequent number of files and supporting documents for the previous audit, and several meetings had been held with the Department where it had been communicated that the actual fruitless and wasteful expenditure had not been R44 million, but R1.2 million. It had not yet been verified, however, and would be managed during the final audit process. It was highlighted that the R1.2 million was fruitless and wasteful expenditure, and that the remaining amount would be regarded as irregular expenditure because the expenses had not been signed off by the authorised person. The matter was being thoroughly investigated to ensure that a more accurate report was provided on the Karakuri project. On 31 July 2017, AGSA would be able to provide a comprehensive report to the Portfolio Committee, with all the findings clearly stated.

Mr L Ntshayisa (AIC) said he was interested in the important indicators that had not been included in the APP. He asked what the Department’s response had been when notified that the principals, for instance, had not signed their performance agreements.

Mr G Davis (DA) said that the work done thus far was highly appreciated by the Portfolio Committee. He was also concerned about the indicators that had been omitted from the APP. What had the Department’s response been when confronted about the omitted indicators? He felt that the omission seemed to have been deliberate, because the indicators had been present in previous reports, but he wanted to know whether it had been an error or an oversight. He said that the AG had highlighted the R44 million worth of fruitless and wasteful expenditure two weeks after the Department had received the United Nations Educational, Scientific and Cultural Organisation (UNESCO) award. It was later mentioned in March that the AG had made a mistake, and that the amount for the fruitless and wasteful expenditure was not R44 million but instead about R1.2 million. He was concerned about the reputational damage caused by these two conflicting findings. He asked why the AG had published the finding prematurely on a finding that was not verified.

Mr D Mnguni (ANC) asked why the indicators had not been added to the APP. The Department should highlight how challenges were identified, as well as when and how these challenges would be tackled. He asked what was being done to ensure that what had been raised by the AG was implemented. Some PEDs had not set targets for specific customised indicators due to poor planning and at times, lack of funding, so he was interested in finding out what the role of the Department was in recognising areas where the PEDs could receive adequate support in order to meet the necessary demands. He also felt that it was the responsibility of the AG to oversee expenditure throughout the financial year in order to avoid hearing about fruitless and wasteful expenditure.

The Chairperson was concerned about the timeline between the dates that the DBE had to submit supporting documents after the audit, and the period in which the final audit was announced to the public. She felt that a close relationship between the AGSA and the DBE was needed moving forward, and that perhaps both parties could highlight the challenges faced in that regard so that the Portfolio Committee could give recommendations. The APP targets had to be aligned to the MTSF as well as the NDP. The AGSA had also highlighted that the number and percentages for the Funza Lushaka bursary holders had not been added. She asked what the benefits experienced through the programme were, and how the learners receiving support from the funds injected to the programme were affected, as well as what advice would be given in order to continue with the project.

Ms Meisie Nkau, Business Executive: AGSA, said that she would provide an overview of the procedure followed by the Auditor General, as well as the recommendations given by the AGSA. An audit was conducted and the findings would be issued during the audit. Before the audit was complete, an interim audit took place and was finalised in March. A final audit then took place before the report was issued in July. The AGSA also discussed a management report which included all the information recorded during the audit which was concluded in June before issuing the final report. By the time the AG issued a report in July, it included all findings executed from the end of June. If the DBE management did not agree with the findings, the AG allowed a submission for supporting documents to be discussed and investigated. This would have taken place until 29 July.

In the case where the R44 million had been declared fruitless and wasteful expenditure, there had been no supporting documents included. The AG had highlighted and disclosed the R44 million resulting from the findings that had arisen at the time. The Department, however, had noted the challenge and begun an internal investigation. The review of the 2017/18 APP report was a proactive exercise, in order to inform the DBE’s management of all findings. The review was done to brief the Portfolio Committee on the APP beforehand, as previously requested. According to the Public Audit Act, the Auditor General’s report had to be tabled in Parliament before being discussed in public. She recommended that when the Department presented information, the Portfolio Committee had to ensure that the internal auditor and the chairperson of the audit committee were present.

