The Audit Committee (AC), the Audit and Risk Committee (ARC), Casidra and the Western Cape Department of Agriculture appeared before the Standing Committee on Public Accounts for a briefing on their 2016/17 and 2017/18 annual reports.
The AC reviewed the reports of the Internal Auditors, the Audit Report on the Annual Financial Statements and the Management Report of the Auditor-General of South Africa. The Committee noted the unresolved matters relating to internal control deficiencies in the report of the Audit-General of South Africa. The AC noted the areas for improvement in the system of Internal Control of the Department. The AC acknowledged the corrective actions taken and the actions commenced by the Department after the year-end.
The ARC reviewed the reports of the internal auditor, the audit reports on the annual financial statements and the Management Reports of the external auditors (PricewaterhouseCoopers and Boshoff Visser). The ARC noted that there are no unresolved matters relating to operational and compliance controls. Casidra received its twenty-eight consecutive unqualified audit report for the AFS since it came into operation during October 1989. The ARC considered the relevant facts and assumptions and concluded that the business will be a going concern in the year ahead.
Members expressed concern about the internal control deficiencies in the Department, given that they affected the work of the Auditor General (AG). However, the AC, ARC, Casidra and the Department could not give their opinion on the matter because it is before the court awaiting Adjudication. They were also interested in getting clarity on a number of issues. These include, the principal-agent relationship, the improvements that had been made in the Department, the issues relating to student support services and the associated remedies going forward.
Ms Judy Gunther, Audit Committee Chairperson, briefed the Committee on the 2016/17 and 2017/18 Audit Committee Reports.
The role of the audit committee is to ensure that the department functions according to good governance principles, complies with accounting and audit standards and monitors that appropriate risk management arrangements are in place. The Audit Committee also monitors the adequacy and reliability of the financial information provided to all users of such information.
The audit committee continues to assist management in discharging its accountability and responsibilities to safeguard the assets, operate adequate systems and controls and preparing annual financial statements by:
- Improving communication and increasing contact, understanding and confidence between management, internal and external auditors
- Increasing accountability by reviewing the performance of internal and external auditors
- Strengthening the objectivity and credibility of financial reporting
- Supporting Internal Audit who is an important assurance provider to the Audit Committee
- And reducing the opportunity for fraud by continually improving the discipline and control
The Committee reviewed the reports of the Internal Auditors, the Audit Report on the Annual Financial Statements and the Management Report of the Auditor-General of South Africa. The committee noted the unresolved matters relating to internal control deficiencies in the report of the Audit-General of South Africa.
The Audit Committee has noted the areas for improvement in the system of Internal Control of the Department. The Audit Committee acknowledged the corrective actions taken and the actions commenced by the Department after the year-end.
Ms C Beerwinkel (ANC) asked for clarity on the statement that the Audit Committee noted the actions of the Department regarding the audit outcomes.
Mr D Joseph (DA) asked the AC to provide details regarding the unresolved matters relating to internal control deficiencies. He asked for clarity on the statement that, "there was no change in accounting policies”. He noted that, under internal control, there were two things said in the same sentence. On one end the report says there were no unresolved matters and on the other end, it says there were unresolved matters reported in the management report. The sentence gives the idea that there were matters that needed attention. He asked for clarity on that. He asked for an explanation on the improvements that were noted by the Committee. Page five seemed to be summarizing a few things that needed to be dealt with. It appears that the AC noted but did not specify. He advised that the Committee should go further than noting things unpack what the AG is dealing with.
Mr S Tyatyam (ANC) noted that both financial years have issues in relation to the internal controls which have not been resolved. He asked for an explanation on the matter. The unresolved matters affected the Auditor General's work. According to their report, they could not delve too much because of the internal control deficiencies that could not be accounted for. He asked for AC's view on the outstanding matter that had not been resolved. How has the AC been assisting to resolve the matter? He asked for the AC's interpretation of the Treasury prescripts in relation to the same issue.
Mr Tyatyam wondered why the unresolved matters persisted for two years, given the fact the they are reported on a quarterly basis. What is the major challenge that it has been two financial years and yet these matters remain unresolved? He expressed concern about the matter of transfer payments and goods and services. In both financial years, there is an issue that has been raised on incorrect classification, according the AG, as per the prescripts of the Treasury General. What is the view of the AC on how these payments should be classified?
