The 2017/18 Quarter 4 report showed great progress towards the achievement of the six Strategic Outcome Oriented goals envisaged by the 2014-2019 Strategic Plan of the Fifth Parliament. Of a total of 19 performance indicators, only five have not met the targets. One of these indicators is for the timely tabling of governance documents. Two of these indicators deal with client satisfaction in Programme 4, which were marginally below target. The fourth below-target indicator dealt with the percentage of Population Participating in Parliamentary processes. The fifth indicator was for the integrated services strategy implementation. This showed a marked improvement in performance from previous quarters and previous financial years. The emphasis of 2017/18 has been on optimally allocating their resources to ensure performance improvement. The Acting Secretary to Parliament outlined the financial performance of its five programmes.
The Committee requested a detailed report on all the accruals and a breakdown of expenditure on the Women's Conference. A parliamentary committee chairperson was not happy with the R101m underspend on staff salaries surrendered to Treasury as her committee had been without a content advisor since 2016. Members asked for an update on in-sourcing of cleaning and catering; what had happened to the Legislative Sector Bill; what was procured by the internal audit committee as there is overspending; what the delays were in the procurement of the audit software; why four political parties (ACDP, AIC, ANC, UDM) did not receive funding transfers; why Parliament had not set up a Treasury Advice Office; why the Offices of Speaker and Chairperson have no performance indicators; how value for money is ensured if Parliament’s R2 billion budget has so few performance indicators; how to ensure financial statements are submitted in time; why there is under-expenditure in the Office of the Institutions Supporting Democracy (OISD); why there was 100% achievement for legal advice yet Parliament has lost so many legal battles.
Ms Penelope Tyawa, Acting Secretary to Parliament, informed the Committee the 2017/18 Q4 report showed great progress towards the achievement of the six Strategic Outcome Oriented goals envisaged by the 2014-2019 Strategic Plan of the Fifth Parliament. Of a total of 19 performance indicators, only 5 have not met the targets. One of these indicators is for the timely tabling of governance documents. Two of these indicators deal with client satisfaction in Programme 4, which were marginally below target. The fourth below-target indicator dealt with the percentage of Population Participating in Parliamentary processes. The fifth indicator was for the integrated services strategy implementation. This showed a marked improvement in performance from previous quarters and previous financial years. The emphasis of 2017/18 has been on optimally allocating their resources to ensure performance improvement. She outlined the performance of the five programmes.
Programme 1: Strategic Leadership and Governance
This programme has performed consistently throughout the 4 quarters of the year, with 2 out of 3 indicators meeting target. The programme has spent 95% of its R105.334m annual budget. The Office of the Speaker spent 96% of the R42.529m annual budget. The 7% overspending in Q4 is due to invoice payments for services rendered in Q3 but paid during Q4. The variance of R1.907m is a result of two invoices for international trips not yet received and paid as well as a favourable exchange rate. Invoices for services rendered would be accrued for in terms of Standards of Generally Recognised Accounting Practice (GRAP) and the unspent funds would be available for spending in 2018/19 in terms of section 16(2)(b) of the FMPPLA.
The Office of the NCOP Chairperson has spent 94% of the R37.567m annual budget, resulting in a variance of R2.312m or 6%. The 4% overspending for Q4 is due to invoice payments for services rendered in Q3 but paid during Q4. The R2.312m variance to date is as a result of invoices for international trips not yet received and paid as well as the strength of the exchange rate.
The Parliamentary Budget Office has spent 96% of its R16.060m annual budget. The 4% variance is as a result of a planned international conference being cancelled.
The Office of Institutions Supporting Democracy spent 99% of the R9.178m annual budget. The underspending of R1.090m or 34% for Q4 is due to the virement to cover anticipated overspending as indicated during Q3.
Programme 2: Administration
Programme 2 has sustained a high level of performance from Q3 to Q4. In Q4, all four indicators met target. Compliance with prescripts and regulations has maintained 100% performance from Q3 to Q4. The Q3 report and financial statements for December, January and February were all submitted timeously. The administration programme has spent 82% of the R175.634m.
The Secretary’s Office spent 75% of the R19.862m annual budget (75%). The low spending is due to planned activities put on hold. The unspent funds would be available in 2018/19 financial year in terms of FMPPLA.
The Finance Management Office spent 94% of the R51.088m annual budget. The R1.624m overspending for Q4 is due to invoice payments for services rendered in Q3 but paid during Q4. The R3.195m underspending to date is as a result of resignations during the year as well as the investigations on use of funds which did not happen for the financial year.
