DPME, Brand SA and Stats SA Audit outcomes; DPME, Brand SA and Stats SA 2019/20 Annual Reports; with Deputy Minister

Public Service and Administration, Performance Monitoring and Evaluation

17 November 2020
Chairperson: Mr T James (ANC)
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Meeting Summary

2019/20 Annual Reports

The Office of the Auditor-General of South Africa (AGSA) briefed the Committee in a virtual meeting on the annual audit outcomes for the Department of Public Service and Administration and its entities for the 2019/20 financial year. This was followed by the presentation of the Annual Reports of the DPSA’s entities – Statistics SA, Brand SA and the Department of Performance Monitoring and Evaluation (DPME).

AGSA reported that the DPME had maintained their clean audit status over the past five years. BrandSA had managed to improve from a qualified audit opinion in 2018/19 to an unqualified audit opinion in 2019/20. StatsSA achieved an unqualified opinion with findings. Non-compliance with key legislation involving procurement and contract management remained a challenge which needed to be addressed urgently by BrandSA and StatsSA.

Members asked AGSA about the turnaround strategies that had been implemented to deal with the impact of COVID-19, and the loopholes in the monitoring of the government that had been revealed. How was the AGSA tracking monitoring? How far was the process of financial disclosure by government officials, including disciplinary measures for those who failed to do what was required? What plans did AGSA have to eliminate wasteful expenditure? Had any processes been initiated to hold officials who were responsible for irregular expenditure accountable?

The Deputy Minister said improved performances had been recorded at these entities, and the Department wanted to continue to improve and assist government systems so that the correct audit outcomes could be achieved. The performance in all the institutions averaged above 80%, which showed that the DPME was going in the right direction.

The DPME’s presentation covered the performance of the Department against annual targets outlined in the Department’s Annual Performance Plan (APP) 2019/20 as well as the recommendations from the Committee from various engagements. In total, 82% of targets had been achieved.

StatsSA said there was an increasing demand for statistical information at a local, national, continental and global level. However, there had been severe budget cuts, additional staff were not affordable, and the income and expenditure and living conditions surveys were not funded. There was a high vacancy rate, staff were overworked, and new skills were required. The supply of basic statistics was at risk and declining over time, and COVID-19 had challenged its work methods. The entity achieved 91% of its targets, spent R2.553b of its R2.514b allocation (1.6% over expenditure) and achieved an unqualified audit opinion.

BrandSA said the year had seen a general worsening in the economic outlook, and public sector governance, state capacity and unethical conduct remained under scrutiny due to ongoing revelations of corruption through the Commission of Inquiry into State Capture. Achievements in the realms of sport and people/culture continued to drive positive perceptions of the national brand. The entity had achieved 83% of its performance target. Awareness levels of Brand South Africa had improved to peak levels in 2019.

Members asked if the DPME had tightened its internal controls to avoid irregular, fruitless and wasteful expenditure happening in the future. What measures were in place to stop issues of expenditure without following SCM processes, because it negatively impacted the audit outcomes? They were critical of the fact that Ministers had not completed their delegations to their respective Deputy Ministers, which had delayed the completion of performance agreements. Stats SA was asked if they had devised a strategy for fieldworkers to operate under risk-free conditions during data collection in the COVID-19 pandemic. What were the implications of being understaffed? Would it be able to keep up a high quality of work as usual?

Members asked Brand SA for a status report regarding the investigation of the suspended CEO. It was important for this to be finalised so that they could work towards having a permanent CEO. There were concerns regarding its financial performance management, and they wanted to know what measures the entity had adopted to strengthen its risk compliance, specifically the monitoring strategy and record keeping. They also asked if the Bushiris’ flight to Malawi had cast a negative light on South Africa as a reflection of the country’s security capacity.

Meeting report

AGSA Briefing: Audit Outcomes for 2019/20 financial year

Ms Ilse Slabbert, Senior Manager, Auditor General of South Africa (AGSA), said the presentation would focus only on financially unqualified opinions, with or without findings.

Audit outcomes of portfolio over five years

The Department of Performance Monitoring and Evaluation (DPME) achieved an unqualified audit opinion with no findings. It was commended for sustaining an effective internal control environment, the provision of leadership which set the correct tone at the top and sufficient oversight support. These factors had resulted in the DPME maintaining their desirable audit outcome.

