Department of the Premier 2017/18 audit: AGSA & Audit Committee briefing

Public Accounts (SCOPA) (WCPP)

23 October 2018
Chairperson: Mr F Christians (ACDP)
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Meeting Summary

The Auditor General of South Africa (AGSA) told the Standing Committee that the Department of the Premier (DotP) had under-spent its budget of R1.4 billion for the 2017/18 financial year by R39.8 million. For the past three years the Department had had a clean audit outcome, with no findings. However, various emerging risks had been brought to the attention of the DotP so that it could put measures in place to control them.

The Department’s audit committee reported that the Department had 81 approved posts, of which 58 were actually filled. In risk management, it had achieved all 40 of its planned actions, and 30 of the 33 initiatives to mitigate fraud risk had been implemented. The three that were not achieved were related to the review of the “whistle blowing” policy, and the anti-fraud and corruption policy which had not been submitted to the provincial top management for approval or circulated to the departments for distribution. There were two cases related to alleged corruption on hand at the end of the reporting period. The audit committee would continue to remain vigilant on these issues and their impact on the control environment. A transfer payment versus service goods issue, which had been raised in the fourth quarter, had been managed and handled within the available parameters so it had not affected the Department’s clean audit outcome. The whistle blowing policy was intended to improve the control environment and provide guidance on how to report fraud, corruption or unethical behaviour. 

The Premier said that by the end of the year, broadband had been installed in 1 875 Western Cape government sites. Plans were currently being finalised to expand broadband to municipalities. Austerity measures had been in place in the DotP for some years now. 2017/2018 had been a year of constrained budgets.  Where posts had been vacated and could not be filled again, existing staff had had to take on additional responsibility while striving to maintain the high standard of service delivery expected of the Department. During this period, the DotP had moved from governance for the sake of compliance, to governance for service delivery, and from governance by reporting, to governance by results. The Department had spent 97.2% if its budget and achieved 92% of its indicators.

The Director General of the Department said that there was currently no provincial-wide policy comment framework that provided an opportunity for all role players to be involved in the new policy process. The audit committee drew attention to the delegation framework of the Department of Public Service and Administration (DPSA) which had identified a list of issues that needed to be adhered to. The committee needed to record the levels of delegation to avoid them being exceeded, which would render subsequent decisions null and void.

Members asked questions about conflict of interest cases and allegations of corruption; when the whistle blowing policy had last been reviewed; how the Department was coping with reduced staff levels; whether any employees were doing other remunerative work outside the employee’s employment in the relevant department; and what had caused such a significant increase in the DotP’s advertising expenditure.

Meeting report


Department of the Premier: Audit Report

Mr Danie van Huyssteen, Senior Manager: Auditor General of South Africa (AGSA) said that the Department of the Premier (DotP) spent R1.3 billion out of a budget of R1.4 billion, with an overall under-spending of R39.8 million (2.8%). If it is above 2%, the AG’s office emphasises the matter. In the previous year, there had been an under-spending of 1.6%. The revenue budget of R1.8 billion was exceeded by R2.3 million (1.3%). In the previous year it had been 96.3%, because of over-collection. For the last three years, the Department had had a clean audit outcome with no findings. Significant other matters did not form part of the financial statements, and were presented as additional information. No material findings were raised under the compliance focus areas.

The AG’s office had evaluated the usefulness and reliability of the reported performance information for Programme Two (Provincial Strategic Management), Programme Four (Centre for e-Innovation), and Programme Five (Corporate Assurance). There were no material findings for these programmes. There had been achievement of the planned targets for the year within the programmes that were audited. Only on very limited occasions did the Department under-achieve. Pre-determined targets were 92%achieved.

No specific internal control deficiencies were found relevant to audit of the financial statements. SCOPA resolutions from the previous year’s committee were set out in the Annual Report. There were various emerging risks that had been brought to the attention of the DotP that it should be aware of and put controls in place to control them and address the emerging risks. These risks were transversal risks that would emerge in the SCOPA document.

Mr Jeremy Fairbairn, Acting Chairperson: Governance and Administration (G&A) Cluster Audit Committee, said the introduction and summary was no different to the previous report, and referred to page four about the audits that were intended to be conducted: there were eight planned and eight were completed. It was the same issue of governance. There was no difference with the last briefing. It was significant to know that there were 48 risk areas with significant coverage. Two were covered by other assurance providers and eight were included in the annual plan. The approved ten risk areas contained in the annual audit plan had been completed and the internal audit reports had contributed to an improvement in operations. The 12 remaining risk areas excluded from the annual plan represented an assurance gap in terms of the resource constraints that it was experiencing.

There were 81 approved posts, and the Department was sitting with 58 actual filled posts. In risk management, there were 40 planned actions, and the DotP had achieved all of them.  The balance of 26 risks were represented as 11 with intolerance to action plans, 13 with outside intolerance and two inherently medium to low. The Audit Committee would continue to encourage assurance over all significant areas overseeing the implementation of a combined assurance model. 

Strategic action plans were overdue and required attention. This was significant because many of them were relate to governance in the talent and culture tier, which entailed embedding their philosophy and setting their values – there was work to be done in that regard.  Attention should be paid to the infrastructure tier of technology, specifically the policy for the on-boarding of new application systems of software and the data privacy policy.