Internal Audit has spent 75% of the R14.605m annual budget resulting in an underspend of R3.721m. The R107k overspend in Q4 is due to invoice payments for services rendered in Q3 but paid during Q4. The R3.721m variance for the year is due to delays in the procurement of audit software, delays in the finalisation of the competency framework and the Internal Audit maturity assessment, and resignations during the year.
Strategic Management and Governance spent 99% of the R17.996m annual budget. The high spending for the quarter is due to invoice payments for services rendered in Q3 but paid in Q4. The Registrar of Members’ Interests spent 98% of the R1.453m annual budget.
The Legislative Sector Support 68% of the R40.182m annual budget. The low spend is a result of cancelled sector programmes and payment of study fees for Members of Parliament done only in April 2018. The unspent donor funds would be available for 2018/19 in terms of the FMPPLA.
Spending for Projects is 78% of the R30.418m annual budget. The low spend is due to invoice payments for services rendered by 31 March 2018 not yet received and savings of about R2m on SONA. All unpaid invoices for services rendered by 31 March 2018 would be accrued in terms of the Standards of Generally Recognised Accounting Practice (GRAP). The unspent funds would be available in 2018/19 in terms of the Act.
Programme 3: Core Business
Core Business showed improved performance from Q3 to Q4. This programme has three performance indicators, of which two were achieved in Q4 and one which did not meet the target. The overall average performance for timeliness indicators is improving over time and the service charter indicator has met its target of 95% timeliness in Q4. Core Business spent 96% of the R563.976m annual budget.
There is no spending within the Deputy Secretary: Core for Q4. 118% or R1.767m was spent against the annual budget of R1.500m, resulting in overspend of R267k. The expenditure relates to the Women’s Conference as more delegates turned up with additional catering and accommodation costs.
The National Assembly spent 95% of the R35.147m annual budget. The variance is due to printing invoices received but not paid for as at 31 March 2018. All unpaid invoices for services rendered by the 31 March 2018 would be accrued in terms of GRAP. The unspent funds would be available in 2018/19 in terms of the Act.
The National Council of Provinces spent 93% of the R47.688m annual budget. The overspending in Q4 is due to invoice payments for services rendered in Q3 but paid during Q4. The R3.194m underspending is as a result of outstanding invoices for the Taking Parliament to the People in the Eastern Cape late in March 2018 which were not received and paid by financial year-end.
International Relations and Protocol spent 98% of the R46.989m annual budget. Core Business Support spent 96% of the R274.937m annual budget. The underspend is as a result of invoices for services rendered in March 2018 but not received and paid, resignations and delays in filing vacant critical positions as well as outstanding legal fees invoices.
Knowledge and Information Services spent 98% of the R157.715m annual budget. The overspending for Q4 is due to invoice payments for services rendered in Q3 but paid during Q4.
Programme 4: Support Services
Programme 4 has five indicators which are all annual. Preliminary results indicate that three indicators have met the target. Two indicators on client satisfaction marginally missed the target. One client satisfaction survey was conducted by the Human Sciences Research Council. The other client satisfaction survey relates to household services. Performance was 0.3% below target. Support Services spent 90% of the R357.588m annual budget.
The Deputy Secretary: Support Services spent 99% of the R357.588m annual budget. Human Resources spent 96% of the R59.280m annual budget. The 4% overspend is invoices budgeted for during Q3 but paid during Q4.
Parliamentary Communication Services spent 85% of the R65.006m annual budget. The variance is a result of negotiating low rates with service providers which resulted in savings and resignations during the year.
Information Communication and Technology spent 88% of the R82.186m annual budget. The underspend is a result of computer equipment purchased and delivered in March 2018 and invoices not received and paid, as well as delays in appointments, and resignations. All unpaid invoices for computer equipment received by the 31 March 2018 would be accrued in terms of GRAP.
Members Support Services 78% of the R12.177m annual budget. Underspend is due to delays in the filling of vacant positions. Institutional Support Services spent 92% of the R135.589m annual budget. Underspend is a result of the delay in implementation of the socioeconomic survey, delay in the replacement of Parliament’s fleet as well as resignations during the year.
Programme 5: Associated Services
This programme has four indicators, of which three met the target and one did not (integrated services implementation). Associated Services spent 99% of the R672.127m annual budget. Spending on Members’ Facilities which relates to Members’ entitlements in terms of the Members Handbook and medical aid contributions for former Members of Parliament and Provincial Legislatures is 98% of the R238.171m annual budget. Spending on Transfers to Political Parties represented in Parliament for 100% of annual budget.