Ms Gunther responded that the action of the Department regarding the unresolved matter is that they are taking the matter to court. The AC can only note that they are taking the matter to court because they are not in agreement the AG. That goes for both the 2016/17 and 2017/18 financial years. The unresolved matter is the one relating to transfer payments and goods and services. The Department agrees with the AG on the other outcomes. That goes for the internal control areas within the reports as well.
Mr Tyatyam said that although the AC is employed by the Department, there should be a level of independence that the AC must always preserve. What is the AC's view on the dispute between the Department and the AG?
Mr D Mitchell (DA) pointed out that the Committee cannot put the AC in a position to give an opinion on a matter that is before the court. It is out of order to do that.
Ms Gunther said that the Independence of the AC is there. The AC does not side with any party. The AC is there to look at the objectives and whether those objectives are reached. It is understood that audit committees should always be independent, and the independence should be unquestionable. The AC had long discussions with the AG and the Department. Letters were written to both the AG and the Department on the matter. That is the AC's stand point. A lot of things were said during these meetings and discussion. Both parties then resolved that they will be taking the matter to court. The AC is committed to resolve anything that can be resolved. She said that she could not tell the Standing Committee on what her opinion is because the matter is before the court.
Ms M Maseko (DA) said, regarding the internal control deficiencies, the word "Deficiencies" did not appear in the AG's outcome. She asked if the AC is putting it out there to acknowledge that it is a deficiency or if it is just and English word used to acknowledge the opinion of the AG.
Ms Gunther responded that the report relates to the AG's outcomes.
Ms Maseko said that in March 2017, there was a deficiency. Again in 2018, there is a deficiency within the internal control. The AC meets quarterly and acknowledge that there are some internal control deficiencies. How is the AC mitigating that internal control deficiencies are not reported again and again?
Ms Gunther responded that the issue did not go away from 2016/17 to 2017/18. It was not resolved then and it is still not resolved. If the court case is not going to happen before the end of this year, that statement will stay because the AG said that there are internal control deficiencies. Whether the AC tries to resolve it between the Department and the AG, it is not going to help because they both say they are not going to change the way they do business. Accounting policies had not changed at all. There was a new practice note but the accounting policies as such did not change. For the areas where the AG recommended improvements, the Department did not have a problem with that. The only problem was regarding the goods and services and the transfers. All the other matters were resolved. Regarding the pre-determined objectives, there were recommendations made in the 2016/17 financial year and the Department made the necessary changes.
Briefing by the Audit and Risk Committee: Casidra
Prof Estian Calitz, Chairperson: Audit and Risk Committee, briefed the Committee on the ARC 2016/17 and 2017/18 financial reports.
The role of the Audit and Risk Committee (ARC) is to ensure that Casidra functions according to good governance principles and complies with accounting and audit standards, and to monitor that appropriate risk management arrangements are in place. In addition, the Audit Committee monitors the adequacy and reliability of the financial information provided to all users of such information.
The ARC is committed to assist Management in discharging its accountability and responsibilities to safeguard the assets, operate adequate systems and controls and prepare AFS by:
- improving communication between Management, internal and external auditors;
- increasing accountability by reviewing the performance of internal and external auditors;
- strengthening the objectivity and credibility of financial reporting;
- supporting Internal Audit who is an important assurance provider to the ARC; and
- reducing the opportunity for fraud by continually improving the discipline.
The ARC reviewed the reports of the internal auditor, the audit reports on the AFS and the Management Reports of the external auditors (PricewaterhouseCoopers and Boshoff Visser).
The ARC noted that there are no unresolved matters relating to operational and compliance controls. Casidra received its twenty-eight consecutive unqualified audit report for the AFS since it came into operation during October 1989. The ARC has considered the relevant facts and assumptions and concluded that the business will be a going concern in the year ahead.
Ms Beerwinkel said that according to the report, financial statements make a distinction between main business and business undertaken on an agency basis. Who funds the main business and who funds the agency business?
Mr Joseph was concerned about the depreciation of assets. He asked if there are any insurance companies or expertise that can assist with that. The briefing highlighted that there was no funding formula and that it was an exception to the general accounting policies. It was not clear why there was an exception. He asked for an explanation on who gives the exception. He asked for clarity on what the ARC identifies as the risk, regarding the transfer of ownership. What has Casidra or the Department put in place to mitigate that risk? and what kind of risk is being referred to?