Brand SA achieved an unqualified opinion with findings.  The improved audit outcome represented the efforts made by the various levels of assurance providers in ensuring that enhanced preventative internal controls were implemented and monitored in the area of payables from exchange transactions, which was previously qualified. The entity, however, still struggled to comply with certain laws and regulations, an area that should receive urgent attention.

Stats SA achieved an unqualified opinion with findings. Some of the bid documentation for procurement of commodities designated for local production and content did not stipulate the minimum threshold for local production and content. The material non-compliance reported in this area resulted in a regression in the audit outcome.

Credible financial reporting

The DPME and Stats SA achieved unqualified audit opinions based on fairly presented financial statements submitted on 31 July 2020. No adjustments/corrections were required on the submitted versions of the financial statements. While Brand SA’s audit opinion improved from qualified to unqualified, this was as a result of the correction of material misstatements in the submitted financial statements as a result of the audit process.

With credible performance reporting, it must be noted that in all three submissions, after the audit process, there had been reliable reporting on the performance information.

Last year, the DPME and Stats SA had no material findings on compliance with legislation, whereas this year Stats SA received that finding with regard to local content in procurement. The DPME and Brand SA continue to struggle with some compliance areas.

Preventative controls

Preventative controls were measures designed and implemented by management to avoid threats to the objectives of the entity materialising. The fundamentals of strong preventative controls were:

  • Leadership that inspired a culture of ethical behaviour and commitment to good governance;
  • Adequate and sufficiently skilled officials who instil confidence towards effective and consistent functioning of internal controls;
  • Comprehensive policies and procedures that empower the employees to perform their day to day duties with ease;
  • Mechanisms for officials to report any pressure or influence directed towards them not to act in line with set policies and procedures;
  • Regular risk assessment, accompanied by response measures that were monitored regularly;
  • Combined assurance model, where all assurance providers -- senior management, internal audit function and the audit committee -- were working toward the same goal to strengthen controls through monitoring and oversight.

Status of internal controls

There were no concerns for DPME. At Brand SA, there were still concerns, and some interventions were required with review and monitoring compliance. Brand SA did not conduct a risk assessment for the year-end review.

Key drivers of internal control

Stats SA:

  • Compliance monitoring was not effective due to misinterpretation of the 2017 procurement regulation on local production and content, resulting in non-compliance being identified.
  • Procurement was done on a fleet contract that had already expired, in contravention of Treasury regulations.

Brand SA:

  • Deficiencies were identified in the record-keeping controls of the trust, and discipline was lacking in the adherence to set daily and monthly controls. Management therefore did not prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information. Consequently, material adjustments had to be made to these reports as a result of the audit process.
  • There were inadequate controls over the review and monitoring of compliance with key legislation, especially those governing supply chain management (SCM). This resulted in non-compliance on competitive bidding processes as well as the variation of scope and extensions of contracts. Additionally, cases of improper conduct in the SCM system that may constitute an offence were not reported to law enforcement, as required by the Treasury regulations.
  • The entity did not conduct a risk assessment, as required by the Public Finance Management Act (PFMA).

Conclusion

The DPME was commended for maintaining their clean audit status over the five years. Best practices should be maintained, and the internal control environment reviewed and enhanced on an ongoing basis to ensure that it remains effective.

Brand SA managed to improve from a qualified audit opinion in 2018-19 to an unqualified audit opinion in 2019-20. This was, however, offset by the fact that this was achieved only through the correction of the material errors that were present in the statements submitted for auditing purposes. Focused attention should be paid to improving preventative internal controls in the areas of record keeping and daily and monthly checks and balances, to ensure ongoing credibility of financial information.

Similarly, both Brand SA and Stats SA should effect improvements in ensuring that in-year performance reporting was valid, accurate and complete, to enable the production of a fairly presented annual performance report at year-end and the appropriate monitoring of performance against pre-determined objectives throughout the year.

Non-compliance with key legislation about procurement and contract management remained a challenge, to be addressed urgently by Brand SA and Stats SA.

Discussion

Ms M Ntuli (ANC) asked what the turnaround strategies were that dealt with the impact of COVID-19 and the loopholes in the monitoring of the government. How was the AGSA tracking monitoring? How far was the process of financial disclosure by government officials, including disciplinary measures for those who failed to do what was required? What plans did AGSA have to do away with wasteful expenditure? The Integrated Development Framework Bill was due for a while.

