DPME, NYDA & Statistics SA 2017/18 Annual Reports; BRRR recommendations progress report

Public Service and Administration, Performance Monitoring and Evaluation

09 October 2018
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

Annual Reports 2017/18

The Auditor-General of South Africa (AGSA) stated that Statistics South Africa’s (Stats SA) audit outcomes for financial statements have been unqualified with no findings for the 2017/18 financial year and that audit financial statements were submitted on time. Findings on annual performance reports were submitted with no material misstatements for the current financial year, 2018/19. In the current financial year, the R57.3 million unauthorised expenditure was a result of overspending on compensation of employees.  The R58 000 fruitless expenditure was a result of interest on back paid salaries and travel related costs.  The R36.2 million on irregular expenditure resulted from contravention of Supply Chain Management (SCM) legislation. On supply chain, three quotations were not obtained. The vacancy rate of key senior management has increased and is the root cause SCM contraventions. AGSA recommends a follow up with the department on progress made on the audit action plans put in place to address the 2017/18 audit outcomes and continuous discussions/engagements through the Minister should be held with National Treasury regarding budget cuts on compensation of employees’ and unfunded mandates.

The Committee asked what the impact of unfilled vacancies was, and what monopoly means, and stated that the report is inconsistent and lacks empirical evidence.

The National Youth Development Agency (NYDA) and the Department Planning, Monitoring and Evaluation (DPME) both have unqualified audits with no material findings. There was no unauthorised expenditure for the vote.  Fruitless and wasteful expenditure amounted to R340 000, with R249 000 incurred by DPME and R91 000 incurred by NYDA. This was a result of no shows. Irregular expenditure incurred for the year was a result of contravention of SCM legislation and amounts to R277 000, with R274 000 from DPME and R3000 from the NYDA. Irregular expenditure decreased from R640 000. Both have maintained the internal control on sound financial reporting.

The Committee asked why DPME got such a low percentage on contract performance measures and monitoring.

79% of Stats SA’s organisational performance targets were achieved as scheduled. 12% were not achieved, 4% were achieved early, and 5% were achieved late. On financial performance there was an over expenditure of 101%. Goods and services amounted to R39 million, compensation of employees amounted to R57 million and total over expenditure was R18 million. On HR performance 53.5% of staff are female and 46.5% are male. Staff with disabilities are at 1.2%. The sick leave average is nine days per staff member. There were 104 terminations, and one Statistician-General was appointed.

The Committee asked; whether any measures have been taken to protect field workers considering the land expropriation without compensation matter; at which level the 104 employees who left were employed, clarity on the state of readiness for census 2021; and if Stats SA was consider stopping any projects because of budgetary cuts.

The NYDA on financial performance, 98% of the economic participation was used on education, and 97% was used on skills development, on national youth services 100% was used, on research and policy 78% was used, administration utilised 99% of its budget and CAPEX used 99%. On human resources, 60% of staff are female and 40 are male. The agency has two disabled employees. For programme 1, the number of youth owned enterprises supported through Grant Programme is 801. The number of beneficiaries supported with key fundamentals for success offered by the NYDA is 21 808, and the number of jobs created and or sustained through supporting entrepreneurs and enterprises is 4071.

The Committee asked how sustainable the youth owned enterprises are and whether it would not be better to equip the youth with matric qualifications as opposed to giving them low skills jobs.

The DPME vacancy rate of 10% was not achieved due to internal promotions, external department promotions, and resignations. A recruitment plan has been developed and approved by management and improvement plan is being implemented to reach a target of 10% by the end of quarter three of 2018/19.  Actual vacancy rate for quarter four is 21.4 % from 25.5% in quarter three in 2017/18. Vacancy rate for quarter of 2018/19 was 17.9%. The current vacancy rate is 13%. On human resources, 40.7% are male staff while 59.3% are female.  On race, 75% are African, 3.8% Coloured, 10% Indian, and 11.3% are White.

The Committee asked who should be held accountable for the implementation of the goals targeted to be achieved by 2030.

Meeting report

Briefing by AGSA on Stats SA

Ms Keamogetswe Ruters, Senior Manager, AGSA, took the Committee through the presentation. The Auditor-General of South Africa (AGSA) has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen the country’s democracy by enabling oversight, accountability, and governance in the public sector through auditing, thereby building public confidence. Stats SA’s audit outcomes for financial statements have been unqualified with no findings for the 2017/18 financial year and audit financial statements were submitted on time. Findings on annual performance reports were submitted with no material misstatements for the current financial year.

On internal control drivers there was regression as well as with leadership and financial performance management which are of concern. Governance is good and has remained the same. There was no material uncertainty on whether Stats SA can continue to operate in the future.