Mr Tyatyam said that there has been transfers from the Department that come very late to Casidra. As a result, Casidra, sometimes, is not in a position to implement some of the projects in time. Casidra ends up applying for rollovers. How has ARC dealt with that? He asked for ARC's perception in terms of the Agent and principle relationship. Also, how does ARC deal with that?
Prof Calitz said that, as far as Casidra's management of the system is concerned, the reporting distinguishes between the main budget, which is what Casidra remains primarily accountable for and funded by the Department of agriculture as an institutional funding. Regarding the projects, where the agency function comes in, Casidra has a responsibility for flow through of the funds, but they are not funds that are at the disposal of Casidra. It is accounted for independently of the head office of Casidra. The Financial statements are reflecting that, and the auditing is also making that distinction between the general financial statements of Casidra and the statements pertaining to every project.
Prof Calitz said that the exception is not designed for commercial farming, in its basic essence. The entity specific audit was undertaken with the approval of the authorities. It is not something that the external auditors did as an exception which they themselves came up with. It was cleared with the AG. A few years ago, there were discussion between the CEO of Casidra and the Department about the appropriate funding formula for Casidra. What materialized from this was that there was an agreement that Casidra would be financed for a core establishment in order for Casidra to fulfill its function. It has to have a certain personnel complement, certain amount of infrastructure etc. That funding competes with all sorts of funding annually in the budget prioritization process. It is important for Casidra to fulfill its function that there is some stability in that funding formula. One of the things that might come as a threat to Casidra's functioning is the more recent notion that Casidra can earn additional money by selling its services to other Departments and to municipalities if the need arises. The important thing about institutional funding is that it should be determined on the basis of other criteria than own funding, which is the case for Casidra. Regarding principle agents, ARC had just been informed about it. ARC had never had full information to consider it. It would be out of order to give an opinion on the matter.
Discussion on the 2017/17 and 2017/18 Annual Reports of the Department of Agriculture and Casidra
Ms Beverley Schäfer, MEC for Economic Opportunities, Tourism and Agriculture, thanked the Committee for the session. It is important that the Department finally get to report to the Committee on the performance for the two outstanding years. The Committee and the Function it fulfils is very important to the Department.
The Department will do its utmost to answer all the questions to the best of their ability. The Department has always been diligent in responding to the meetings called by the Standing Committee on Public Accounts.
Regarding the dispute with the AG, the AG has filed its answering affidavit of which the Department received a copy the 25th February 2019. Legal services, together with the state attorney and council for the Department are applying their minds to the same and are working on the relying papers after which the judge president of the Cape High Court will be approaching for allocation of a hearing date on the semi urgent call.
The Department's position, in respect of the ongoing cases, is that it is not in a position to comment on the merits or demerits of either party's case as the matter is before court awaiting hearing and adjudication. The Financial statements represent the Department's approach and assessment of its financial transactions for the relevant financial years and the AG's report reflects the apparent disagreement with the same. The Department received the highest awards in 2007, 2008, 2011, 2012, 2015. These were all the top awards for the Department in South Africa.
The Chairperson asked the Committee to discuss the Minister’s opening remarks.
Mr Joseph thanked the MEC for the Department’s response to the Committee's request and providing clarity in terms of their dispute with the AG. The Department's good track record and the awards received come from a different angle all together. It does not come from the government. It comes from external organizations. He asked the Department to state when there a deviation, according to the AG, that the Department did not report according to the previous years.
Mr Tyatyam said that on page 15, the MEC reported on steady progress in meeting 2019 targets. What were the major drawbacks in terms of not achieving some of the targets that have been set? He noted that the Minister mentioned that the Department has been having good reports. However, approaching 2019, there have been no good reports. How will that part be resolved in terms of the targets?
Ms Schäfer corrected Mr Joseph. These awards were given by the AG. The South African Institute for Government Auditors made the following awards to the Department: highest score in annual public sector reporting 2007, 2008, 2011; overall winner for annual public sector reporting in 2011 and including 2012 and 2015. These awards were given by the AG. So, the Department has an excellent track record. Bearing that in mind, it shows that this court case is a serious one. It must be a serious one if the Department prides itself in the track record that it has always had and stood for. Also, the Head of Department has been recognized for the great work that she does as an HOD nationally. In fact, National Government has even used her services with the permission of the Premier over many years because of her record. So, the awards are there to show that the Department takes this court case very seriously.
