COVID Audit Report; Implementation of Community Schemes Ombud Services and National Housing Finance Corporation Audit Outcomes; with Deputy Minister

Meeting report

Chairperson’s introduction

The Chairperson welcomed the Deputy Minister and officials of the Department of Human Settlements (DHS), the team from the office of the Auditor-General of South Africa (AGSA), and the parliamentary support staff. She recalled previous interactions with AGSA, and commented that this was a follow-up meeting after the finalisation of the special report as pronounced by the AG.

AGSA presentation

Mr Londoloza Songwevu, Senior Audit Manager, AGSA, reminded the Committee that the observations from Special Report 1 and 2 had already been shared with the Committee. A recap would be given of these observations. In terms of Special Report 1, AGSA would have performed work from April 2020 until September 2020. Towards the end of September and the beginning of October, AGSA had engagements with the DHS where it had been decided that the resettlement initiative would no longer be part of a response to COVID-19, and that it would continue as a normal programme of the sector. This meant that it would no longer be performing COVID-related work in relation to the initiative. As a result, any work that had taken place after that would have been follow-ups.

The role of AGSA in the reporting process was to reflect on the audit work performed to assist the Portfolio Committee in its oversight role of assessing the performance of the entities, taking into consideration the objective of the Committee to produce a Budgetary Review and Recommendations Report (BRRR). Around the BRRR, AGSA’s role was to reflect on the work that had been performed -- in this instance, the resettlement programme.

Describing the focus of the audit, Mr Songwevu said there had been a budget of R1.426 billion for 95 projects, made up of R554 million from the 2019/20 Urban Settlements Development Grant (USDG) and R872 million from the 2020/21 Human Settlements Development Grant (HSDG). The planned Covid-19 shelters would consist of 30 850 permanent structures, and 31 571 temporary residential units. Spending on the shelters had amounted to R166 million -- R123 million from the USDG and R43 million from the HSDG.

As at 30 June 2020, only 47% (eight out of 17 selected projects) had commenced but were not complete, and some audit work was performed. The budget and expenditure for the initiative could not be audited, as consolidated information was not available. AGSA could not perform any audit work on the other nine projects because construction had not yet started

Overall observations, recommendations and commitments

The National Department did not alter their monitoring processes in response to the emergency nature of this programme despite the recurring weaknesses relating to inadequate reporting on some of the sector initiatives. Credibility concerns had thus been raised regarding information used to monitor the implementation of the initiatives.

The Ministers and Members of Executive Council (MINMEC) had established a human settlements command centre (HSCC) to coordinate the implementation of the initiative, in accordance with the intergovernmental relations (IGR) framework. The progress at the date of the report, however, showed fragmentation in the effectiveness of the HSCC structure.

There were weaknesses in the effectiveness of preventative controls in the exercise of oversight to ensure performance and financial accountability. This was evidenced by the ineffectiveness of the sector in overseeing the implementation of the plan, coordination of the role players and addressing emerging challenges.

The fraud risk was informed by the fact that there was weak coordination and accountability at sector level for the allocation of budgets and the tracking of expenditure incurred on this initiative. The expected urgency may create an opportunity for fraudulent activities, as land parcels and structures may end up being procured at inflated prices.

Follow-up during second special report on COVID audit

Mr Songwevu reported on the status of subsequent audit.

In Limpopo, challenges were experienced on quality issues in the Talana project, resulting in investigations by the National Home Builders Registration Council (NHBRC) on quality matters and the Special Investigating Unit (SIU) on allegations of fraud and corruption in the awarding of the tenders. Due to these issues, the units in the Burgersfort project were put on hold.

In the Free State, during the visit to the site, instances were identified where up to seven people occupied a temporary shelter with a total area of only 9 m². Steps to rectify the sizes of the temporary residential units (TRUs) built in the Linda Mkhonto settlement were not taken.

