The Committee convened on a virtual platform to be briefed by the Auditor-General of South Africa on the audit outcomes for the Department of Home Affairs (DHA), the Independent Electoral Commission (IEC), and the Government Printing Works (GPW) for the 2020/21 financial year. The Committee was also briefed by the DHA on its Annual Report for the 2020/21 financial year and its implementation of an Audit Action Plan to address the audit findings.
The Committee heard that the audit outcomes of the overall portfolio of Home Affairs entities had improved slightly compared to the previous financial year. The IEC improved from an unqualified opinion with findings on compliance with legislation to an unqualified audit opinion with no findings. The DHA’s audit outcomes remained stagnant. It received an unqualified audit opinion with findings on compliance with legislation. The audit outcomes for the GPW were outstanding as financial statements for the 2020/21 financial year had not been submitted for audit and the audit had not commenced.
Total irregular expenditure amounted to R19.6 million, of which R4 million was incurred by the DHA and R15.6 million by the IEC. Total fruitless and wasteful expenditure amounted to R 726 000 - R557 000 at the DHA and R169 000 at the IEC.
The Committee expressed concern about the non-submission of financial documents by the GPW and asked for clarity on what measures had been implemented to address these issues. Members were worried about the lack of implementation and monitoring of Audit Action Plans and urged the DHA and its entities to improve upon their responses to the Auditor General’s findings in order to prevent recurring findings from one financial year to the next.
The Committee sought clarity on measures by the DHA to ensure that the policies and procedures for the collection of fines and penalties issued were put in place, as recommended by the AGSA.
The Committee commended the IEC on its unqualified audit without findings.
Members expressed concern that recurring findings by the Auditor General did not appear to be resolved by the DHA. They noted that the Auditor General had recommended that there should be timely consequences for officials who did not implement action plans or neglected their duties.
The DHA reported that it achieved 68 percent of its performance targets. Nine out of 12 targets were achieved in the Administration Programme, five out of six were achieved in the Citizens’ Affairs Programme and half of the targets were achieved in Immigration Programme. The poor performance in the Immigration Programme was related to the COVID-19 pandemic and the closing of borders and the halting of international travel, which resulted in fewer operations being carried out.
In 2020/21 financial year, the DHA spent R8.47 billion - 96.4 percent of its budget - with R3.51 billion spent on the compensation of employees, R2.34 billion spent on goods and services, R2.3 billion spent on transfers and subsidies, and R321.72 billion spent on payments for capital assets.
The material findings in the audit of the DHA related to material misstatements in the annual financial statements, subsequently corrected by management; non-compliance with legislation; and the need to improve the IT environment. The Committee was told that a dynamic Audit Action Plan had been prepared.
The Committee congratulated the DHA for obtaining an unqualified audit outcome for the fifth consecutive year. It also welcomed the newly appointed Commissioner and Deputy Commissioner of the Border Management Authority.
The DHA was requested to furnish the Committee more regularly with progress reports on the Audit Action Plan. More details were requested about a task team appointed to deal with long queues at DHA offices. The Committee noted recurring audit findings about revenue collection and asked how the problems would be resolved.
The Chairperson convened the virtual meeting and welcomed Members and the delegations in attendance. He recognised that Members came out of a period of elections and noted the challenges of load shedding and its impact on the connectivity of Members and the delegations.
The purpose of the meeting was for the Committee to be briefed by the Auditor-General of South Africa (AGSA) on the audit outcomes of the Department of Home Affairs (DHA), the Independent Electoral Commission (IEC) and the Government Printing Works (GPW) for the 2020/21 financial year. In addition, the Committee was to be briefed by the DHA on its Annual Report and financial statements for the 2020/21 financial year. The last item was a briefing by the DHA on its implementation of Audit Action Plans to address the audit findings.
The delegation from the DHA consisted of Mr Njabulo Nzuza, Deputy Minister of Home Affairs; Mr Tommy Makhode, Director-General (DG); Mr Gordon Hollamby, Deputy Director General (DDG): Finance and Supply-Chain Management; Mr Thomas Sigama, DDG: Civic Services; Mr Thulani Mavuso, DDG: Institutional Planning and Support; Adv Conny Moitse, DDG: Counter-Corruption; Ms Nkidi Mohoboko, DDG: Human Resources and Development; Mr Gene Ravele, Project Manager; Ms Vukani Nxasana, Acting Commissioner of the Border Management Authority and Head of Properties and Facilities; and Dr Nakampe Masiapato, Commissioner of the Border Management Authority.
The delegation from the AGSA included Mr Fhumulani Rabonda; Acting Business Unit Executive; Ms Bonolo Moshe, Audit Manager; and Ms Moroesi Mooketsa, Senior Audit Manager for the GPW.
The delegation from the GPW consisted of Ms Alinah Fosi, Chief Executive Officer (CEO); Mr Ian van der Merwe, Chief Financial Officer (CFO); Mr Lungelo Nkwanyane, Senior Financial Specialist; Mr Anele Apleni, Chief Information Officer; and Ms Constance Shabangu, Chief Audit Executive.
