WCED Audit outcomes: 2018/19 Annual Report

Public Accounts (SCOPA) (WCPP)

15 October 2019
Chairperson: Ms N Nkondlo (ANC)
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Meeting Summary

The Committee was briefed by the Western Cape Education Department on its audit outcome. Members of the Committee were informed that the Department had regressed in its audit findings from a clean audit to an audit with qualified findings. The Department expressed its dissatisfaction with the findings and assured the Committee that it was working hard to improve its audit outcome for the next financial year.

The Department indicated that the looming budget cuts pose as a challenge for the Department in several areas. One of the challenges is the continuous migration of learners from other provinces into the Western Cape. It has placed more pressure on teachers in schools across the province. Another challenge is maintaining funding for the Department’s pro poor policies.

Members indicated that whilst they understood that the Department does have its own obligations, it has a Constitutional imperative to provide education all children in the Western Cape. The Department agreed with the Committee’s recommendation and assured the Committee that the Department will always try to execute its constitutional obligation.

The Auditor-General (AG) flagged the internal controls of the Department and added that the Department should work on strengthening its internal controls. The Department informed the Committee that it was aware of the recommendations provided by the AG and that it had already moved to address the weaknesses of their internal controls. A plan has been put in place by the Department and will be provided to the Committee at a later stage.

Meeting report

Ms N Nkondlo (ANC) indicated that the official Chairperson of the Committee is not available, and that she will be chairing the meetings for the next week.

The Chairperson said that because the briefing on the audit report had occurred in an earlier closed session, the current meeting would be a discussion on the report.


Ms Debbie Schäfer, Member of the Executive Council (MEC or Minister), Western Cape Education Department (WCED) said that the Department is under pressure to spend the entirety of its budget, and she has made this clear to the officials. She added that there has been a shifting of ‘goalposts’ within the Department.

Minister Schäfer said that this was the first time in four years that the Department had not achieved a clean audit. This was very disappointing for the Department. The audit outcome mostly flagged issues such as the performance of the Chief Executive Officers (CEO) and the performance information of the Department.

Mr Brian Schreuder, Superintendent-General, WCED, said that he is satisfied with the review of the Department’s governance structures and the associated assurance partners, including the internal audit and the Auditor-General (AG). He added that he is not satisfied with the regression in the Department’s audit outcomes. The Department is working hard to ensure that it can address all of the issues found in the audit outcome. This includes strengthening its governance structures as well as implementing new innovative ideas to improve education outcomes. The Department is trying to find a balance with the constringency of procurement processes and their delivery. This is a fine balance, but the Department will discover it so that it can improve the delivery of services.

Mr M Sayed (ANC) asked what goal posts the Minister was referring to and who changes these goal posts.

Minister Schäfer said that she cannot give out the financial details at this present moment and this might possibly emerge during the discussions.

The Chairperson said that the Committee will now focus on Section C of the audit report.

Ms L Botha (DA) indicated that the report mentioned that there were seven closed cases for fraud and corruption. She asked what sanctions were imposed on the guilty parties.

Mr Sayed asked the Department why there is a contradiction in the information in the audit report on whether the Department’s internal controls have been effective.

Mr Sayed asked what action plans in response to the audit findings are, and what is been done to implement the action plans.

Ms D Baartman (DA) congratulated the Department on its audit outcome.

Ms Baartman asked what was discussed during the management meetings listed in the audit report. She also asked why there were no valid apologies sent by certain officials for not attending the meetings.

Ms Baartman asked how many learners had migrated from other provinces into the Western Cape education system, and from which provinces they came from. She also asked the higher level of school enrolment referred to in the report was.

Regarding the open cases of fraud and corruption, Ms Baartman asked for details on the nature of the cases and what action has been taken.

On programme one, which was under spent, Ms Baartman asked for an explanation of the under spending. She also asked if the rollovers were approved were in programme two.

Ms Baartman noted that there were fewer appointments of interns, she asked for reasons

Mr Schreuder said that the Department does not have the details of the closed cases at this present moment but will provide this at a later stage.

Mr Leon Ely, Chief Financial Officer (CFO), WCED, said that there has been less fraud and corruption within the Department in current financial year.

Mr Schreuder said that there were valid apologies given by the senior managers. Usually managers will only miss meetings if there are competing demands placed on them.

Mr Schreuder said that rollover funding is always with the adjusted estimate budget which is only approved late in the financial year. On the issue of slow progress, he mentioned that this has been a challenge for the Department. The executive has discussed with management on a variety of agreed upon recommendations for improvement that have come from internal audit recommendations. The Department has a financial improvement plan which is monitored once a month to keep track of progress. Implementation of the recommendations has been difficult because the administration spans across districts and schools. There are currently are three tiers of implementation: the Department, districts and schools. He added that the Department has not been able to meet the timeframe of the targets that it has set. To improve this, the Department has entrusted its executives with the implementation of recommendations.