For the current financial year, the R57.3 million unauthorised expenditure was a result of overspending on compensation of employees.  The R58 000 fruitless expenditure was a result of interest on back paid salaries and travel related costs.  The R36.2 million on irregular expenditure resulted from contravention of SCM legislation. On supply chain, three quotations were not obtained. The vacancy rate of key senior management has increased and is the root cause.

AGSA recommends a follow up with the department on progress made on the audit action plans put in place to address 2017/18 audit outcomes and continuous discussions/engagements through the Minister should be held with National Treasury (NT) regarding budget cuts on compensation of employees’ and unfunded mandates. 

Discussion

Mr S Motau (DA) asked how AGSA defines monopoly because it is a broad term.

Mr M Ntombela (ANC) asked what the impact unfilled vacancies created since departments had stopped filling them. He also asked what the consequences for non-compliance are, and how many officials were sanctioned.

Ms Z Dlamini-Dubazana (ANC) said the presentation lacks empirical evidence. The irregularities are based on 2011/12 tender issues. She asked if the AG must take five years to come up with an opinion because the report does not say anything about 2017/18. They are saying there was fruitless expenditure on supply chain, and this shows uncertainty because something must have happened for the AG to get to that opinion. The AG needs to be precise and not just say regression is based on legislation.

Ms Ruters responded that monopoly occurs when there is no competitor for example Eskom. When this happens, there is a high risk of corruption.

Material uncertainty refers to the financial health of the department.  From the work that AGSA has done, there is no foreseeable ability that the department will pay its debt within the next 12 months.

On the 2011/12 issue, it did not affect the current financial year.

The Chairperson asked AGSA why they cannot formulate theories. He urged them to speak specifically to the AG’s substantive matter and ensuring that departments are accountable.

Mr Risenga Maluleke, Statistician-General (SG), Stats SA said that Stats SA is unhappy with the delay to revert to the department by the AG with the final ruling so that it can engage the AG on it. This is to avoid situations where matters are finalised in the last minute.

Ms Dlamini-Dubazana said the opinion of the AG does not touch on what the SG is saying, so should apply their minds in what they are doing. She is unhappy with this inconsistent report with lack of evidence.

Ms Ntombela suggested the Committee sit with both the AG and SG and find a solution because this could damage the reputation of both entities.

Mr Motau said on the vacancy rate, his concern is that it is not a short-term problem and it might take a while to fill those posts. He asked what the impact is, and if there are contingencies plan in place.

Response

Ms Keamogetso responded on the comments by the AG on operations that it relates to predetermined objectives. It was not brought up because it is still part of international best practice. 

Mr Maluleke said that on the vacancy rate, it is easier to deal with voluntary severance, but some jobs need to be done, so specialists are required. Some department feel the impact.

The Chairperson said AGSA must stick to their constitutional mandate and allow other entities their independence.

Briefing by AGSA on DPME AND NYDA

Ms Dhana Naidoo, Acting Senior Mnager, AGSA, took the Committee through the presentation. Both entities have unqualified audits with no material findings. This has not changed over the years for both entities. Audit of financial statements, findings on annual performance reports on findings together with key legislation was unqualified for both the agency and DPME. 

On financial health, no material uncertainty exists as to whether the entities can continue to operate in future.

There is no unauthorised expenditure for the vote.  Fruitless and wasteful expenditure amounts to R340 000, with R249 000 incurred by DPME, and R91 000 incurred by NYDA. This was a result of no shows. Irregular expenditure incurred for the year was a result of contravention of SCM legislation and amounts to R277 000, with R274 000 from DPME, and R3000 from the NYDA. Irregular expenditure decreased from R640 000.

Both have maintained the internal control on sound financial reporting.

Discussion

Ms Dlamini-Dubazana said regarding the inadequate contract performance measures and monitoring on page 21, how does the DPME get such a percentage when it is monitoring other departments? She further congratulated the NYDA.

Mr Motau congratulated NYDA on another unqualified audit report.

Ms Mpumi Mpofu, Director-General, DPME, responded that the percentage is in relation to supply chain and not the department. This is also the department’s sixth clean audit, not fourth, so it is not a non-compliant department. Also, this issue was brought by the DPME to the AG. It is not something that the AG picked up on.

Briefing by Stats SA

Mr Risenga Maluleke, Deputy Director-General, Stats SA, took the Committee through the presentation. On organisational performance, 79% of targets were achieved as scheduled,12% were not achieved, 4%were achieved early and 5% were achieved late.

On statistical outputs published, 265 statistics were released. On digitisation, Paper Assisted Personal Interviews (PAPI) was conceptualised and tested to Computer-Assisted Personal Interviewing (CAPI). 95% of user requests were responded to, the website has two million visitors, and 350 000 documents were downloaded.

On financial performance, there was an over expenditure of 101%. Goods and services amounted to R39 million, compensation of employees amounted to R57 million and total over expenditure was R18 million.

On Human Resource (HR) performance, 53.5% of staff are female and 46.5% are male. Staff with disabilities are at 1.2%, the sick leave average is nine days per staff member, there were 104 terminations, and one Statistician-General was appointed.

