The Portfolio Committee on Women in the Presidency was briefed by the Department of Women and the Commission for Gender Equality on their Annual Reports and received a presentation by the Auditor-General of South Africa on the two Annual Reports.
The Auditor-General of South Africa found that the Department had made little progress over the year; however a key vacancy had been filled. There had been less irregular and wasteful expenditure than in other years.
Members were not satisfied with the progress of the Department and its senior management. Most of the questions asked required answers from the Minister and the Department itself. An urgent meeting for this to happen would be organised.
The Audit and Risk Committee’s findings concurred with everything said in the Auditor-General’s Annual Report and aided by giving more details.
The Members asked whether the Department could improve so as to make a tangible difference in the lives of women in South Africa.
The course of gender equality and transformation continued to face large obstacles that need collective efforts to combat. The Commission for Gender Equality had carried out and achieved some of the objectives as set out in the Annual Performance Plan (APP). The Commission had put in place effective internal institutional processes to ensure stability and certainty and through the collective efforts of staff had done justice to its mandate under testing budgetary constraints.
The Members commended the Commission for its work and achievements.
The Chairperson thanked everyone in attendance of the meeting. She gave the apologies for Members who were absent.
Briefing by Auditor-General of South Africa (AGSA)
Ms L Vermuelen, Senior Manager, AGSA, thanked the Chairperson for the opportunity to present. She explained that the AGSA had a constitutional mandate and, as the supreme audit institution of South Africa, it existed to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector through auditing. The role of the AGSA was to reflect on the audit work done to assist the Portfolio Committee in its oversight role of assessing the performance of its relevant entities.
During the process of the annual auditing, there were three main areas the audit looked at; these were the fair presentation and reliability of financial statements, the reliability and credibility of performance information for predetermined objectives, and the compliance with key legislation on financial and performance management. There were five different types of audit opinions that could be expressed but for the purposes of this presentation only two were relevant – unqualified opinion with no findings (clean audits) and financially unqualified opinions with findings.
Unqualified opinion with no findings:
- produced credible and reliable financial statements which were free of material misstatements;
- reported in a useful and reliable manner on performance as measured against predetermined objectives in the annual performance plan (APP); and
- Complied with key legislation in conducting their day-to-day operations to achieve their mandate.
Financially unqualified opinion with findings:
The auditee produced financial statements without material misstatements or could correct the material misstatements, but struggled in one or more area to
- Align performance reports to the predetermined objectives they committed to in APPs;
- Set clear performance indicators and targets to measure their performance against predetermined objectives;
- Report reliably on whether they achieved their performance targets; or
- Determine the legislation that they should comply with and implement the required policies, procedures and controls to ensure compliance.
Ms Vermeulen explained the accountability cycle in which accountability was assured by planning, doing, checking and acting. In terms of the Portfolio’s achievement on the plan-do-check-act cycle, little improvement was achieved. She gave a breakdown of the Department’s progress with regards to the categories defined in the accountability cycle. The DoW struggled to set useful performance indicators and targets for itself. The basic financial and performance management controls had regressed. However, critical vacancies in Chief Financial Officer (CFO) position were filled. The DoW was found to provide some assurance.
Ms Morongwa Mashinga, Manager, AGSA, gave more detail of the audit outcomes of the Department and the Commission for Gender Equality (CGE). The Department did not have a clean audit. There were no material adjustments made to the financial statements. The quality of performance reports of the DoW regressed but that of the CGE improved, which meant the quality of performance reports overall remained stagnant. There was an overall regression in compliance to legislation. There was a slight improvement in the irregular expenditure of the Committee as the amount was less than in the previous financial year. The audit outcome of the portfolio remained stagnant over the past four years. Both DoW and CGE received an unqualified audit with findings.
She elaborated on the quality of the financial statements, annual performance reports and compliance with legislation for both the DoW and CGE and compared the achievements of this financial year to that of the previous year. The status of internal control was determined by three categories; leadership, financial and performance management, and governance. Only in the area of governance was there a good rating whilst the other two areas had regressed by five percent. She said the first level assurance was only able to provide some assurance, while the second and third levels provided better assurance. These included CGE’s internal audit unit, the audit committee and the Portfolio Committee.