Mr S Malatsi (DA) had two issues regarding irregular expenditure, and wanted to know more about the engagements with the Department on this. Regarding the 98% of the R75.5 million irregular expenditure related to the contract for vehicles for Stats SA, and the R7.3 million concerning Brand SA which was related to several service providers without the proper authorisation of an appropriately delegated official, was there any indication of some sort of processes that had been initiated in terms of holding officials who were responsible for this accountable? What were the corrective measures for these transactions?

Ms R Lesoma (ANC) noted the outstanding matters that the AGSA had raised, and said the entities must give their responses on this matter. As a Portfolio Committee, they had to ensure that what the DPME could achieve must go on to other departments so that the issues could be discovered. In terms of compliance and the supply chain, the importance of the relationship with the board must be noted, because they were the middle people between the Committee, the executives and Parliament. There needed to be a response to show that the 2020/21 report would be better than 2019/20.

Ms C Motsepe (EFF) said that according to the AGSA report, there were two entities where corrections were supposed to be made. What corrections were to be made at Stats SA and Brand SA? Which oversight target had Brand SA not reached specifically?

AGSA responses

Ms Slabbert responded to Ms Ntuli about the loopholes that had been created by COVID-19, and said that the AG was asked by the President to do COVID real-time audits. In terms of the audits, the AG had performed procurement testing regarding personal protective equipment (PPE) -- masks and sanitisers -- that were purchased after the 2019/20 year-end report. Certain discrepancies had been communicated with some of the other auditees. The AG would provide ongoing feedback to Parliament in terms of the real-time audit when it got tabled.

Regarding the financial disclosure of government officials, the AG had not been a part of that process, but with their ordinary auditing process they did identify potential conflicts of interest which were then reported to the respective auditees, so in that respect they were informing leadership of the respective departments of the conflict of interest through the auditing process.

Regarding fruitless and wasteful expenditure, this was related more to what the departments’ entities were doing to eliminate this, which they would answer in their presentations. From the AG’s side, they had given specific recommendations to the departments and entities on how to eliminate the fruitless and wasteful expenditure. This followed meetings that were conducted during the year with those charged with governance inside the entities, to determine their progress in eliminating those areas.

She said it would better for her colleagues to answer the specifics on Stats SA and Brand SA regarding irregular expenditure,

Mr Thabiso Matladi, Senior Audit Manager, AGSA, replied to Mr Malatsi on irregular expenditure, and said that this was related to a transversal contract for fleet management. This was an old contract that had been extended over the years and in February 2019, National Treasury had said that there would no longer be extensions to the contract. At the end of the contract, they did not have an existing contract they could use for them to continue with their operation. When AGSA started with the audit process for 2021, they would engage further with the Department.

Replying to Ms Motsepe on Stats SA, he said that the only change that the Department had to make was on audit performance of information. The AG looked at the information that was presented, what was planned at the beginning of the year and what was reported on at the end of the year, and then compared to see if there was consistency. In a meeting with management, those issues would not be found again in the audit of 2021.

Mr Nkanyiso Jama, Audit Manager, AGSA, referred to the audit of Brand SA, and said the changes that were made on the financial statements were adjustments on the performance information which were related to the targets that were not consistent with the plan, and they had noted that in the annual report.

On the disclosure of commitments in the financial statements, there were mistakes there, looking at the supporting evidence and what was disclosed in the financial statements, and management needed to make those corrections.

Regarding irregular expenditure, the approval process was not in line with regulations for the modification of existing contracts, and this was brought to the attention of management. This involved issues around the preference points that were not allocated in terms of the Preferential Procurement Policy Framework Act (PPPFA), and also a contract based on functionality criteria not stipulated in the original invitation. Management had started investigating these issues, and they would wait for management to conclude this, and the officials would be held responsible for management to take action. There would be a follow-up next year to see if the action taken by management was appropriate.

Deputy Minister’s remarks

Ms Sindisiwe Chikunga, Deputy Minister of Public Service and Administration (DPSA), said that the Department would give the annual performance reports from the DPME, Stats SA and Brand SA. Improved performance had been recorded at these institutions, and they wanted to continue to improve and assist government systems so that audit outcomes could be correct.

The DPME was on its eighth straight clean audit. The aim was for the audit findings to help them improve. Through the audit action plans, they were going to mitigate and ensure that they resolved the identified challenges. The performance at all the institutions was above 80%, which showed that the DPME was going in the right direction. It remained committed to improving and ensuring that its straight auditing record continued and the cycle did not break, as well as assisting Brand SA to take the correct mitigation measures.