A new finding had been non-compliance with procurement regulations – the Housing Development Agency (HDA) had appointed a service provider for structural assessment and monitoring TRUs in Talana without following a competitive bidding process.

He said the sector continued to lack processes to effectively implement, monitor and coordinate sector plans to carry out the original upgrading of informal settlements programme. Leadership should improve accountability to avoid further delays in the delivery of adequate housing.

Follow up during the PFMA 20/21 audit cycle

Mr Songwevu said that during the Public Finance Management Act (PFMA) 2020/21 audit cycle, key issues noted during the construction of TRUs were reported in the special reports that still needed attention. These included non-compliance with procurement regulations, issues related to poor quality of construction and compliance with national building norms and standards, and a lack of processes to efficiently and effectively implement, monitor and coordinate sector plans across the three spheres of government.

Follow up on previous recommendations and commitments

The key root causes and AGSA's recommendations were:

• Inadequate controls to prevent non-compliance with procurement legislation. Accounting authorities should strengthen preventative controls to identify non-compliance.
• Management did not effectively develop and monitor implementation of action plans. Accounting officers/authorities must thoroughly review developed action plans to ensure they address root causes.
• Key positions were not filled at some of the entities, and the non-establishment of an internal audit unit at the Estate Agency Affairs Board EAAB. The filling of critical positions must be prioritised.

Current recommendations to Portfolio Committee

Mr Songwevu said the Committee should monitor and regularly follow up with the executive authority and accounting officer/authority on:

• Progress on audit action plans put in place by the Department and entities to ensure improvement in the audit outcomes of the portfolio.
• Monitoring the vacancies to ensure stability of leadership.
• Follow-up with the entities that incurred irregular, fruitless and wasteful expenditure to ensure there was consequence management.
• The culture of consequence management should be enforced in the portfolio.

He concluded that the fundamentals of strong preventative controls were a culture of ethical behaviour and commitment; adequate and sufficiently skilled officials, comprehensive policies and procedures, mechanisms for officials to report any pressure or influence, and regular risk assessment, accompanied by response measures

Discussion

The Chairperson reminded Mr Songwevu that in the previous meeting, he had said he would get back to the Committee on the issue of the procurement of personal protective equipment (PPE), and asked him to brief the Committee in that regard.

Mr Songwevu said that the issue of the procurement of the PPE would form part of the regularity audit, which would be commented on after 31 March 2022. Those audits had not yet started.

Ms E Powell (DA) said when the Committee approved its programme, the Committee spoke about AGSA’s briefing being on the agenda for this meeting, and queried why it was on the agenda again, given that a presentation had already been given by the AG in respect of the Special Report that was tabled in June 2020, as it was now March 2022. She noted the opening remarks of the AG in respect of the presentation being given for a second time. It was a duplication of what had already been presented before the Committee. What the Committee should be calling for was the SIU report made public in February, which had contained a number of scathing findings in respect of what was contained in the Special Report. The Committee was still waiting for the NHBRC’s report into the irregularities at the Talana TRU, which had findings in respect of the SIU’s investigations as touched on by the AG. Could the Committee be given an indication as to when it would be able to interrogate that report? According to the presentation, steps had still not been taken to rectify matters at the Linda Mkhonto TRU. Was this at June 2020 or March 2022?

The DHS continued to lack processes to effectively implement, monitor and coordinate sector plans, which was a finding that the Committee had noted in their BRRR and had already served before Parliament. With over 42 state officials and parliamentarians gathered in the meeting, what was the purpose of the presentation? When could the Committee interrogate the "meat" that had resulted from the findings of over 18 months ago in terms of calling the SIU before the Committee to go through the findings? The presentation seemed to be a waste of time as there was nothing new that had been presented to the Committee.

