The Committee received presentations from the South African Social Security Agency (SASSA), the National Development Agency (NDA) and the Department of Social Development (DSD).
SASSA said that their focus was on the audit plan and measures to deal with financial misconduct, because these were issues that continued to sully its reputation. The action plan was aimed at overcoming the lack of leadership, improving financial performance management and governance, and exercising greater control over grants. The agency gave details of the R2 billion in irregular expenditure which had contributed to its negative audit report.
Members said that what had put SASSA in its current position was a lack of planning and negligence, because people should have been paying attention to administrative detail. The AG had said that most of the irregular expenditure was because the supply chain management (SCM) capacity at SASSA was not up to standard, so the Committee wanted an assurance that the critical positions in supply chain management would be filled. Members also pointed out inconsistencies in the report, and said SASSA had to address all its challenges in a concrete and sequential way. The Committee needed to get quarterly progress reports to avoid being told by the Auditor General (AG) that normal processes had not been followed.
The NDA presented its action plans to respond to the 2018/19 audit findings and to the recommendations in the Budget Review and Recommendations Report (BRRR). The NDA structured their presentation to deal with the root cases and corrective plan, which incorporated the timelines to be applied. The Committee responded that all they had wanted was results, and the NDA had raised the bar to a new level.
The DSD reported that during the quarter under review they had managed to meet only 65% of their set targets, and this would require them to put more traction in the following quarters to maker up the backlog.
Members questioned the gratuities paid to the Department’s former Minister and Deputy Minister; asked why the Western Cape had not been prioritised for the anti-gangsterism strategy; how the public could access psychosocial services, particularly in the light of the current scourge of gender-based violence (GBV); and how it was dealing with the challenges involving Early Childhood Development (ECD) centres.
SASSA: Audit action plan and financial misconduct cases
Ms Busisiwe Memela, Chief Executive Officer (CEO), South African Social Security Agency (SASSA), said SASSA was going to focus on their audit plan and financial misconduct cases because these were issues that continued to impact its reputation, over and above the work they did. It would address the high-level action plan in terms of the audit, focusing on the two material adjustments that had to be made in the financial plan of 2018/19.
They would address all the different issues that the Auditor General (AG) had indicated as challenges in their space, which related to the leadership capacity that had affected control measures resulting from not filling a number of positions.
Ms Memela said the high-level action plan would cover the leadership, financial performance management, governance, grants and the audit action plan, and financial misconduct cases, most of date back to 2016/17.
Mr Tsakeriwa Chauke, Chief Financial Officer (CFO), SASSA, said that in the 2016/17 and 2017/18 years, the agency had struggled to achieve a qualified audit. A change was needed in the 2018/19 year, and it had managed to overturn the negative audit outcome. The challenges in 2016/17 and 2017/18 had been the incompleteness of irregular expenditure receipts, which was financial misconduct.
He said there had been an issue with social assistance fees. There was a dispute between the agency and the AG on the amount payable to the South African Post Office (SAPO) as a service provider. The main reason for the dispute was due to the transition project that SASSA underwent when taking over the contract from Cash Paymaster Services (CPS) to SAPO. There were a lot of decisions that had to be taken and implemented on the ground. Part of the problem was that there were inadequate controls relating to the management of contracts in relation to the fees in terms of validating who got money from which platform.
SAPO had three main charges:
- R51 - when a person received money at a traditional cash paypoint.
- R23.49 - when a person received money over the counter.
- R13 - when a person got the money from a merchant or an automated teller machine (ATM).
What the AG wanted to know was how SASSA verified which platform a person got their money from. These were some gaps that related to the contract management context.
SASSA had developed the system and module of reconciliation only during the time of the audit period. It had managed to reconcile all the fees to SAPO, and that had ended up with SASSA being able to distinguish between the expenditure and over-payment.
The second issue related to an expense of R74 million which was incurred during 2017/18, between the months of February and March. This related to the transition, where SASSA had to in-source part of the work that was done by CPS, which was the Automated Clearing Bureau (ACB). This was the interpretation of how the agency needed to implement the phasing out of CPS and the in-sourcing of the ACB, because this work was done primarily by SASSA.
The matter was currently in court as there was a dispute between SASSA and CPS over the amount of R74 million. Because the matters were not concluded and there was a struggle with the AG, that was what had led to the material adjustments.
Part of what the AG indicated in the report was that the leadership did not implement effective controls to ensure accurate financial reporting, nor did they exercise adequate oversight responsibilities in compliance with applicable legislation, and this was related primarily to the two material adjustments that SASSA made.
There were also side issues around this, and for them to be able to turn it around in 2019/20, there were few commitments that they were undertaking to change the situation.
Mr Chauke highlighted the steps that SASSA would take to enhance leadership in the organisation:
- Make sure disciplinary action was taken. There were already 141 officials engaged in the process, and disciplinary steps had been taken to correct whatever had not been done.
- Improve the ethical conduct by making sure that the organisation knows the staff it has employed by doing background checks. 3 133 checks had been done so far, but SASSA still needed to do the remainder of its 8 000 staff. It had prioritised its focus at the management level, but also on people who have key functions, like ground administration and supply chain management (SCM).
- Consolidation of the action plans of its nine regional offices, to make sure that the minor issues that were picked up by the AG do not become major. They had developed a detailed action plan that covered all elements. They also had a high-level plan to track these matters at the executive level - the dashboard. There also needed to be a status recourse engagement which the AG required SASSA to do.
Those three policies had been developed and were currently being implemented, and by 31 March 2020 SASSA would have dealt with all these issues.
Regarding capacity issues, the agency had a moratorium that was implemented in 2018/19. The upliftment of the moratorium in the first quarter of 2019/20 meant that they had prioritised a couple of key positions largely at an operational level, just to close the gaps in terms of internal control. 233 posts had been advertised, and they had looked at the key positions that needed to be filled, which were at the different stages of recruitment.
SASSA looked forward to having completed the recruitment process for all the critical positions by the end of March 2020. They may not fill all of them, but the critical ones would be filled.
Mr Chauke said that since its establishment, SASSA had not done a review of the operational structure to assess if the organisation was fit for its purpose and able to give capacity where it was required. The review of the SASSA operating model had already been done, meaning that the high-level review had already been done and should be concluded by the end of November, which would indicate how the structure could support the operation.
SASSA needed to make sure that there was an improvement in terms of the quality assurance of the financial statements. What they had done was to review the independent audit so that they could pick up any discrepancies before it was handed to the AG.
Financial and Performance Management
Mr Chauke said that during 2018/19, management did not properly prepare financial reports that were supported by reliable information. One of the issues with the financial statements was contract management. There needed to be a review and update of the consolidated contract register, because it influenced the bigger part of spending, and the way in which it would be rectified was highlighted in the different points under commitments stated in the presentation.
SASSA had run a project from 2018/19 to review contracts to check if they had been concluded in accordance with supply chain management. This process had been completed, and all that was left was to present the report to the Committee.
Looking at the outstanding commitments, under normal circumstances the delivery period was 30 days. After the 30 days had ended, SASSA should be able to look at what outstanding commitments were still valid. The agency had enhanced their system to deal with any exceptions.
The commitment cited was one of the issues that they struggled with. The clearing of the long outstanding commitments meant that they would not have any commitments which would still sit in the system, which were not valid, or no longer relevant. It could be in a case where it was found that the delivery of goods and services had not happened, but it was still considered a commitment.
Certain irregularities had been found pertaining to asset management, and with SASSA being a big organisation, what they have done was a mid-term verification process just to check the existence of assets. This was to check whether each and every asset existed, and whether the condition of such an asset had been updated accordingly in terms of what they were expecting, but also to understand which assets needed to be disposed of.
Mr Chauke said that this process meant that they were now dealing with exceptions to make sure that those found to be obsolete would have to go through the process of disposal. Those that had been damaged must go back into the system to be updated as damaged, so that their value could be adjusted accordingly because a damaged asset would not carry the same value it had when it was in working condition. This process according to Mr Chauke would be finalised before the end of the year.
During the year end period SASSA also does final verification to ensure that the status quo of the mid-year result was still in existence, as that would influence the final statement. He believed that this project would conclude the issues around asset management.
Mr Chauke said SASSA had implemented a property management module. This was a requirement primarily because of the number of offices that SASSA had, which included the local and district office and service points. This module had been up and running from 1 April 2018, and what they had done was to make sure that the information with the Department and the information that they had was the same. That reconciliation had been done, so that they would not have any problems. They had also uploaded all properties where SASSA had acquired the profile, using its own processes which had been completed.
Mr Chauke said one of the issues that SASSA had picked up regarding the asset register, was that there were issues at the local offices because of how one may sometimes find services points at the local offices. This had an impact in the sense that when the AG checked on assets, they may have been moved from one room to another, and if they found them in a different place, this created a problem.