DPME Annual Report 2019/20

Mr Clement Madale: Director: Strategy and Service Delivery Support, DPME, said the presentation would cover the performance of the Department against the annual targets outlined in the Department’s Annual Performance Plan (APP) for 2019/20, as well as the recommendations from the Committee from various engagements.

Mr Thomas Nkosi, Strategy and Communication Services, DPME, presented the Department’s Annual Report presentation.

In total, 82% of targets were achieved, and 18% targets were not achieved. This was the eighth consecutive clean audit.

Programme 1: Administration – 14% targets not achieved, and 86% targets achieved.

Programme 2A: National Planning Coordination – 100% targets achieved.

Programme 2B: National Planning Coordination – 25% targets not achieved, and 75% targets achieved.

Programme 3: Sector Monitoring Services – 30% targets not achieved, and 70% targets achieved.

Programme 4: Public Sector Monitoring and Capacity Development – 11% targets not achieved, and 89% targets achieved.

Programme 5: Evaluation, Evidence and Knowledge – 13% targets not achieved, and 87% targets achieved.

Employment and Vacancies

Filled posts by gender: 228 women and 158 men. Filled posts by race: 336 African, 17 White, 15 Coloured and 18 Indian.

Budget and Expenditure Report

The final appropriation was R956 939, and actual appropriation was R914 518 -- a variance of R42 421. Expenditure as a percentage of the final appropriation was 95%.

The final appropriation for 2018/19 had been R958 035, and actual appropriation was R874 745.

The Department had spent 95.6% of its allocated budget for 2019/20. Reasons for under-spending included compensation of employees (CoE), where there had been delays in implementing the revised organisational establishment structure; and in goods and services/capital, where there were delays in the Department of Public Works and Infrastructure (DPWI) securing additional office accommodation for the DPME.

Fruitless and wasteful expenditure was R282 000, and was primarily travel related. R154 000 was under investigation.

R168 000 was confirmed as irregular expenditure, and was primarily related to travel, and variation orders for venues due to changes in sizes of delegations. R894 000 was under investigation involving travel and conference venues, as well as R424 000 related to contraventions of SCM regulations.

Consequence Management

The majority of fruitless and wasteful expenditure cases had been resolved, and no disciplinary action was taken since the fruitless expenditure was beyond the reasonable control of the employees. Eight cases totalling R4 243 were referred to as recovery from the relevant employees. Supervisors had been informed for disciplinary steps to be taken. The DPME also wrote to the National Treasury for an interpretation of regulations. Disciplinary action was pending a response from the National Treasury.

Irregular expenditure involved unavoidable variation for venues due to changes in the number of delegates at the last minute, which had prevented obtaining prior approval from National Treasury.National Treasury had been approached to clarify the treatment of such cases.

Portfolio Committee recommendations

Mr Madale said following key recommendations were made by the Portfolio Committee:

  • DPME and the Department of Cooperative Governance and Traditional Affairs (DCOGTA) must brief the Committee on the piloted District Development Model (DDM) and the lessons learned.
  • Develop the Integrated Planning Framework Bill intended to ensure integration, coordination and coherence of government planning and alignment of resources. Both departments should account to the Committee by November 2020.
  • DPME and the Department of Rural Development and Land Reform (DRDLR) must engage on the location of the National Spatial Development Framework, to ensure integration and better coordination planning.
  • DPME must explain the suspension of the signing of Performance Agreements between the Ministers and the President.
  • DPME and BrandSA must be diligent in observing the compliance issues raised by the Auditor-General.
  • DPME must conduct an evaluation on the Unemployment Insurance Fund (UIF) to determine the extent to which it brought relief to people who could not get paid due to the lockdown of business activities.

Progress on implementation of recommendations:

Mr Madale said the Portfolio Committee had received a briefing on the implementation of the DDM by DPME and DCOGTA on 4 November. The Department had been working closely with DCOGTA in the piloted districts. Valuable insights were gained. However, due to the prioritising of the monitoring of the COVID 19 response, the indicator was changed in the annexure to the revised 2020/21 DPME annual performance plan to the number of monitoring reports on the implementation of the COVID 19 response through the district development model. A detailed roll out plan of the DDM (with targets and timeframes) must be requested from DCOGTA to set the basis for a comprehensive monitoring and evaluation framework and plan.

Work on updating the draft Bill had initially stalled due to the impact of COVID-19 and the budget cuts that resulted from the budget reprioritisation. The DPME had gained legal assistance from the Department of Trade, Industry and Competition towards the legal review and updating.