To mitigate fraud risk, 33 initiatives were planned and 30 were achieved. The three that were not achieved were related to the review of the “whistle blowing” policy and the anti-fraud and corruption policy, which was not submitted to provincial top management for approval or circulated to the departments for distribution. There were two cases related to alleged corruption at the end of the reporting period. The Audit Committee would maintain vigilance over the aforementioned issues and their impact on the control environment.

The Audit Committee’s emerging risks were the continuing capacity and funding constraints, particularly in the information technology (IT) environment. It was known that the Centre for e-Innovation was responsible for assisting many departments and contained employees with a high skill set. It was concerning therefore that the budget for e-Innovation had been cut for 2019-2020, and yet these services were required by departments within the DotP. Gaps within departments and the Centre for e-Innovation were a skills issue. The Centre for e-Innovation needed to provide services to those departments to help bring them up to speed in terms of IT issues and what was required. What this could translate into would be out-sourcing to service providers, and that also implied additional costs.

There had been budget cuts for the corporate service centre, as a support service to front line departments, but the service frequency had not been diminished and the same service needed to be provided. The Day Zero issue was related to the water shortage disaster, and how the Department had been able to avert that particular risk through a provincial strategy.

There had been a silo-based approach to monitoring the achievement of the provincial strategic plan. This was not recognising the current risk assessment, but was a significant threat to the achievement of the plan.

Finally, the transfer payment versus the service goods issue which had been raised in the fourth quarter, had been managed and handled within the available parameters. The Joint Task Team had been used to address issues that had been questioned as to whether it was a transfer payment, so it had not impacted the department in terms of a clean audit outcome. It had been handled well.

In conclusion, the Audit Committee commended the Accounting Officer and his team on the achievement of a clean audit opinion with unqualified findings for the year. AGSA would continue to support the DotP with the audit outcomes through the Head of Department.

Discussion

Mr D Joseph (DA) wanted clarity on the whistle blowing policy that was not submitted, and asked if it was a requirement for it to have been submitted.

Ms M Maseko (DA) asked about the Department of Public Service and Administration (DPSA) delegation framework, and the delegations framework policy comment co-ordination. The report seemed to indicate that there was no synchronised way of working. For example, with the policy comment co-ordination, Mr Fairbairn had said the Director could not comment because the implementation of the policy was happening at a lower level. Was the work in the Department being done in a silo so that monitoring became difficult for top management?

Mr Fairbairn responded that the whistle blowing policy was to improve the control environment and to give the target audience guidance on how to report on fraud, corruption or unethical behaviour.  The policy was in place, but it had not been reviewed to ensure that it was up to date. That was the issue that had been raised. It sets the parameters in which to report corruption, fraud and unethical behaviour.

Mr Joseph asked a follow up question, stating that the fact that the whistle blower policy was not submitted for approval showed that it was a target that needed to be completed and submitted, and so he wanted clarity on that. Though he also wanted to know the effectiveness of the policy, for now he wanted clarity on the way the sentence was phrased.

Mr Fairbairn said that in the sentence that Mr Joseph was referring to, ‘for approval’ related only to the second item and the ‘not reviewed’ was related to the whistle blowing policy.

Responding to Ms Maseko’s question, he said province-wide policy comment framework gave the role players strategic direction for their involvement in the policy comment process. It gave all role players a framework within which to participate in the process. It was not so much the monitoring, but more about how individuals participated in giving policy comments.

Ms Maseko asked for further clarity. The document stated that the findings and managing the corrective steps would be audited by the Auditing Committee. So, on the DPSA delegation framework, it stated: “Governance improvement was required within the oversight responsibility tier. Management accountability. Legal authority raises concerns regarding clarifying delegation levels which were not completed. Decisions made in this period may be subject to challenge and may be found to be null and void. Governance was impaired at the lowest tier infrastructure relating to policies and procedures and reporting and communications”. It seemed to her as though there was no synchronicity, so she wanted to understand what was trying to be communicated in that paragraph. She asked what would be being monitored, if this was the case.

Mr Fairbairn responded that if the delegation levels were not adhered to and a decision was taken, obviously the decision was null and void, so one had to indicate that in that person’s delegation of authority that they had taken that decision, and that was the issue that was under the DPSA delegation framework. The DPSA delegation framework was a compliance audit -- there was a list of issues that had to be adhered to and in following that process, the audit had then highlighted that this was a concern and a risk in terms of the possibility that delegation levels could be exceeded, and that therefore the subsequent decisions taken would be null and void. The Audit Committee needed to record the levels of delegation to prevent this from happening. It was raising it as a possible risk.

Mr Joseph asked about the two cases referred to in the report that were still outstanding, and asked if the Audit Committee was satisfied with the timeframe of where those cases were?

Mr Fairbairn responded that when comparing to the previous financial year, the fact that those two cases were still outstanding at the end of the year was a concern, but this was under investigation and the question about where the cases currently were should be addressed to the Department, and not the Audit Committee.


Department of the Premier: Annual Report

The Chairperson handed over to the Premier to make opening remarks, as she was due to leave early because of other work obligations.