Representing the IEC were Mr Masego Sheburi, Deputy Chief Electoral Officer; and Ms Dawn Mbatha, CFO.
Deputy Minister Nzuza, introduced the new Commissioner of the Border Management Authority (BMA), Dr Nakampe Masiapato, and the Deputy Commissioner of Operations, Maj-Gen David Chilembe to the Committee. He tendered the Minister’s apology for not being able to attend the meeting because of other commitments.
Briefing by the AGSA on the audit outcomes of the DHA, the IEC, and the GPW
Mr Fhumulani Rabonda, Acting Business Unit Leader Executive at the AGSA, stated that the AGSA fulfilled a constitutional mandate to strengthen South Africa’s democracy by strengthening and enabling oversight, accountability, and governance in the public sector. The goal of the AGSA in this meeting was to provide the Committee with the relevant information needed to hold the Executive accountable, and to enforce consequences for those who had betrayed the governance of public sector institutions.
The mandate of the AGSA was found in section 188 of the Constitution which required the AGSA to audit and report on accounts, financial statements, and financial management of government institutions. The aim was to enhance the work of the Committee to monitor, investigate and make recommendations about executive organs of state, constitutional institutions, or other bodies. This included their legislative programmes, budgets, structure, functioning, staffing and policies.
Mr Rabonda commented that the oversight role of the Committee included holding the Executive Authorities accountable for failures in the control environment, following up on actions taken against officials who had committed transgressions, following up on previous commitments made by Accounting Officers, determining if corrective steps were taken to address shortcomings in the internal control environment and enquiring what training and support was given to officials to enable them to execute their responsibilities.
Overview of the audit outcomes for the Home Affairs portfolio
The Committee heard that the audit outcomes for the overall Home Affairs portfolio had improved slightly compared to the previous financial year. The IEC improved from an unqualified audit opinion with findings on compliance with legislation to an unqualified audit opinion with no findings. The DHA’s audit outcomes remained stagnant. It received an unqualified audit opinion with findings on compliance with legislation. The audit outcome for the GPW was outstanding as financial statements for the 2020/21 financial year had not been submitted for audit and the audit had not commenced.
The AGSA commended the IEC for achieving a clean audit outcome and noted that the IEC had continued to maintain a strong and stable leadership culture and to improve on financial and performance management and effective governance structures. It continued to ensure actions were taken to address internal control deficiencies. At the DHA, effective steps were not taken to recover money in fines and penalties due to the DHA. The financial statements submitted for audit required material corrections. In most instances, material findings raised were reoccurring, indicating that Audit Action Plans were not adequately implemented or continuously monitored.
Quality of financial and performance reporting
The AGSA reported that the DHA and the IEC had consistently been able to submit financial statements within the legislated deadlines. The AGSA noted an improvement at the IEC where in the current year they were able to submit financial statements that did not contain material errors. In the prior year, the statements submitted for auditing required material corrections.
At the DHA, material misstatements related to impairment of receivables and accrued departmental revenue and were due to inadequate reviews to detect and correct material errors in the annual financial statements. There was inconsistent and incorrect application of adopted accounting policies for impairment. Material adjustments were therefore made to the annual financial statements and an unqualified opinion was obtained. The findings raised were recurring due to inadequate monitoring and implementation of action plans.
The AGSA noted that at the DHA, there had been a regression in the quality of performance information submitted for auditing. Material inconsistencies were identified in the current year due to ineffective reviews of the performance report. These errors were subsequently corrected.
At the IEC, there had been an improvement in the quality of performance information submitted for auditing in the current year. During the prior year, the IEC made material corrections to the annual performance report as actual achievement reported did not align to supporting documents. No such corrections were required in the current year. In the current year, a correction was required in relation to one target that was inconsistently reported due to ineffective reviews of the performance report.
Compliance with legislation
The AGSA reported that there had been an improvement in the focus area of compliance with legislation in the overall portfolio of Home Affairs. The IEC had no reported material non-compliance. At the DHA, material noncompliance was identified in the areas of material adjustments to the financial statements. There was a continued struggle with compliance with legislation. The material non-compliance was similar to that reported in the prior year due to ineffective action plans to address significant internal control deficiencies. Effective steps were not taken to recover money due to the DHA relating to fines and penalties issued at the ports of entry. This was due to the lack of policy and procedure.
Regarding irregular, fruitless, and wasteful expenditure, it was reported that the total irregular expenditure identified amounted to R19.6 million, of which R4 million was incurred by the DHA and R15.6 million by the IEC. At the DHA, the highest contributors to irregular expenditure involved payments made on the ABIS-project, and cleaning contracts where competitive bidding processes were not followed. At the IEC, the highest contributors to irregular expenditure involved the failure to follow competitive bidding processes and payments which were made on expired contracts. It was reported that there had been a regression in fruitless and wasteful expenditure.
The total fruitless and wasteful expenditure identified amounted to R726 000, with R557 000 incurred by the DHA and R169 000 by the IEC. At the DHA it was mainly related to postponement of flights for the deportation of Congolese nationals. At the IEC it related to a tax directive on a lump sum paid to the South African Revenue Services (SARS) on behalf of former employees.