The Chairperson responded that the presentation had not been a waste of time. In the meeting, the Committee would be interacting with the various entities who, in terms of the Committee’s programme, would later return to report on their findings. It was important for Members to understand the entities’ current positions and progress. In terms of the Committee’s programmes towards the end of September, all the entities would be appearing before the Committee to respond to issues that the AG had raised in the findings of the Special Reports and the BRRR reports. They would respond in terms of their action plans as to whether they had dealt with root causes of the issues raised. It might have been a waste of time for Ms Powell, but for other Members, it was important to understand where the Committee was in terms of the Special Report as finalised by the AG, including issues of the BRRR. She thanked AGSA.

Ms N Sihlwayi (ANC) thanked AGSA, who consistently reminded the Committee about good governance. The presentation had not been presented to the Committee for the first time, but it was important for the Committee to continually reaffirm what was correct and just to the Department. She pleaded for AGSA to continue to tell the Committee where it lacked in terms of presenting good government programmes and procedures to its system.

The AG had raised two pertinent issues about the TRUs that were not occupied. Some of them were occupied by incorrect beneficiaries. Could the Department guide the Committee on the process and procedure to place a relevant beneficiary in a house? Many people in communities that were in dire need of houses within the project were dying due to depression caused by being deprived of housing they knew they should be getting. It could not be government processes that undermined the people. It was important to determine how best to address the issues of processes and procedures. The issue of lack of coordination between systems started from the Department or the relevant organisation internally. Organisational objectives would not be reached if they operated in silos. This matter was very critical and coordination was important. It needed to be determined how best to address this particular issue.

Mr A Tseki (ANC) said the Committee should note the report as progress, and move forward.

Ms Powell agreed with Mr Tseki, noting that this was not a report on progress but a duplicate report that had already been served before the Committee.

Mr Tseki was concerned about the manner in which Ms Powell’s was putting forth her concern, as they would later argue about the meeting minutes again. The commonality was that the Committee must move forward, noting the concerns raised by Ms Sihlwayi.

Ms Powell agreed with Mr Tseki on the chatline.

AGSA’s response

Mr Songwevu thanked the Members, and particularly Ms Sihlwayi onforer question regarding beneficiaries and the lack of coordination. On the beneficiaries, there had been a process. However, what AGSA had found was that on the ground, those allocations were not made in terms of the processes as designed by the prescripts. It recommended that it be the responsibility of the accounting officers to make sure that what was documented as the approved process of allocating beneficiaries was indeed what was applied. From AGSA's observations, implementation was key. The processes were there, but needed to be strengthened.

Regarding the lack of coordination, the starting point was having common indicators, which the national Department was working on, but the lack of customised indicators was a big contributor towards this lack of coordination. There was no process, even regarding budget spending itself, so information that was submitted to the national AG could not be reconciled with information from the provincial AG offices. There was also an issue that what was submitted to national by the provinces was not necessarily valid, accurate and complete. Therefore AGSA should start having indicators that must then be anchored around the requirements of the medium-term strategic framework (MTSF). This was not occurring at the level that it should be.

The Chairperson thanked AGSA for the presentation, and noted the issues that had been raised. She committed to following up with the Department. She welcomed the Deputy Minister and her team.

Department of Human Settlements: introduction

Ms Pam Tshwete, Deputy Minister, DHS, introduced the officials from the Department, the Community Schemes Ombud Service (CSOS) and the National Housing Finance Corporation (NHFC). She said that the AG’s presentation had been very useful, and promised that some of the issues raised were being addressed, such as the filling of critical positions. The Department had filled the positions for the board members of all the entities and there was stability at all the entities. On the issue of the Community Schemes Ombud Service quantum, the Department in their MINMEC saw it as something they needed to work on because initially it was meant for emergencies and to be a once off. The Department was working with the Minister and MECs of provinces to come up with permanent solutions rather than temporary solutions regarding TRUs. The Department was aware of the issues of the investigation in Limpopo and was waiting for an outcome.