Mr Abdulhay Patel, Manager: AGSA, gave a brief description for how the AG had arrived at the figure of R44 million. The AGSA had access to the Home Affairs data base which was used to verify the ID documents. The educators as well as 500 000 learners had been verified, using the Home Affairs database according to the rules stated. In about 400 to 600 cases, it had been discovered that the learners were deceased. In other case, there were fewer than 14 learners in the class, and in such cases a teacher should not be having the class unless it was a prison, old age home or farm area. This also meant that the stipend should not have been paid to the teachers, as well as the voluntary educators. The AGSA had also picked up that there was no system in place to monitor the expenses, and the control environment within the programme was unreliable. It was a challenge for the AGSA to verify the attendance register from the provincial coordinators as well as the voluntary educators, who would be using information from incorrect sources. When investigating some of the ID documentation, it was discovered that some learners were deceased before the curriculum had begun. This meant that they did not qualify to be a part of the programme, according to the old policy. The Department had then issued a new policy, which had been approved by the incorrect delegated official, for payments of stipends to take place at a reduced rate. The new audit documents presented by the Department had taken into account the new policy, which had not been properly approved. The AG had also picked up indicators of fraud during site visits, where voluntary educators and provincial coordinators were sharing learners. The R44 million figure issued as fruitless and wasteful expenditure, which was correct at the time, was based on the information on the database and did not take into account the new policy.

Mr Patel highlighted that the value of the Funza Lushaka bursary was not only financial, and the AGSA had noted that a number of schools did not have enough teachers. Although there was a large influx of qualified teachers available to send across the county, the funding at the provincial level prevented employment of those teachers.

Mr De Haan explained that during the review, the DBE had still been negotiating with principals in schools, so that specific target had not been included in the APP. The DBE had also removed some of the indicators, stating that they were concurrent indicators which needed to be included in the provincial APPs. The National Department had prepared the APP based on the functions it was responsible for, and so had the provinces. Although this had been done, after thoroughly observing both the National Department’s and provincial departments’ APPs, AGSA had there were still gaps. He felt that the oversight function needed to be addressed, as all functions formed part of the DBE.

Mr Patel said that the AGSA viewed all customised indicators as material indicators for targets which the National Department and provincial departments set unilaterally. The AGSA would then do a consistency review of the targets, to ensure that they were all mentioned in the APP. In cases where funding was not adequate, it was important that the province ensure that the target remained on the APP and to include reasons why it had not been fulfilled in the APP. It was important that the indicators be included in the APP so that the National Departments could ensure that the funding was made available for the targets set within the provincial APPs.

The Chairperson expressed appreciation for the discussion, and asked that the DBE take over the next session. She asked how the Portfolio Committee could ensure that the provincial departments were fulfilling the country’s mandate. It was important that the National Department presented a report which also included the work completed by the provincial departments.

Mr Davis asked for clarification on the process which had led to the R44 million clearance. He asked whether the differences between the audit presented by the AG and the newly investigated audit provided by the Department were based on the policy which had been used during the audit.

He said he was concerned about the validity of the new policy and the approval process, and asked for a full and detailed report so that the Portfolio Committee could understand the concept of the procedure followed. He also highlighted that although the processes that had led to indicators being omitted was clear, it did not explain how the indicators had been presented in previous meetings. He asked why the omission had become a new problem. He was concerned about what had changed. He also asked the AGSA whether the Department had agreed to rectify the matter.

Ms N Mokoto (ANC) asked the AG what input or interventions had been made to ensure that the missing functions did not come across as a stumbling block. She asked whether the Department had the authority to ensure that the Provincial Department played its role. She also felt that internal audits had to begin when the APPs were initially put together.

Mr D Khosa (ANC) asked how soon the R44 million and R1.2 million issue could be clarified

Ms J Basson (ANC) felt as though the Members of the Portfolio Committee were ‘singing the same song’. She asked who had first discovered that the R44 million had gone through as fruitless and wasteful expenditure. She felt that the investigation had been slow, and asked that the AG seek further clarity on the matter and come up with a conclusion. She also highlighted that the provincial departments were inconsistent with implementing policies, as well as the APP targets. She asked which curriculum the percentage of learners who had completed were being referred to.

Mr Mnguni requested that the AG provide clarity on the application of the old and new policies during the audit. When the second policy had been mentioned, the AG had emphasised that the policy had been approved, however incorrectly. He asked that the AG help the Portfolio Committee understand how the policy was incorrectly approved. Had AGSA had made provisions in the policy for instances where there had been 14 learners and one had passed on? He felt that the policy seemed to favour the minority, as a class with 14 students could perhaps lose three students, meaning that the remaining students would no longer be taught, as the class would be considered invalid by the audit.

The Chairperson did not agree with Mr Mnguni’s assumption, as she felt that all Members of the Committee were aware of how the programme worked. The policy did not imply that the remaining learners in the class would not be taught once one or two other learners had passed on. The Committee could not portray the image brought forward by Mr Mnguni. She asked the DBE Director General to provide clarity on some of the issues brought forward.