Regarding Supply-Chain Management (SCM) compliance, it was reported that there had been an overall improvement with no material findings identified. However, other findings related to SCM compliance should be investigated. At the DHA, the most common findings related to employees doing business with the state, and where bid specifications did not stipulate the minimum threshold for local production and content. At the IEC, the most common findings related to competitive bidding processes not being followed when procuring from an established panel.
The AGSA recommended that preventative controls should be strengthened to ensure no irregular, fruitless, or wasteful expenditure was incurred. Standard operating procedures, including record keeping procedures, for procurement from panels should be put in place. Closer oversight by the Supply-Chain Unit was required where procurement was done from established panels to ensure consistency in guidance and compliance with procurement regulations.
Governance and internal controls
Regarding the status of internal controls, there were issues where there was room for improvement, particularly in the areas of policies and record keeping relating to procurement from established panels.
On the status of the IT environment, it was noted that sound IT governance required that there should be an accountability framework to specify decision rights and encourage desirable behaviour. Effective IT governance and system controls would help ensure that entities were not vulnerable to cyberattacks and continuity concerns.
On IT governance at the DHA, the AGSA noted that although a framework was approved in an effort to improve IT governance, there was insufficient remedial action to address prior year findings. Instances of inconsistent application of controls remained prevalent. There had been no improvement in the overall IT environment. There were recurring audit findings; missing security updates; unsupported software; insecure internal network configurations; legacy systems with functionality limitations; and incomprehensive MOUs with third party service providers. These observations indicated a weak state of controls.
At the IEC, there was minimal improvement in the overall IT environment. There were a significant number of recurring findings relating to segregation of duties on ESS; security patches not deployed; and an overall lack of compliance with set and approved policies and procedures. There was no monitoring of security incidents and events due to lack of adequate tools to enable monitoring. The IT governance framework was approved during the last month of the financial year. Lack of an approved framework impacted the manner in which IT operational processes were implemented and managed. Management should ensure that action plans from previous audit findings were adequately implemented and continuously monitored to ensure adherence to approved policies and procedures. In addition, management should ensure that governance frameworks were valid at all times.
Summary of root causes of problems at the DHA
The root causes of the problems and inconsistencies at the DHA included the inadequate review and monitoring of compliance with applicable laws and regulations relating to financial reporting and revenue management. There were no documented policies and procedures to guide the collection of fines and penalties issued and other long outstanding receivables.
Another root cause was the inadequate monitoring of implementation of action plans. The plans did not effectively address repeat audit findings, including those relating to IT. Reviews performed were inadequate to detect and correct material errors. There was inconsistent and incorrect application of adopted accounting policies for the impairment of receivables and the impairment of accrued departmental revenue. Material adjustments were made to the financial statements.
Recommendations of the AGSA
The AGSA recommended that the DHA review and monitor compliance with legislation; effectively develop policies and procedures for the collection of fines and penalties issued; and monitor the design and implementation of action plans to ensure improvement in the audit outcomes. There must be timely consequences for officials who did not implement action plans or neglected their duties.
Regarding the IEC, it was recommended that the entity implement enhanced compliance monitoring procedures and continue with rigorous and diligent implementation of the Audit Action Plans.
In addition, the AGSA recommended that the Committee monitor and regularly follow up with the executive authorities of the entities regarding progress on Audit Action Plans; irregular, fruitless, and wasteful expenditure; and the implementation of consequence management.
Ms M Molekwa (ANC) appreciated the presentation from the AGSA and appreciated the slight improvements in the Home Affairs portfolio. On the implementation and monitoring of Audit Action Plans, she asked whether there are any regular engagements on this between the AGSA and the DHA.
Mr M Tshwaku (EFF) asked how the DHA would ensure that the IT infrastructure was maintained. What would the DHA do to ensure that policies and procedures for the collection of fines and penalties were put in place, as recommended by the AGSA?
Ms A Khanyile (DA) commended the IEC on its unqualified audit without findings. She noted the recommendations that the AGSA had made to the Committee. On the lack of procedures for the collection of penalties she said that the Committee needed to follow up on the DHA’s implementation of the AGSA’s recommendations. Regarding the modernisation of the DHA, the Committee needed to ensure that the DHA actually performed as planned, and that it did not report on targets it had not planned for. She expressed her appreciation for the information presented to the Committee by the AGSA.
Mr A Roos (DA) noted that the AGSA had raised the issue that concerns or findings from previous financial years did not appear to be resolved. The AGSA had recommended that timely consequences should be enforced for officials who did not implement action plans or neglected their duties. The audit outcomes were also a reflection on the oversight of the Committee. He asked what these consequences should be. The Committee had on several occasions asked the DHA to come and report back on the Audit Action Plans of its entities, and this had not materialised. What else could the Committee do to ensure compliance with these Audit Action Plans? He asked for the AGSA’s recommendations in that regard.
He noted the AGSA’s concern that some entities were not responding to requests for information, and that there were instances of repeated misstatements and entities not submitting financial statements year after year. There were grave concerns that have been ongoing for years about the entities’ IT governance and system controls. The GPW had suffered a data loss in the past year which was caused by improper governance.