It was establishing an inter-departmental technical committee to ensure alignment with key stakeholders, which included the Department of Cooperative Governance, the Department of Agriculture, Land Reform & Rural Development, National Treasury, Human Settlements and the South African Local Government Association. The technical committee would seek to align key functions, and would run in parallel to the legal review process and would produce an analysis report for incorporation into the Bill. The updated Bill would follow the stipulated process which includes the conducting of a socioeconomic impact assessment and submission to the Office of the State Law Advisor. The updated Bill would be available for public comment in the next financial year.

The responsibility for the National Spatial Development Framework (NSDF) resided with the Department of Agriculture, Land Reform and Rural Development (DALRRD), which was the custodian of the Spatial Planning and Land Use Management Act (SPLUMA). The DPME continued to engage with DALRRD on the functions around the NSDF, and had invited DALRRD to share its insights at its Departmental strategic planning session on 20 October. Based on insights gained, the DPME’s Director General (DG) had requested a trilateral meeting with the DGs of the DALRRD and Cooperative Governance to resolve issues around the re-assignment of functions, and this was scheduled for the month of November. It was noted that the NSDF was still to be approved by Cabinet.

Challenges regarding procurement and COVID-19 had delayed the procurement of a service provider for the implementation charters. It had been agreed to conduct two stakeholder engagements (public and external) on the NSDF implementation, and an NSDF implementation colloquium by 31 March next year. The DPME was supporting the DALRRD in developing the NSDF implementation charters.

The signing of the performance agreements between the President and Ministers had been put on hold on the eve of the signing ceremony which was scheduled for March 2020 due to the Level 5 Covid-19 lockdown. All the efforts of government were then focused on containing the spread of Covid-19 and its negative impact, with the purpose of saving the lives of the people of South Africa. The process had been reinstated, and all Ministerial performance agreements had been updated, with the addition of Covid-19 and resourcing reprioritisations. All Ministerial performance agreements (MPAs) had therefore been signed by the President.

The DPME had addressed all the issues raised by the AGSA and had obtained a clean audit opinion with no findings

The DPME was in the process of conducting an assessment on the effect of the COVID relief measures introduced, which include the Temporary Employers/Employee Relief Scheme (TERS).

Impact of COVID- 19 on municipalities

The DPME had surveyed the impact of Covid-19 on municipalities in June over a period of three weeks. The survey had focused on the following five categories:

  • Impact on revenue;
  • Impact on mobilising resources for expanded services due to Covid-19;
  • Impact on expenditure;
  • Impact on service delivery;
  • Impact on staff.

 

The key findings of the survey were:

 

Impact on Revenue

 

78% of municipalities were not prepared for reduced revenue. Many municipalities already had a strained cash flow; COVID-19 would exacerbate current circumstances and have a significant negative impact on municipal revenues.

In the wake of COVID-19, municipalities were expected to provide additional services to communities during the lockdown.

As announced by the President, additional funding of R20 billion was made available to municipalities to provide emergency water supply, to sanitise public transport facilities and to support vulnerable communities. Additionally, an estimated R1.5 billion in 2019/20 Municipal Infrastructure Grant (MIG) funds were being redirected to urgent water supply projects.

Impact of mobilising expanded services

On 5 June, News 24 had reported that in just one month, the Covid-19 pandemic had put a R900-million dent in the revenue of the City of Tshwane.

The City of Tshwane had requested assistance from the national and Gauteng governments, as additional costs relating to food parcels and plans for the homeless were expected to reach at least R850 million.

The City of Tshwane had projected that it would need R290 million per month to provide food parcels for an estimated 500 000 households in need.

Impact on municipal expenditure

Most of the regular services were suspended. It would be difficult to address the significant backlog in the required activities with dwindling revenue.

Balancing expenditure between the COVID-19 agenda and the business-as-usual agenda would be one of the most significant challenges municipalities would confront in the upcoming year.

Although it was difficult to see past the current crisis, leaders needed to think about the future while managing day-to-day service delivery challenges.

Impact on delivery of services

On May 27, it was reported that the eThekwini Municipality had revoked its Covid-19 lockdown relief scheme amid fears of a financial collapse. A report presented to the city’s Executive Committee revealed that the municipality had R13 billion in arrears owing to it, and if debt-collection processes did not resume, it would “be in serious financial trouble by year-end.”