Ms Maseko advised that when the Department responds and refer to the case, it might lead the Committee into the merit of the case. So, the Department should try to answer based on the questions coming from the side of that Committee.
Mr Floris Huysamer, Chief Financial Officer, Western Cape Department of Agriculture, said that the reporting approach changed towards the financial year when the AG audited the Department. But none, of the paper work could change.
Mr Dirk Troskie, Director: Business Planning and Strategy, Western Cape Department of Agriculture, said that the main objective that the Department wanted to achieve was to grow the economy. To grow the economy, the Department had to increase the export of wine to China and to create jobs. In terms of increasing export of wine to China, the target was set to double the export of wine to China over this period. The Department increased exports by 109% from the start till the end of the last financial year. In terms of employment, the Department had set a target of a hundred thousand jobs to be created. Between the fourth quarter of 2014, and the fourth quarter of 2016, the Department added 127 000 jobs to the Western Cape economy, both in primary agriculture as well as in ago-processing secondary agriculture. However, the drought struck the province and by the fourth quarter of 2018, the total increase was just over 80 000 jobs over that period. He added that agriculture is very important. Close to 1/5 of all jobs, in the Western Cape Province, is directly or indirectly linked to agriculture. What the Department is doing is important for those people who are the most vulnerable in the jobs market.
Ms Beerwinkel said that the Committee is being made to understand that the AG is questioning the credibility of the Department, and that is not the case. In the report of the AG, there is a "No" in everything. The only issue that the AG has with the Department is the reason why they are in court. They do not have any material misstatements, they do not have any procurement and contract management problem, no revenue management problems, no expenditure management problems etc. There is just one thing that the AG has an issue with the Department and that is that principle-agent relationship. So, it has nothing to do with discrediting the Department and all the awards it has won. It is about the recording of a practice note. She asked the Department to state when they became aware of this practice note.
Mr Huysmayer responded that this is the issue that is before the court. So, the Department cannot discuss the matter.
Discussion on the 2016/17 and 2017/18 annual reports of the Department of Agriculture and Casidra
The Chairperson asked the committee to discuss the 2016/17 annual reports of the Department and Casidra
Mr Tyatyam said that on page 176, the report mentions that there were areas of improvement noted by internal audit. What were the areas of improvement? How have these improvements been addressed? Why was the Department in the same situation in terms of the internal control deficiencies? He asked for an explanation on how the issues of the misclassifications of funds been dealt within the meetings between the Department and the AC.
Ms Maseko said that, regarding the student support services, the internal audit highlighted that there is need for corrective actions and monitoring will happen. The 2017/18 report has FET and HET assurance engagement and it also states that there is need for corrective action. She asked if there are totally different scenarios of student support. What will be the remedy to the problem going forward?
Ms Joyene Isaacs, Head of Department, Western Cape Department of Agriculture, responded that most of these things are long term. Agriculture is not short term. There are a number of things that are similar in both reports. For instance, there is a report about an evaluation that spanned across two years. In fact, the Department only got the results this year. This is because the Department is assessing an ethical standard that has been implemented by the wine industry. A number of people have asked for more information, so the Department had to extend it. Regarding Higher Education and Further Education, there was a tracking system and it went very slow in terms of the implementation. Internal control told the Department that it was not doing what it was supposed to do. The Department kept it on two years so that it could push the service provider to complete it. There were a number of interactions to get it done. So, each of those have very particular backgrounds. Regarding the Higher Education and training, they want to shift the college to National. The Department needs the get the accreditation also sorted out. There is a number of procedures that need to be sorted out. They are probably going to stay on the list for a long time.
Ms Maseko said that, from the AC's report, it looks like it is something that can be fixed in one financial year.