On financial health and financial management, she said that both organisations had more than two unfavourable indicators in the previous year. In this financial year, CGE was able to improve this rating to have two or less unfavourable indicators. There was no change within DoW. Whilst CGE managed to improve its financial health and reflected a new asset position and positive cash flow from operating activities for the 2017/18 financial year, concerns with the DoW remained. The Department had a high level of accruals at the end of the reporting cycle and the unauthorised expenditure incurred in the previous financial years continued to have a direct impact on the Department’s cash balance, causing it to remain in an overdraft position of R32m. She said closer attention needed to be paid to spending patterns, especially towards year end to ensure that the Department did not overspend its budget in future. She provided more in-depth details of the Department’s over expenditure on an annual basis since its establishment in 2014.
On Supply Chain Management (SCM), the most common findings were mostly at the DoW. The local content minimum threshold for local production was not adhered to, declarations of interest were not submitted and a preference points system was not applied or was incorrectly applied. Both the DoW and the GCE were found not to invite competitive bidding . No auditees had findings on non-compliance with legislation on consequence management.
She said management (accounting officers and senior management) did not respond to messages from AGSA with the required urgency to address risks and improve internal controls. Vacancies in key positions continued to be a contributing factor to findings raised. The CFO position at DoW was now filled, although it was towards the end of the financial year and therefore did not have a material impact in terms of the 2017/18 outcomes. The Department had completed commitments on investigations and consequence management which had to be finalised by the end of the financial year 2017/18 and work was still in progress regarding its commitments to integrated planning and Supply Chain Management.
AGSA recommended that the Committee must-
- request regular feedback on actions implemented to improve the financial health, budget management and control and turnaround plans/interventions (at least on a quarterly basis) and that the Department be pressurised to resolve the matter surrounding unauthorised expenditure.
- request management to provide quarterly feedback on status of key controls, especially around SCM and ensuring fair procurement processes at reasonable prices.
- continue to probe management on feedback regarding progress on implementation of recommendations for finalised investigations conducted.
- closely interrogate indicators and targets set by management to ensure that the indicators and targets address key issues pertaining to women, that need to be addressed by the Department based on its mandate.
Audit and Risk Committee (ARC)
Patricia Stock, a member of the ARC, gave a presentation on the Annual Report, the challenges and its recommendations. The ARC was an independent and non-executive committee appointed to provide oversight, advice and guidance on governance, risk management, and internal control practices/matters in the Department and thereby enhancing its transparency and accountability. The ARC consisted of five external members and had eight meetings during the financial year. The ARC concurred with the conclusions of AGSA on the annual financial statements and the performance information of the DoW. The DoW planned 27 performance targets for the financial year, 16 of which were achieved. This was a 20% increase in the achievement of planned performance targets from the previous financial year.
During the review of the Department, there was a challenge with the timing of the submissions. The Internal Audit Unit and Risk Management Unit had capacity challenges in implementing the planned projects. The Department had invoices from 2015/16 which required reconciliation to prevent double payments. It had inadequate human resource capacity to clear audit findings. There was no SCM Director and the SCM Deputy Director had been placed on precautionary suspension. The Department implemented all the processes relating to disciplinary cases and the cases could not be finalised within the prescribed time frame due to circumstance beyond the DoW’s control.
The policy framework for provision of sanitary dignity to indigent girls and women was developed and implementation was initiated. The Department did not have the capacity to analyse all components of the Nine Point Plan. As a result it selected four focus areas for analysis. An erratum to the APP, to ensure that the revision of the performance target was reflected in the APP, was not made. The AGSA qualified the achievement of the target since it did not cover all areas of the Nine Point Plan.
Four Country Reports for International Multi-lateral Forums were produced. However input from the Department was not received and the reports were based on inputs from the other departments. The performance of the Department was not improving and it recommended that management monitor the progress on a monthly basis and that the APP performance targets be realistic and avoided, where possible, targets which had external dependencies.
The ARC noted the efforts and commitment made by management of the DoW to ensure that the Department had and maintained corporate governance systems. In concurrence with the annual report, the ARC was not aware of any Standing Committee on Public Accounts’ resolutions and prior modifications to audit reports. The DoW did not have an Internal Control Unit. The Directorate: Internal Operations Efficiency did not have the capacity to address all internal controls aspects. The Internal Audit Unit did not have sufficient resources and skills to cover all areas. It was recommended that the Department request support from the National Treasury to review some of the areas such as Information Technology, Risk Management and SCM.
