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STANDING COMMITTEE ON PUBLIC ACCOUNTS (SCOPA)
7 August 2003
WORK GROUPS: REPORT BACK
Chairperson: Mr F Beukman (NNP)
Documents handed out:
Second Work Group Report (Appendix 1)
SCOPA Group 2 Resolutions
Committee Minutes (Appendix 2)
Standing Committee on Public Accounts, Group 2 and Group 1 discussed various issues. In Group 2 report-backs were given including reports by the Public Service Commission, South African Certification Council, Social Housing Foundation and the President Fund. Group 1 issues discussed included resolutions for SETAs and Transnet.
Work Group Report-backs
Ms P Mothoagae (ANC) said that they dealt with the following in Cluster One:
Public Service Commission
Having considered the written replies from the Department, the Committee was satisfied that the Accounting Officer was attending to the matters in question in terms of their PFMA obligations concerning financial management. Having considered the Annual Report, the Report of the Auditor-General and the replies from the Public Service Commission, the Committee is of the view that no further interaction with the Department is necessary for the year under review.
South African Certification Council
She said that there was nothing alarming at the moment with this report and moved to adopt it.
South African Qualification Authority
She said that the workgroup sent some questions to the CEO and the response received was very satisfactory.
Servcon Housing Solutions
Having considered the Annual Report, the Report of the Independent Auditors and noted the unqualified audit opinion expressed by the Independent Auditors, the Committee was of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaited the next Annual Report and the Report of the Independent Auditors
Department of Social Development
She said that the group could not deal with this report as it had some unauthorised expenditures and the issue regarding relief funds were still outstanding.
Social Housing Foundation
She said that the report was unqualified and therefore was adopted by the group, without discussing it.
Sport and Recreation South Africa
She said that the group could not adopt this report due to some unauthorised expenditures.
Trans-Caledon Tunnel Authority
She said that the report was unqualified and therefore was adopted by the group.
Water Research Commission
She said that the report is an unqualified one, although they had to sent some questions to the CEO for clarification, which was accordingly received.
ERF 706 Rietfontein
She said that the report was unqualified and therefore was adopted by the group.
She said that this was a qualified report and would have to await for the incoming report.
Special Investigation Unit
She said that this was a qualified report and some questions had to be sent to the accounting officer. Although the group adopted the report, it hope that they would rectify those concern as soon as they can.
Commission on Gender Equality
She said that there was a problem with this report and had to sent questions to the CEO. The group hope that those concern would be rectified in the report that would be received from CGE during this month.
South African Institute for Drug Free
She said that the problem of the group was to the fact that this body had not registered for VAT and had to sent some questions to it. They are therefore waiting for its next annual report.
South African Sports Commission
She said this was a qualified report as there were some queries, which they are still waiting to be responded to.
The group agreed that they would have hearings on SETA the 10 September 2003.
Mr B Nair (ANC) said that SETA has not responded on the performance audit report as the management report has required. So the group decided that it would continue with that performance management report without such management comments.
Disaster Relief Funds
She said that the group initially took the decision to incorporated them into one resolution pending confirmation of the provision to amalgamate such to the Disaster Management Act. However since it was not incorporated into the Act, then it would be dealt with as a separate resolution.
Parliament Draft Resolution
She said that the group felt that this should be dealt with by the Committee when it considered resolutions.
The Chair said that the Committee took notice of the tabling of the resolutions, which would be circulated on the 8 August 2003 and adopted in the next meeting of the Committee.
Standing Committee on Public Accounts - Group 1
Mr L Chiba (ANC) said that his group discussed Public Investment Commission hearings, which would take place on the 13 August 2003. The group was also briefed on this matter by the Office of the Auditor-General. The House had already adopted 29 resolutions coming from this group and there were still ten more to be adopted, which had already been approved by the plenary. The group has also adopted sixteen resolutions, however they were still yet to be adopted by the plenary before they went to the House.
