Community Schemes Ombud Services turnaround strategy; Estate Agency Affairs Board 2017/18 Annual Report
Human Settlements, Water and Sanitation
26 February 2019
Chairperson: Ms N Mafu (ANC)
The Committee was briefed by the Department of Human Settlements on the Estate Agency Affairs Board 2017/2018 Annual Report. Members heard that the EAAB had only performed in 15 out of the 34 indicators; however there has been an improvement with the net assets of the organisation and the Fidelity Fund Certificate backlog has been cleared.
The Committee expressed concern about the lack of transformation within the sector and asked why there was still a gap in terms of the racial and gender divide, and whether the goal to fill all vacancies by the end of March was too ambitious. Members cautioned the EAAB about repeating the same mistakes. The Committee reminded the organisation about the agreement made with the EAAB in 2016 regarding the amount of interns which should be accepted, and asked for progress in this regard. Members were especially impressed that under the new CEO of the EAAB the backlog has been cleared within one month.
The Committee was briefed by the Community Schemes Ombud Services (CSOS) on the progress made with regard to the Turn-around Strategy, Corporate Governance challenges and the Auditor-General findings. Members heard that the organisation only had three vacant positions at executive level and 11 vacancies at managerial level. It was envisaged that all the vacant positions would be filled by the end of March.
The organisation was issued with an adverse opinion in terms of the audit findings as there was irregular expenditure of R26 million. The organisation has employed people within finance to assist with the completion of manual payments and procurement processes. Members questioned the reasons behind the unallocated funds and heard that this was in relation to payments being made without the necessary reference numbers. This situation was being remedied by outlining the correct process on the CSOS website.
Members found it comforting that the EAAB was committed to transformation and this was verified through their ‘One Learner – One Agency’ Youth Empowerment Brigade Programme which sought to reduce the racial gap in the sector, and provide employment for interns of colour and the previously disadvantaged.
Briefing on the Estate Agency Affairs Board Annual Report 2017/2018
Ms Mamodupi Mohlala, Chief Executive Officer (CEO), the Estate Agency Affairs Board (EAAB) presented the Estate Agency Affairs Board Annual Report 2017/2018 presentation. She started by speaking to issues regarding the annual performance for the 2017/2018 period. She indicated that this was a difficult time for the EAAB because when one looks at the performance summary for that period, there were 34 indicators, and the EAAB only performed in terms of 15 of those indicators.
In terms of the 2017/2018 financial year, it was evident that with regard to the total amount of Fidelity Fund Certificates issued, 49645 were issued in total, which was an increase from 48969 in the previous year. The EAAB is looking at ways to increase those figures even more within the current and future years to come.
The comparison of the gender split within the sector between the last and current financial year, unfortunately it shows that there is still dominance by white males followed by white females. With regard to the amount of black females, there has been an increase of 63 black females since the last financial year.
In terms of the racial breakdown of the sector, there is a dominance of white interns as opposed to the number of interns of colour. As of the 15th of January, the EAAB has been able to clear the Fidelity Fund Certificate backlog, meaning that all new applications for Fidelity Fund Certificates and the renewal of existing ones have been approved and issued. In total, the EAAB has been able to produce 27000 Fidelity Fund Certificates; this is of significance because these certificates are the tools which members of the industry use to complete their functions.
With regard to the financial situation of the EAAB, the report shows that there has been an improvement with the nett assets of the organisation. In 2017 the organisation made a loss of R52 million. The financial position since then as increased mainly due to the increase in the investments made into the EAAB. The reason why there has been a profit of R13 million is because of the decreases in operational expenses and employee related costs.
From a financial point of view, the EAAB has noted that many of the audit findings relate to the finance department and they have made extensive efforts to appoint new personnel in order to improve on this front. The increases in personnel included financial accountants, and advisors.
Community Schemes Ombud Services (CSOS) - Progress made with Regard to Turn-around Strategy & Corporate Governance Challenges & AG findings
Ms Ndivhuo Rabuli, Acting Chief Ombud, CSOS, made the presentation to the Committee. She started off by discussing the governance structure of the organisation and said that they only had three vacant positions at an executive level and eleven vacancies at a managerial level. There is a plan to improve the vacancy rate and hopefully all of the vacant positions will be filled by the end of March.
In terms of the audit findings, they were issued with an adverse opinion. There was the irregular expenditure of R26 million. The organisation has employed people within finance to assist with the completion of manual payments and procurement processes.
The problem regarding the budget was that no financial reporting was done in the year, so if there were any discrepancies with regard to finance, these discrepancies will now be dealt with through proper financial reporting channels.
Mr M Wolmarans (ANC) in addressing the EAAB expressed concern about the lack of transformation within the sector. He asked why there is still such a gap in terms of the racial and gender divide. He also wanted to know what the EAAB plans on doing as a strategy to reduce these gaps as they are far too imbalanced. He asked further whether the goal to fill all vacancies by the end of March was too ambitious.
Mr K Sithole (IFP) also expressed concern about transformation within the industry. He said that even within the mechanisms in place in the EAAB, caution should be taken to avoid repeating and recreating the status quo.
Ms M Nkadimeng (ANC) thanked the two entities for their presentations. She reminded them (the two entities) about the agreement made with the EAAB in 2016 regarding the amount of interns which should be accepted. She wanted to know how progress with that was coming along. She also wanted to know what happened with estate agents who have not shown compliance and those who have showed compliance.
The Chairperson expressed the importance of the EAAB being committed to transformation and the employment of new interns. She said that this state was very far from being a transformed state and this was why this was an important issue. She added that working towards transformation meant assisting the country on a socio, political and economic level. The delay and backlog in the issuing of Fidelity Fund Certificates has always been a big issue, so she was especially impressed that under the new CEO of the EAAB, Ms Mamodupi Mohlala, this backlog has been cleared within one month.
Ms Mohlala, responded to the comments on transformation, and said that it is something which has her full attention. She spoke about the 'One Learner – One Estate Agency’ Youth Empowerment Brigade Programme) , which seeks to reduce the racial gap in the sector, and said that since the unemployment rate in this country is so high, getting new interns and interns of colour and those with previous disadvantage more specifically, would not be an issue.
The plan of the EAAB is to go to the furthest corners of this country to find individuals to join the internship pool. This will be done through more rigorous advertising in all different languages in the various newspapers. The only challenge that might come forth would be if the SETA (Sector Education and Training Authority) does not uphold their commitment, however, the CEO has been making great efforts to make contact with the SETA in order to make sure they have their full commitment. The EAAB is formalising their business plan with regard to incubation, and will present this new plan once it is complete.
Ms Rabuli addressed comments made regarding the filling of positions and said that the CSOS has already made progress through advertising these vacancies and were currently in the process of conducting interviews. With regard to consequence management, the targets have been finalised and they will commence with disciplinary proceedings soon.
In terms of the unallocated funds, these relate to payments being made without the necessary reference numbers. What they have done to help this issue is put up the correct process on how the payments should be made on the CSOS website.
The meeting was adjourned
Mafu, Ms NN
Khoarai, Mr L P
Nkadimeng, Ms MF
Sithole, Mr KP
Wolmarans, Mr M
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