Ms Helen Zille, Premier: Western Cape, said that she had made opening comments at the morning session of the Portfolio Committee, and that they stood for this session as well.  

Ms C Beerwinkel (ANC) said that with respect, SCOPA was a completely new committee and so they would like to hear what the Premier had said in the morning because there might be matters that they would like to incorporate in their questions, and some people might not have been present at the morning session.

Mr D Mitchell (DA) said that he thought the meeting was moving forward but it seemed that Ms Beerwinkel was taking them back, so he would reserve his questions for a later time.

The Premier said she accepted Ms Beerwinkel’s comments, and would go over her morning remarks again. She was pleased that they were discussing the report of the Department of the Premier for the 2017/2018 financial year. By the end of the year, broadband had been installed at 1 875 Western Cape government sites. Plans were currently being finalised to expand broadband to municipalities. Austerity measures had been in place in the Department for some years now. 2017/2018 was a year of constrained budgets.  Where posts were vacated and could not be filled again. in many cases existing staff had had to take on additional responsibility while striving to maintain the high standard of service delivery expected of the Department. During this period, the DotP had moved from governance for the sake of compliance, to governance for service delivery, and from governance by reporting, to governance by results. The Director General had ensured this happened in 2017/2018. The Department had spent by 97.15% of its budget and achieved 92% of its targets.

The Premier extended her thanks to the Director General, the Superintendent General, the management and staff of the Department for their hard work and achievements during a time of austerity.

Discussion

The Chairperson said that SCOPA would go over the governance section in the Annual Report.

Mr Mitchell thanked the Department under the DG for making the governance section of the Annual Report so reader-friendly, particularly for residents of the province who may go through the section and would not be able to question the Department in the same way that SCOPA could. Linking to the focus on good governance that was part of the strategic vision of the Department, he wanted to know about the new cases that had been opened and reported on. He wanted an indication of what those cases entailed, and asked if the Provincial Forensics Services could highlight what the cases were about. Regarding the Bid Specification Committees signing the declarations prior to any meeting, he asked who tracked the procedure to ensure that that in fact was what happened.

Mr Joseph referred to a line in the report that indicated that “during this financial year, the Department saw further inclusion of Enterprise Risk Management (ERM) in management discourse and decision making”, and asked for a contextualisation of that sentence. Further he wanted to know what the various channels were that were being referred to, where it was said that “various channels for reporting allegations of fraud, theft and corruption exist.”  How effective was the whistle blowing policy, particularly to the external public institutions and persons?

Ms Beerwinkel asked when last the whistle blowing policy was reviewed. She said that Mr Mitchell commented on how clear the governance section was in the Annual Report. She said that this was the last time that they as a Committee of SCOPA would sit in front of the DotP, as their terms were coming to an end. She would highlight a particular Department, the Department of Transport and Public Works because they had spelt out things for SCOPA. She said she was thinking of the next Parliament and the new people who would come on to the Committee. The report contained a lot of acronyms and Committee names that were abbreviated, and though everyone present understood them, future Committee members may not know who was being referred to. She requested that in future, when the Department presented that it spells out what all the Committees do and who the committees are, when discussing governance. She suggested that the DotP look at the Department of Transport and Public Works and see how it fleshes out its presentation on governance.

She referred to the report’s statement that the Department had “an independent internal audit function providing independent assurance,” and said that almost every department tells SCOPA that their internal audit sections were understaffed. Internal auditors identify risks and then some of the risks could not be resolved because of the understaffing of the internal auditors in a department. She asked what the DotP’s plans were to adding staff members to internal auditors in its Department, or was the Department under a moratorium for adding staff members, or could it not find people with the correct qualifications?

Following up on Mr Joseph’s reference to “various channels for reporting allegations of fraud, theft and corruption exist and these are described in detail in the Provincial Anti-Fraud and Corruption Strategy and the Departmental Fraud and Corruption Prevention Plan,” she said that these were documents and policy, and were they dealt with in the Standing Committee. Did the DotP have a copy of them in case the Committee wants to look over them, particularly the Departmental Fraud and Corruption Prevention Plan?

She asked if there were any employees that were doing other remunerative work outside the employee’s employment in the relevant department. Under health, safety and environmental issues, the report stated that “the interventions contributed to ensuring efficient, effective and responsive Provincial Government Governance” -- was there one policy that the Premier’s Department had that covered all of that, or did they all have a different policy that addressed those specific aspects? The report referred to an occupational health standards (OHS) meeting at Norton Rose Building chaired by the Department of Health to streamline health and safety related matters, at which the DotP was also present, and she wanted to know what policy they were discussing. It was also stated that matters in the Occupational Health and Safety Committee which were unresolved had been referred to a newly established committee, the maintenance committee – what were some of the matters that had been referred to the committee? She said that it was a strange coincidence that all the injuries listed in the report had occurred at Kromme Rhee -- “eight formal and informal OHS-related incidences were reported and attended to during the year under review. These ranged from a veld fire at Kromme Rhee, insect bites at Kromme Rhee, a trip and fall incident and a back injury.”

She had a final comment that as she looked at the Department, she saw a sea of male faces and she hoped it would change in the new round. She added that the departure of Ms Marsha Korsten, the current DDG: Strategic Programmes, would be a great loss to the DotP and Treasury.