He said that the group acknowledged that there were alot of problems around SETA and decided to request the group researcher to go through the various resolutions that the group has already adopted and identify common problem amongst SETA's. He said that once this is done then the group would propose an overall resolution for all SETA's, which would have identified their common problems.
He said that the group decided that since the issue of disclosure had not been reported then they had to wait Transnet Annual Report for 2002/03. Only then would the group examine whether all the disclosures had been included.
The Committee felt that there should be a session at plenary to deal with this matter, irrespective of whether the Annual Report contains on it or not. Further proposed that it would be proper if the Committee could be briefed by the Auditor-General on its progress in this matter.
Categorisation of Report
Ms Mothoagae said that her group could not deal with the categorisation of miscellaneous report and requested it to be deferred for the next meeting.
Mr Chiba said that there are twelve reports, that are classified as Category C, which need resolutions to be drafted for and adopted by the group.
Adoption of Minutes
The Committee unanimously adopted the minutes without amendments.
Auditor-General Special Report Draft 14
The Chair noted that the hearings would take place on the 20 August 2003, as original agreed on.
Adoption of Resolution
All the resolutions that were tabled would be dealt with next week.
These two reports were tabled:
The Progress Report on the implementation of PMFA and
The General Report of the Auditor-General on the Local Government.
Election of Acting Chairperson
Mr V Smith (ANC) was elected unopposed, as acting chair for the meetings schedule for the 13 and 14 August 2003.
The meeting was adjourned.
Second Work Group Report
STANDING COMMITTEE ON PUBLIC ACCOUNTS: GROUP 2
RESOLUTION: VOTE 2-PARLIAMENT
The following resolution is submitted to Plenary for consideration and adoption. Group 2 adopted the resolution during a meeting held on Thursday, 7 August 2003.
1. Parliament RESOLUTION: VOTE 2-PARLIAMENT
The Standing Committee on Public Accounts has held a hearing on Parliament and have considered their evidence on the Annual Reports and the Reports of the Auditor-General on the annual financial statements of Parliament, for the years ended 31 March 2001 and 31 March 2002, as well as certain papers referred to it. The Committee reports as follows:
The Committee commends the Accounting Officer and staff of Parliament for the Auditor-General's unqualified audit opinion expressed on both financial years and trust that future audit opinions will also be equally unqualified.
Noting the above, however, the Committee wishes to bring the following to the attention of Parliament:
1. Financial Management: PFMA applicability to Vote 2 - Parliament
The Committee notes the continuing uncertainty pertaining to the legislative financial management framework applicable to Parliament. In the same way provincial legislatures may themselves be in this ambiguous position.
Given that the PFMA represents the public sector financial management best practice framework and further noting the absence of a singular legislative framework for Parliament and the nine Provincial Legislatures, the Committee wishes to strongly register its utmost concern with the slow progress made in finalising the necessary legislation.
Since the absence of a clear legislative framework makes it extremely difficult for all the relevant roleplayers, the continuing delay in this regard is becoming unacceptable as it impacts on the ability to exercise proper oversight over the institution tasked with holding the executive accountable.
The Committee therefore recommends that Parliament urge the Presiding Officers of Parliament to facilitate the process of introducing draft legislation in this regard within the next twelve months. That in pursuing this matter, there also be interaction with the Speakers of the Provincial Legislatures to ensure consistency of accountability of legislatures at national and provincial levels.
2. Budget: Priorities and process (Par 4.1.3, page 50 and par 4.1.1, page 49 of AR)
Section 3.1(d) and section 3.2 of the PFMA currently provides for the Presiding Officers to act as the Treasury of Parliament and further provides that surplus funds may be retained by Parliament.
During the year under review, the budget was exceeded by R17, 463 million that would have been regarded as unauthorised expenditure if the relevant provisions of the PFMA had been applicable to Parliament.