His understanding was that an official was guilty of financial misconduct if they wilfully or negligently failed to exercise power or perform a duty delegated by the accounting officer in terms of the governing legislation. Was this the same understanding as the AGSA’s? What were the sanctions for such misconduct and who should be held responsible?
The issues in SCM were a concern. Also of concern was the continuation of employees doing business with the state. It had previously been stated that they should face disciplinary action if it was proven to be true, and that it was also a criminal act that required law enforcement intervention. Did the AGSA agree that employees doing business with the state and its entities should be facing disciplinary and criminal action? Who was responsible for taking such disciplinary action? To what extent had this been occurring in the DHA and its entities?
Regarding the quality of the financial and performance reporting, he noted that the Committee, in the previous year, had spoken about the misstatements and challenges that certain officials were perhaps having in understanding the AGSA’s reporting requirements, yet the same problems were reoccurring. What was a reasonable timeframe for the audit findings to be addressed alongside these training issues?
Mr K Pillay (ANC) appreciated the report presented by the AGSA and noted that even though there had been only a slight improvement overall in the portfolio of Home Affairs, it must be welcomed. He applauded the IEC for addressing the findings in the previous audit report, which resulted in them achieving a clean audit outcome. He noted his concern about the outstanding financial statements of the GPW and said that this process should be sped up so that an audit could be conducted.
Ms T Legwase (ANC) also appreciated the report presented by the AGSA, and applauded the improvements made by both the DHA and mostly by the IEC. She asked for clarity on the cancellation of a flight for the deportation of Congolese people and asked for information on what action was taken by the DHA after finding out that some staff members did not show up for the flight and accommodation. Did the DHA have a plan to improve their reports relating to financial and performance information, as was recommended by the AGSA?
Ms M Modise (ANC) agreed with Members’ appreciation of the improvements in the DHA and the IEC. She noted the concern about the recurring issues about the implementations of the AGSA’s findings during previous financial years and stated that there was a clear lack of implementation. It was time that the Committee stressed that the individuals who were responsible must be held accountable by the DHA.
It was really concerning that the GPW had failed to submit its financial statements. The the GPW needed to furnish the Committee with justifiable reasons for this. The GPW must also furnish the Committee with a breakdown of challenges that prevented it from submitting its documents on time so that the appropriate interventions could be discussed and implemented. There was a need for increased focus on the implementation of Audit Action Plans, and the DHA needed to strengthen its measures in dealing with their implementation. The Committee welcomed the slight improvements and the efforts that had been made, but there was still a lot of work that needed to be done to prevent the repeat of adverse findings by the AGSA.
The Chairperson enquired about the issue of permits in mining areas and the role of the DHA’s anti-corruption unit in preparing a report in this regard. He asked whether the AGSA had ventured into that area. He asked for an overall assessment of the civilian immigration in terms of the implementation of previous recommendations of the AGSA and if there were any identified recurring findings or obstacles. He asked whether there had been a process of interfacing with the Lindela Holdings Facility and whether the AGSA had considered how this situation would have affected the financial status of the DHA regarding the deportation of the people. He said the Committee needed certainty about the challenges of the GPW, including whether its Audit Committee was functioning. The Committee noted and appreciated the continuous work of the IEC.
Responses from the AGSA
Mr Rabonda thanked Members for their kind words and their acknowledgement of the work done by the AGSA. The feedback would assist the AGSA in improving the relevance of the information it presented. He commented that the full-time appointment of the Director-General of the DHA was a good step in the right direction to improve the capacity of the DHA. This would help set the right tone of critical management and urgency to understand and work to resolve the AGSA’s findings. It was only through this process that the recurring issues would be addressed. The Public Finance Management Act 1 of 1999 (PFMA) was the legislation that must be adhered to when there was a transgression, negligence, or misconduct. There was then a need to investigate such a matter to ensure that remedial action, which could include sanctions, could be implemented. Investigations must be done at the right level to address the scope of what is wrong, and must be conducted by a properly qualified person.
Regarding the DHA’s failure to collect fines, penalties, and revenue, he commented that this was a symptom of the big issue relating to the contravening of legislation. There was no penalty in place that would be a sufficient deterrent to stop people who were fined from contravening the law. People came into the country illegally or without adhering to the laws of the country. They were fined, but there was no way to follow up on them again. This was a policy issue. There was a need for appropriate measures to deter those who contravened the Immigration Act in order to ensure that immigration laws remained credible and kept their integrity. The Committee must support the DHA in this regard, and continuously monitor the collection of fines and penalties.
On implementation of the Audit Action Plans, he noted that there were regular engagements between the AGSA, the DHA, and the relevant Chief Financial Officers to ensure that the AGSA’s recommendations were understood and could be effectively implemented.