Mr Joseph asked for clarity on the two outstanding cases, and also how many designated senior management staff were required to annually disclose to the Executive Authority particulars of all their interests in accordance with the Public Service regulations? Had any of the employees in the Department made applications to perform remunerative work outside of the public service?

The Chairperson said that two of Mr Joseph’s questions had already been asked by Ms Beerwinkel.

DotP’s response

Mr Ruthven van Rensburg, Chief Director (CD): Provincial Forensic Services (PFS), in response to the question posed by Mr Mitchell about what the two cases entailed said that the first case was about allegations of conflict of interest during a procurement process. The other case involved allegations of corruption in connection with a contract. In response to Mr Joseph’s question on what channels there were for reporting corruption he said that there were three different channels: firstly, the National Anti-Corruption Hotline, which was managed by the National Service Commission (PSC). Upon receipt of allegations, the PSC refers the issue to the Provincial Forensic Services that investigates those allegations that involve economic crime. If it involves management issues, it is referred to the relevant accounting officer. The second way to refer allegations was by means of walk in complaints or phone-in complaints, and the Department gets a number of this nature. The third way is that the Western Cape Government has an internal tip-off line which is also anonymous and managed by the Provincial Forensic Services.

In response to the question on how effective the whistle blowing policy is, he responded saying that for external persons the Department had found it fairly effective, especially regarding tenders or contracts. Those external persons get the department’s details from communication channels and notices that they see at various points of contact with government, and even though they do not strictly fall within the protection of the Protected Disclosures Act, the identities of the people who bring forward the allegations and complaints are protected.

In response to Ms Beerwinkel’s question on when last the whistle blowing policy was reviewed, he said that the amendment of the Protected Disclosures Act in 2017 necessitated the reviewing and updating of the policy and it was done this year. The Premier had signed it off on 18 July 2018.

In response to Ms Beerwinkel’s question on the anti-corruption strategy, he said the four pillars that the document was set on was firstly creating an ethical environment and culture; secondly, prevention, detection and deterrence mechanisms; thirdly, response mechanisms to economic crime; and fourthly, effective remedial action taken. He said that if SCOPA was not in possession of the strategy, he would be happy to make it available to the Committee.

Mr Andre Joemat, Head: Corporate Services Centre, Western Cape Government, said he would deal with the ERM and internal audit questions. Mr Joseph’s had asked for clarity on the statement which reads, “further inclusion of ERM in management discourse and decision making,” which reflects on the risk discussions in the Department and the maturity in managing risk and the risk profile in the Department. It had become embedded in all of the Department’s layers of decision making from the highest level, at its strategic planning, where there was a dedicated session to look at the Department’s risk profile and emerging risks. It occurred lower down also with the executive committee, which was chaired by the DG, where all the DDGs were present at quarterly meetings where they looked at the “gov com,” which was the governance exco where they look at the strategic risk profile of the Department as well as programmatic risks and how they all feed into the strategic risk profile. At branch levels headed by each of the Department’s DDGs, in the DDG’s own executive committees, they have a dedicated conversation with standing items on their agendas on a monthly or quarterly basis, depending on the item. This was what was meant by being embedded. It had become part of the Department’s narrative and discourse. It was about engaging with the risk profile and determining whether the risks were being managed, mitigated and the extent to which the Department had or did not have tolerance for those risks. At the same time the Department had to determine action plans to mitigate these risks, and they were assigned and monitored on a quarterly basis at the EXCO, which was the governance committee of the Department. It informs the audit section of the Department on what the audit scope is, what the highest risks are, what the risk tolerance of the Department was, which in turn leads to an engagement with the internal auditors to determine what was included in the audit plan for the Departmen,t which allows for further management of risks in another structured way. That was how risk management was embedded in conversations and in actions of the Department.

In response to the question raised by Ms Beerwinkel about the staffing challenges in the internal audit function, he said that in the last two or three years, as a result of an imposed compensation of employees (COE) ceiling, there had been staffing challenges in the internal audit function, just like in other areas in the Department. In the last eighteen months, it had been exacerbated by higher turnover rates in the internal audit function. Level nine assistant directors were being poached by other departments, but also by spheres of government. It was indicative of the people employed in the internal audit section. The Department had young, upwardly mobile people and this behaviour was typical of young professionals. With people management of young people in the Department, the problem was that with the age cohort, people had a different view of work life. There were various strategies to mitigate that and lessen the impact that it had on the execution of the work.

The first was that there was a robust engagement in the planning with departments to determine what the most significant risks that required audit coverage were. This engagement took several months with departments and was what was called demand planning, so that the audit scope was reasonable after assessing the demands of the departments and the supply that was available from the DotP, and was reasonable in order to mitigate negative audit outcomes.

The second mitigating strategy was structured, and was housed in the combined assurance framework. The internal audit function was one layer in that, so the rest of the layers could be viewed as one’s defence players in the audit and risk universe, and would be managers with internal controls, given the external audit also had a role to play. Ideally every manager and every department would want to have 100% coverage. He was comfortable that they were getting the best audit plans in respect of the scope and extent of that scope. They were always engaging departments to reach an agreement, and the extent to which the DotP was completing the plan was a measure of what it was doing in that space. The management of the COE challenge became their main concern so that they could fix the high staff turnover which was in itself because of the ceiling and bureaucracy. The DotP had had to introduce a COE funding committee which considered all the vacancies in the Department. Through this process, in order to manage the ceiling costs, posts that were viewed as critical were the only ones that were filled.