Looking ahead for the next three years Stats SA plans to finalise legislative reform, manage quality statistics and integrate and modernise business processes.

Discussion

Mr Ntombela said considering the current situation of land expropriation, what contingency measure has been taken to protect field workers, at which level were the 104 employees who left the organisation, can they give clarity on the state of readiness for census 2021, and would Stats SA consider stopping some projects because of budgetary cuts.

Mr Maluleke responded that on census of commercial agriculture a media launch has been done to alert the farming communities of the census. They have worked with the field workers during the population census amongst others, so this will not be new. When people refuse to be numerated they can be taken to court and usually they get fined. In Agriculture, the size and ownership of the farm is looked at.

Mr Maluleke said Census 2021 is still in the preliminary stages and Parliament will be briefed at a later stage.

On cutting down projects, Stats SA looks at what is not feasible to do without money and see what is critical and prioritise that.

Briefing by NYDA Annual

Mr Waseem Carrim, Chief Executive Officer (CEO), NYDA, took the Committee through the presentation. For programme one, the number of youth owned enterprises supported through Grant Programme is 801. The number of beneficiaries supported with key fundamentals for success offered by the NYDA is 21 808, and the number of jobs created and or sustained through supporting entrepreneurs and enterprises is 4071.

On financial performance 98% of the economic participation was used, on education and skills development 97% was used, on national youth services 100% was used, on research and policy 78% was used, administration utilised 99% of its budget, and CAPEX used 99%.

On human resources, 60% of staff are female and 40% are male. The agency has two disabled employees.

On the job summit, a transport policy needs to be skewed towards new entrants and discouraged work seekers. Transport subsidies can have a measurable impact in boosting and sustaining employment. Access to broadband and the reduction of data costs are important. The high cost of data is a barrier for entry. Recognition of informal skills outside of matric qualification is critical to have mass absorption into the labor market. Recognition of internship programs as qualified experience is necessary to allow greater absorption and avoid young people moving from one job to another. Advertising of posts should state that they are ring fenced for young people between the ages of 18 – 35 and target rural unemployed youth.

Discussion

Mr Motau said regarding NYDA’s call to make jobs permanent even though the Extended Public Works Programme (EPWP) was designed to be temporary, is it not possible that only a handful would get permanent jobs. Mr Motau asked if it would not be better to help young people without matric certificates get matric, instead of giving them low-skilled jobs.

Mr Ntombela asked how sustainable are the youth owned enterprises? On gender and race, he asked who benefits the most.

Ms Dlamini-Dubazana said it is unfortunate that the Committee did not see the norms and standards contemplated on page eight. Regression for the agency is on IT, she asked how that married with the allocation NYDA made, and how it was possible that they failed to obtain three quotations.

Mr Carrim responded that there cannot be one programme that seeks to employ the youth. There should be other creative ideas of what can be done. The youth are suffering, and graduates do not get jobs because of stringent entry requirements. The President considered NYDA’s proposition that experience should not be part of the entry requirements. Companies do not consider graduates from Technical and Vocational Education and Training (TVET) colleges and NYDA proposed that companies start employing them. There should also be provision for youth from townships who cannot afford to attend interviews in town.

On sustainability of youth owned enterprises, some who were offered jobs after the mentorship programme are doing well, and young women are thriving.

On race and gender there is a 50/50 split between males and females.

On norms and standards, the document will be brought to the Committee for recommendations and additions.

The Chairperson said the regulatory regime makes it hard for the youth to get into business, and something must be done about this.

Briefing by DPME

Ms Mpofu took the Committee through the presentation. Programme one – administration has 17 targets for the financial year. 16 targets were achieved, one was not achieved. National planning and coordination have eight targets for the financial year. Six targets were achieved, and two were not achieved. Sector monitoring has four targets for the financial year. Three targets were achieved, and one was not achieved. National youth development has three targets for the financial year. One target was achieved, and two targets were not achieved.

A vacancy rate of 10% was not achieved due to internal promotions, external department promotions, and resignations. A recruitment plan has been developed and approved by management, and an improvement plan is being implemented to reach a target of 10% by the end of quarter three of 2018/19. The actual vacancy rate for quarter four is 21.4 % from 25.5% in quarter three in 2017/18. The vacancy rate in quarter one of 2018/19 was 17.9%. The current vacancy rate is 13%.

On human resources, 40.7% are male staff while 59.3% are female. On race, 75% are African, 3.8% Coloured, 10% Indian, and 11.3% are White.

Discussion

Mr Motau said that DPME must pin down to ensure that by 2030 the jobs that the Committee said it would create are created. If DPME fails, who would they hold accountable, and who would they credit when the goals are achieved.

Ms Mpofu said the responses will be sent to the Committee in writing.

The meeting was adjourned.

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