Mr Ely said that the audit committee has reported on the service providers and the assurances that they have given the audit committee on the internal controls of the Department. This is separate from the AG’s audit report, which contains its own findings. The Department is aware that there is a greater fixation on effective internal controls and is working to ensure that these will be strengthened. The Department has made significant strides in the implementation of the AG’s recommendations and there is a plan in place to track the progress. Internal audit tracks the progress of the Department on its implementation to ensure that the reporting is done accurately.

On interns, the Department looks for specific competencies and at times it does not find these competencies to fill the vacancies. The Department gives interns exposure to the working environment to gain experience. Many of the interns are employed by the Department. The rollovers refer to the previous financial year and all of them were approved, except the provincial ones.

Mr Schreuder mentioned that there are two areas that the AG looks at, which are the predetermined objectives and the financials of a Department. Previously, the AG only looked at the financials. The predetermined objectives fall into the Department’s performance plan and are prescribed by the National Department of Education (DBE). The predetermined objectives are not always clear, and sometimes differ between provinces. Mr Schreuder added that this is what was meant by the shifting of the goal posts.

The Chairperson asked for a reason why the Deputy Director-General (DDG) did not attend the Education Planning Committee meetings. She also asked what the Department means when it says in the report that “pro-poor policies might be unsustainable”.

The Minister said that the population of the Western Cape is becoming poorer. Given that the Department has had budgetary constraints and is set to face budget cuts next year, it is becoming difficult to allocate funds to pro-poor policies.

Mr Ely said that there are two types of government schools: no-fee payer schools and fee payer schools. Pro-poor policies mostly assist the no-fee payer schools. The fees of the school are subsided by the Department. Amenities such as transport and textbooks are provided by the Department to the students. Pro-poor polices are at a risk because of the poor economic climate which has led to the Department cutting its allocated budget. This has made it difficult for the Department to sustain its funding in pro-poor policies.

Mr Schreuder said that the assessments done on the provincial economic outlook indicate that the province is becoming poorer. And the problem is that the funding is not increasing with the need and demand within the province. He added that the reason why the DDG has not been attending the Institutional Development and Coordination Committee meetings is because the individual is no longer an employee of the Department. The DDG resigned due to ill-health.

The Chairperson said that she understands the financial position that the Department is facing, but it is important that the Department remembers that it has a Constitutional duty to provide education to all learners. She insisted that the Department should find a way to balance the two responsibilities.

The Chairperson indicated that the Committee should deal with section E of the report.

Mr M Xego (EFF) asked if the Department had a plan to deal with the issues in internal controls so that they do not re-occur in future. He asked that this be provided to the Committee.

Mr Xego asked why the funds from the High School Improvement Plan were shifted.

Ms Baartman touched on the audit cost of the Department. She asked if the Department had savings, or if it did not yet pay its cost.

Ms Baartman asked why there was a decrease in the number of bursaries given to Departmental employees, and if it is due to a lack of funding. At the outsource services, the budgeted amount is approximately R15 000. Ms Baartman asked what the differences are in the past year for the amount to have increased from R22 000 to R37 000.

On the conditional grants, Ms Baartman asked if these are the same grants that the Department had spoken of, or if there is a different conditional grant that needs to be dealt with. Ms Baartman asked what the goods and services relate to.

The Minister said that the Constitutional duties cannot be delivered without the money. The Department does want to fulfil its duties, but it is struggling without having the required funding.

Mr Schreuder said that the issues that were flagged by the AG were the record keeping of learner attendance and teacher attendance, and learner records/textbooks. These controls are implemented all the way down to the school districts. Record keeping is not the issue but rather the system of record keeping. There is a programme manager that is responsible for monitoring of record keeping in these areas. The Department is working on improving its record keeping.

Mr Ely said that the officers in the schools are improving their record keeping of learner attendance and have the information which can be accessed by the Department. The Department has a system that allows schools to upload class registers. The director will follow-up on this every month.

Textbook registers are the responsibility of the school principals, and the learners are required to sign a register to indicate that they have received a textbook, and the teacher must ensure that all school learners have their textbooks. The Department has implemented a system that monitors its controls.

The High School Improvement Programme operates from grade 10 to 12, and the main focus is to improve matric results. There is additional funding provided to schools with this programme.

On the audit cost, the budget is less, and the issue is on the timing of the invoice. When an audit has been conducted, the Department is given an invoice which it has to pay. Currently, the invoice has not been settled.