Mr Gerber added to this by saying that the DotP funded what it could afford at the moment, and that as part of this policy, there was nothing preventing a department from doing more than what DotP could provide for it -- the DotP could say it could avail a certain amount to assist with getting additional support outside of the DotP.

Mr Geldenhuys responded to questions raised about section 6 on page 109. He contextualised that the health, safety and environmental issues were dealt with in response to the Occupational Health and Safety Act, and the measures that were implemented during the year that was under review were aimed at increasing the Department’s compliance with that Act. It was important to note that the mere fact that occupational health and safety was being dealt with in the governance section of the annual report showed that there was an understanding that it formed an integral part of good governance. There was a direct link with the provincial strategic goal 5, which was embedding good governance in the Western Cape government, which had to do with creating a working environment which was safe and conducive to reduce incidents that may result in loss of productivity.

With regard to the Norton Rose Building, the DotP was currently accommodated in 16 different buildings throughout the CBD, not including other staff who were accommodated in other regions. Many of these buildings were privately owned with multiple tenants in the building, which made it very difficult to have a coordinated response per building. So when Norton Rose, under the initiative of the Department of Health, conducted a meeting, all the government departments that were accommodated in that building came together to discuss and ensure that the evacuation procedures were made well known to government employees accommodated in the building, and that there were regular evacuation exercises so that staff were aware of the evacuation routes and that these routes were open, safe and available for use should a crisis occur.

In response to the question about the matters that were discussed at the maintenance committee, in order for occupational health and safety to operate properly in the department, there was a great dependence on the Department of Community Safety and the Department of Transport and Public Works. Operational issues were discussed in the maintenance committee, like some of the security issues -- such as whether they complied with minimum information security standards, or physical standards such as the absence of public address systems, and whether they sounded an alarm when there was an emergency and staff needed to evacuate. Most of the issues were around access control, alarm systems and operational matters which play an important role to make sure that staff could safely evacuate if they needed to.

Mr Robert Shaw, DG: Strategic Office Support, said that there were officials in the DotP who submitted applications and were approved to do R work – which was other remunerative work outside the employee’s employment in the relevant department. There were about 30 employees who had been approved in the 2017/2018 financial year.

In regard to Mr Joseph’s question on how many designated senior management staff were required to disclose annually to the Executive Authority particulars of all their interests in accordance with Chapter Two of the Public Service Regulations, all senior managers had been required to disclose for several years now, and the DotP had had 100% compliance with this. Since 2017, there had been a new directive concerning other categories, which included middle managers, deputy directors and OSD employees, as well as finance and supply chain employees. This added another 200 employees to the group of people who had to disclose, and in these other categories there was also 100% compliance.

Mr Drikus Basson, Chief Financial Officer: DOTP, said that he would respond to the question raised about the declaration of interest for the bids specification committee that was raised by Mr Mitchell. Firstly, the DotP’s supply chain management (SCM) model was a collaborative one, so there could be no committee meeting held without the SCM official present. Secondly, when thinking of the level of integration, the declaration of interest (DOI) in the case of the DotP was also a declaration of confidentiality and impartiality. Every committee needs a meeting. Every meeting needs an attendance register. The attendance register was integrated with the DOI and in order to attend a meeting, one had to also sign the DOI and this formed part of the pack that would be on record for the supply chain unit.

Ms Maseko said that in the area of risk management, the audit committee had highlighted management accountability, and authority was an issue and that the decisions made in that period may be subject to challenge and may be found to be null and void. She asked if this was highlighting that there was no scope for delegation from top management to other levels. Were these the type of risks that would have fallen under the category of risks that were tolerated, as said earlier, and if they were, why were the internal audits tolerated and why was this allowed to occur in the DotP, because it left a gap in accountability.

Mr Gerber responded that in terms of internal controls, it was the factual correctness of the issues that were raised here. Concerns about factual correctness had resulted in 2016/17 data being subsequently corrected in the 2017/18 financial year. The finding that was referred to by Ms Maseko was one that occurred in 2016/17 and was found and discussed, and when the 2017/18 audit took place there were no findings that needed to be deemed null and void under management accountability and authority by the Audit Committee.

The Chairperson said that the DotP also said that they had reviewed the whistle blowing policy. SCOPA was under the impression that the policy had not been reviewed, so that was another piece of information that was not factually correct. 

Ms Beerwinkel said that she was glad Mr Gerber had seen that there was an error in the annual report, and had asked him to share the corrected information with SCOPA for the summary of the 2017/18 audit committee report. Mr Gerber had said the information under that section was information from 2016/17. She also asked about the information about the policy comment coordination, and all five points under that section.

Mr Gerber said that he was prepared to go through the corrected information that had been stated under that section, and that there would be no disagreement with that action. This was not to say all the information was incorrect, but there was information in the updated document that used clearer language. Everything that was required by the financial legal services had been done in the 2017/18 year. He asked if Ms Beerwinkel wanted him to go through all the points at that moment.