Regarding training on the AGSA’s reporting standards, he noted that the type of reporting used in public finance was not taught at university level, meaning that the standards needed to be learned. There was a deliberate effort to put together a learning plan for people tasked with preparing the financial documents. Both the National Treasury and the National School of Government had programmes in place for this. The AGSA had noted the issue of skills at the DHA, but also applauded the improvements since the previous financial year. In the previous year there was an issue around impairments and standards as tno model was used to implement the findings of the AGSA. In the current year, there was an improvement and the DHA’s management implemented the recommendations and used a model that complied with the standards.
Regarding employees doing business with the state, the AGSA concluded that the DHA must investigate to determine who the employees were and then implement consequence management.
At the GPW, the audit was “not smooth” and the AGSA was committed to understanding what really went wrong. The audit for the previous financial year was only completed in January 2021. There were continuous engagements with the purpose of trying to debrief and improve the audit processes. The management and the audit committee were trying to find ways.
The Chairperson asked what was meant by saying that the GPW’s audit was “not smooth.” Mr Rabonda responded that the GPW’s financial statements had a lot of material misstatements that were not supported by underlying and reliable records, making reconciliation impossible. There were multiple requests to change the financial statements and to submit different information and supporting documents. There were also a lot of push-backs from the GPW on a process level, and when management was not satisfied with the findings, it was escalated back to the AGSA. The GPW rejected the audit report of the AGSA without sufficient reasons and the file was closed with a disclaimer of audit opinion because the GPW was still challenging the report despite multiple engagements by the AGSA. There was a need to get to the bottom of why the GPW was rejecting the findings and pushing back without the supporting documents to support their claims.
Ms Moshe referred to the auditing of foreign missions. She noted that the AGSA was not able to physically go in and audit the missions. The AGSA performed a virtual audit of the foreign missions with the assistance of data officials, meaning that there had not been any limitations in this regard. None of them resulted in material findings. There was an immaterial finding in regard to missing visa labels. In that case, there could have been a mistake in the recording process used to ensure, when a visa was cancelled, that it had not been issued illegally or paid for with stolen money. The AGSA was confident that the e-visa system that the DHA would be rolling out would mitigate some of the issues encountered with the services that the DHA was rendering in foreign missions.
Regarding the auditing of payments, she said the scope of the AGAS’s audit did not cover the Immigration Programme of the DHA but it would be considered in the 2022 audit year. The AGSA had not noted any issues in its audit of the Citizenship Programme, and had urged management to implement and maintain the same controls in the Immigration Programme.
The Civics Program of the DHA was included in the scope of the audit by the AGSA, and no material issues were noted.
Regarding the Lindela Holdings Facility, she noted that the AGSA had focused on the ceding of the contract, as the previous supplier was being liquidated and was not able to render the services required by the DHA. The contract was then ceded to another service provider, and the AGSA focused on whether the contractual terms and arrangements of the ceded contract were consistent with the original contract to make sure that the DHA was not being overcharged. No issues were found in this regard. Regarding the DHA’s purchase of a property from the Department of Public Works and Infrastructure (DPWI), she stated that the necessary payments had been made, but pending court action had prevented the DHA from taking full ownership of the Lindela Holdings Facility, which had resulted in the current contract with the supplier being extended until such time that the court ruling had been resolved.
Responses from the IEC
Mr Masego Sheburi, Deputy Chief Electoral Officer, IEC, thanked the AGSA for its report. He noted that the IEC was scheduled to engage with the Committee at a later stage and would thus reserve its comments until then. He thanked the IEC members and staff for the work put in to achieve a clean audit outcome, as this helped to engender trust in state institutions.
Ms Dawn Mbatha, the Chief Financial Officer, agreed with Mr Sheburi’s responses.
Responses from the GPW
Ms Alinah Fosi, CEO, GPW, said she appreciated the opportunity to respond to Members’ questions and comments. Regarding the GPW’s failure to submit its annual financial statements, she noted that the entity experienced a power surge on 4 February which affected servers containing important financial data as well as operations information. The GPW had put measures in place to recover that data and to start rebuilding the financial data. Companies had been hired to assist with the data recovery processes to ensure that the data was repopulated. The GPW would move to table its annual financial statements by May 2022. The GPW fully acknowledged and respected the role of the AGSA and other oversight entities. It had been maintaining a functional and engaging relationship to make headway on the audit matters to strengthen its controls. The GPW requested an extension from the Minister of Home Affairs, the AGSA, and the National Treasury. The audit committee meetings had been held as scheduled, and the GPW’s relationships with the risk and audit committees had been good. Improvements were being made. The GPW was confident that these efforts would facilitate the audit processes to ensure that the AGSA was aware of the rebuilding processes to recover its data.
Responses from the DHA
Mr Tommy Makhode, Director-General, DHA, commented on the fruitless and wasteful expenditure relating to the deportation of Congolese people. He stated that the matter had been referred to the Loss Control Committee to conclude this matter within the current week. According to the DHA’s own investigation, there had been no evidence of negligence from any of the officials that were handling this matter. Regarding the booking of flights, the DHA was looking at ways to recover the money that was paid to the service provider which was supposed to obtain landing rights in the country and failed to do so. The contractual liability was being evaluated.