Voices of South Africa’s informal settlement residents during the COVID-19 Crisis reported for the week of 17 June that the provision of sanitation in metropolitan informal settlements had not improved and remained at crisis levels everywhere, except in Ekurhuleni. Toilet cleaning and refuse removal in non-metro informal settlements was still extremely limited. Several municipalities found it difficult to deliver the increased demand for water, sanitation and electricity brought to bear by Covid-19. For example, Makhado municipality had no water for five days after the water treatment plant failed on 20 May.

Impact on staff

Despite COVID-19 related challenges, municipalities reported that municipal staff appeared to be relatively well-positioned to carry out their duties.

As infection rates increased and it became more difficult to avoid contact with COVID-19 positive individuals, absenteeism due to ill health was expected to increase substantially, hampering the effective delivery of municipal services.

Such a scenario could result in intensified labour action, should workers and unions feel that the health and safety of the municipal labour force was not the main priority.

Discussion

Ms V Malomane (ANC) asked how far the disciplinary process was against the officials who failed to submit financial disclosure frameworks. Had the DPME tightened its internal controls to avoid irregular, fruitless and wasteful expenditure happening in the future?

Ms Lesoma asked how the cancelling of travelling would be prevented in the future, because this occurred before COVID-19. The executives were receiving training through the National School of Government (NSG) which was good, because it would help to achieve the predetermined objectives. While the DPME was compiling the report and its lessons of Section 100 in the Free State, they should share this information with COGTA to ensure that there was no repeat when compiling the report. COVID-19 had caused many setbacks with the programmes the DPME had set out to achieve. Did the DPME conduct continuous impact assessments to evaluate the progress of implemented programmes which focused on the broader programme coherence and planning?

Mr Malatsi said that he wanted to follow up on the performance agreements of the Deputy Ministers, and the fact that they could not be produced because Ministers had not completed their delegations to their respective Deputy Ministers. A year after the fifth administration had come into power, there was no finalisation of the delegated authorities or Deputy Ministers -- could this be elaborated on? What was the time frame for the finalisation of the performance agreements of the Deputy Ministers? They were way after the initial deadline, and there were still more delays. It was not only for the Ministers and the Deputy Ministers, and the fact that it was not yet finalised meant the job had not been done. When was the last performance agreement by a Cabinet Minister finalised, because two weeks ago, there was the Parliamentary session with questions to Ministers, and Minister Mthembu had said that it would be finalised by 18 October. At the post-Cabinet briefing, he had said that they were not able to finalise them on that day, because four Ministers had not yet finalised them. He requested that those need to be finalised so that progress could be seen. He noticed that the presentation had not spoken about lifestyle audits, which was a matter that had featured prominently in the government’s programme -- what was the status on the delivery on that commitment of the DPME?

Ms M Kibi (ANC) asked what measures were in place to stop issues of expenditure without following SCM processes, because it negatively impacted the audit outcomes.

Ms M Clarke (DA) would like to know if the Committee would be getting a report on the COVID-19 expenditure, because the report mentioned a R900 million impact on the City of Tshwane, and an effect on various other municipalities. She concurred with Ms Lesoma that not all issues could be blamed on COVID-19 and it would be interesting to see the situation before COVID-19 and the COVID-19 expenditure, so those detailed reports needed to be given so that the Committee was aware of what the real expenditure was, and what impacts COVID-19 had compared to the situations the municipalities were in before COVID-19.

DPME Responses

Mr Madale responded to Ms Malomane on those who had not submitted their disclosures on time, and said that these officials had complied, but had done so out of the time that was allowed. Those who had valid reasons had been excused, but those who did not have valid reasons had been issued with written warnings.

Regarding the control environment concerning irregular expenditure, the DPME did have strong systems to detect irregular expenditure. However, most of this expenditure had happened due to unforeseen circumstances. The annual report of 2019/20 was when things were normal and people were travelling places. This irregular expenditure happened when people travelled and a meeting was cancelled, or if there was a meeting that was meant to be only ten people, and 20 people showed up because stakeholders had not bothered confirming whether they were coming or not.

Mr Blake Mosley-Lefatola, DDG: Public Sector Monitoring and Capacity Development, DPME, responded to Ms Lesoma on the issue of the Section 100 intervention, and said the Department was compiling a report to note what the lessons were from the Section 100 intervention. The DPME wanted to ensure that the government had proactive monitoring systems in place that would tell them when things were not going right in government so it could intervenes timeously, and not when the crisis hit the ground. They were working in conjunction with the DCOGTA and colleagues from the provincial COGTA Department, and it was primarily to improve the monitoring systems and to ensure that lessons learnt around interventions enabled them to work better.