Ms Beerwinkel asked Mr Gerber to clarify the point on the policy comment coordination.

Mr Gerber said that the finding for this was that there was currently no provincial-wide policy comment framework that provided for all role players with regard to involvement with the new policy process.

Ms Beerwinkel asked Mr Gerber to repeat his last statement, because she had asked earlier in the session if the policy was a provincial wide policy or if it was a DotP policy.

Mr Gerber said that the DotP gets its policies from national legislation which the DotP comments on, and the finding to which he was referring stated that there was currently no provincial-wide comment policy in place, so currently departments submitted through policy units or through legal services, and they were saying there should be a format in which to focus one’s discussions so that everyone presented in the same format. Currently no such policy existed, and there was no legal requirement for such a policy to exist, but it would be good practice to have it. The DotP had a problem with the following statement, however, that “government’s infrastructure tier policy and procedures were not in place as there was no provincial parameter to this,” but they should be saying there should be a policy and a guideline to say when commenting on policy, that this was the format in which one should do it.

The Chairperson suggested to Ms Beerwinkel that SCOPA should look through the document after the DotP had edited the document, and that they be invited to present on this section. He suggested that the audit committee should also be invited so that they could explain if there were any issues.

Ms Beerwinkel clarified that she did not want to debate every issue in this section. She just wanted to point out that there were inaccuracies in the reporting on the infrastructure tier, the governance and oversight responsibility tier, which was an important role that had to be played. If the internal audit says management accountability and authority needs attention, it makes you wonder what is going on. She said her response had been to what she had in front of her, so she agreed that SCOPA should invite the DotP and the audit committee to present on this section again.

The Chairperson confirmed that there would be another session where issues of governance would be discussed and concerns could be raised. The Members indicated they were happy with that suggestion.

The Chairperson said that he wanted them to now discuss finances.

Mr Joseph wanted to commend the DotP on the extensive report on Health and Safety and he was happy that it was getting the necessary attention it deserved under point six. The DotP’s participation in the Water Scarcity Plan was critical. He wanted to know if there was a budget attached to the Water Scarcity Plan, or if DotP participated but it was paid for by the Department of Transport and Public Works, and if there were capital projects in the pipeline to ensure that the Plan was successful. He also wanted further clarity on the two cases -- was there a monetary value attached to them, and what was the value of taxpayers’ money?

Mr Gerber said Mr Van Rensburg would speak to the value of the two cases. With regard to the Water Scarcity Plan, the DotP played a coordinating role and had received a budget of R2 million in order to draft a Water Framework Plan which had now been discussed and would be made into a bigger plan and run by the DotP, because it would be for the entire province. A budget of R6 million would be allocated to roll out the broader plan. The DotP would play a coordinating and supporting role, and they had a water engineer to assist the departments and municipalities.

Mr van Rensburg said that with regards to the first case about conflict of interest, there had been no monetary value. The second case was still on-going, and the report was under review at the moment, so a value could not be indicated at this time.

The Chairperson asked the SCOPA members to ask their questions as they were briefed by the AG.

Ms Beerwinkel wanted to ask about the appropriation statement. She addressed her statement to Mr Gerber, and said that a best practice for him would be to remember that it was the DotP that had woken SCOPA up to the environment. The Department of Transport and Public Works had told SCOPA where it came from and where it took it to. In the next report, could that information be included, otherwise she would ask about it again? The DotP had under-spent but over-collected, and part of that over-collection was because of an unpaid grant that the City of Cape Town sent back to the DotP from broadband. Why had it been given to them in the first place for the amount that was given, and why did they have to return it? She asked how many posts they had on their organogram that were kept there, because it would be difficult to fill it if it was taken off and one day they decided to fill the position again. The reasons given by different departments for the under-spending on cost of employment were ironic, as the reason was that staff had left the DotP. She asked why they had they left the Department.

Mr Joseph said that the AG had said there had been an increase in the under-spending by the DotP. Was the Department satisfied with this, and what was it going to do to get back to the normal level?

Ms Beerwinkel asked that when the DotP did not have enough staff and other staff had to take over, what the impact was on leave, sick leave, over time and extra payment. What were the implications for the DotP? 92% of targets had been achieved -- how important were the 8% that were not achieved?

Mr Gerber referred to the broadband repayment, and said before DotP had started the broadband project they purchased broadband capacity from the City of Cape Town. The DotP had made transfers to them to assist them in paying for the fibre that they laid for the DotP. When Neo-Telecom came with their own broadband that they started to roll out it, was not necessary to use the City anymore, so the City had repaid those funds to the DotP.

Regarding the organisational structure, as far as he was aware they cleaned up their organisational structure on a regular basis. Only when there was a scheduled restructuring that was about to take place did they say it was best not to get rid of a post until the process was complete. There was no retention of posts that were not funded. All posts in the organogram were funded. When it came to money not spent on staff, it did occur sometimes that the DotP would keep a post vacant for various reasons. For instance, the Director of International Relations post had been kept vacant for a while because there was a discussion currently about whether it should be a directorate in itself.

With regard to the 8% of targets not achieved, this referred to four partially completed targets, and details could be supplied if needed.