Mr Chauke said that the root cause affecting governance was that there was no capacity within the agency.
The Chairperson interjected to say that although Mr Chauke was pointing out the root cause, it was problematic that it was not written in the presentation and because it was not written, the agency would then need to tell the Committee the root cause in each and every area. He also said that Mr Chauke must make it his responsibility to make sure that these root causes were written down and the presentation was updated accordingly.
Mr Chauke said there was an issue of capacity in this area and that in the whole agency they had only one resource around the function of risk management, and that had been the biggest issue SASSA had.
Management had committed to appointing a risk committee, and he could confirm that it was up and running. Previously, this committee was not functional.
Because of previous issues, SASSA had decided that they needed to develop and implement a five-year strategic risk register. All executive management service (EMS) performance agreements already actually reflected risk management as a functional activity at the executive level. Therefore, any person who had a branch had that commitment in the performance agreement.
The Chairperson sought clarity regarding point two in terms of the finding.
Mr Chauke responded that the main finding was what had been captured in the presentation -- that there was no register and it was not updated. They had discovered as management that there were areas that needed to be addressed for the implementation of change.
The Chairperson took a moment to explain why there was a problem. He said that unless the AG had written it in the way it was being reflected in the presentation, that SASSA was being instructed by the AG to develop a register, was problematic and for that reason he found it difficult to note it as a finding.
Mr Chauke replied that the finding was what was written at the top of the page in the presentation, titled as ‘AGSA finding’.
The Chairperson assured Mr Chauke that he was doing a good job and did not think he was messing up, but the pattern of information delivery was not assisting the Committee to move with him during his presentation. He asked him to explain what the first column was, and Mr Chauke responded by saying that it was what management was committing to do to resolve the finding.
The Chairperson then asked about the root cause of the finding, and Mr Chauke said that he had indicated that the root cause was that there was no capacity, which was what management would put into place.
The Chairperson then alerted Mr Chauke to the fact that in his absence, someone reading the report must be able to relate to it in the same manner that he did. The problem he was trying to rectify was that, all parties must speak about the same thing. Furthermore, the fact that Mr Chauke was speaking about the root causes, yet they were not written in the presentation, opened up the potential of having the agency play games with the Committee, by deciding on the root cause that would make their case look good. Therefore, the Committee had to know that if SASSA says it was dealing with the issue of capacity and the AG had a similar finding, there must be honest accountability so that if the issue of capacity continued, the Committee could question why it was continuing.
The Chairperson said he wanted SASSA to commit to the root cause by noting it down, so that they could challenge it if it was not the right root cause. This was the reason why he was stressing the importance of noting the root cause down. Even though the finding was there, it was incomplete without the root causes.
Proceeding with the commitments that SASSA management was making, Mr Chauke said they had needed to identify critical policies and procedures that created an operational risk. What they had done thus far was just to say that they needed to get all policies in terms of the desk top analysis but prioritise certain policies that were giving problems for the agency. As a result, they were currently reviewing three policies, and one of them had just been approved by EXCO and the CEO.
Under human resources, there were 11 policies that they were prioritising, especially for the 2018/19 year, to be able to conclude the process. There were also 16 policies that the agency would be able to say they had updated for the year 2019/20 because they delt with risk in the operations.
Capacitating the internal audit function was linked to the risk, because when the internal audit was capacitated, they would be able to do the internal risk auditing properly. The positions that SASSA was currently advertising would be operational posts. The agency hoped to conclude that process by 31 March 2020. That would assist with governance in terms of risk management, risk reporting and the risk register in the organisation, ensuring that this was not a finding again in 2019/20.
Plan for findings that affected DSD audit
Mr Chauke said that SASSA was responsible for doing work on behalf of the Department, which had to do with the grant administration, as grants were being taken care of by SASSA on behalf of the Department. The work that SASSA dad was reflected in the books of the DSD as it was regarded as an agency of the Department.
This part of the presentation would deal primarily with the unqualified audit opinion received by the Department. The commitments detailed in the presentation were what SASSA was committing to do to overturn the AG’s qualified audit opinion.
The AG’s finding was based on finding a file that had missing documents for a person applying for a grant. Having a file with missing documents was what led to the limitation of scope, and that was what had resulted in the Department getting an unqualified audit opinion.
The root cause of what led to an incomplete file was the fact that some grant applications took place years back, and there was no update of the documents when legislation by the Department changed.
Currently there were 11.8 million files belonging to beneficiaries - people that get money from SASSA -- that they were committing to update. This commitment had been divided into two categories -- dealing with what the AG had found on the ground, and prevention, which was a long-term project.
SASSA would be attending to the files that the AG had earmarked as incomplete. There was a possibility that next year the AG could sample different files from the 11.8 million, so what they needed to do was update the whole portfolio, which was the 11.8 million files that SASSA currently had.
What SASSA had undertaken to do was to update the 11.8 million files through a scanning project. The project was currently under way, where existing documents were being scanned so that there was an electronic copy on record. While the project was being done, there also needed to be quality assurance of the files to make sure that whatever file was incomplete, they could go and find the missing document.
Finding the missing document meant finding the grant recipient, so that they could be informed of what was missing in the file and get a copy, and in that way the file could be updated. Thus far 6.2 million documents had been scanned, so around five million still remained unscanned. They had not resolved the exceptions, which was a process that entailed chasing each and every beneficiary that had a file with missing documents. This was a project that the agency was running and had put resources towards.
The ongoing scanning solution was the third commitment that the agency had made. This would see scanning happening at source. For new applications, the process would entail scanning the application so that there was so backlog in the scanning process. In 389 local offices, SASSA would ensure that the scanning solution that had been implemented was ongoing.
Mr Chauke said there was also a pilot project currently under way in ten offices, but it had not been rolled out because the agency was busy negotiating with the Department of Labour, which was questioning whether the scanning project was a new function. Successful negotiations would mean that the agency could roll the project out across the country.
The large amount referred to in the second finding by the AG of noncompliance, referred to a situation where a person applied for a grant. For example, if a person applied for a foster care grant, the grant was processed and paid out dependent on a court order. So, if a court order was received four months later, the amount became an accumulated amount that would need to be paid out to a beneficiary. Alternatively, it could happen that an application could not be finalised in the month of application for various reasons, so when in it was eventually paid out, it would be paid out as a lump sum.
What the agency was committing to in this regard was:
- The first commitment to update beneficiary files had been done and completed by the agency.
- Training officials on legislative requirements had taken place. The agency felt that there were gaps in the interpretation of procedures in the Free State, KwaZulu-Natal, the Eastern Cape and North West.
- In relation to commitment three, the Department had said that they needed to relook at the daily verification to make sure that if a certain number of grants had been put into payment for that particular day, someone reviewed the legitimacy of those transactions, which had to do with back office work.
- The Department had tried to rein in the large amount of delegation, because this had become a risk for fraud. Where there was an amount of about R10 000 which needed to be paid to a beneficiary, an assistant manager or someone ranking higher must review that payment and file to make sure that it was legitimate and had been calculated correctly before it was paid.
A circular had already been issued in that regard to guide the regions and to indicate the new delegations that had been put into place.
The next finding that affected the DSD, had to do with non-compliance with procedures and policies in relation to large amounts, and grants not reviewed to confirm the eligibility for overtime.
The agency had not done a targeted review in 2018/19, which it was supposed to do every year, so that it could issue review letters to a particular portfolio of grants. In the review letters, SASSA advises grant recipients to report to the local offices to check whether the status they had at the time of applying for the grant was still the same or had changed, making the person unqualified to receive a grant .
Mr Chauke explained that the medical and administrative reviews mentioned in the presentation, were different categories. As part of the administrative review, a means test would be conducted to check if the income of the recipient was still the same. When a medical review was done, it was done to see if the medical condition that existed at the initial application stage for the grant, still existed. Because the review cycle period was nine months if the person no longer qualified for the grant SASSA would stop payment only nine months after the review start date.
The AG had found a social relief issue that had to do with the system not being updated with changes, and non-compliance with the process. This finding had to do with a person coming to apply for a social relief food parcel. What the agency had found to occur often was that an applicant applied for the food parcel but did not come in to collect it. Then, when someone else went to apply for a food parcel, they were given the food parcel of the person who never collected theirs, without updating the system of the changes that happened. The first commitment that SASSA had made in relation to this finding was that they would link the system so that when they make the changes, it also notified the supplier who provided the service.
