Departments of Cooperative Governance and Traditional Affairs and entities Audit Outcomes: AGSA briefing

Meeting report

Mr K Mileham (DA) asked if there was a plan to get the Commission for the Promotion and Protection of the Rights of Cultural, Religious, and Linguistic Communities (CRL) to address issues relating to the comments made by the Chairperson about the events at Ngcobo in the Eastern Cape. Was it also possible for the Committee to get a briefing on the exposure of municipalities to the Development Bank of Southern Africa (DBSA)?  

The Chairperson said the CRL would be invited to appear before the Committee in the following week, and the Department would also be invited.

Mr Mileham said the National Treasury should also be invited.

The Chairperson said there was a need to start the discussion with the Commission, and then invite the Director General of the Department and an official who specialised in local government at the Treasury.

COGTA Portfolio: AGSA report

Ms Connie Myburgh, Business Executive: Auditor General of South Africa (AGSA), said that the purpose of the presentation was to brief the Committee on the performance and comparison of the audit outcomes on the annual performance reports of the COGTA portfolio, to enable the Committee to perform its oversight duties.

All the entities and departments had made significant improvement between the 2015/16 and 2016/17 financial years, based on the usefulness and reliability assessment for selected programmes. The departments and entities listed were the Department of Traditional Affairs (DTA), the Municipal Infrastructure Support Agency (MISA), the South African Local Government Association (SALGA) , the CRL, the Department of Cooperative Governance (DCoG) and the Municipal Demarcation Board (MDB).

In the 2016/17 financial year, there had been material findings for DCoG in Programmes 3,5 and 6. The DTA had no material findings reported for Programmes 2 and 3, both for reliability and usefulness. MISA had no material findings recorded for usefulness, but had recorded material findings for reliability under Programme 2. SALGA and CRL had no material findings for usefulness and reliability for all the objectives that were assessed. The MDB had material findings under usefulness for Programme 1.

Ms Myburgh said one of the challenges noted by AGSA concerning the departments and entities was that they were not specific in defining the activities around their objectives, which led to difficulty in establishing the usefulness of their indicators. She recommended that the departments should work on improving their internal processes, particularly the review and control processes which were important for them to meet their targets in terms of usefulness.  Although overall performances for both reliability and usefulness in the 2016/17 financial year had improved over the performances for 2015/16, the outcomes percentages for 2014/15 and 2016/17 had been the same, because there had been retrogression in the 2015/16 financial year

Discussion

Ms B Maluleke (ANC) asked why there was no outcome indicated for Programmes 1 and 2 for DCoG.

Mr Mileham commended the preciseness of the presentation, and thanked AGSA for saving time. He asked if AGSA had confidence in its audit outcomes, because there had been a report that SALGA was manipulating its books. He asked if AGSA checked for the necessity of the indicators submitted by the departments, or if it simply measured the indicators. He asked how useful the key performance indicators (KPIs) were for determining the effectiveness of these indicators.

Ms Myburgh said Programmes 1 and 2 were not selected for assessment, and the programmes without outcomes were also not selected. With the methodology used by AGSA, it did not audit 100% of the programmes, so only the more important programmes were audited.

Ms Maluleke said though the programmes were not audited, was it possible to show if there had been improvements in programmes that were not audited?

Mr Mileham asked if AGSA checked if there were improvements from the previous year in programmes that were not selected for auditing.

Ms Myburgh said the DCoG had gone through a restructuring between 2016 and 2017. This had led to a change in the programme structure, which had also influenced the choice of programmes selected for auditing.

Mr N Masondo (ANC) said there was a need to understand service delivery in the performance of all the programmes. It was important to measure efficiency and how resources were being utilized, and the achievements of the entities. He asked if the progress indicated denoted service delivery.

Ms Myburgh said some of the audit reports were done by contractors. DCoG, MISA, DTA and the MDB were done by AGSA. SALGA was done by KPMG, and CRL was done by another auditing firm. The qualities of the audit and the opinions were reliable because AGSA took responsibility for the audit and the audit opinion. AGSA was a part of the review and ensured that the opinions were appropriate. Also, AGSA ensured that the indicators aligned with the mandate and how it was implemented.

Ms Stefanie Weidem, Manager: AGSA, said the usefulness check ensured that the processes were clearly defined and that the indicators were detailed so that the objectives could be measured.

Ms Myburgh said the mandate of the AGSA was to express an opinion in terms of the reliability of the information provided in the audit process, and it could not determine to what extent service delivery was achieved.

Ms Maluleke expressed concern that the meeting was meant to present the audit outcomes, but the concentration had been on the annual performance plans (APPs) for 2016 and 2017. She asked for an overall presentation of the audit outcomes for all the entities.

Mr Mileham said he was concerned that there was no one from the Department, the MDB, SALGA or any of the entities to explain why the issues mentioned in the report existed. Also, he commented that DCoG focused on local government, but there was no mention of provincial government in its APP. He asked for clarity on who should look after the provinces.

The Chairperson said the last question asked by Mr Mileham had been political. The question should be raised when the Department appeared before the Committee. The Committee had to deal with the Department and ask why it had concentrated on the local government. Also, the Committee had not focused on the need for DCoG to include the provinces in its plans. He concluded that it was important for the DCoG to coordinate the entire sphere of government.

He asked the AGSA to make its closing remarks.

Ms Myburgh said DCoG had received a qualified opinion in 2016/17, basically because of the Expanded Public Works Programme (EPWP), irregular expenditure and non-compliance in the supply chain. The DTA had been clean, with no findings, for the first time. MISA was unqualified, with findings on reliability for Programme 2 and non-payment for 21 days. SALGA and CRL were clean. AGSA would send a report on the audit outcomes to the Committee if it deemed it necessary.

Ms Maluleke said the information provided would not assist the Committee with its oversight. It would be better if the shortcoming of the entities were available in the report. However, she thanked the delegates from AGSA and said that the information provided would provide a basis for comparison with the 2017/18 audit outcomes.

Committee matters

Mr Mileham said the assertion by the chairperson of the CRL, Ms Mkhwanazi-Xaluva, that Parliament was responsible for the cult killings in Ngcobo, was not fair to the Parliament. It was important for her to know that Parliament had a constitution that it must uphold.

The Chairperson said the Minister had intervened by discussing the issue with Ms Mkhwanazi-Xaluva. He said she would be meeting with the Committee next week, and encouraged Members to engage with her in a friendly manner.

The meeting was adjourned.