The Chairperson said one of the questions asked by Ms Beerwinkel was why staff were leaving

Mr Gerber said this had been addressed in the previous session.

Ms Beerwinkel said he could not say that.

Mr Michael Hendrikse, DDG: People Management, said that if one looked at the statistics on staffing, there was use of leave days. The average was eight days, and the DotP was now currently reconciling the data about sick leave and the number of cases that were referred to take leave by the health and service providers in terms of the types of conditions that people were experiencing. There were a number of interventions that were implementing, such as resilience training to cope with work. For regulations about overtime, there was a limit on the amount of overtime that a person could work in a specific period of time. The DotP’s overtime spend was 0.6%, but that did reflect the voluntary overtime that occurred because posts were not filled, and the work still needed to be done. There was a knock-on effect because of this, and the DotP did respond to it through health and wellness advocacy programmes. In each programme there was a culture training that dealt with issues such as the impact of an added work load on employees. It was interesting to note that in the last ballot survey, the entropy levels of the Department had come down from 27 to 23, but this did not detract from the fact that staff were doing more and were being asked to do more on a voluntary basis.

Mr Basson said that in response to Mr Joepsh’s question about the notional under-spending benchmark, under 2% points to good spending progress. In the year under review, there was about R2 million that the DotP could not spend because of the Water Resilience Plan, which went from a short term to a long-term focus, so that was money that was ear-marked for that project. There was roughly R8 million that had been allocated to the State Information Technology Agency (SITA) and SITA delays in invoicing on their part. If there was no invoice one could not pay the account, so if the R10 million was deducted, the DotP’s under-spend would be closer to the recommended benchmark of 2%. Some of the underspend was not in the DotP’s control.

Ms Beerwinkel asked about the R20 million that was not paid on “info-tainment” which resulted in an underspend on programme four.  

Mr Basson said that R2.5 million of the R20 million referred to COE under-spending. There was R3.8 million under broadband, as SITA had delayed invoicing the DotP. The R7million under the Government Information Technology Office (GITO) was for network equipment audit, which would be delivered in the new year. R8.9 million was for strategic ICT services, and the info-tainment monitors through the Groot Schuur Hospital facilities board accounted for R 1.2 million.  There was also the client relationship management system which was also discussed there, where the SITA delay had caused the DotP not to spend R4 million.

Ms Beerwinkel said that she now understood that the info-tainment monitors were included within that R20 million. She asked if everything requiring legal services was done in-house, or if they contracted in legal services at all? Regarding contract consultants, the DotP had given the Project Title and the Nature of the Project in a title, but she asked whether the nature of the programme should not have a greater amount of information, and not be the exactly the same as the Project Title? Also, did NCC stand for non-compliance? She asked who the contractors were and what they did.

Mr Lucas Buter, DDG: Legal Services said that the majority of legal services were rendered internally. There had been 626 requests for legal opinions and on only 12 instances had the DotP asked an opinion from the bar on behalf of all of the 13 departments cumulatively, and that had cost R1.3 million. An external opinion on average cost about R100 000, so about 98% of the legal services work was done internally. However, there were times when a matter was complex and had major implications for a department, and in those circumstances, at the request of the department, the DotP legal services would approach an advocate of the bar to render an opinion. The Legal Services did have an external resource that assisted in training and skills transfer in the legislative drafting space, because that was a scarce skill. When one advertised a post for a legislative drafter, nobody with legislative drafting skills applies, so it was something one needed to build internally over time so that the resource assists with training and advises on more complex legislative drafting processes. On the contingent liability and external resources, the DotP spent R300 000, and they sourced two opinions for the DotP, and the rest was taken up by sheriff’s fees and digital audio recordings in a particular matter.

Ms Beerwinkel said that Mr Buter should note that she had not asked him why they spent so much money, because she could see they had spent less than last year. She wanted to know if all the legal services were rendered internally, which would explain the decrease, or if some of it was external.

Mr Basson said when looking at the tables on page 159, the consultants table the project title was meant to be short, but there was no guidance on what needed to reside there. On the nature of the project, he felt that the information there was appropriate and that the project title was also appropriate, but the DotP would take on Ms Beerwinkel’s advice and ask that there be a shorter version for the project title submitted in future.

NCC was a non-compliance contributor. One would find that the Government Technical Advisory Centre (G-TAC) was attached to the National Treasury, so they were not a company, so they could not have a Triple BEE status. One would find that the University of Cape Town was a university and not a company, and then there was the Colorado Seminary which was attached to the University of Denver, Colorado, which did not have a South African footprint so Triple BEE did not apply to them. So they were non-compliant contributors (NCCs).

For contractors, they had a breakdown available, but he mentioned the main items included in this section. There was a health and wellness programme with ICAS that accounted for R2 million of the R4.2 million reported; there were also security services at Kromme Rhee, and that was R 956 000 for the contractor there; and there were audio-visual requirements for several meetings which made up for other amounts; and then there was also money spent on repairing equipment, especially at Kromme Rhee, which was roughly R200 000.

Ms Beerwinkel said that she was unaware that Shanaaz Majiet was now a consultant. She wanted to know what exactly they did, because it was said recruitment and field workers would roll out the behavioural insight intervention in Mass Opportunity and Development (MOD) Year Beyond schools.