The Committee therefore strongly recommends that Parliament urge the Presiding Officers of Parliament to develop regulations consistent with Treasury Regulations to regulate the use of funds, which in terms of the PFMA framework might be regarded as unauthorised.
Furthermore, these regulations must also provide a sound financial management framework for dealing with donor funding and a mechanism should be put in place to ensure the continuation of programmes when donor funding comes to an end and the programmes have not been finalised.
3. Risk Management and Fraud Prevention Plan (Par 6, page 46 of AR)
The Committee took note of the risk assessment that was completed during September 2002 and that it was taken into consideration in the development of the Fraud Prevention Plan. The Committee further took note of the implementation of a Fraud Prevention Plan as from 1 April 2003.
The Committee recommends that the Audit Committee provide a report to Parliament, within 60 days after tabling of this report in Parliament, on the effectiveness of the most recent Risk Assessment Exercise and Fraud Prevention Plans. The report should also indicate whether all risks identified have been addressed in the audit plan and that sufficient prevention has been taken to eliminate the identified risks. If required, the assistance of the National Treasury should be sought.
4. Internal Audit (Par 4.1.9, page 52 of AR)
The Committee notes management decision to outsource the Internal Audit function of Parliament. It was again brought to the attention of the Accounting Officer that the necessary structured arrangements should be implemented to ensure the transfer of skills to officials of Parliament appointed to the Internal Audit Division.
The Committee recommends that the Audit Committee and the newly appointed Manager: Treasury Advice and Audit submit a report to Parliament on the effectiveness of the Internal Audit Division within 60 days after tabling of this report in Parliament, including:
(a) The extent to which the risks identified during the risk assessment exercise are covered by the internal audit plan, and
(b) The action plan for transfer of skills to permanent internal audit staff of Parliament.
5. Catering (Par 4.1.4, page 50 of AR)
The Committee is concerned about the current manual system in place instead of a computerised system for control over sales and stock. The Committee expressed their concern that although the implementation of a new computer system was identified as a priority during the hearing held on 8 May 2002, a new system is scheduled to be installed only during April 2003.
The Committee therefore recommends that the Accounting Officer submit a progress report to Parliament within 60 days after tabling of this report in Parliament, which will include timeframes of implementation and completion of the new computerised system.
6. Constituency allowances and financing of support staff of political parties (Par 4.1.6, page 51 of AR)
It became evident during the hearing that information required of all political parties, confirming that they had implemented effective and efficient control systems for the management of allowances received from Parliament, was still outstanding in quite a number of cases. It also came to the attention of the Committee that the draft rules for the payment of constituents' allowances and financing of staff of political parties had not yet been approved.
The Committee recommends that:
(a) Improved rules be drafted and implemented with immediate effect to ensure political parties have effective, efficient and transparent management and internal controls in place.
(b) Provision is made in the rules that Parliament obtains a certificate from the political parties' auditors that funds were utilised and spent in terms of the aforementioned rules.
7. Donor Funding (Par 3, page 45 of AR)
During the 2001-02 financial year, Parliament received donor funding in excess of R15 million. These funds are earmarked by the donors for specific projects and cannot be spent on other expenditure. Financial statements should be submitted to the donor on the spending of the funds.
During the hearing it was requested that the financial statements of these funds be forwarded to the Committee, but no such statements were received. The Committee expresses its utmost concern that when information is requested and agreed to it by the Accounting Officer that the requested information is not submitted. The Committee therefore recommends that the Accounting Officer as a matter of urgency provides Parliament with the assurance that such statements are available/exist for the 2001-02 financial year and would also be available for auditing during the 2002-03 financial year.
8. Accounts receivable (Note 11.1, page 63 of AR)
It came to the attention of the Committee that an amount of R703 428 relating to payments made for negotiations between South Africa and a delegation of an African State was indicated as irrecoverable by Parliament.
The Committee recommends that the Accounting Officer should seek advice from the National Treasury regarding this matter to determine whether the said amount should be written off and that the Accounting Officer then approaches the Presiding Officers accordingly.