Deputy Minister Nzuza said he appreciated the work done by the AGSA and the recommendations for the DHA to improve its financial performance in its efforts to move towards a clean audit outcome. The areas of progress and the 56 percent reduction in irregular expenditure were good news. The DHA had come to a resolution around the issues of contingent liabilities. The details of the Audit Action Plans would be dealt with when the DHA engaged on its Annual Report. The fruitless and wasteful expenditure resulted from the deportation of illegal immigrants and resulted from the contractor failing to obtain landing rights under the transversal contracts.
The Chairperson thanked the delegations for their responses. He said it was important that the entities note the issues raised by Members and the AGSA. The Committee noted and accepted the recommendations by the AGSA in relation to all the entities in the report. The Committee was concerned about the state of the GPW’s governance, especially in light of what had been reflected by the AGSA’s report and the recommendations made. Various teams had been deployed at the GPW to investigate its governance, and the Committee urged the Home Affairs Ministry to fast-track matters.
The Committee appreciated that the AGSA would venture into the area of immigration to identify the weaknesses in that programme of the DHA. The scope should also extend to the Border Management Authority. Most of the Committee’s oversight work would focus on these issues.
Briefing by the DHA on its 2020/21 Annual Report, financial statements, and Audit Action Plans
The Committee was briefed by the DHA on its Annual Report and financial statements for the 2020/21 financial year, and on the implementation of the Audit Action Plans to address the audit findings.
Introductory remarks by the Deputy Minister
Deputy Minister Nzuza, reported that the DHA had achieved 68 percent of its performance targets with nine out of 12 targets achieved for the Administration Programme, five out of six achieved for the Citizens Affairs Programme and half of the targets achieved for the Immigration Programme. In total, the DHA achieved 19 out of its 28 targets. The worst-performing programme was the Immigration Programme. This related to issues of having to close the borders and the halting of international travel, which resulted in fewer operations being carried out.
Overview of the DHA’s organisational performance
The DG, Mr Makhode, told the Committee that the DHA was committed to citizen empowerment and inclusivity, economic development and national security. Its aims were to be an efficient and secure custodian of citizenship and civil registration; securely and strategically manage international migration; efficiently manage asylum seekers and refugees; and efficiently determine and safeguard the official identity and status of persons.
Nine of the set targets were not achieved in the 2020/21 financial year, a seven percent decline in achievement from the previous financial year.
The DHA provided the Committee with a breakdown of its performance by programme:
For Programme 1 (Administration), nine out of 12 targets were achieved with over-achievement reported in some targets:
- A concept document, including the development of an Implementation Project Plan, on the Revised Service Delivery Model was approved by the DG. The Revised DHA Access Model was presented to the EXCO on 25 January 2021. The model was supported, and then presented to the DG and the Minister on 10 March 2021, and issues pertaining to efficient access to services were raised.
- The entity overperformed on its target for its Communication Strategy and Action Plan with 53 media engagements, eight outreach engagements, and four campaigns conducted. The reason for the over-achievement on media campaigns was due to communications on COVID-19 related matters and other departmental developments such as the publishing of the Official Identity Management Policy in the Government Gazette, a call for public comments on a One-Stop Border Post published in weekend newspapers and on social media, and also a review of certain permits.
- The Official Identity Management Policy was submitted to the Minister for submission to Cabinet and was approved by the Minister on 30 March 2021.
- The target for the DHA Bill to be published in the Government Gazette for public consultation was not achieved. The Bill was approved by the EXCO for submission to the Minister, but the DHA needed to source a legal opinion on the Bill and finalise consultation with the School of Government on the establishment of the DHA College. The legal opinion on the Bill was not obtained and consultations with the School of Government had not been concluded by the end of the financial year. The target had been rolled over to the 2021/22 financial year.
- The target of the Biometric Movement Control System (BMCS) being partially rolled out to four airports was not achieved. It was only installed and configured at two airports, OR Tambo and Cape Town. The lockdown regulations with travel restrictions delayed the rollout of the system to ports, and this target had been rolled over.
- The target of the e-visa system’s first phase had been achieved and the app integration had been completed.
- The target for contracting a service provider to develop the Asylum Seeker and Refugee System was not achieved, as the service provider was not appointed. The procurement process was put on hold to clarify roles for the DHA and the State Information Technology Agency (SITA) in the procurement processes.
- The target of evaluating two of the DHA’s business processes to identify possible vulnerabilities to fraud, corruption and security breaches was achieved. In addition, 70.88 percent of reported cases on fraud and corruption were finalised within 90 days. The DHA conducted 31 Threat and Risk Assessments, achieving its targets, and four extra assessments were conducted with additional resources utilised from within the branch. The DHA referred 533 vetting files to the State Security Agency (SSA). Confidential files were given priority of Secret and Top Secret files due to reduced contact with applicants and other referees.
For Programme 2 (Citizen Affairs), five out of six targets were achieved with over-achievement reported in some targets:
- The total number of births registered within 30 calendar days during the 2020/21 financial year was 751 250, an overachievement of this target.