She assured the Committee that the Department was taking the recommendations made by AGSA seriously and working on them. As requested, the Department was there to brief the Committee on the implementation of audit outcomes for the CSOS and NHFC. The Committee would recall that not long ago, CSOS was struggling and not necessarily stable. In her turnaround strategy, the Minister had responded to this and things had quickly improved. The entity now had a new board and there was a lot of progress. The CSOS had put in place long-term interventions to deal with issues raised by the AG.

She requested the presenter to explain the various findings further, particularly those that were in red, which were dependent on the end of the financial year end, being March 2022. The CSOS unfortunately relied on a trust relationship, hoping that all community schemes would register with it, which had led to loss of revenue. To deal with consequence management, the entity had established an independent Loss Control Committee, which had not existed before.

Ms Sindisiwe Ngxongo, Deputy Director-General: Entities Oversight, IGR, Monitoring and Evaluation, DHS, introduced the Chief Ombud of CSOS to take the Committee through the CSOS presentation.

CSOS remedial actions and improvement plans

Adv Boyce Mkhize, CSOS Chief Ombud, said he was appreciative of the opportunity to present progress made in relation to the audit remedial actions and improvement plans flowing from the AG’s findings from the previous year.

He highlighted the following key issues pertaining to the findings:

• The CSOS was on a new trajectory in terms of transforming its systems, processes and ensuring that there was ongoing compliance with the legislative frameworks and that its internal systems were appropriately strengthened.
• The audit opinion from the previous year was a qualified audit opinion. This was a slight move from the previous year’s adverse audit opinion, which indicated that there was some slight movement towards a desired state. This was due to the reality of the systems and some of the breakdowns inherited prior to assuming office. The basis of the qualified audit opinion was largely premised upon the fact that CSOS had not accounted fully for the entire universe of community schemes that were supposed to register with it by law. In terms of section 59 of the CSOS Act, there was an obligation for all community schemes to register with CSOS.
• Two main challenges had been encountered with regard to this. CSOS’s legislative framework, in as much as it created an obligatory requirement for schemes to register with CSOS, lacked the enforcement mechanism to ensure that schemes in fact comply. This matter was being dealt with by the Department to strengthen their legislative frameworks. There was also a lack of a profile for the CSOS. CSOS was hardly known in terms of its ambit, mandate and jurisdiction. Due to this, there were difficulties in terms of some of the schemes being completely ignorant of the legal requirements. This had been addressed through an aggressive advocacy campaign that CSOS had already instituted, and some major improvements had been seen in the profile of the CSOS, with it being in the public domain. This was already bearing fruits. This would be accelerated in the new financial year.
• The CSOS was looking into ensuring that all the schemes that were registered in the country had a database that could be shared between the CSOS and other structures such as the Deed’s Office, to ensure alignment. The CSOS had already signed a memorandum of understanding (MOU) with the Deed’s Office and other related entities for it to enable data sharing and ensure synchronisation.
• The CSOS was in the process of finalising a technical opinion that was going to deal with the issue of generally recognised accounting practice (GRAP) interpretation, particularly with regard to accounting for the complete universe of schemes. The qualification emanated from the fact that if CSOS did not account for the full universe of schemes, then the PFMA section that deals with the entity collecting all revenue that was due to it, would kick in immediately.
• The CSOS had appointed a service provider who would enable the CSOS to help with data cleansing of schemes. Part of what the CSOS had discovered was that some of the schemes were duplicated or bore similar names, which confused the system and distorted the CSOS’s ability to account truthfully in terms of the complete universe of schemes.
• The CSOS had obtained a report on a process through an entity called Lightstone, which had provided a geo-mapping of schemes. The CSOS now had data that gave them a full picture of the complete schemes' universe, which would enable it to kick into the next phase of the programme of actual physical verification of the schemes.
• The CSOS had adopted a systems development programme that digitises the CSOS’s processes. This would enable schemes to remotely load their documents through an interactive web-based system. CSOS had an external service provider that had assisted them in the development of the registration model. They would be developing other models as they went along, including customer relations management as well as a disputes management system. All of these were going to create a platform for an integrated digitised environment for the CSOS to interact with stakeholders in real time and account for all those that had not been accounted for. This included a process of issuing levies and bills to the CSOS’s customers.
• Of the findings that were made by the AG, the CSOS had completed 13, nine were ongoing simply because of their nature and character, and would be finalised in due course, while four had not yet started because they had not yet fallen due and were dependent on the financial year end.