Currently there were two systems being used to run the operation -- the Basic Accounting System (BAS) which was where the payments happen, and the Social Security Pension (SOCPEN), which was where the applications happen. There was no direct interphase, primarily because Treasury would not allow any other system to interphase with BAS because it would affect other departments. A task team had been appointed to look at this function to make sure that configuration could happen. The agency believes that it would be able to finish this process at the end of the financial year, to align the system.
The second commitment had already seen the agency conduct training in the North West and Free State. The agency had spoken about the findings during the audit and the regions where the samples were done.
There was an issue that the AG had identified in their findings that had to do with the inadequate management and recording of grant debts which related to the payout of a grant the month after the death of a beneficiary.
Mr Chauke explained that a grant recipient qualified for a grant payout that took place on the 1st of every month, However, the preparation of that file for payout takes place a month prior, so ordinarily what happened was that files were drawn a month in advance on the 25th for beneficiaries that would be paid the following month. That portfolio was interphased with the Department of Home Affairs (DHA) to confirm that the people could be paid. When the instruction was issued to the bank and National Treasury to pay out, sometimes during the period between the 26th and the end of the month, some beneficiaries would pass away, and the agency would find that they had paid someone they should not have paid primarily because of the cut off dates.
Addressing the three noted commitments to address the findings, SASSA said a written warning was given to officials that did not check the transactions or addressed these three findings during the audit. A bigger portfolio of grants paid to recipients was with SAPO. Therefore, the agency had a relationship with SAPO which included having drawn up an agreement between themselves and SAPO, to make sure that pay-outs to deceased recipients within the SAPO space could be stopped.
However, pay-outs to recipients who were paid through the bank was still an issue that the agency had not been able to finalise, because it had to re-negotiate with the bank around that. 11.8 million beneficiaries were with SAPO, which meant SASSA could manage and mitigate against that exception through the agreement. By developing a gatekeeping strategy, they would be able to minimise any exceptions within the validation. This strategy would be considered by the executive committee (EXCO) only at their next meeting to enhance this area.
The AG also found that there was inadequate management of Service Level Agreements (SLAs) with SAPO, and that the relationship with SAPO was not managed correctly, with no punitive measures being implemented between SASSA and SAPO. The commitment to review the Master Service Agreement (MSA) and the SLAs meant that their needed to be cognisance of any debts that the AG had reviewed, and also what the internal audit reviewed. The draft MSA and SLA with SAPO had been completed. What was outstanding was the review of the fee structure with SAPO. SASSA was currently in negotiation with SAPO because the fee structure needed to change. The way that the MSA and SLA had been drafted was easy to manage, as well as the penalties in the event that there was non-compliance in that regard.
SASSA had also committed to improving the governance framework between themselves and SAPO, and the Department had also been involved in this process. To honour this commitment, SASSA had undertaken to manage this process as a project so that anything that needed to be addressed could be fixed within project timelines.
A directive had already been issued through the CEO, in agreement with the guidance framework which detailed the national and provincial structures, to make sure that SASSA could track the relationship and the deliverables to be done by SAPO. This should make sure that the AG did not have this finding in the 2019/20 audit.
Financial misconduct cases report
Mr Chauke said that because of the R2 billion in irregular expenditure and the financial misconduct issue that had been identified at the previous sitting with the Committee, SASSA believed that it was important to brief the Committee appropriately about the share SASSA had in the R2 billion, and where it came from.
He showed the Committee a slide that depicted a breakdown of the financial misconduct cases, which primarily indicated snapshots of the cases that SASSA was dealing with that had led to the financial misconduct finding.
The amount that SASSA had requested to be condoned was made up of 254 cases. Consequence management had been done, but it was also important that National Treasury did the condonation because irregular expenditure could not be cleared without Treasury making a determination. Only once National Treasury had made a decision around it, could it be taken out of the register. If a decision had not been taken, it could not be taking out the register, and that was one of the issues that they were dealing with in terms of irregular expenditure.
Mr Chauke said that SASSA was still waiting for condonation of R4.9 billion detailed in slide 21. Of the 254 cases submitted for condonation initially, National Treasury had come back with one case to be included as irregular expenditure, which related to Trifecta.
Major Irregular Expenditure Items (Part of Backlog cases)
Mr Chauke presented a series of slides to give a breakdown of what made up the R1.8 billion that had been mentioned.
The first amount of R419 million was for physical security services that were provided to SASSA between 2011 and 2016. This amount was calculated based on the number of security contracts that were extended more than once, and National Treasury had come back to say that those security contracts should not have been extended, and many extensions were declared irregular.
SASSA had asked National Treasury for condonation and in response National Treasury had asked SASSA further questions about consequence management and fpr confirmation that there were no fraudulent activities. This had been presented to a unit called Fraud and Compliance, to check if there could have been an element of fraud, and the report back was that there had been none. Corporate services and cross course management had been looked at, and there was a conclusion that the extension of contracts was confirmed to have been in line with legislative requirements. That report was presented to the Accounting Authority to look at, so that SASSA could go back to Treasury to get condonation.
Mr Chauke pointed out that R358 million had to do with the leases that SASSA got into in the Northern Cape and the North West. This matter had gone to court and eventually the Constitutional Court, and the relevant people had been found guilty for the securing of the leases. When the court process was finalised, SASSA went back to National Treasury, and the outcome was that National Treasury condoned the amount.
There was a transaction for R75 million which was subjected to a forensic investigation. The second highest bidder had been appointed instead of the highest scoring bidder when the contract was awarded. This was a public open tender at the time of making a decision. SASSA had gone with the second highest scoring bidder, and that was challenged in court. National Treasury also did an investigation into the matter and confirmed that it should not have taken the second highest bidder over the first. The difference in amount between the highest scoring bidder and the second, which was R4 million, was classified as fruitless expenditure.
There had been an amount of R316 million that was related to payment made to CPS regarding re-registration. Only once the court process was finalised would SASSA be able to engage National Treasury on it.
The information communication technology (ICT) contract extension happened in May 2016. The circular issued detailed that a contract could not be extended or varied by more than 50% of the original contract without Treasury approving it. By the end of April 2016, SASSA had already started the process of extending the contract. The Accounting Authority had considered this process on 5 May when the new circular was put into place, which resulted in an oversight of that transaction. The issue of having extended the contract without prior approval from National Treasury was picked up during the audit. SASSA had engaged National Treasury about this, which had allowed for consequence management to take place. As a result, the process should go back to National Treasury at the end of November for condonation of the R18 million.
SASSA had a contract called the Integrated Community Registration Outreach Programme (ICROP) for R279 million, which was an open tender. However, what did not happen was the verification by SASSA of the experience mentioned by the bidder, and it was later found that the experience was not as reported in the official procurement documents. SASSA had suspended this contract, but the company that was appointed had started their claim for damages, so this matter had gone to court. In their view, this became an irregular expenditure because of the issues picked up.
R43 million had been spent on the work stream during the period of in-sourcing grants. There was also the Ngoepe Commission that dealt with this matter. SASSA had undertaken to do an internal review to assess what they could have done differently. Labour relations had compiled a report which was currently being considered by the Accounting Authority, just to confirm whether or not only consequence management needed to be implemented, and how it should be implemented. This would be done, taking into consideration what had happened at the Ngoepe Commission. That should allow SASSA to finalise this process.
The R16 million transaction that related to the diagnostic risk assessment, was a deviation that SASSA did to appoint a contractor to do the risk assessment of pay-outs back in 2012 because there was risk associated with pay points. Even though National Treasury had already done investigations on this matter, SASSA had written to National Treasury on several occasions to request the release of the report, but it had not happened. It was unclear to them what the reasons behind the non-release were. SASSA was still awaiting the report to be able to take the process forward. The issue could not be concluded until it was understood whether or not there were fraudulent elements, or a misjudgement of the decision taken at the time.
R12 million was an irregular expenditure that was a result of a deviation to appoint a contractor or service provider to do communication and marketing services, which had happened during the transitional period. There was an issue about SASSA failing to communicate with people, and over and above what was done by the Government Communication and Information System (GCIS), SASSA had augmented the communication platform by roping in a service provider that was appointed by the DHS. However, there was a difference of understanding between National Treasury and SASSA, as Treasury preferred that SASSA go on a quotation process. This matter was currently being investigated by the Accounting Authority to take it forward in terms of consequence management.
SASSA had sampled the major cases that they were dealing with, and if they resolved the remaining eight cases, they would be able to resolve the R1.5 billion which was related to the main cases. If the R133 million that SASSA had already requested National Treasury to look into could be resolved by the end of the year, the closing balance for SASSA for the year 2019/20 would be around R200 million.
Progress on fruitless and wasteful expenditure cases
Mr Chauke said fruitless and wasteful expenditure had amounted to R83 million. Again, SASSA had decided to lift the major cases when tackling this issue.
The first case was that of VIP Protection security services, which was a matter that was currently in court.