- The annual target for the issuing of smart ID-cards to citizens over the age of 16 was achieved, with 1.23 million smart ID-cards issued. Overtime work in January and February 2021 assisted in reducing the back-office backlog and contributed to this overachievement. Despite the achievement of the target, system downtimes were still a challenge. In addition, machine-readable passports were issued within the recommended turnaround times, as prescribed.
- The target for publishing the Draft Marriage Policy in the Government Gazette for public comment was not achieved. This target had been rolled over.
- The targets of submitting the Citizenship Discussion Paper and the Civil Registration Discussion Paper to the Minister for approval were achieved.
For Programme 3 (Immigration), five out of the ten targets were achieved, rendering this program the worst-performing programme of the DHA:
The targets that were achieved were;
- 288 law enforcement operations were conducted.
- 91.1 percent of critical skills visas were decided within 4 weeks.
- The Refugee Protection Policy Discussion Paper and the International Migration Policy Discussion Paper were submitted to the Minister for approval.
- The One-Stop Border Post (OSBP) Policy was published in December 2020 for public comment.
The targets that were missed were:
- The adjudication of permanent residence applications within eight months, with only 43.7 percent of applications being settled within the prescribed period. This target had been rolled over.
- Only 83.3 percent of business and general work visas were settled within eight weeks for applications processed within South Africa. The business unit could not finalise more applications as officials only started returning to the office during Covid-19 lockdown level 3 in a limited capacity. The business unit had to observe the COVID-19 health and safety requirements which necessitated officials working on a rotation basis. This target had been rolled over.
- The target relating to the rolling out of the Border Management Agency (BMA) was not achieved, but milestones achieved included assent for the relevant legislation and the appointment of the Commissioner and Deputy Commissioners of the BMA.
- While the annual target of incrementally establishing the National Targeting Centre (NTC) was not achieved, some milestones were achieved. Due to the absence of an NTC Steering Committee, the draft Implementation Protocol prepared by DHA Legal Services could not be processed further for conclusion with relevant organs of state. This target had been rolled over to the 2020/21 financial year.
-The target of appointing multiple preferred bidders for the redevelopment of six land ports of entry was not achieved. The DHA was addressing outstanding information that was required for the finalisation of the draft Request to Proposal documentation.
Mr Gordon Hollamby, DDG: Finance and Supply-Chain Management, DHA, presented the financial information of the DHA for the 2020/21 financial year.
The DHA spent R8.47 billion - 96.4 percent of its budget - with R3.51 billion spent on the compensation of employees, R2.34 billion on goods and services, R 2.3 billion on transfers and subsidies, and R321.72 million on payments for capital assets.
There were two areas of underspending, namely the compensation of employees because of the implementation of wage agreements, and on goods and services. The DHA collected R370 million in revenue. The Covid-19 pandemic significantly impacted revenue collection.
The AGSA finalised its audit on 10 September 2021, and the DHA received an unqualified audit outcome with findings. The material findings related to misstatements in the annual financial statements, subsequently corrected by management, and non-compliance with legislation. Another material finding was that the status of the DHA’s IT environment required intervention. Fruitless and wasteful expenditure increased over two years from R21 000 to R557 000, and irregular expenditure decreased from R284 million to R 7.7 million. The overall SCM compliance improved, with no material findings in the 2020/21 financial year.
A dynamic draft Audit Action Plan was prepared and submitted to the DHA’s Internal Audit Committee to validate that the actions proposed would address the AGSA’s findings. Progress against the plan was monitored at back-to-basics meetings and reports were presented to the EXCO and the Audit Committee. Failure to implement the actions or to provide progress reports resulted in consequence management. A summary of the contents of the draft Audit Action Plan was presented to the Committee, along with the monitoring measures.
Challenges and priorities
Mr Makhode briefed the Committee on the DHA’s challenges and the priorities. He said the DHA’s Audit Action Plan aimed to drive a culture of compliance and accountability and to apply timely consequence management where it was warranted. However, there were significant challenges that continued to constrain optimal performance. These included long queues in its offices caused by unpredictable walk-ins; discontinuation of Saturday working hours; unstable systems; and the accumulation of applications for services which were not rendered under higher lockdown levels. In addition, there was a high vacancy rate in frontline offices and in certain critical posts at management level; a significant dependency on other organs of state to deliver services; and high degrees of litigation. The DHA’s labour intensive model was hampered by the COVID-19 pandemic, but valuable lessons had been learned about how it could continue to provide services during the pandemic.
To deal with long queues the DHA was considering various interventions such as renovating one office in the Eastern Cape and utilising an appointment system in selected offices. The DHA was also exploring the possibility of expanding its footprint by engaging with malls and banks about providing DHA services. It was also addressing the issue of running dual systems in its IT environment.
In dealing with the vacancy levels, the DHA had made some recent appointments, such as the Chief Information Officer, and had sought assistance from the private sector. The DHA had submitted its business case to the National Treasury and was awaiting a review.
Ms Molekwa congratulated the DHA for obtaining an unqualified audit outcome for the fifth consecutive year. She encouraged the DHA to develop realistic internal controls to keep irregular, fruitless and wasteful expenditure to a minimum. It was important that the internal controls address the findings of the AGSA.