The Department does ask employees to apply for bursaries, but not every employee chooses to take the bursary, and this has resulted in the savings that have been outlined. It is not the case that the Department has decreased its funding into bursaries.

The conditional grant includes goods and services and the disability grant. This grant was under spent, but the Department has requested a rollover. Regarding the outsource services, those are consumer grants that were covered previously.

Ms Botha asked what the four complaints listed in the report involve. She also asked if there were any lives lost this past financial year, and what the other losses constitute.

Mr Sayed proposed that the Department give the Committee updates, as well as Scopa, on their progress. He asked if the Department could notify the Committee on a reasonable period for it to report to the Committee. On the travel and subsistence, he asked how many foreign trips were taken by the Department. He asked if the Department could provide the purpose of the trip and where the trips were taken too, who formed part of the delegations, whether the officials travelled at the same time, feedback on the trips, and how long each trip was.

Mr D America (DA) said that with the predetermined objectives, the Department will never be able to get the internal controls 100 percent right. There will always be a variance in the report on their achievement. He asked if there is an agreed tolerance level of the variance that is allowed, which will not result in a re-occurrence of the findings.

Mr America asked what the Department plans to do with the continued migration of students from other provinces into the Western Cape. He also asked which programmes will be affected by the budget cuts.

The Minister said that the strain on municipal services has become a serious concern for the Department. Some of them are not managing. The Department is currently trying to negotiate with the City of Cape Town to reduce the high rates it charges the Department for school facilities. She indicated that the budget cuts will have a severe impact on the Department. The Department has estimated that the five-percent budget cut will equate to R1.2 billion, which is equivalent to an entire year of the Department’s budget for infrastructure. This will make it difficult for the Department to maintain its school infrastructure and build new schools. She added that teachers within schools are under severe stress at the moment and are struggling to cope with the demands.

Mr Schreuder said that teachers are core to the Department’s initiatives. So much so that 85 percent of the Department’s budget is allocated for teachers salaries. He added that the demands that have been asked of the teachers have been great. This has meant that teachers have had to perform extra duties. Currently, there is no space for the Department to cut their budget. The teacher to child ratio in the Western Cape is 1:40, which is currently the worst in the country.

Mr Schreuder said that the Department will supply the foreign travel details. One of the focus areas of the Department is to develop leadership. He has asked the Minister if the Department can select certain individuals that it can help to develop their leadership skills. The Department has a programme that it has been asked to present next year, but presently it is struggling with determining the funding required for the programme. Officials to the EdTech conference in the United States, participating in such events has allowed the Department to not only contribute to discussions on innovative methods for improving education, but also to gain new ideas that it can use for the schools in the province. The Department is focused on future-learning programmes.

Mr Schreuder said that the Department will be able to report back to the Committee at least twice a year.

On the tolerance level, Mr Schreuder said that the AG applies an audit tolerance level of the reported figure and the found figure.

Mr Ely said that the “other” consists of courier delivery because the Department must deliver the question papers to the schools and other costs that relate to communication. In terms of the pillar policy, when an official applies to it, the Department must consider that leave application. This goes to the office manager who assesses the leave application and the Department must either approve or disapprove it.

Mr Ely said the fraud case occurred in the 2008/09 financial year. The employee was convicted and served a jail term. Currently, the Department is working on recovering the money.

Mr Ely said that internal controls are a very complex area. There are two areas, operational controls and key controls. The Department has to consider the costs for maintaining key controls. The tolerance level is gauged through the investment that the Department is willing to make on a particular control.

Mr America asked how much of the money was retrieved from its investment in State Information Technology Agency (SITA).

Mr Ely said that the Department did not receive any funding from its investment in SITA. SITA provides funding for other projects, which augments the investment that it has made. He added that he is not sure whether in this case the Department had been reimbursed by SITA.

Mr Sayed asked when the Department will provide the Committee with clarity on the cases it has mentioned in the report.

Mr Ely said that he cannot make any remarks on its current investigations. The Department is trying to conclude the investigations.

Mr Sayed asked if the investigations that have been mentioned in the report have started, and that the details of each case mentioned be provided to Scopa.

Mr Ely said that National Treasury (NT) has a new framework on cell phone policies, and if there is non-compliance, investigations should be done. He added that the Department has cell phone contracts with various network providers in the country and has to communicate with them. This stalls the investigations and may take up to 12 months. In 2017/18, the Department had 53 cases, and only six have been concluded. So, there has been movement in that regard. Internal control investigates irregular payments that are made in the Department.

The Chairperson thanked both the Members and officials of the Department for their input in the discussion. She asked the Department to update SCOPA on its progress on the implementation of the recommendations. She reminded the officials that they must ensure that they try to deliver on the Constitutional imperatives whilst balancing their financial obligations.

The Meeting is adjourned.


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