Replying to Mr Malatsi on lifestyle audits, he said the process of conducting lifestyle audits, primarily among the appointed officials, was at a fairly advanced stage. Discussions had been held between the DPSA and all the other departments that belonged to the governance of state institutional development departments, and with the National Anti-corruption Task Team, where the guidelines had been discussed on how the matter should be approached. The next step was to make any recommendations and forward them to Cabinet.

Replying to Ms Clarke on the COVID-19 expenditure report, he said that the DPME would make this available. The National Treasury was the custodian of the report, but the DPME was working with the Treasury to monitor the impact of COVID-19 on the expenditure. The DPME would access the report and make it available to the Committee. However, COVID-19 expenditure would still continue, given that there was still a Level 1 lockdown.

Replying to Mr Malatsi on the performance agreements, he said that the Ministers delegated powers and functions to the Deputy Ministers. Once that had been completed, then the performance agreements could be crafted in terms of the delegated functions that had been given to the Deputy Ministers. There was no exact time frame when this would conclude, and that information would be submitted to the Committee at a later stage.

Ms Malatsi said that every process had a beginning and an end. When the Committee sought an indication of timelines, it was to ensure that the Committee would be able to do their job. The lifestyle audits being at an advanced stage could be relative to how advanced they were. A project like that should have a timeline that indicated the intended timeline when they aimed to finish all the preparation work, and when they aimed to conclude, so that it could go through the official channels. It was difficult to accept the responses, because the DPME could not provide a simple time frame.

Ms Lesoma requested that they get the information on the timelines no later than next week in writing.

StatsSA Annual Report 2019/20

Mr Risenga Maluleke, Statistician-General, StatsSA, presented on the 2019/20 annual report, and on progress with the census 2021 and legislative reform. He referred to the following highlights in the report:

Statistical outputs

StatsSA had published 281 statistical releases and reports on the economy and society.

User paid surveys had included:

  • The released Census of Commercial Agriculture (CoCA);
  • Conducting the National Household Travel Survey (NHTS);
  • Handing over the results of the 2018 Census of tenants at the Coega Special Economic Zone (SEZ);
  • Handing over the results of second phase of the Mpumalanga Employment and Business Survey (MEBS)

Modernising the statistical value chain

  • Geospatial information frame (GIF) digitalised;
  • Rolled out digital data collection methodology -- four household surveys
  • Quarterly Labour Force Survey (QLFS) parallel concluded for digital collection;
  • Census mini-test conducted

National Statistics System

  • Designated South African Police Service (SAPS) crime statistics as official;
  • Independent statistical support -- responded to a national call from the Independent Electoral Commission (IEC) when results of the national and provincial elections were contested;
  • Launched goal tracker tool – digital portal to track sustainable development goals.

Service delivery

  • User request responses – more than 95% of simple enquiries handled within 15 minutes, and more than 90% of  normal enquiries within 24 hours;
  • 2.7 million website visitors;
  • 398 000 documents downloaded;
  • Overall user satisfaction with the performance of Stats SA – 86.4%.

Financial Performance

  • R2.514 billion allocation, R2.553 billion expenditure, representing 1.6% over-expenditure.

StatsSA at risk

There was an increasing demand for statistical information on a national/local, continental and global level. There were severe budget cuts, additional personnel not affordable, and the Income and Expenditure Survey (IES) and Living Conditions Survey (LCS) were not funded. There was a high vacancy rate, and 118 staff had left in 2019/20, as well as staff being overworked and new skills being required. Regarding supply, basic statistics were at risk and declining over time, and COVID-19 had challenged work methods.

Looking forward

In the next three years, the aim was to drive legislative reform, maintain the quality of national indicators, conduct Census 2021, drive business transformation and change, and re-align resources and structure.

BrandSA Annual Report 2019/20

Ms Thandi Tobias, Chairperson of the Board: BrandSA, said that this year was the most difficult year for Brand SA, given that they were a brand management organisation, so they did not only manage “South Africa Incorporated,” but they looked at issues involving the economy and those tabled by the President, as well doing both domestic and international analysis. The reports showed what they could activate before COVID-19. The performance of Brand SA had improved over time. Issues of irregular expenditure and mismanagement would be answered in this presentation. 