Progress was made in filling the critical positions like the Chief Risk Officer, CFO, internal auditors and more. The other positions which remain unfilled would be filled in the next financial year. The Department spent 99.9% of its budget for compensation of employees. Four employees were on precautionary suspension pending finalisation of the disciplinary hearings. The number of audit findings decreased from 77 to 66 when compared to the previous financial year. Poor expenditure management resulted in the irregular expenditure of R6.1m.
Briefing by Commission for Gender Equality
Ms Keketso Maema, Chief Executive Officer, CGE, said the Commission received an unqualified audit opinion.
The Commission received unqualified audits for all strategic objectives. There was under-reporting on radio engagements held in this financial year and this was subsequently corrected. The AGSA did not raise any material findings on this as far as the usefulness of the information provided was concerned. The audit results indicated an overall improvement from the previous financial year’s results.
CGE had four strategic objectives;
- Strategic Objective (SO) 1: To ensure the creation and implementation of an enabling legislative framework that promotes the attainment of gender equality.
- SO2: To protect and promote gender equality by engaging with relevant stakeholders to educate and raise awareness on issues of gender equality, to challenge patriarchal perceptions and stereotypes and take action against infringements of gender rights through the implementation of appropriate redress.
- SO3: To monitor state compliance with regional and international conventions, covenants and charters, that had been acceded to or ratified by the Republic and related to the objectives of the CGE.
- SO4: To build an effective efficient and sustainable institution that would fulfil its constitutional mandate on gender equality.
Ms Maema gave an overview of the performance with regards to the strategic objectives and elaborated on the achievements, findings and issues that were found in each performance indicator.
The performance for SO1 were:
- One follow-up report on recommendations made to various private sector companies on gender transformation investigation report of 2016
- One investigation report gender transformation in tertiary institutions
- One status report on gender policies and practices using the gender barometer
- Twenty submissions and an assessment report on women’s representation and decision making in the traditional sector
- One consolidated court monitoring report
- One report on women in correctional facilities
Two policy dialogues conducted at national
For SO2 the targets were:
- 720 complaints attended to in terms of CGE Complaints manual
- A report on gender mainstreaming workshops conducted
- Hold 135 outreach and legal clinics
- Four systemic investigations conducted (mining sector, decriminalisation of sex work, maternal health and transformation of the judiciary)
- Nine coordinated programmes with targeted stakeholders conducted in provinces
- A resource book on gender equality legislation developed
- 72 radio slots utilised
- Nine provincial reports produced on engagements with the traditional sector and religious sector
- 36 stakeholder engagements on gender issues.
There were also joint coordinated programmes with the LGBTI sector and chapter nine institutions.
For SO3 the targets were:
- Assessment Report written on the implementation of the African charter and localising Sustainable Development Goals
- Two assessments reports on the Convention on the Elimination of all Forms of Discrimination Against Women and on African Governance and Development Institute written
- Two reports written on attendance at international and regional events.
For SO4 the targets were:
- Involved in Litigation on Muslim marriages case and various equality court cases
- CGE’s 20 Year Review report developed
- Representation and Decision Making of Women in Traditional Leadership- a report which highlighted challenges for policy makers regarding the need to sensitise these institutions to the constitutional imperative for gender transformation
- Gender transformation reports which placed on the spotlight challenges of gender transformation in the mining sector, private sector and institutions of higher learning
- Africa Gender Development Index report, in collaboration with United Nations Economic Commission for Africa, which highlights gender mainstreaming engagements with a mining company and a radio programme.
Mr Moshabi Putu, CFO, CGE, presented on the financial management of CGE. He gave very detailed information on the annual financial statements for the period, which included a financial performance overview, the financial position as at the end of March 2018 and the cash flow statement for the period. For the corporate services overview, information on human resources, information and communication technology (ICT), corporate communications and risk management was given to the Committee. He also presented on the regularity of audit outcomes, the status of audit issues and action plans.
The Commissioner’s program incurred costs of R11.6m (or 9%) less than a budget of R12.7m. This saving arose mainly from vacancies which were only filled in the latter part of the financial period. The programme accounted for 14% of the total expenditure for the year. In comparison, the Corporate Services programme was set at 25% of the total annual budget and realised at 26% (R20.8m). The budget was over-spent by 7% mainly due to depreciation and amortisation which were not budgeted for, materialising at R1, 3m for the financial year. The core service delivery programme was budgeted for and realised at 60% of the total annual budget. The total expenditure for the programme at R47, 9m, exceeded the previous year’s budget of R46, 2m by 4%. The additional spending was however funded from donor contributions to specific projects.