Mr Mweli said he was pleased with the approach and attitude that Portfolio Committee had taken to investigate the issues that appeared unclear. Other Portfolio Committees sometimes forgot that human beings were bound to make mistakes. He said that according to the constitution -- chapter three, sub-section one -- the national, provincial, and local departments were inter-relational. This meant that no department was above the other and that no function could force the other departments to do anything. He was worried that the suggestion from the AG on ensuring that the concurrent functions were met, had not taken into account the constitution.

He explained that at the time that the AG had presented the DBE with the R44 million of fruitless and wasteful expenditure finding, the Department had not had the necessary supporting documents. An independent company had been appointed to conduct an investigation which had concluded that R1.2 million would be declared fruitless and wasteful expenditure. The DBE was willing to provide the Members of the Portfolio Committee with the documents and was glad to hear that the AG was going through the documents as well.

He said that the amended policy was not supposed to have been approved by the Chief Director, but instead approved by the Accounting Officer. The amendment had also not taken place after the audit, but during the financial year in question. He believed that the policy was correct, but that it had been approved incorrectly according to the procedure. The old policy had stated that if a teacher did not have 14 learners in the class, the stipend would not be paid out to the teacher, regardless of the services rendered. The amendment ensured that if a teacher or voluntary educator did not have 14 learners in the class, the DBE would still be able to pay out a stipend for the service rendered at a reduced rate, which also meant that the classes could continue and the remaining learners would still benefit. It had not been properly approved at the time, but it had now been correctly approved.

He said that the current performance marking system was different, as it was new. The Committee had to bear in mind that the DBE was learning how adjust to the new system, so saying that there were no controls in place was an over-exaggerated statement -- it was just inadequate, and the Department was working on it. Furthermore, he had picked up weaknesses within the internal audit unit. The strengthening of the unit was important. He had made changes to strengthen it. He said that the zero targets in some of the provincial department’s APPs might be due to the constrained fiscal environment they found themselves in. From the indicators that were excluded, some of the indicators were to be finalised.

Mr De Haan said that the DBE had not included the signatures by the principals because negotiations had still been taking place.

He then went on to explain the APP review process. He said that the AGSA had received the draft APP in January before it was approved in March. The APP would be reviewed and the review notes would be issued to the DBE, to which the Department would respond and highlight whether there was an agreement. The APP would be corrected, should there be a need. This was the Auditor General’s way of adding value to the entire process, to avoid raising findings at the end of the audit that had been discovered in the beginning. The AGSA worked with the DBE to get the most accurate and measurable APP. A recommendation had been made to meet with the managers of each provincial department to discuss the APP. The Department of Strategic Planning would also be invited to meetings held with the DBE to improve strategic planning and to help the departments draw up better APPs. There would be meetings on 18 and 19 May 2017. The AG sometimes identified control weaknesses, usually when documents were not received for specific expenses. This was usually because some of the control systems in place would not be working as intended. An investigation by a forensic auditor would be launched into the matter identified by the AG, as the DBE had done.

Mr Davis was concerned that the Director General, on behalf of the Department, had had to hire an independent company to override the findings of a Chapter 9 institution. He felt that this meant that the Chapter 9 institution had not performed its duties correctly, which had required another company to conduct a comprehensive audit on behalf of the Chapter 9 institution. This meant that the DBE would comply with the findings of the Chapter 9 institution only when it was in agreement with the findings. This was a cause for concern. He mentioned that although the Department had said the amount for fruitless and wasteful expenditure was R1.2 million, he was still inclined to believe the findings of the Chapter 9 institution. He asked if AGSA would report back to the Committee after taking into consideration all that the Department had submitted.

The Chairperson asked the Portfolio Committee to agree to wait for feedback from the AG as it had been mentioned that the R44 million of fruitless and wasteful expenditure, correctly stated, would remain until the AG had gone through all the submitted documents and cleared the amount. The documents would be shared with the Portfolio Committee at a later stage.

Ms N Tarabella-Marchesi (DA) said that under normal circumstances, the Department should have completed an internal audit before the Chapter 9 institution made the large audit. She asked why the Department had had to outsource a company to perform the audit. Did the strengthened internal audit mean that external companies would not be hired to audit the DBE’s finances in future?

Mr Mnguni believed that to oversee a role correctly, the correct information was required. He asked what the DBE and AG meant by having a policy incorrectly approved.

Ms Mokoto said that the Portfolio Committee had to commend the DBE for correctly responding to the matter presented by the AG after the findings had been issued. She felt that a report to the Portfolio Committee was necessary after the AG had concluded the investigation of the documents received.