Ms Tyawa, in her conclusion, stated that Performance in Q4 shows marked improvement from the previous quarters and the previous financial year. However, indications are that they would continue to operate in a constrained fiscal environment that impedes service delivery. They would continue to look for ways to improve performance through efficiency initiatives and innovation. The drive to fill funded critical positions is moving forward with urgency whilst bearing in mind medium to long-term sustainability of the balance sheet. The allocation of institutional resources would focus on the strategic priorities.
Ms V Mente (EFF) remarked that the Minister of Public Service and Administration recently stated that spending on capital expenditure was not in line with the planned move of Parliament to Pretoria. She asked for an update on in-sourcing of cleaning and catering as there was underspending in Compensation of Employees (CoE) which means there is no willingness to employ people. What was procured by the internal audit committee as there is overspending there? If Members are not responding to surveys, she asked why Parliament is not making use of the Parliamentary Monitoring Group (PMG) services to assist because it attends all the committee meetings of Parliament.
Ms Tyawa explained that the research Parliament is undertaking is very specialised. That is why they issue an open tender. They then choose the right company with the right methodology and national footprint to do the research surveys. They are aware they have under-expenditure on CoE. The staff of Parliament is young and mobile. People come and go. The Parliament continually fills vacancies, as a result. They have 122 positions to be filled. Filling vacancies would always be a factor for Parliament. There is a lot of investment on compensation of employees. Money for unspent Goods and Services returned to Treasury would now be deployed to CoE, but that process still has to be implemented. Parliament has to establish its own data on the impact of relocation. The Parliament needs to do its own socio-economic impact study, but that has been delayed. There is a need for a scientific data. It does not matter where Parliament goes because its features would remain the same.
She replied that over-spending on internal audit is the result of the money spent on the Auditor-General and for buying a tool to be used internally. They have done an assessment on insourcing catering and cleaning. For catering, they have made sure they follow HR policies on short term positions. Cleaning would follow the same processes but in a systematic manner. The proposal is to be presented to the executive authority. They do not want to just absorb people, but want to follow the policies of the institution when doing that. Already, there are cleaners in Parliament that are in the A1 bracket, and if they bring in new ones, those have to be paid as the current ones employed by Parliament. This was an on-going process.
Mr J Steenhuizen (DA) asked for an update on the Legislative Sector Bill. He requested an itemised report on the expenditure on the Speakers' Forum. He asked about the delays in the procurement of the audit software. What is the cause of the variance in transfer payments to political parties and measures to mitigate against that.
Ms Tyawa explained that the expenditure on Speakers' Forum comes from the EU Fund. It brings 10 legislatures together to share knowledge on common practices. She reported that the internal audit software has been procured and installed already. She said the Legislative Sector Bill is still with the provinces.
Mr Manenzhe Manenzhe, CFO: Parliament, reported that the variance in transfers to political parties refers to money that has not been paid to four political parties because of non-compliance. The affected political parties are the ACDP, AIC, ANC, and UDM and they have been informed.
Mr Steenhuizen stated it is highly unlikely that the Legislative Sector Bill would see the light of the day because they have not been given the briefing documents on what it entails and wants to achieve.
Mr M Waters (DA) asked into which programme the Parliament Treasury Advice Office fits into in order to show compliance with the law. He pointed out that some divisions such as the Offices of the Speaker and NCOP Chairperson have no performance indicators whereas the Parliamentary Budget Office has. He asked how value for money is ensured if there are very few performance indicators, considering that Parliament is allocated a R2 billion budget. He asked why payments for the Women's Conference are reflected in the following quarter – was this a result of outstanding invoices?
Ms Tyawa replied that certain indicators were at an operational plan level. What they are reporting on is a high level input on APPs. She stated they need to do a strategic plan with the Committee so that it could see how they plan and what they want to increase and achieve. They now measure, for example, the time it takes for the Committee to produce minutes and to get them processed. They used to measure audit reports, but that has been changed altogether. They now focus on outcomes. If they measure the number of Exco meetings, they need to measure the outcome of the Exco meetings against the APP. She stated the Women's Conference had an over-expenditure of R1m and the payments reflect on the quarter to date.
Adv Modibedi Phindela, Acting Deputy Secretary to Parliament, explained that the Act does not state that the Treasury Advice Office should be established. There is no law that states it should be established.
Mr Waters remarked the OISD has no performance indicator. Big budgets are spent on programmes that have no performance indicators. The establishment of the Treasury Advice Office is necessary for good governance.