Mr Roos thanked the DHA for its responsiveness during the recent local government elections. While there were a few complaints about offices being closed, there were quick responses from the DHA that allowed people to get their temporary identification certificates.
He welcomed the focus on consequence management and asked that the Committee be furnished with progress reports on the Audit Action Plan more regularly to ensure that it was implemented.
Regarding the DHA’s war on queues, a task team had been assigned since 2019. What had the task team achieved and did they have terms of reference? The Committee needed to be furnished with more details as information so far had been vague. He asked that the Committee be provided with the DHA’s access model now that it had been improved. It was important that Members understand the access model to allow the Committee to highlight any potential gaps.
He asked for more information on the progress of the project to have the DHA’s services at all clinics and health facilities.
He welcomed the newly appointed Commissioner and Deputy Commissioner of the BMA. He asked whether the section 97 presidential proclamation had been signed to transfer the relevant borderline enforcement functions to the DHA. He asked for clarity from the DHA’s CFO about the special adjustment budget and how this related to underspending of goods and services during the 2020/21 financial year.
Regarding the revenue collection process, he noted that this problem was recurring in the AGSA’s findings for the DHA and its entities. What had been done to improve revenue collection within the DHA and its entities?
Mr Pillay applauded the DHA for handling the challenges that it faced during the period of elections. He asked about progress in ensuring collection of uncollected identity documents.
Referring to smart offices, he said it was unacceptable that there were disparities in technology between offices. He asked that the Committee be provided with a list of the smart offices and a timeframe for reforming all of the DHA’s offices. The ability to get an identification document linked to many services, even vaccinations, and it was important that the DHA ensured that every citizen could get an identification document.
Ms Modise commented that the DHA was performing fairly well considering the high demands of the kind of service it was expected to provide. The Committee was aware of the difficulties that the lockdown restrictions would have posed. She noted that despite having the lowering of lockdown levels in the past few months, the performance targets had still dropped. She asked for clarity on the underlying challenges and difficulties that caused these negative performances.
Regarding the upgrading of six ports of entry, she asked whether there were specific time frames. There was a need for periodical progress reports on this issue. The sooner there was progress on the upgrading of ports, the better.
On the issue of uncollected identification documents, she asked for clarity on what measures the DHA had put in place to speed up collection, apart from the standard SMSs that were sent as reminders for collection. It was worrying that such important documents in citizens' lives were uncollected.
The Chairperson asked the DHA delegation to respond to questions from the Members and to the AGSA’s findings, especially on non-compliance with legislation and the enforcement of consequence management.
Mr Makhode assured the Committee that the DHA would not “bend with the breeze” but would do continuous follow-ups on consequence management.
He commented that some of the reasons why the DHA did not achieve its targets were related to closed services, the ban on international travel and the disruption caused by the COVID-19 pandemic in the supply chain management of the entities.
The DHA was scheduled to brief the Committee at a later stage about aspects of the BMA and the need to ensure COVID-19 protocols and regulations at the ports of entry. For example, at the DHA’s Contact Centre, the staff had to be halved to enforce social distancing. Staff were working on a rotational basis, which had an impact on productivity. Every government department had compliance officers who monitored these activities.
Regarding the uncollected identification documents, he said there was a need for a stronger campaign to get the message across that if you applied for an identification document you would have to collect it within a prescribed time. He agreed that there was a need to ensure that all the offices of the DHA offered the same services, including smart ID-cards. That could be realised by finalising partnerships with banks.
Mr Thulani Mavuso, DDG: Institutional Planning and Support, DHA, responded to the questions about the access model. He stated that the DHA was continuing with the project. It was looking at expanding the offices in areas under-serviced by the DHA. One method of achieving this was the deployment of mobile units.
Mr Thomas Sigama, DDG: Civic Services, DHA, said a war on queues strategy had been approved and put in place. The DHA’s systems had to be stabilised across the board. There were also issues of infrastructure that resulted in overcrowding and stampeding at offices. The terms of reference for dealing with this needed to be finalised and would be shared with the Committee. The DHA had already identified the offices that will take part in the piloting phase of the appointments system. Offices that had high levels of people coming in would be prioritised.
Mr Hollamby responded that the DHA’s budget was cut during the special adjustments budget. Revenue projections were cut by 50 percent. The DHA collected only R370 million in revenue. It did not get the projected foreign revenue, and local projections also fell short. It was difficult to enforce fines and penalties issued. The material findings of the AGSA related only to revenue collection.
Mr Gene Ravele, Project Manager of the BMA, said that the section 97 presidential proclamation had not been issued because it required concurrence by the relevant Ministers. Only the Minister of Agriculture had concurred, but the DHA was in engagements to finalise this matter.
On the timelines for the upgrades to the six ports of entry, he said that the DHA was finalising the request for proposals. This would be submitted to the National Treasury’s Budget Office by the end of November 2021. The DHA’s projections were that the upgrades would be completed by the end of 2024.
The Chairperson thanked Mr Ravele for the time he served as the Acting Commissioner of the BMA.
The meeting was adjourned.
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