Mr Huysamer said that there were eight internal auditing in 2016/17 financial year. For six of them were 100% all recommendations were implemented. The Student system was the basis of why other things fell behind. The other one was information Technology disaster recovery plan. Those were the only two that had outstanding recommendations for 2016/17 financial year. The Department of Agriculture is on a different platform than the rest of the province in terms of IT. The Department therefore needs to do other things that other departments do not have to do. The Department now wants to create a disaster recovery site. There is the need to put the same system in a mirror image at another place. The problem is the Department needed something like 24 square meters and the quote that came in was for just over R2.1 million. The cant could not pay R166 000 a square meter. The Department needs to revisit what needs to be done there. Two of the four recommendations could not be done because the site was not built in terms of the disaster recovery plan. Regarding the student support plan, there were 22 actions agreed upon and only three were implemented. The Department needed a complete IT system because the other one was outdated. The Department did pick up issues with the service provider. It was nearly two years falling down schedule. All these recommendations were dependent on that system to be completed before the recommendations could be done. So, the Department does have its challenges. Internal control is not only financial, it is a complete exercise.
Ms Beerwinkel said that on page 210, the Department explains its transfers and subsidies. Page 262 lists the amount that was transferred. Page 279 explains where the transfers went. The report then breaks down how much was given to Casidra and how much was given to the other private enterprises. She asked the Department to guide the Committee to the page, in the Casidra book, where they payment to Casidra can be found.
Mr Huysamer said that there were two different accounting processes. Casidra has opening balances and closing balance which the Department does not have. That is a reconciliation on their side. Both the Department and AG, confirm that the transfer is followed, to make sure Casidra received whatever the Department had sent.
Mr Freek Van Zyl, Chief Financial Officer, Casidra, responded that in the Casidra 2016/17 annual report, one figure is reported on page 62 and the other figure is reported on page 74. It is the one on page 74 where there is a reconciliation as far as what cash was received in the financial year and what was transferred over the year. The figure on page 62, which is gross funding from agriculture, is R 23.387 million. On page 74, the total is R 200.133 million.
Ms Beerwinkel asked for an explanation about the overspending in the Casidra book.
Mr Van Zyl responded that it is just one transaction that was transferred to the drought fund by Casidra, which was around four million rand. In the 2016/17 year, two million rand was transferred to the drought fund and it was not budgeted by Casidra, and in the 2017/18 year, it was four million rand.
Ms Isaacs responded that in 2016/17, drought was in its second going on to its third year. The Department needed permission from treasury to move money to Casidra from the Department's own savings. So, it could only happen in the adjustments. The Department also started applying to national for funding. Drought funding to support farmers comes from four sources at different times. It came from national disaster, DAF, Western Cape Province and the Department's own budget. Even a drought disaster has a complexity to it because the sources of money are from different people. The reporting is required from different people. Casidra has always done payments because one of the problems facing the Department is that when and the end of the financial year, the farmer's problems do not stop.
Mr Tyatyam asked for an explanation on why the AG thinks that the leadership did not exercise adequate oversight over financial reporting and the matter of non-adherence to SCM.
Mr Huysamer responded that the AG has four root causes. These include leadership, internal control, and oversight. If they find something wrong, they will link it to the root causes. They found transfers wrong, according to their report. Because they found it wrong, they said there was a leadership issue. That is the core of the Department's disagreement because the Department says otherwise. They make assumptions in terms of what they believe they found. They are a chapter nine institution, and this is their opinion.
Ms Maseko asked if it is correct to assume that the Department can account for every cent that has been invested within Casidra for the benefit of the Department.
Mr Huysamer responded that there is a reporting mechanism and a memorandum of agreement which states what needs to happen to the money and there is a reporting process that happens to do that.
Ms Maseko asked for clarity on how long the reporting has been going on for. Is it a new thing?
Mr Tyatyam asked the Department to tell the Committee where the report can be found.
Mr Huysamer responded that the reporting between Casidra and the Department is in terms of the memorandum of agreement. Where the Memorandum of Agreement, for instance for drought, the reporting would be at Sustainable Resource Management (SRM). The reporting mechanism is there because there is a memorandum of agreement.
Mr Huysamer responded that the reporting has been going on for the past 10 years.
Mr Tyatyam said that what the committee has been missing is the Memorandum of understanding. The Committee is not well versed with that memorandum of understanding. In future, one needs to get the Memorandum of understanding. It is difficult to hold someone to account if you do not know what the agreement was.
Ms Beerwinkel asked the Department to state when it knew about the practice note.
Mr Huysamer responded that there were many papers the Department responded to. Then there was a practice note. The last one was in May 2018.
Mr Joseph asked the Department to explain the role that the `AG plays in the pre-determined objectives. Also, when do the per-determined objectives kick in?