The Chairperson agreed with Mr Waters, saying at some point they need to know if there is value for money on budget allocations. The Committee should be given a breakdown of expenditure on the Women's Conference.
Ms E Coleman (ANC) asked what could be done to ensure financial statements are submitted on time – she was not sure about the time line. She asked why there is under-expenditure in OISD and if the variance in the Office of the Speaker is caused by travel-related invoices only. She requested the Committee be furnished with the accruals for the year-end and for what they were.
Ms Tyawa explained that the FMPPLA states that signed reports have to be submitted within five days. This was an area that needs to be addressed and they have discussed it with the legal office. They find it impossible to get documents signed off within five days in Parliament. The variance in the Office of the Speaker was caused by delayed payments according to GRAP.
Mr Manenzhe explained that the accruals were standing at R30m as of end May 2018. They are for travelling done in January, February and March. They are trying to ensure there are no unpaid invoices from suppliers at year-end. Travel agents have been asked to submit their invoices timeously in order to complete outstanding payments. He reported that OISD requested that money be shifted to other programmes.
The Chairperson remarked that the explanation given by Parliament proves the necessity that the Treasury Advice Office should be established.
Ms Coleman was unhappy that it appears no one knows about what the accrual policy of Parliament states. All its programmes appear not to know the value of invoices that still need to be settled for 2017/18. She is not pleased with the 5-day submission period for financial statements in December and Parliament needs to come up with alternatives. The R101m CoE surrendered to Treasury also does not make her happy as her committee, Portfolio Committee on Economic Development, has been without a content advisor since 2016.
Mr Steenhuizen said he sees no reason why documents cannot be signed in time when an executive authority is not in Parliament physically, considering that Parliament has got all the means and apps to authorise a signature. The documents can be signed electronically as long as there is verification by the executive authority.
The Chairperson stated he did not agree with the explanation on the accrual story. The Committee must be given a detailed report on the list of all the accruals, and then do the reconciliation later.
Mr N Gcwabaza (ANC) remarked that the accruals were not consistently spread over the quarters and it is not clear what steps Parliament is taking. The accruals are going to get into the new financial year. The Committee is not told whether the accruals would be rolled over or accrued.
Mr C De Beer (ANC) suggested accruals should be noted in the quarterly financial reports and not to inform Committee about them only when the annual report has been presented to Treasury.
Ms Tyawa replied they would try to get the financial statements signed on time and the legal division is busy trying to get this matter sorted out, but it seems to be not moving forward. She indicated the Treasury Advice Office is a matter they have been talking about with the Finance Minister and DG. On accruals, she said they always do an analysis of invoices to check for irregular and fruitless and wasteful expenditure. The CoE underspend surrendered to Treasury is a result of direct charges. They have reasons suppliers were not paid within 30 days and the travelling processes were done manually. They were now looking at a system where suppliers are going to be paid in time.
The Chairperson said it is unacceptable to have a system where people are blaming each other. Suppliers are complaining about slow payment and the effect on their cash flow, yet there is money that Parliament is keeping which could be used to pay them on time.
Mr Waters suggested the Committee must be given a breakdown on costs for Q3 and 4 because it appears there is something that makes these two quarters not to talk to each other.
The Chairperson asked for clarity on the money that is with Nedbank and why it is there.
Mr Manenzhe explained if there is money not paid out from their account, the money was transferred to the call account where it did not accumulate much interest. Thus it was transferred to Nedbank to yield more interest.
Ms Mente asked for clarity why the bottom lines presented quarterly give a totally different figure to the annual budget. The annual reported total is different to the totals of the quarterly figures. She said it is abnormal for the PBO to exceed targets by 200%. It could be that their targets are too low or it has gained more people.
Mr Manenzhe stated the R129m budget cut has dropped the bank balance and that has affected the interest.
Ms Tyawa explained that the PBO produces reports for the four finance parliamentary committees. It does not deal with Parliament’s administrative budget. They are professionals in that unit. Perhaps when the PBO started it set its targets too low. If that is the case, it means the targets must be revised.
The Chairperson asked why the Core Business programme reflected 100% achievement for legal advice yet Parliament has lost many legal battles.
Ms Tyawa replied that the 100% achievement refers to the turnaround time and support given to Members. It does not refer to the cases lost or won. They only measure is the provision of legal services within six days.
The Chairperson remarked that this means there is no value for money because it is quantity that is measured, not quality. He asked why donor funding is fluctuating and there are discrepancies.
Ms Tyawa replied that all the Legislative Sector Support (LSS) funding is from the donor funding.
The meeting was adjourned.
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