14 new recruits joined the Commission during the year, whilst 12 employees were terminated from the establishment. Three of the resignations followed the institution of Disciplinary Committee processes. The Commission had a vacancy rate of 10%, which was an improvement from previous year’s rate and did not have a materially negative impact on the ability to deliver services.
The Department supported the PEI function on core mandate work, critically including the quarterly campaigns (Human Rights, Youth, Women and 16 Days of Activism). Strategic Partnerships leveraged the reach through all media channels. A wide and deeper penetration in terms of listenership, viewership, and readership across all sectors of society was satisfactorily achieved, mainly via collaboration with like-minded institutions and other partners & donors. Over R4m in donations were received in cash & in-kind for the year under review.
There were no instances of fraud detected or reported to management during the period under review. No litigation with any material, financial or other exposure to the Commission was underway, contemplated, anticipated or known to management. A SCM head was released from duties upon resignation. However, charges of financial misconduct were instituted. There were no financial losses or exposure, but there were transgressions on non-compliance with the formal requirements of the Public Finance Management Act. Consequence Management, in the form of a warning was undertaken on the incurrence of irregular expenditure and a form of misconduct on an extended contract for ICT services amounting to R641 000.
Ms T Stander (DA) asked how AGSA determined what the DoW was meant to achieve and how those targets were measured. She asked about the R114 000 in fruitless and wasteful expenditure and why it was not included in the Annual Report. She asked what specifically incurred the irregular expenditure of the R7m. She wanted to know how many people acted as accounting officers or had signatory powers during this financial period. She said SCM seemed to be a recurring issue. She asked which employee failed to disclose interest in supplier and which supplier submitted the false declaration.
Ms Vermeulen said that normally with the APP, a technical indicator description would be submitted; this would guide the AGSA in terms of what needed to be looked for. In addition to that, the AGSA has discussions with management to provide understanding where the technical indicator description did not.
Ms Mashinga said that of the R114 000 fruitless expenditure, R33 000 was condoned, as it related to a supplier that did not provide services at an event. The remaining R82 000 related to the sanitary dignity packs where AGSA was unable to get enough supporting documents to prove that all the packs were delivered by the service provider.
She said R6.1m of the irregular expenditure related mostly to two tenders, where insufficient appropriate evidence could not be attained to verify the tenders. There were some tenders where preference points were not correctly calculated or applied, when awarding those quotations and tenders.
With CGE, she said there were some contract modifications in which some contracts were extended without following proper processes.
On the signatory powers, she said most of the quotations and tenders were handled by the delegation on SCM and there was no non-compliance found. The new CFO had taken over this role.
Ms G Tseke (ANC) asked that in future the AGSA provided separate reports and presentations for the DoW and CGE so that more depth and detail could be given. Overall it seemed like there was no change in the performance of both the Department and CGE. It was clear from the report that the senior management was not doing well, even though there had been a change in ministry. She asked if the changes in the APP had been taken into account by the AGSA.
Ms Mashinga said that it had been noted that there was one change made to a target.
Ms L Van der Merwe (IFP) asked whether the amount of irregular expenditure that was found by AGSA was the same amount that was relayed to AGSA by the DoW. It was unsettling that each year the progress of the Department was either unchanged or regressed.
The Chairperson asked when the wasteful expenditure had been detected as there had been a change in ministry.
Mr M Dirks (ANC) asked if it would be possible in future to have the Department present when the AGSA presented, as most of the questions asked needed to be answered by the DoW. He wanted more clarity on how it was possible for governance to be assessed as good when the financial management was not up to standard. Financial controls were a key issue in governance.
Ms Mashinga said that of the R6.1m irregular expenditure identified, R2.2m was disclosed by the Department. Most of the fruitless and wasteful expenditure had occurred in the previous financial years. When assessing the status of internal control, AGSA looked at risks. The audit committee had reported no findings.
Ms Vermeulen said that she had not completed a budget analysis that provided information on what was discovered by AGSA and what was relayed from the DoW. She could give feedback at a later stage.
Mr Dirks reiterated that there could not be good governance if there was financial mismanagement.