Mr Mweli appreciated the Committee’s concerns, but did not agree that the external audit had been conducted to contradict the findings by the Office of the Auditor General. When the finding was made, the DBE had accepted it. However, having conducted an internal audit, it had the view that the amount disclosed was incorrect. The DBE had been unable to provide supporting documents at the time, and so the R44 million had had to be disclosed as it was. The external audit could have confirmed the findings by the AG, as the AG had strengthened the report from the audit.

The Chairperson asked about the findings in the reports from the provincial departments, and  specifically whether Limpopo and the Eastern Cape were moving towards having clean audits.

Ms Nkau said that the Department had needed to hire the company to conduct a thorough investigation and help provide supporting documents.

Mr De Haan said that a proper review would be provided in July. The R44 million was not yet cleared, and when it was the Department could give a proper presentation. He said that during a meeting with the Chairperson, the continuous errors found in the Limpopo and Eastern Cape audit reports had been discussed. In both provinces, the auditors for the provincial departments had said that there had been a lack of documents in the report. He had asked whether the documents concerned new or old matters, and the auditors had said that it was a combination of both. This had led to the conclusion that there was a lack of consequence management. There had also been four chief financial officers within the past two years, which also meant that there had been no consistency within management. The control environment had not been constant.

The Chairperson was pleased with the discussions and the spirit that the DBE and AGSA had embraced during the meeting. She requested a quick briefing on the Mpumalanga and Limpopo situation before proceeding with the quarterly report.

Report on Mpumalanga and Limpopo crisis

Mr Mweli said that the crucial member for this presentation had not yet arrived, based on the initial order on the agenda. However, he would provide a short update on the unrest taking place in Limpopo and Mpumalanga, which had been of concern. He had been informed that on 9 May, the Portfolio Committee would be receiving an update on the status of the programme. He said that there had been intense disputes between the municipality and the communities in Bushbuckridge, Mpumalanga and Vuwani, Limpopo. In Vuwani, the community wanted to return to the old municipality. Hope was fading faster than expected, and he felt that the Department in Vuwani was back to where it had begun. There was no learning at all taking place in Vuwani. The DBE was trying to make provision for grade 12 learners to attend classes between Friday afternoons and Sundays so that the learners would be able to write the final year exams. This was not an implication that the grade 12 learners were more important than other students, but he felt that it would be necessary to ensure that the learners had the opportunity to pass their matric. An interim committee meeting would also be held, and the Minister would attend. Further feedback would soon be given to the Members of the Committee. On the other hand, the schools in Bushbuckridge, Mpumalanga were once again functioning. The Member of the Executive Committee (MEC) had managed to restore peace within the community, and learning in the schools had resumed. A catch-up programme during the volatile environment would be required. The schools would be using a similar programme which had helped Vuwani in Limpopo the previous year.

The Chairperson was disappointed to hear about the incident, and hoped that the matter would be resolved in the meeting which had been set up.

Discussion

Ms Tarabella-Marchesi felt that the issue was puzzling, because when the agreement between the ANC and Independent Electoral Commission (IEC) in Matatiele was concluded, it had been handled with care. She asked why this issue was not being taken seriously. Why were the children not taken into consideration? She asked whether the lack of political involvement in the situation within the schools meant that the matter would not be handled as well as the government had done in Matatiele.

Ms H Boshoff (DA) asked whether the DBE would be ensuring that there was adequate transport to take learners to schools to attend the catch up programmes on weekends. She had recently been to Mpumalanga and felt that the situation in Bushbuckridge was still very volatile. She also asked if transport would be made available to the learners in Bushbuckridge to attend classes. Had a plan of action had been put in place to ensure that learners arrived at the school?

The Chairperson stressed that it would be hard to separate education from politics, and that the two incidents mentioned by Ms Tarabella-Marchesi were not similar. She also protected the Director General from answering the questions which Ms Tarabella-Marchesi had raised.

Mr Mweli said that he would discuss the situation with the correct people -- those who had been present throughout the crisis. He assumed that where transport was needed, the catch-up programme would ensure that it was available. Resources would be provided to ensure that the students were fed. He said that the report that schools had been stable had been given by one of the Department’s officials, Mr Mhlanga, whom he had met at a funeral in Mpumalanga. However, he would be willing to verify the information.

Ms Boshoff said that she had personally travelled to Mpumalanga and had spoken to several teachers as well as headmasters, who had given a different report. She asked the Director General to mention when he was quoting feedback he had been given by other Departmental officials.

The first session was adjourned.

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