The Chairperson interrupted Mr Chauke’s presentation to ask him to elaborate further about the protection given to the children, as stated in the presentation.
Mr Chauke responded that the children of the former Minister were protected by the service provider appointed by SASSA.
Ms Lindiwe Zulu, Minister of Social Development, interjected to point out the importance of making people understand what was being spoken about so that there was an avoidance of throwing information around without going into detail, because right now no one understood why the children needed protection. It gave the impression that someone had just woken up and decided to give these children protection.
Mr Chauke explained that the decision to provide VIP protection had to do with the time SASSA was busy with the grants issue. SASSA at the time was exposed to many risks associated with the officials, and as a result it had procured the services of company to protect its executives and some critical officials. Because they had experienced a situation where one of the SASSA officials was shot dead in the office, the appointment of the service provider was to enhance the security of the former CEO, the head of fraud management, and some prominent members of the communications division in the Department, because they did communication work for SASSA and so they were affected. There was therefore an agreement that SASSA should protect them.
There was also urgency related to the threat assessment within the environment of the Minister and the children, and because SASSA already had a service provider, there was a discussion that the service could be extended to some of the officials in the Department to manage the risk. The major issue was that there was no written agreement between SASSA and the Department, and both the accounting officer for SASSA and the accounting officer for the Department had left, and there was no written document that SASSA had been left with. Because SASSA did not have the authority to protect the officials of the Department, and because there was no written agreement, that expenditure had to been declared as fruitless and wasteful expenditure.
The Chairperson questioned what SASSA meant when they said that they had no authority, adding that the lack of authority on their part could not translate into mere fruitlessness but rather irregular expenditure, because if SASSA said it had no authority, fruitless expenditure was not about having authority, but rather about spending in a messy way, sometimes with the authority being there. Talking about what authority meant, he said that it had been a misapplication of supply chain management, and that could not be fruitless. Having no authority was a legal matter in terms of answering the question of whether someone was the right person to execute the duty at hand. He asked Mr Chauke to come back to the Committee with an explanation or answer.
Mr Chauke went on to explain that the fruitless and wasteful expenditure for the Mkondzo event in the Western Cape was a result of late cancellation after service providers had delivered. The amount reflected was what SASSA had paid for some of the services that had already been rendered when the cancellation happened. The service provider had come and erected the marquee and delivered the chairs before the event was cancelled. The service provider had rendered services as expected, but they were not enjoyed.
There was a timing issue that resulted in the fruitless and wasteful expenditure for lease payments for unoccupied accommodation in the Free State and Gauteng. The lease was supposed to come into effect at a particular time and when SASSA wanted to move into the leased property, they found that it was not ready because there were waiting for approval from National Treasury regarding tenant installation. Because of that delay, there was a misalignment between the existing and the new lease.
Control measures to manage financial misconduct cases
Mr Chauke described the strategy within SASSA to deal with the financial misconduct cases.
With regard to the completeness of the irregular expenditure register, SASSA had tackled the register first, and the actions implemented had resulted in an unqualified audit for 2018/19. Because it had a footprint in all provinces, sometimes the collection of information and validating manually became a problem. Therefore SASSA was introducing a system which would be electronic so that people could update wherever they were, and that information could be ready in a paperless format without misinterpretation. This was an activity in progress.
As part of the activities implemented, despite the fact that SASSA was busy with the transition from CPS to SAPO, they had done a road show to speak to management to create awareness and ensure no more financial misconduct cases would be on the register in an effort to prevent irregular expenditure.
To prevent irregular expenditure, a pre-audit was done in accordance with the newly established Supply Chain Management (SCM) unit, meaning that before a new contract was signed off it must go through the SCM unit for validation.In prioritising the SCM unit capacity. SASSA ensures that people who were recruited were trained appropriately.
Mr Chauke stressed that the lease portfolio was a serious issue for the agency, primarily because SASSA had a dependency from the Department to finalise some of the procurement issues. For example, when SASSA started, it had occupied a building which was procured through SASSA. The policy decisions that they and the Minister had taken was that the Department of Public Works (DPW) would handle office accommodation on behalf of SASSA. If the lease was in their name and they required the DPW to get them the lease by 2020, they would often find that Public Works had not finalised their procurement process by 2020, and when National Treasury was asked for a deviation they would not be in agreement that they should stay in the same building. This then resulted in them either needing to vacate the building, or go through their own process, and this was an issue that SASSA struggled with.
SASSA were focussing on 2019/20 in terms of consequence management. They had already set up a project plan to deal with the cases remaining on the register.
As a final comment, Ms Memela (CEO) said she wanted to indicate to the House that what had become clear was that SASSA’s major cases did not necessarily involve fraud. However, the fact of the matter was that they needed to follow due process to make sure that administrative errors were corrected through consequence management.
The big eight cases actually needed to be resolved as quickly as possible to ensure that by the end of the year, SASSA could come back to the Committee and point out where they were in terms of progress with regard to this cases. Its major challenge was that on the labour relations side, they did not have help to execute, so the issue was the need to in-source capacity so that they could resolve the cases as quickly as possible and focus on the business of the day.
The other key issue to highlight was the fact that many of the cases dated back to around 2015/16, but be that as it may, things needed to be done and in some instances, people had left the organisation. Nonetheless, due process must be followed.
The Chairperson said that the Committee’s main interest was making sure that the findings by the AG ended. The key word was that they were an “oversight” Committee which required them to monitor and evaluate SASSA to ensure they fulfilled their commitments. The AGSA had alerted the Committee to three areas of concern:
- Proper records relating to intelligible performance information;
- Compliance with the law.
Ms M Sukers (ACDP) asked about the big amounts the Committee kept hearing about throughout the presentation, one of which involved R1.8 billion. She had heard the explanation about where the money was, but her question was how much of that money was gone without there being any tangible benefit to the Department. Her second question was about the cost incurred when SASSA appointed the second highest bidder instead of the first, relating to the R75 million. How much of that money did SASSA lose because of the case? What did it mean for the other service provider in terms of any money paid? It was important for SASSA to let the Committee know if there was any value derived from this expenditure, because just because it was an irregular expenditure did not mean that there was no value obtained.
Ms D Ngwenya (EFF) said that listening to SASSA’s report she was able to conclude that what put SASSA in the position it was in was a lack of planning and negligence, because should people have been paying attention to administrative detail.
She questioned whether SOCPEN was serving its purpose and if there was a way it could be enhanced. If this was not possible, could there be a change in the system altogether to make sure it worked, because there were a lot of loopholes. Ideally if it was what it was supposed to be, they would not be going through the issue of non-alignment that had been raised.
Although she was not sure how governance worked in government entities, in the private sector it was important that an organisation had a very strong human resources department, with good labour relations experts that would deal with fraud and other issues like SASSA had. She wanted to find out the HR process of dealing with disciplinary-related issues. Did SASSA have an expert who dealt with these cases and would be in a position to give a clear, detailed report about what was happening with the identified officials involved in fraud and corruption?
Ms Ngwenya said the service fee payments to SAPO that the AG had mentioned raised a lot of questions. Could SASSA not reduce the payments that go to SAPO in service fees, by encouraging beneficiaries to use the paypoint facility, where the fee was only R1?
Referring to the issue of the second highest bidder and the R4 million variance, she said that clarity was needed as to whether it needed to be recovered and coming back to SASSA, or if was it gone, meaning that nothing else could be done.
She was concerned about the legal fees involved in all the cases that had been taken to court in relation to service providers. She wanted to know how much it was costing SASSA, and if they could not get rid of third parties that affected issues like those of the leases. Was it not possible for SASSA to do it in-house without involving the DPW, because that would be cost effective.
Ms A Abrahams (DA) asked if SASSA had done any awareness campaigns to promote the lower usage options when it came to service fees, like the R13 ATM option, to try and save SASSA some money as opposed to paying the higher service fee?
Her understanding was unclear about what happened when National Treasury wrote off debt. Was there still recourse to recover the funds from suppliers, or would that be done only with the help of the courts, like in the case of CPS?
There had been talk about appointing new supply chain management people, as the moratorium had been lifted, but her understanding was that it had been lifted only for senior positions. Did it mean it had been lifted across the board at SASSA, because they were now appointing a lot of other people and not just in senior positions?
Regarding the incomplete cases and dealing with the backlog in trying to complete files, she asked what interventions were being put in place so that they did not sit with the backlog again and ensured complete files first time round.
Ms L van der Merwe (IFP) said the extensive presentation gave her hope. It was clear that in the past, SASSA had had leadership and management problems, and many of these could have been corrected if the proper checks and balances had been in place. The AG had fruitless and wasteful expenditure had resulted from cases not being finalised within 12 months. There was now a task team that would deal with fruitless and irregular expenditure, so she wanted SASSA to give an assurance that going forward they would actually deal with cases much faster, and not take the 12 months that the AG had flagged.