Ms Isaacs responded that there is a set of nationally agreed indicators, which is about 22 and sometimes 23, that is agreed by the nine provinces and national. That has to be the Departments' indicator. Then, there are provincial objectives that need to be in. The AG needs to check both of them, in terms of what the Department puts out there. About three years ago, they started looking at the pre-determined objectives and looked at whether the Department had reached a target. It is believed that eventually they want to publish whether a Department has reached 80% critical mass. It links back to the budget whether you have done 80%, but you have spent 100%. There might be link between the budget and the pre-determined objectives. So, the AG definitely looks at it. At the Moment they have started with two programs and they have expanded it to three and to four because it is also about a learning curve for them because it is new. It is not necessarily like the financial audit. It is a completely different set.
Mr Huysamer added that they audit it. The Department says that it has reached its target, and then they go and check if the Department lied or not. In other words, they look for evidence. So they are involved. In their audit report, they also give an opinion on the non-financials.
Ms Beewinkel said that the auditor does a spot check, pulls out a certain program. if they had chosen a different program, because program three is where Casidra fall under. If they had chosen a different program, would they have picked up this discrepancy?
Mr Huysamer responded that the discrepancy of the transfer payments does not come from that audit. They do different samples for findings. However, because the transfers payments were all big numbers, it is possible they do not audit them all.
Ms Beerwinkel asked if the transfer to Casidra was not in program three.
Mr Huysamer responded that some of them were. For instance, the drought transfers were not in program three. That was in program two.
Mr Tyatyam asked, regarding the 18 cases on staff debt in terms of bursaries. Are the staff are not finishing training or are they dropping from their courses?
Ms Beerwinkel said for an explanation of the virements on page. It looks strange that after the virements, the books balanced.
Mr Huysamer responded that the shift was 0.42%. It was only R3.4 million which is over the budget. There was no need for the shift to happen because the Department has 8% deviation in terms of the PFMA that the Department can stay within.
Ms Beerwinkel was concerned about the amount that was taken from rural development and used for drought management. Additions were made to farmer support and development. Rural development and farmer support development speak to basically the same thing. It is strange that so much money was taken from rural development which seems to be a very important program that should rather be funded more.
Mr Huysamer responded that there was under spending on rural development because they are a very small unit. They had a problem on capacity. A lot of people were leaving. For that reason, they had under spending. The Department had other places were the saving could be put to good use.
Huysamer said that the Department gives bursaries to staff, but if they are unsuccessful, the Department would get the money back from them. The principle is that the Department does not pay for unsuccessful studies. It is not the Department deciding. The person will decide or the institution the person is at decide that there is no progress enough to continue.
Mr Joseph asked for clarity on the difference between public cooperation and private enterprise.
Mr Huysamer responded that public cooperation is part of government. Private enterprises are not related to government.
Mr Mitchell said, regarding bursaries, training and development and higher institutions. In all three of these, there has been a virement and a decrease. When it comes to the training of staff, why was it reduced? It is understandable with bursaries. When someone is academically excluded from an institution, it makes sense. However, from a training and development aspect, it is an internal training and development. Why is that reduced? Also, the higher institution where money is being transferred to, which institutions are those and what is the purpose?
Ms Isaacs responded that the Department has about six sources of development. The first one is that there has to be an internal focus because the Department has to give people an opportunity who have not finished matric or do not have a first degree. This is not full time, it is done while they are working. It highlights why people default. It is difficult to keep both going. Higher education and training is a college. The Department has a college with a few hundred students who do agriculture. The Department needed to shift the profile of that college because it was predominantly white. It was also predominately male. There was a need to changes both the gender composition. It was also realized that to help the poor students to come and study, you cannot just give a bursary. You almost have to give a scholarship. This is because they often do not have pocket money, bags or clothes. The family's poverty impacts not only on their ability to go an institution but also to have the dignity to participate as a student. The Department also got some money from DAF to take agricultural graduates and place them in places where they can get work experience. This is because these young people cannot find work because they are not well qualified in agriculture.
The Chairperson asked the Committee to discuss the Casidra 2017/18 annual report.
Mr Tyatyam asked if, in terms of the deficiencies that had been there, the Department was in the right track in trying to resolve the issues.
Mr Van Zyl responded that Casidra is in the right track in resolving the issues.