CSOS's remedial action plan

Ms Thembelihle Mbatha, Chief Financial Officer, CSOS, took to the Committee through the 2021/22 AGSA remedial plan, and provided a summary of the key audit findings. These included discrepancies in the revenue and receivables from non-exchange transactions; irregular, fruitless and wasteful expenditure; lack of consequence management; non-compliance with the Broad-based Black Economic Empowerment (B-BBEE) Act and regulations; and misstatements in the annual financial statements.

(See attached document for details)

Overall key remedial actions to address the 2021 audit were:

• Development of an audit action plan with remedial action and timelines to be monitored on a quarterly basis.
• A revenue collection drive and strategy was under way to deal with the completeness of the database, amongst the other projects already under way in the CSOS governance unit.
• In the current financial year, the entity continued with monthly reporting of planned targets against progress. This would allow for the corrective measures identified to be implemented and followed up timeously before the end of the quarter.
• Institution of a loss control committee to deal with consequence management for irregular, fruitless and wasteful expenditure.

NHFC remedial actions and improvement plans

Deputy Minister Tshwete began with a brief introduction to the presentation by the National Housing Finance Corporation (NHFC).

The NHFC was in the process of procuring an exercise resource planning system to manage day-to-day business activities such as accounting, procurement, supply chain operations, risk management and compliance. This system would align and improve processes, leading to better monitoring and accountability as long-term responses to the AG’s concerns. Additionally, the NHFC was in the process of sourcing talent to fill critical vacancies with the hope of completing recruitment by the end of March. The Committee would also be pleased that the R57 million stolen from the NHFC had been recovered.

Mr Bruce Gordon, Acting CEO, NHFC, presented the audit action plan arising from the 2020/21 audit outcomes. along with Ms Nomvula Khumalo, Acting Chief Financial Officer (CFO).

The key issues addressed by the audit action plan involved the entity's supply chain management (irregular expenditure and failure to pay invoices within 30 days of receipt), information technology (IT) challenges, incorrect disclosure in the annual financial statements submitted for audit, and a lack of adequate reconciliations and reviews.

The major interventions to address the supply chain issues were:

• The supply chain manager was dismissed, and internal recruitment of replacement was under way.
• A loss control committee (LCC) was appointed,
• The LCC's terms of reference included ensuring the CFO implemented recommendations to prevent irregular expenditure.
• A contract management system was procured and operational.
• The supply chain policy was updated.
• The irregular, fruitless and wasteful expenditure policy was updated to include reporting requirements and collection.

Commenting on the timely payment of invoices, the NHFC referred to its rental repair programme, where it paid nearly all invoices within 14 days to 130 small, medium and micro enterprises (SMMEs). The creditors' age analysis currently reflected no invoices older than 30 days, but this was not good enough yet, as occasional invoices were still being paid after 30 days. Processes to resolve this were being implemented as part of the remaining SCM solutions

At the time of the merger, the IT systems were totally out of date. An IT executive was recruited and had immediately started to implement an improvement plan, conducting an enterprise architecture project to assess what processes were required. In the interest of security, physical and environmental controls over the server room were improved, with most data now being stored in the cloud, and a continuous IT security enhancement programme was in place.

To deal with accounting issues, the entire finance team had been trained on GRAP. There was now earlier engagement with the AG to ensure the audit was completed earlier, and an electronic filing system was in the process of implementation.

The key 2022 audit risks were irregular expenditure, which had already been identified and action taken; the R57 million stolen from the NHFC's ABSA money market account had been recovered, but this would lead to audit questions; and IT system enhancements were still in progress.