MINUTES OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS
Compiled by the Committee Clerk
Mr. Chiba, L
Mr. Gerber, P
Mr. Gumede, D
Mr. Kannemeyer, B
M~. Mothoagae, K
Mr. Nair, B
Mr. Smith, V
Mr. Robertsen, M
Mr. BeII, B
Mr. Beukman, F (Chairperson)
Mr. Madikiza, G
Ms. DudIey, C
Mr. Mofokeng, R (ANC)
Mr. Bruce, N (DA)
Mr. S Fakie, (Auditor-General)
Mr. R.P Mosaka
Mr. C Botes
Mr. A Van Dyck
Mr. N Marais
1. Adoption of Minutes.
The Committee adopted Minutes number 26 and 27 without amendments.
2. Tabling of Correspondence.
The Chairperson tabled the following correspondence:
Â· Progress Report from the Auditor General: Re- Scrap Metal Contracts at Transnet.
The matter was referred to the relevant Group for consideration. The Auditor General informed the Committee that the investigations has been completed and that the management of Transnet has agreed to include in their annual report the findings, recommendations and the corrective measures implemented to address the situation. He informed the Committee that if he is not satisfied with the disclosure by the Management of Transnet, he would then table the special report on this matter.
The Committee requested the Auditor-General to furnish it with the copy of the report by Thursday. This would assist the committee in deciding a way forward which could be holding a videoconference with the Auditors in Pretoria, a joint meeting with the Portfolio-Committee on Transport, a resolution or referring the matter to the Special Investigating Unit.
Â· Special Report of the Auditor-General: Re-RP 56/2003.
The Committee agreed to schedule a hearing on this report on Wednesday 20 August 2003. It was further agreed that a list of people to be invited would be informed by any additional information that could be submitted to the Committee before the hearing. It was further agreed that the Chairperson and representatives of various Political Parties in SCOPA, should arrange a meeting in which a decision on the process to be followed in preparation for the hearing would have to be agreed upon.
Â· Letters from Mr. F Louw: Re: ADS.
The Committee agreed to refer the matter to the National Director of Public Prosecutions for investigation. It was also indicated by the Auditor-General that his Office has received similar correspondence and that he is aware of the preliminary investigation by Armscor that are currently under way. He advised the Committee of not engaging in a process that could lead to duplication investigations.
Â· Draft Committee Budget for 2004-2005 parliamentary sessions: Members were requested to forward their input to the secretariat.
Â· Correspondence from the National Department of Public Works: Re- Recommendations for condoning of unauthorised expenditure of 2001/2002. The matter was referred to the relevant Group for consideration.
Â· Letter from the Minister of Safety and Security: Matter referred to the relevant Group for consideration.
Â· Statements of the National Revenue, Expenditure and Borrowing issued by the DG of the National Treasury.
3. Update of the Work-Programme
The Chairperson reported that the Programme Committee of Parliament has set aside this month for Committee Work and that committees are at liberty to meet for the whole week. It was however agreed that instead of having three or four half day sessions a week, the committee should have full day sessions on Wednesdays and Thursdays until the end of the Month in which the committee would revert back to their normal operation.
It was further agreed that these meetings should be used to finalise outstanding work and that more time should be allocated to Groups.
4. Adoption of Resolutions
The following, resolutions were adopted with amendments:
4.2 Auditor-General's general report; and
4.3 Health SETA.
5. African Study Tour
The Committee agreed to cancel the tour.
6. Invitations Received
The Chairperson announced that he was invited with Mr. Smith to attend the CPA Conference in Ghana next week.
7. Feedback: Markinor Survey
Majority of members who were present indicated that they were satisfied with the method used in conducting the survey. However others indicated that it could have been better if written questions were used instead of telephonic interviews.
8. Members Training
The Committee agreed that for the current parliamentary session there would be no training for committee members. It was however suggested that in future members training should be formalized and accredited with reputable institutions.
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