Ms Vermeulen said that in terms of the report, governance did not have the exact same meaning as he understood it. It was more about the governance structures like the internal audit committee. The issues would fall under leadership and financial management – which had been assessed as not completely satisfactory.
Ms Tseke said that though the management and committees had complied, in that they met when they were supposed to, what was of greater importance was their impact in addressing challenges.
Ms Mashinga said that it was up to management to implement the recommendations that had been consistently brought forward.
Ms P Bhengu-Kombe (ANC) said AGSA should not group the leadership of the Department and the CGE leadership as one.
Ms M Khawula (EFF) said it was imperative that the Department attend the meeting when the AGSA next presented to the Committee. She asked who had authorised the deviations from the budget.
Ms Vermeulen said that in future the AGSA would report on the DoW and CGE as separatelys.
Ms Tseke asked that more detail be added when the AGSA compiled their reports that.
Ms Vermeulen responded that there were details being asked for that she did not have the authority to share.
Ms Khawula asked why information was being withheld, taking into account the current issue of state capture.
The Chairperson said that there were policies and procedures that had to be adhered to. An urgent meeting with the Minister and Department would be set up to happen in the following week so that questions pertaining to it and its performance could be answered.
Ms Tseke advised all Members to read the Annual Report before the next meeting.
Audit and Risk Committee (ARC)
Ms Tseke asked if the Department’s management seemed willing to implement the recommendations provided. She asked Ms Stock if she believed the Department could improve and have a direct impact on the lives of women in South Africa.
Ms Stander asked if the modified cash standards were the Standard Charter of Accounts and if it was possible for the ARC to submit reports to the Committee after each meeting it had.
Ms Van der Merwe said that the Department had no legacy and reiterated the question on whether it could make a tangible change in the lives of women.
Ms Khawula suggested that the ARC be present in the meeting with the Department and AGSA the following week. She asked what had been done to stop the wasteful and irregular expenditure by the Department.
Ms Stock said that consequence management happened at different levels and for different actions. The ARC had urged the Department to follow through with investigations and disciplinary actions on. In the ARC’s interaction with the current management team, management had shown a positive attitude in terms of accepting the recommendations. The CFO has been very proactive and had come forward with additional issues. However, until recommendations were implemented it could not be said that the recommendations had been accepted.
With regards to the capacity issue, the mandate and budget had to be considered.
Women’s issues cut across all sectors and there were key areas to prioritise. If the Department set out to address all women’s issues under one goal, it would be missing the opportunity to start with prioritised areas first and get that sorted before moving on to the next issue. What the DoW sought to achieve was broad and there should be a true intention to identify the most pressing issues and to work with the departments or sectors that were responsible for changing the identified areas. The capacity of the Department should be informed by the strategy. All the departments should have targets in their respective APP’s that were gender-specific. The DoW had a strategic placement in government but it needed to be able to hold other departments accountable for achieving sector-relevant goals. The Department did not have the capacity or budget to do work on the ground itself but it had the role of oversight over the rest of government. The modified cash standard was an international set of reporting standards that described how to account certain things on financial statements. The role of the Standard Charter of Accounts role was to ensure compliance with those standards.
Ms Stock clarified that 99,9% of the budget allocated for compensation had been used - not that 99,9% of the entire Department budget was used on compensation of employees.
Ms Khawula asked what CGE aimed to do by having appearances on television.
Ms Tseke thanked CGE for its work and expressed confidence in what it would accomplish for women in South Africa. She asked if there were people with disabilities in the staff complement of the entity.
Ms Stander asked for a copy of CGE’s submission to Treasury and for the response that was received. She asked in the disciplinary cases complied with the 90 day resolution time frame. She also sought to clarify if the R641 000 in irregular expenditure was the only case of financial misconduct.
Ms Maema said that the R641 000 irregular expenditure was the only one that was detected. She noted the request from Ms Stander and agreed to forward that information.
Ms Lulama Nare, the chairperson of CGE, said that there was only 101 staff, most of whom, including the commissioners and executives, had to take on multiple roles. CGE was able to do work on the ground because of the relationship it had with established groups that dealt with gender issues.
On the television appearances, she said that those happened when organisers reached out to CGE and CGE would focus on educating women about their rights.
The Chairperson thanked CGE for the presentation.
The meeting was adjourned.
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