Ms Thulisile Manzini, Acting Chief Executive Officer, BrandSA, presented the annual report on what Brand SA had been able to achieve and what was still outstanding, and also reported on the issues that the AG had raised.

Key themes from domestic environment analysis

South Africa had emerged with the sixth administration and Parliament in place. President Ramaphosa had delivered the State of the Nation Address (SONA), and presented the nation with seven priorities:

  1. Economic transformation and job creation.
  2. Education, skills and health.
  3. Consolidating the social wage through reliable and quality basic services.
  4. Spatial integration, human settlements and local government.
  5. Social cohesion and safe communities.
  6. A capable, ethical and developmental state.
  7. A better Africa and world.

The year saw a general worsening of the gross domestic product (GDP) outlook, and public sector governance, state capacity and unethical conduct remained under scrutiny due to ongoing revelations of corruption through, for instance, the Zondo Commission of Inquiry into State Capture.

Achievements in the realm of sport and people/culture continued to drive positive perceptions of the national brand.

Ms Manzini highlighted that BrandSA had achieved 83% of its performance target. Awareness levels of BrandSA were further proof of the impact of its work, with levels peaking at 49% in 2019. This was from a baseline of 15% in 2014/15, improving steadily over the years to 38% in 2017 and 39% in 2018. Awareness of the country logo, and positioning “Inspiring New Ways,” was also at peak levels, reaching 61% in 2019.

Discussion

Ms Ntuli asked StatsSA if they had devised a strategy for fieldworkers operating under risk-free conditions during data collection in the COVID-19 pandemic.

StatsSA was understaffed and had over-expenditure due to over-compensation -- how did it view this for future expenditure? What were the implications of being understaffed? Would it be able to keep up a high quality of work as usual? The understaffing, in conjunction with the over-budget expenditure, was worrisome. The Committee had tried to take the matter further, and if it was not taken further, it would jeopardise the work of Stats SA. The Committee should invite the National Treasury, the Minister and Stats SA to discuss the matter.

Ms Motsepe asked StatsSA if the issue of the filling of posts been addressed, since it had been a problem since 2016. Did it have a plan to ensure that there was a 50% representation of women in senior management positions? If yes, what was the plan? What were risks associated with understaffing, taking into account the additional responsibilities and the quality of the workers at Stats SA?

She asked BrandSA how far the process of finalisation of the report on the suspension of the CEO was, and when this position would be advertised. What had been the reason for the dismissal of executive committee member?

Ms Lesoma asked if she could receive the response to her question in writing for record purposes. Addressing Stats SA, she said transparency and regular compliance checks with regulations were a significant process in prevented maladministration that led to corruption, and if not properly adhered to, they affected the ethics of the government negatively.

The AG’s report had raised concerns about BrandSA regarding its financial management capability, which was one of the priorities of government because a government that was effective and accountable was needed. Drawing from the AG’s report, she asked what new measures the entity had adopted to strengthen risk compliance, specifically monitoring strategy and record keeping. This applied to StatsSA as well. Would it not affect the reliability of the statistics if StatsSA was unable to collect data from rural areas? The AG’s response to this question had not been up to her standard. When would the risk issue of filling the vacancies of the positions of the CEO and CFO be finalised? On Brand SA, what was the negative impact of the Bushiri/ South Africa issue as a reflection of the country’s security capacity?

Mr Malatsi asked BrandSA for a status report on the investigation of the suspended CEO. This needed to be finalised so that the entity could work towards having a permanent CEO.

Referring to the challenges regarding underfunding and capacity constraints at StatsSA, he said it was frustrating that there was no breakthrough to get to the stage where StatsSA did not have these issues. Did StatsSA not have the resources it needed to perform as optimally as it would want to? He requested an indication on the studies not conducted due to the current capacity constraints that StatsSA faced, as well as what the way forward for the next financial year was. Was the projection that, given the current model and capacity constraints, and the anticipation that the situation might not substantially change by the end of the fourth quarter, the status quo would remain? What was the solution, particularly given the use to which such key evidence-based research reports were being put? He asked the Chairperson if he could share the situation regarding the interaction with the Finance Ministry regarding the funding model, so that they could reconcile the response from the AG regarding the funding concerns going forward.

The Chairperson suggested that because of the lack of time, and the House sitting at 14h00, all outstanding questions be responded to in writing and sent to the Committee Secretary.

Members agreed.

The meeting was adjourned.

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