SASSA had said that they planned to complete the vetting of persons occupying key positions within the agency by 31 March 2020. Why had key staff not been vetted before they were employed? Surely the vetting should have happened before they were employed, because a bank robber might have been employed in a key position, and it would be fixed only afterwards.
The AG had said that most of the irregular expenditure was because the SCM capacity at SASSA was not up to standard. SASSA had said that not all vacancies would be filled by March 2020, but she asked for assurance that positions in supply chain management would be filled.
Ms Van der Merwe raised a clarity seeking question about the 1 258 cases, where only 23 had been finalised. According to SASSA, the problem lay with Treasury because the files had been given over to them. Did that mean that all the cases had been finalised and handed over to Treasury? She asked for a breakdown of what percentage was with Treasury and what was outstanding from their side.
Regarding the issue of work streams, having been in that position before, she was quite interested to know about the report that had been commission into the work streams and the outcome there, because it had been said in the report, and supported by what Mr Chauke had said during his presentation, that some people would be held accountable for the work streams. The Constitutional Court had ruled that the works streams were a direct instruction from the former Minister who drove it. She would not want a situation where people took the fall for something that they did not execute, plan or commission. She asked the Committee to keep an eye on that, because people taking the fall for something they did not do themselves, was not fair.
She referred to the large amount spent on communication and marketing services, and asked if it was not time for this to be used for building internal capacity, because the R12 million spent could pay for a lot of salaries, considering the high youth unemployment rate. There were people who had great social media marketing skills out there, so it did not make sense for such a large amount of money to be spent on an external company when they could have in-sourced. Was SASSA considering in-sourcing communication services so that the Committee did not see this kind of irregular expenditure again?
Regarding the provision of security services, she said that normally when there was a threat, a threat assessment was done by the South African Police Service (SAPS) before a security provider was engaged. Had there been a threat report from SAPS, because normally when people were in danger the Minister of Police would assign bodyguards to a specific person? Why had these parallel processes resulted in fruitless and wasteful expenditure, because if there was a threat against certain peoples’ lives, SAPS would have identified it and allocated bodyguards or additional support to those individuals?
On the court case, SASSA had said that the Minister had not defended the matter and the hearing was set down for November. Her question was whether SASSA ws seeking to recover the full R3.4 million from the former Minister.
She asked whether the Mkondzo event in the Western Cape had been cancelled just because the Minister was not going to be there, and said that events should go on whether Ministers could attend or not, because surely there was a Deputy Minister or other officials that could have attended.
Would any amounts be recovered from staff? She was asking this question because when it was found that Hlaudi Motsoeneng had mismanaged a lot of money at the SABC, the Corporation had tried to freeze his pension fund. So in terms of recovering money, would it be recovered from the personnel actually involved in any of these cases? She also wanted to know if any of the 141 officials that were currently being dealt with in terms of disciplinary measures, were repeat offenders.
The Chairperson said that if someone had committed to an event and payment had been made and the event was cancelled, it created confusion between the institution and individuals regarding their responsibility. People working for the institutions were deployed to look after them, and the line was blurred between individuals and institutions when spending R1.3 million is wasted because someone turns their car around on their way to an event, and it is cancelled because they decide not to attend.
He commended the level of self-respect that SASSA had demonstrated, which was reflected in the way the presentation was done. Emphasis was made that the Committee needed to get quarterly progress reports from SASSA because they did not want the AG to come back and tell them that normal processes had not been followed involving an amount of about R2 billion.
He asked Mr Chauke to come back to the Committee about unauthorised irregular and fruitless expenditure so that things could be placed where they belong.
Referring to the issue of communication, the Chairperson told Ms Van der Merwe that it depended on what was being done. If there was quality communication serving a particular purpose, R12 million might actually be a small amount to spend because the impact of the R12 million could do wonders.
He wanted to understand what SASSA meant when they said that files had gone to Treasury and that Treasury was still dealing with them, because he was under the assumption that there was a direct relationship between the Department and AG. If the AG made findings, the Department must deal with those findings, so to what extent would the Department conclude the AG findings, pending what Treasury was going to do? What stopped the Department from concluding its own investigations?
Addressing the Minister, the Chairperson said he was worried about the excuse that R200 million could not be concluded because Treasury was investigating it, and would like everyone to talk about that and consider how justifiable it was. His thoughts were that if at the end of the day Treasury did not come back with an answer, the Committee would still look at the Department.
What confused him was that SASSA said that they were putting into place an audit action plan, and he assumed that this was an audit action plan.
Speaking about performance information, the Chairperson said that the mere intelligibility of information was not enough because information could be intelligible and irrelevant or understood, but not relevant. At the risk of upsetting the AG, he suspects that as long as information was intelligible to the AG, there would be no finding. Perhaps they needed to get the AG to come in and take them through how they get to their findings.
Inconsistency in the articulation of completion dates in the presentation was a cause for concern. Starting with slide six, he pointed out that there was no completion date mentioned although everything else, from the description of the matter, the root cause and the intervention, was clearly stated in the columns. Slide seven it was a clear illustration of how it was better than slide six because it gave an indication of the completion date by having a column for it. All that was missing for him on slide seven, which was a mere proposal, was that in relation to the column headed ‘AGSA finding,’ the second column underneath it should be headed ‘root cause’ so that the pattern was not disrupted and the Committee knew that SASSA was intervening. Therefore, all that was needed from slide seven going forward with all the slides in the presentation was a column for root causes to be included.
Referring to slide 22, he pointed out that the description column was named differently. It was no longer ‘description of the matter,’ but simply named ‘description.’ The Chairperson said that when dealing with matters of accountability, standard information was needed, especially when dealing with matters of finance, so that no assumptions were made. If there were findings, let them just be called ‘AG findings’ consistently.
Addressing the CEO, the Chairperson said his worry about the investigations was that it was not clear what the Committee was getting from SASSA. He assumed that if SASSA said that it had 254 cases, each case would be structured in such a manner that it became clear what the status of each case was. At the moment it was not completely clear, and what the Committee needed was for SASSA to be concrete on each and every issue. If it was irregular expenditure, SASSA needed to clearly set this out, indicating that investigation had been done and express what had been found to be the root cause, and also explaining if the root cause had led to a condonation or possible further investigation. Even if it was a thick document, the Committee wanted to follow each and every case.
Where there was summation of information, issues disappear behind other issues. What the AG was saying was that the cases had not been processed in a way that their status was understood, and they were closed. It was only closed when condonation had been applied for, or when it was discovered that there was possible corruption that was investigated, and the consequences thereof were provided. Each case must not be muddled with any other case.
When SASSA gives the Committee an update, it must address all the issues in a concrete and sequential way.
He agreed with Ms Ngwenya that if one looks at a number of issues in the presentation, it showed that a lack of basic management was the cause of some of the omissions, and if they as a Committee allowed this to happen, it put into question what they were there for. SASSA should not allow a repeat of the issues outlined in the audit in relation to management to happen, because it was embarrassing to have some of the things mentioned there. It confirmed what the AG had said -- that high level management was found wanting when it came to the provision of assurance.
The Chairperson said it would be beneficial in the future, if SASSA wanted to be the heroes of the people of South Africa, they needed to conform to systems, because it was the systems that would help the people.
Ms Memela said that in response she would highlight some of the issues that were easy to dispense, and the rest of the team would deal with the detail. Apologising for not providing detail in the presentation, she confirmed that they did have the details of each case and could provide them.
Responding to the issue of the legal fees, she said that they would check with their legal department that had the information and provide details, and also include a breakdown of what had been spent so far. The Minister had told them to deal with the legal issues and get them out of the way and that was why they were exploring alternative ways to clear the matters so that they could build a sustainable institution for the future, and make sure that they could impact the lives of the people in South Africa.
Regarding SAPO payments, SASSA currently had a service level agreement in place with SAPO, but she agreed that some of the payments were something that they needed to look at. Some of the issues had arisen from the history of how they paid their beneficiaries. She proposed that as a collective, together with the Portfolio Committee, they need to relook this issue because currently the expectation was that with the 1 740 pay points that SASSA had, more needed to be opened. She was not certain that SASSA should be pursuing this at the moment, but this did not mean they were not making sure that people who could not get to where the money was were provided with alternative means to get the money. The costs would come down only once they looked at alternative ways of paying.
Regarding HR capacity, in the past SASSA had had a moratorium and had started filling vacancies within HR. Currently the department did not have a general manager. They were in the process of recruitment to make sure that they had capacity and the people to help them deal with these cases as quickly as they could.