Mr Tyatyam said that according page 38, part of the responsibilities is to ensure the integrity of the company's integrated annual report. Is the integrity of the annual report intact? He asked for Casidra's view on the funding model, particularly about the issue relating to the principle and agent relationship.
Mr Huysamer responded that the question on principle- agent relationship cannot be answered either by the Department or Casidra because it is one principle that the Department also contests.
Mr Kobu Oosthuizen, Acting Chief Executive Officer, Casidra, said that in terms of the challenges, the biggest challenge was the drought funding which was not in Casidra's APP.
Mr Van Zyl said regarding the funding model that the answer will come from the court. It is not only going to impact Casidra and the Department because there are other Departments across the province which also have agencies working for them. So, the outcome of that is much broader than only Casidra.
Mr Van Zyl responded, that over the last couple of years, the reporting model or the framework for businesses out there expanded a lot. Casidra has tried by starting with the governance section. Unfortunately, Casidra is also very much framework driven. There are more things that Casidra can report on but the budget is very limited. However, it is not fully integrated currently.
Ms Maseko said that one of the focuses for Casidra is to identify and establish the new partnerships. With the drought being one of the problems, how hard was it for this financial year for Casidra to establish that. What is the contingency measure going forward because the drought will not go away soon? Regarding the hardship of managing the CPS, is there and ease in doing it now? What regulations have been put in place that is alleviating the challenges that were making it difficult for the CPS to operate accordingly for the benefit of the communities that were supposed to be the beneficiaries to the CPS?
Mr Oosthuizen responded that, regarding the CPS, Casidra is only involved with one. The responsibility for the CPS is fully with the Department of Rural Development and Land Reform. Casidra's interaction is more in terms of the farm where Casidra has created a private company and the farming enterprise is fully formed under this company.
The Chairperson asked the Committee to discuss the Department's 2017/18 report.
Ms Maseko noted the 41% of the consultants that were appointed had BBBEE level of five rating and the majority were awarded contracts were on the level of four or five. What are the reasons for this?
Mr Huysamer responded that the Department works on a BEE scoring. If the Department goes higher than four, there will be specific reasons for that.
Ms Maseko asked, regarding land care, the department to explain if there are programs implemented for the Department to implement the land care projects.
Ms Isaacs responded that it is the first time ever this program gets audited. If you do not understand what the AG is looking at, you will get a shock. For the program, the Department gave the evidence. They understand evidence in a way that is probably different to that of the Department. So, there is need for the Department to calibrate them. The Department has put corrective steps in place. But It was the first time that they were audited. That counts against them, but it also counts in the favour of the Department because now, the challenge is that they need to actually fix it so that it does not happen again. What is more important is the land care deals with the issue of land. How to look after the soil you have. So, they do alien clearing, they do fencing, they do awareness of young people. The research show that if you train young people between nine and twelve, and you establish and environmental values, it continues right through their lives. So, the Department is looking at that and it is doing that.
Ms Ashia Petersen, Director: SRM, said that regarding the land care program, the Department was required to have construction completion certificates. What the Department does is that it provides inputs on the farm plants. The Department does not necessarily do the construction. The Department can demonstrate that It has provided the necessary advice and it is up to the farmer to decide whether they are going to implement or construct the necessary infrastructure.
The Chairperson invited the Minister and the HOD to give their closing remarks
Ms Schafer said that it was important to acknowledge the members for steering their way through every complex session. sShe thanked everyone for the indulgence and patience. She also thanked the Department for their patience.
Ms Isaacs said for every year under review, if there is no drought, there is a water crisis. If there is no water crisis or a drought, there are fires. If there are no fires, there is avian flu. At the moment, the Department is dealing with flash floods that happened in January, the drought, the fires etc. It is also the Change of season for the avian flu. The Avian flu will impact especially on the black farmer. What the Department has learned is that as much as agriculture is done, if the disaster framework is not managed, the Department will in for a rough ride. Resilience is important. Also, it is important to have an oversight, whether financial or non-financial.
The Chairperson asked Ms Maseko to give closing remarks from the Committee side.
Ms Maseko thanked the Department for meeting the committee. The Department of Agriculture is the heart beat of this province. The economic growth and the economic development of this province depends on this Department to run excellently. Despite the challenges, the Department is trying their level best to make sure that they sustain the little that is there within the province. The Committee Salutes the Department for all its hard work.
The meeting was adjourned.
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