Mr Anthony Hazell, Chief Director (CD): Policy and Strategy, DotP said that field work was done by rolling out the growth-monitored behavioural insights project, where the DotP ran an experiment in collaboration with the World Bank. It was a project that the World Bank was rolling out in various developing countries and it had approached the DotP because it wanted to test it out in the South African context. It was teaching children that their brain was like a muscle and that their current learning capacity was not a fixed thing. They had run a basic experiment at each of their Yebo Schools, where they had a treatment and control group. The treatment group was provided with videos and follow up sessions with facilitators, and the control group just got National Geographic videos which were educational but not growth-oriented. There was an experiment on the changes in growth monitoring and the changes in academic performance. There were very promising results in the high schools and the Western Cape Department of Education was looking to roll out this programme more broadly in grades 4 – 8. The Western Cape Department of Education had facilitated the sessions for them and then submitted the field reports to the World Bank.

Mr Joseph asked whether the International Relations Desk, when fostering relations, kept track of the monetary value of investments. Did they just use the money to foster the relations -- what happened after that?
 
Mr Nkosekhaya Lala, CD: International and Priority Programmes, DotP, responded that they were working together with Wesgro to keep track of what was happening. If there was a delegation that went to a particular country with the aim to promote trade, tourism and investment in the Western Cape, they tracked to what extent that had happened. They track how many delegations from that country had actually come to the Western Cape and what investments they had actually made. This was monitored quarterly in the DotP’s interaction with Wesgro.

Mr Joseph asked if the DotP got a monetary value of how much they invested in the Western Cape. Were there monetary figures provided in the report from Wesgro?

Mr Lala said that monetary figures were provided by Wesgro.

Ms Beerwinkel said there was too much travelling that always happened, and there was always no outcomes. Where could SCOPA see the results from these excursions?

The Chairperson said that Mr Lala did not need to respond to that immediately, as that question would form part of the requests for clarification that would be sent to the DotP by SCOPA.

Ms Beerwinkel said she did not understand why there was such a high expenditure on advertising and computer services. Money spent on contractors was almost three times as high as it was last year. The same question applied for agency and support services. She thought gardening services and managing the cafeteria was outsourced -- who was running it? She asked about the Provincial Training Institute in Kromme Rhee, service providers to provide a suitable queue management solution, and accruals not recognised for more than 30 days. She wanted an explanation for irregular expenditure involving SITA, as well as details of cases that had been condoned. 

Mr Basson responded that the increase in advertising expenditure was because of the Western Cape government’s Drought and Water Communications campaign. There was R2 million for the Water Resilience Plan, but in addition they had received R3 million for a Drought Communications Campaign which they had spent fully.  This explained a lot of the difference in advertising expenditure. There had also been also spending on events such as the Knysna Oyster Festival, the Open Book Festival, the Cape Town International Jazz, and all of those sorts of events were included within the R11 million. Under computer services, there was SITA at R305 million, and foreign payments to Microsoft for software licences amounting to R106 million. The DotP’s broadband spend goes via SITA, and as broadband was gaining momentum there was an expectation that this item would increase.

Ms Beerwinkel asked the Chairperson if it was inventory or fleet services that had gone from R6 million to R80 million?

The Chairperson confirmed that it was inventory.

Mr Basson said he had explained about the contractors, but wanted to respond to the second part of the question which was, ‘why the increase?’. He said in involved the ICAS health and wellness programme, but Ms Beerwinkel interjected and said that her question was about the decrease in inventory.

Mr Basson said that under the decrease in inventory, the R80 000 refers to VoIP telephones that were bought as part of the broadband rollout. It meant that the previous year more were purchased in the broadband rollout, and so this year only a small quantity was purchased.

Regarding the question on property payments, particularly the question referring to what gardening services were paid for by DotP, there was a venue in George which was a training facility, and was partly in Kromme Rhee as well. The management of the cafeteria was at Kromme Rhee in Stellenbosch. The DotP pays a monthly amount as a management fee to the contractor, and then the meals they would recover from the departments that utilise the venue. Under agency and outsourced services, the change from the Standing Committee on Appropriations (SCOA) meant that all the outsourced items were closed down and could not be accessed anymore, and all of that went to the consultants. That was a SCOA adjustment.

Regarding the accruals, it was stated that ‘subsequent to year end, six cases amounting to R81 280.30 were condoned and one case amounting to R33 763.45 was deemed as valid expenditure, and therefore not recoverable (not condoned)’. If one looked at the irregular expenditure of R474 000 for the year under review and then considered the six cases that were worth R81 280.30, in those cases the accounting officer had reviewed what happened, found that a step was missed in the process, but the value for money was achieved despite the irregular expenditure, and the accounting officer had condoned those expenses because of the value for money received. He provided the Committee with details of various minor incidents of irregular expenditure, and how the Department had taken action to address the challenges.

Mr Gerber thanked his colleagues for their hard work and the Committee for their honest and open manner.

Mr Joseph, on behalf of the Committee, thanked the Premier, Mr Gerber, Mr Basson and all the senior members of DotP, all the stakeholders and all staff at the DotP.

The meeting was adjourned. 


 

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