She understood why the Minister had enforced a moratorium at the time. It was because SASSA had kept on employing without a plan. At least now they had an operating model and so they were able to plan on where they needed capacity. Over time they would fill those vacancies and critical roles, particularly those that impact on the people on the ground. SASSA had agreed that the supply chain, HR and other positions needed to be filled to ensure that it had the capacity to ensure that they did not make the mistakes they had made in the past.
She said SOCPEN was a big story. Whenever they went to some regions, they would say that SOCPEN was horrid, while other regions would say that it was great, so they were now looking at how they would get to the bottom of how they could enhance it. It had been enhanced over the years, but more work had to be done so that SASSA used systems of the future, because SOCPEN was a databased system and they were making it do things it was not supposed to do. If they could put a layer on top it would be fantastic, because it had great historical knowledge information.
Mr Chauke referred to the tender that was awarded for R75 million, and said the R4 million figure was in relation to the second bidder who did not do any work. However, SASSA had said that if they had gone with the lower costs, they could have saved R4 million, and that was where the fruitless and wasteful expenditure came from.
SASSA could confirm that they were prioritising the filling of supply chain management position, and all SCM positions that were vacant and had been advertised. They were currently conducting interviews and short-listing candidates.
Irregular expenditure was the only expenditure that could affect the agency, because fruitless expenditure could be dealt with by themselves. Irregular expenditure was either going to be condoned or recovered. If it was going to be recovered, the process would be done internally through legal services, but if it was going to be condoned, there was only one institution – National Treasury -- that could condone irregular expenditure, and only once it had made up its mind could it be taken off the register. When SASSA went to the Treasury, they would do so having concluded the consequence management, but for Treasury to make the decision, it had to be them and them alone.
Mr Chauke said SASSA had taken note of all the comments, but that one thing he wanted to address was in relation to the question about whether there would be money recovered from staff. He said that when an investigation was done, it could be determined if there was staff negligence and if the money was recoverable or not. Only when the case was finalised could SASSA say that they were condoning or recovering the money. There could be money recovered from staff like fruitless and wasteful expenditure, for instance, where it was discovered that accommodation was booked for a person and they had not taken it up. If the reasons for doing so were not valid, the money could be recovered from that person, but if circumstances were beyond the control of the employee, that would be noted and considered.
Regarding the question from the Chairperson about whether the VIP protection was fruitless expenditure or not, Mr Chauke said that value was received, but it was received by the Department as a separate entity, and in SASSA’s books that was how it was disclosed. This was also a debate that SASSA had with the AG, whose response had been that the value was received by the parent company and not by them as an agency, and that was how it had been classified.
The Chairperson commented that the value accrued had been accrued irregularly, because if there was value it could not be a fruitless expenditure, because it indicated that money was irregularly spent.
National Development Agency: BRRR and audit action plan
Audit action plan
Ms Thamo Mzobe, CEO, National Development Agency (NDA), said that as the NDA they have structured their presentation to deal with the findings, the root causes and corrective plan which incorporated the timelines to be applied.
Elaborating on the finding of disclosures in the annual financial statement (AFS) not being compliant with generally recognised accounting practice (GRAP) standards, she explained that the NDA used a standard that was different to what the DSD used.
The loss of key personnel in the fourth quarter of the year had been due to the chief financial officer (CFO) resigning during the third quarter, and the financial accountant being on leave for a long period of time. The corrective action to address the financial statement findings indicated that the analysis submitted to the newly appoint CFO would be implemented by the end of December. This would allow the CFO to acquaint herself with the Department, as she would be new to the position.
As raised by the AG, the personnel were not up to standard in terms of key requirements of National Treasury.
Expenditure management and consequence management
Expanding on the first corrective action for the AG’s finding on expenditure management and consequence management, Ms Mzobe said that the NDA wanted to separate the two issues of the findings so that they could go back in terms of non-conclusive investigations. The others that were internal had been dealt with, with the support of the legal department, to make sure that the labour-related matters were dealt with internally. However, the outcomes were that no personnel had benefited unduly in the process. For the NDA, there had been no corrective measures that they were supposed to institute, but they had incorporated it into the report that was submitted to National Treasury.
The Chairperson asked for an explanation about what the NDA meant by saying that no personnel had unduly benefited. There was something wrong with that, because the fact that they did not benefit did not free them from being punished. It was not about the NDA paying, but about doing things right.
Ms Mzobe said with the corrective measure of conducting bi-annual SCM workshops across NDA offices, what they had discovered was that although the supply chain personnel were the custodians of the legislation, if the people who were the end users were not compliant, it became a challenge that spreads across the organisation.
Corrective action to address findings on assets
The NDA said that the detailed verification of assets in five provincial offices had been concluded, and the remaining five offices, including the head office, would be completed by end of October. By the time the presentation was submitted, which was a week before the meeting, it had not been done. The new revamped register would be completed by the end of December, which would be the end of the third quarter.
Regarding the audit findings on the review of policies in line with changes in regulations, a root causes of the identified shortcomings were the date of issue of changes in legislation, or the instruction note not allowing for full process drafting of policy amendments, and the matter of consultation and approval by the Board was because of the timeline. The timeline between December, when the law changed, and the end of the financial year did not allow for consultation to review the policies and follow the due processes for approval by the Board.
The corrective measure to address the finding, which was management issuing directives signed by the CEO to give effect to implementation of changes in laws and regulations while the policy review processes were under way, was to circumvent the timelines in terms of the consultation processes.
Supply chain and contract management
The NDA had failed to make the assurance in terms of vetting all those bidding to be service providers, if they were not employed by the government. Ms Mzobe said it could be a tricky environment, because to verify the vetting with the Department while trying to stick to the timelines of the tender process sometimes caused challenges. If there was no disclosure on the Standard Bidding Document (SBD) form, the NDA would not know until someone brought it to their attention.
One of the root causes was that there was no segregation of duties, as mentioned previously, due to insufficient personnel.
The NDA had already started with the process to revise the daily operational checklists to address shortcomings identified by the AG. The process had been finalised immediately after the AG had finalised the report.
Action plans to address governance findings
The implementation of the monitoring controls that needed to be strengthened was immediate after the AG had left. At the meeting that took place with the Board, it was undertaken that the checklist for the Board would be developed in quarter two of the financial year.
Ms Mzobe said that the NDA contracted the Institute of Directors to on-board the Board members, and this had taken place in August. A submission to the Department to request a new recruitment process as custodians of the Board was set to be finalised by the end of October.
The petty cash policy would be reviewed by the end of the third quarter to address thresholds, and would allow for approval of exceptions by the CFO to go through delegation.
Actions to address findings on performance information
Ms Mzobe said that the NDA team, including the provinces, had met the previous day to look at the key performance indicators (KPIs) and to incorporate the input of the AG in order to qualify what was missing in causing the technical descriptions to be insufficient for the AG to rely on during their audit.
There were KPIs identified as still being relevant. However, they still needed to be re tabled by NDA so that they qualifiedwithin the due processes to be followed.
In the presentation, it had been stated that the reporting system for proper recording of performance information had been concluded and would be in use from November. The process would start on 8 November.
Grant funding to civil society organisations
The AG had sampled three funded civil society organisations (CSOs) to determine how the beneficiaries and non-governmental organisations (NGOs) of civil society had utilised and managed their funding.
As an action plan, the NDA had established partnerships where the CSOs had been linked to various agencies and NGOs, to assist them with the process.
The inclusion of project monitoring and reporting key performance areas (KPAs) on performance contracts of development practitioners and managers by 31 December 2017, was been taken up to ensure that at they were doing their mid-term review for performance assessment. They had looked at the performance contracts of the development managers to incorporate the monitoring of the projects around this area.
Budgetary Review and Recommendation Report: Action plan
Ms Mzobe said that the Budgetary Review and Recommendation Report (BRRR) had contained three recommendations.
The Board had been appointed effective 1 April 2018, because this was a key issue in terms of compliance with governance. The vacant position at the office of the Chief Financial Officer had been filled and the candidate would resume duties in mid-November, which covered what was outstanding of the progress for this recommendation.
The NDA had so far strengthened its the risk management functions through the appointment of a risk manager. At all Exco meetings, regular risk management and internal audit reports would be available.
From time to time, National Treasury would issue notes. What had been identified as a gap thus far was that when these were updated, they would land up with the CFO and not filter down to the supply chain manager and workshopped to internal personnel, so that was what they were trying to focus their monitoring on. The CFO would report monthly if there had been any Treasury notes issued for the organisation, and not for the supply chain alone.
The Chairperson said that if applause was allowed, he would clap for a job well done by the NDA.
Ms Ngwenya said that it was impressive how the NDA knew exactly what was going on and the way she saw it, she could confidently say that it had started existing from scratch. What had grabbed her attention was the issue of the CSOs that did not provide audit evidence. She wanted to know what the cause of this was, because from where she was sitting this was a serious problem -- funds were going to CSOs, and there was no report back. Money was just spent, and no one was taking accountability, which was why the NDA had the problems it did at the moment. The Committee wanted to know who those CSOs were, which province they came from and what the NDA was going to do about them, because they do not deserve to get funding if they were not accounting for the funds that they were receiving.
Ms Abrahams asked about the NDA’s request to Treasury for condonation of irregular expenditure to be written off by the end of February 2020, and wanted to know how much was involved.
Ms N Mvana (ANC) commented that the presentation had been done well, and that both reports were clear and gave direction as to what was going to happen. The only thing for the Committee to see was whether the steps that had been mentioned were going to get done.
The Chairperson reminded the CEO that the Committee had said that they wanted all the recommendations from the audit action plan and BRRR, just like the NDA had done it, but which SASSA had not. SASSA did not have to do another presentation -- they could just send the relevant part. This should make the Minister happy, because all they wanted was results and the NDA had raised the bar to a new level.
Ms Mzobe referred to the issue of CSOs in terms of non-compliance by not reporting, and said it was a process based on the model that they had, which involved incubating and mentoring them. However, some organisations were slow to respond, and sometimes they were late in picking up the issues. They had found that at the starting point, when they engaged in an agreement about a grant which was released in tranches, if during the first tranche the CSO had not complied, the second tranche was not released. The AG had picked up on those matters, and as a response in terms of remedial action, the NDA would make sure that they picked them up and locate them in the category of requiring mentoring, and link them to the accredited service provider.
The Chairperson apologised for interrupting while the NDA was busy, but indicated that he needed to appear before the leadership with other Chairpersons. Before leaving, however, he wanted to share upfront the quarterly report of the Department which he had read, although it was not usual practice. His concern was that the Committee needed to examine its alliance with what was proposed in the recommendations as a results-based approach. It was one of the things that needed close scrutiny.
He asked Ms N Bilankulu (ANC) to continue chairing the proceedings in his absence.
Mr Sugar Ngcobo, Executive: Corporate Services: NDA, said that there was a cumulative figure in terms of the irregular expenditure which in the main was emanating from the “evergreen” lease agreements for their offices that were concluded years back, cumulatively sitting at R105 million. That was the amount that the NDA would be discussing with an independent investigator, as advised by National Treasury, for the consideration of condonation.
The NDA had managed to obtain condonation of R12 million from the 2017/18 year, which was within the competency of the Accounting Authority.
Department of Social Development: First quarter report
Mr Mzolisi Toni, Acting Director General (DG), Department of Social Development (DSD), said that the APP was outward based, and the performance report was based on quarterly targets that were outward based and not output based, as per the workshop in August where they had agreed on how they needed to report. Although it had been difficult, they had tried to move incrementally towards outcome reporting, though the APP was output orientated. This was a journey and he was confident that DSD would turn the corner because the will, determination and enthusiasm was there within the team that he was leading, but they would still require the Committee’s guidance in bridging the gap between output reporting against APP targets and the Committee’s desire and request for outcome based reporting.
Mr Toni said that he was reporting that during the quarter under review, the DSD had managed to meet only 65% of their set targets, and this would require them to put more traction in the following quarters to meet the remainder of the first quarter targets.
The DSD wanted to make sure they did a critical interrogation of the report, and had decided that the CFO would provide a high level financial overview of how they have done in this particular quarter, and at the end of the report they would be detailing how the expenditure was derived, and the chief director would described the actual implementation of the targets planned for this quarter. In that way he hoped that the Committee would get a flow of how the money was spent, what amount was spent and where it was spent.
Mr Clifford Appel, CFO, DSD, said that in the previous Portfolio Committee meeting, the Chairperson was talking about organic findings and more analysis, and it was his hope that in the next session the DSD would provide more organic analysis in terms of their finances. For this quarter and the next quarter, more analysis would be provided in relation to expenditure.
Referring to page six of the presentation, particularly to the 23% spent on the compensation of employees, he highlighted that the DSD currently had vacancies of around 12-15%, and this was a carryover from the previous cycle, where they had had a moratorium on the filling of vacancies. This would be seen again in quarter two, because the filling of the vacancies was starting only now.
Regarding the compensation of employees, he said that with the reduction of headcount, even if the DSD had filled all the vacancies, they would still have had a shortfall of around R70 million. Therefore, the DSD needed to re-organise itself before embarking on a review of the organisational structure to come in line with what was required by Treasury in terms of the headcount.
The household expenditure of 24.75% was made up mainly of gratuity payments to the former Minister and Deputy Minister.
Mr Thabani Buthelezi, Chief Director, DSD, said that he would present the performance information that would detail how the DSD had performed against the pre-determined commitments it had made to the Committee. What was contained in the presentation was in line with its annual performance plan.
As the DG had already indicated, the DSD did not meet all of its commitments. Some were partially met, and it was common that within the first quarter, performance could be a bit slow and catch up would be done in the second quarter. The Department also had to conclude the work of the fifth administration and start planning on what they were going to do going forward.
Programme 1: Administration
Explaining how the five integrated silo systems came to be integrated, he said that the people on the different systems were the same people, and so the integration of the system into one was done so that they were able to link them, as detailed in the presentation.
One function was a sector infrastructure programme, where the work that had been done included the construction of some of the institutions, which included child and youth centres. The view that the DSD had taken was that given the interventions that they had been making, either by constructing the institutions from scratch or upgrading them, they wanted to assess the extent to which their services had improved, and also if the lives of the people accessing these services had improved. The Department had been doing a refurbishment study regarding this.
Programme 3: Social Security Policy and Administration
In trying to create self-reliant individuals and communities by linking beneficiaries to economic opportunities, some of the work had involved linked matriculants who have been grant recipients with opportunities for funding by the National Student Financial Aid Scheme (NSFAS). The DSD wanted to make sure that their grant recipients were linked to other programmes of government so that there were no missed opportunities.
When the previous financial year ended, the Department had presented on the work that they were doing towards the finalisation of comprehensive social security systems. As they developed the National Social Security System, they wanted to ensure that it covered everyone, including workers in the informal sector and those in typical forms of employment. It was work that they were continuing to do, in line with what was contained in the National Development Plan (NDP).
Programme 4: Welfare Service Policy Development and Implementation Support
Although this work was not completed, it was presented in the annual report before the Committee. The DSD had been receiving input about the White Paper given the extensive consultation that they had been doing across government and civil society, and this had been incorporated.
Regarding children’s services, Mr Buthelezi pointed out that the DSD had not completed the work that they wanted to do, which involved the inter-sectoral protocol on the management and prevention of violence against children, child abuse, neglect and exploitation, because they were still doing consultations. This work would be concluded in subsequent quarters. The prioritising of the Children’s Amendment Bill, to offer a solution to address the foster care challenges, would enable the DSD to respond better to issues of social crime.
The National Drug Master Plan (NDMP) had not been processed due to delays in Cabinet processes. This was work that the DSD had accepted in the previous financial year, but due to the many processes and additional consultations that needed to be embarked upon, even now the process had not been concluded. The DSD was committing that in the subsequent quarter approval would be concluded.
Programme 5: Social Policy and Integrated Service
In 2019, the DSD had presented a report that began to look at what South Africa had achieved as a country in terms of the 1994 International Conference of Population and Development (ICPD) programme of action that was done annually.
Regarding NPO registration services, it was important to say that while the DSD remained largely a policy development department, one of the direct services that they provided was the registration of NPOs. The presentation depicted the number of NPO applications received during the April to June period, and how many were processed. The NPO Act requires the DSD to process applications that they had received within two months. The Department had achieved a 99% performance.
A breakdown of the NPOs it was able to register during that period indicated that of the 8 673 applications, the largest proportion was from Gauteng, followed by KwaZulu-Natal, the Western Cape and Eastern Cape. The majority of the NPOs were those that dealt with development and housing, followed by those providing social services and those in religion.
Mr Buthelezi said that one challenge the DSD had encountered was the non-compliance of NPOs because the Act stated that they had to submit a narrative report annually, as well as the audited finances.
During the period under review, a total of 14 768 reports was received as a successful result of the road show for the first time. However, due to capacity issues the DSD was not able to respond to all of them. Only 50% of those received were processed.
One of the DSD’s functions was to ensure through the youth policy and strategy the it was able to empower young people to participate fully in their own development and be the agents of change in their communities.
The DSD realised that they needed to create a platform to allow community development practitioners to meet, engage and share their expertise, hence the establishment of the Community Development Forum (CDF).
The household food and nutrition security programme involved the interventions that the DSD had put into place to address and reduce food insecurity. Through their community development and nutrition centres, during the period of review 220 304 vulnerable individuals were provided with nutritional food. The presentation indicated in which provinces it was done in and if it was done through the DSD or SASSA vouchers. The Department also did household profiling for those that they felt needed the food, and provides intervention through a social relief programme. It had provided a total of 93 476 households with food.
Minister Zulu said the DG needed to correct one small thing from the presentation.
Mr Toni said that there was an area that Mr Buthelezi had reported on with regard to the National Drug Masterplan. This had been processed and was now an approved document. They had also spoken about it to those Members of the Portfolio Committee that had attended the conference on substance abuse.
A Member said that the Committee looked forward to working with the DSD to help them meet their objectives with the plans that had they presented. She asked for details about the gratuity payment that was paid to the former Minister and Deputy Minister. She also appreciated the linking of beneficiaries with economic opportunities, and asked for more details on that so Members could see how in their constituency they could ensure that people made use of those opportunities.
She wanted to know why the Western Cape was not included in the anti-gang strategies, because it had a very high gangsterism problem which was historical, and the strategy was desperately needed. She asked what the Universal Treatment Campaign was, because it referred to a conference that many Members could not attend.
She asked how the public could access psychological support services. Addressing the Minister, she said that she had a situation with a family that suffered as a result of the gender-based violence (GBV) in the two horrendous weeks in South Africa. This family was no longer living in the house where the incident happened, as they had not returned and were living in fear. She just needed to know if there was an automatic referral from the police or whether a request needed to be made by the people suffering the violent trauma.
There was a concern around the programme on GBV which came up in the presentation the previous week. The concern was around communities that felt that the programmes were not sensitive to the religious beliefs of South Africans. She asked if the Committee could be provided with a list of NPOs that the DSD was using, and whether there were programmes that would actually speak to different faith communities so that the DSD did not do a one-size-fits-all in terms of the South African context when dealing with GBV.
Referring to slide 45 she asked what Community Development Practitioners do and could the roll out of further training give an indication of where that would be.
Mr Appel said that the total costs for the gratuity payments that the Department paid had been R4.2 million for both the Minister and Deputy Minister. It was based on the number of years that the Minister and Deputy Minister had served. There was a form provided by the Department of Public Service and Administration (DPSA) on how to calculate the amount, which the DSD could make available to the Committee.
Ms Connie Nxumalo, DDG: Welfare Services, DSD, explained why the Western Cape was not included in the training. This was a quarterly target from April to June, and training would continue with other provinces in the subsequent quarters. The Western Cape was one of the other provinces to be dealt with in the next two quarters.
The Chairperson interrupted to point out that the question was being asked because right now there was a high rate of gangsterism in the Western Cape, so the Committee wanted to understand why the Western Cape had not been prioritised to be among the first.
Ms Nxumalo said that the dates had been provided by the provinces, so the Department could not secure a date for the first quarter with the Western Cape. The Department was aware that in the Western Cape there was a high prevalence of gangsterism. To give context, she said the anti-gangsterism strategy that they were rolling out was targeting the secure care centres and child youth care facilities. Social service practitioners were being trained, as were the child and youth care workers, so that they could manage gangsterism in the respective provinces.
The Chairperson, addressing the Minister, said that the answer was unsatisfactory because the whole country at the moment was looking at GBV as the first thing to attend to, but if Social Development would choose to say if the province did not see this as an urgent thing to deal with, it was a problem. If the province was not coming back to the Department, then the Department should have directed them, because everyone knew that there was a problem in the Western Cape.
A colleague of Ms Nxumalo stepped in to add that what was missing in the answer was that they were dealing with different departments through an approach that was integrated with the police and a number of other structures. The DSD had participated as a department after being invited by SAPS to their conference, and had joined in the activities which they needed to continue.
She fully agreed with the Chairperson that there were a number of challenges, but the Department could not descend on a province without a co-ordinated approach with the Members of Executive Councils (MECs) as well as local structures. However, where they found difficulties in co-ordination, the national government had a responsibility and duty to respond to those communities in particular to indicate that they really needed support, and did not have to wait for the bureaucracy which might cause a delay. In their approach, they were working very well with the MEC in the Western Cape, who responds and attends meetings. Where it becomes a problem was when it becomes bureaucratic in approach. This meant simply put they must pick up on the issues as a Department.
Ms Nxumalo continued by saying that she would address the question on the universal treatment curriculum. It was not a campaign but a curriculum where the Department had master trainers who have been trained through Colombo training, which was an international training programme. Those master trainers were going to train the provinces to be able to improve the treatment regime in the respective treatment centres and outpatient facilities.
The other question was around psychosocial services, and how communities could access such a service. She confirmed that there was a referral system, but could not confirm if it was working well because they still had people not accessing the required services. The entry point for accessing psychosocial services was the social workers’ offices and organisations that the Department worked with, that had been trained to give trauma counselling. Whether they referred speedily was another challenge that they were trying to resolve through an integrated approach.
The Department would be submitting a full response with a list of NPOs, because it had been raised in exactly the same way previously as to whether religious and cultural issues were taken into consideration when services were provided by the NPOs involved in the social change programmes. It would be part of the responses that would be submitted.
Mr Peter Netshipale, DDG: Integrated Development, DSD, responding to the question about community development practitioners and what do, said that they were people appointed to deal with issues within the Department in all nine provinces. They map the area and do community profiling and thereafter compile a report that informs how services needed to be done in view of the needs identified. Then they refer them to different places, but also intervene by providing sustainable interventions, which meant that where there was development in collaboration with the NDA, they would provide those services. But over and above that, they also promote the services of social development broadly and monitor the services of the NPOs, and assist with the registration or compliance monitoring with the communities.
The Department had a policy developed with norms and standards that should be coherent, uniform and about continual empowerment.
Mr Brenton van Vrede, Chief Director: Social Assistance, DSD, addressing the question about linking beneficiaries, said that the linking of social grant beneficiaries had multiple aspects that the Department was working on, and they were doing it across all the programmes within the Department. Comprehensive social security was mainly responsible for writing the policy and consulting other units on what they were doing. There was a section which looks at linking with the other government departments and considering work that had been done already, such as a linking with NSFAS, for example, where social grant beneficiaries automatically qualify. There was some work being done with education as well, although there was not much progress. In health, there was also some work being done, but their data bases were not that good so there was still a lot of work to be done in trying to get the linkage to the data bases.
From social security, they were looking at what different branches were doing so that they could hopefully one day put it into legislation and make it compulsory.
Mr Van Vrede said Mr Netshipale was working hard on the economic opportunities, which was a new project that had just started, so there was nothing on the ground yet to report on, but Mr Netshipale would report on the projects as they began to unfold.
Ms J Manganye (ANC) said that they did not see the community development practitioners in the different provinces, though they were there.
Mr Netshipale said that they were aware of those challenges on how to address the issue of the CDPs. Right now there was only one CDP per ward, which was too broad, but the strategy was to increase the numbers.
The Chairperson said there were two things she wanted to point out to the Minister and DG. She was aware that there were people on the outside who were failing a lot of the Early Childhood Development (ECD) centres, with them being owned by social workers and some were saying that a lot of NPOs belong to CDPs. It had not been confirmed whether this was a myth or real, meaning that it needed the Committee and Department to investigate whether it was real or not.
Minister Zulu responded that the last point should be looked into, because she had noted that even the media was beginning to chase after a lot of centres where there was confusion about who ran and owned the ECDs, and which of them were supposed to get support from the government. Some of them were being run in very bad facilities, and there were arguments about whether they were an ECD or not. She was sure that the Department knew about this, and it was a question of using processes to make sure that they got to the real story. She did not take for granted what she saw in the media.
Explaining the journey that the Department was on, she said that it was a journey that she and the Department needed to speed up. She pointed out that this was the first quarter report and she was hoping that when they came to the second, third and fourth quarter, things would be different to what they had presented at the meeting. The Department was trying its best to shake the system till it responded in the manner which it was supposed to. They also wanted to use the district development model which the President had asked them to do, and from practical experience it was one of the best ways of working.
With the trip that was going to take place to Waterberg, Limpopo, her question had been, what was the approach to that district and when going to that district, what would they be looking for from a social development point of view? This model would help with the impact of the work that they did in the district.
Another concern was that the DSD was running late with the calendar for this financial year. If the Department did do not contribute towards the management committee discussion about the calendar, they would find themselves in big trouble. The Department was still expected to deal with the five-year plan and annual plan to avoid a situation of rushing through things and discovering problems later.
The Chairperson thanked the Minister and Committee members, and adjourned the meeting.
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