The NHFC recommended that the Portfolio Committee note the entity's progress in clearing the audit findings for 2020/21 of its financial statements.

Ms Ngxongo said that the AG's action plan was being monitored by the Department through the risk management forum that was held with all the entities, as well as the CEO’s forum that was chaired by the Director-General. She had elevated the filling of critical positions, particularly in the CSOS and the NHFC. The appointment of the board would be concluded by the end of March. The first responsibility of this new board would be to appoint a CEO, and Mr Gordon would return to his position as CFO.

Discussion

Ms Powell said there were a number of issues that were becoming increasingly concerning regarding the CSOS. There was a lot of noise mounting in the public space and she was receiving an increasing number of queries and complaints. The concerns raised were in respect of delays, and but she noted from the presentation that there would be a tracking system put in place and welcomed it. She was deeply concerned about internal controls, risk management, BEE compliance, and all the issues raised in the AG’s report. She had 14 questions specifically for the CSOS which she would happily provide in writing if needed.

In terms of section 36 of the CSOS Act, the Chief Ombud must issue practice directives with regard to matters pertaining to the operation of the service. These practice directives must be subject to the Act and regulations which direct the performance of the Act in its operation. Allegations had been put to her office by a number of individuals and agencies that CSOS was using practice directives signed by the board to amend or further extend the CSOS Act and the Sectional Titles Schemes Management Act (STSMA), which was not in their mandate. How did the CSOS interpret the Acts to allow for the extension of the two pieces of legislation by means of practice directives? The CSOS was supposed to operate within registered timeframes but in reality, matters were dragging on for years, which was why the Committee welcomed the new tracking system. However, there were a number of procedural flaws and delays that could not be excused. Why was the CSOS not sticking to the timelines that it had set? When delays occurred, why were they not dealt with or explained? She was often "cc’d" into emails, and some of them were responded to timeously while others remained outstanding for months. That morning, a complaint that had been outstanding for months had been responded to while in the meeting. What was the explanation behind the delays? The CSOS had put together a list of BEE compliant-trained executive management agencies (EMAs), and the entity appeared to be compelling owners and trustees to appoint a specific EMA, one having been identified in the Western Cape. So there was no choice in the appointment of EMAs. Other than two names on the list that had been provided, there was no listed company that was actually known to industry players. The CSOS had further promoted the appointment of this EMA by a trustee resolution, even though the STSMA provided that a special resolution of members was required. Under what authority was the CSOS accrediting EMAs? What was the justification for only one EMA having been identified in the Western Cape? What was the specific legislative authority that CSOS was relying on to accredit the EMAs?

A big area of recent concern was the new Protection of Personal Information Act (POPIA). What was the CSOS’s justification and support for its view that the STSMA and its regulations were trumped by the new POPIA, noting that no legislation could vary another piece of legislation? Records to which owners were entitled to under the STSMA and its concomitant regulations were now being withheld or regulated in terms of adjudication orders, and this was being done under the auspices of protecting against potential breaches of the POPIA. Did CSOS have a legal opinion regarding this that they were willing to share with the Committee? The use of the POPIA as an excuse to withhold information, notwithstanding the exemptions contained in POPI itself and specifications in legislation that had already been passed, promulgated and enacted, was a huge issue.

Adjudication orders were capable of being taken on appeal only if there was an error in law, yet there appeared to be little or no consistency in matters, and procedural flaws were extensive in terms of matters being directed to her office. When would the CSOS introduce an internal review process? At the moment, people had to go to the High Court, which was laborious and expensive. People were really upset, with protests and marches being held, and Members’ inboxes were flooded with streams of correspondence from angry adjudication recipients. There were countless examples where the STSMA had been incorrectly interpreted and applied by CSOS, with very little motivation for their decision. In many instances, the adjudication orders were plainly in contravention of the STSMA. Practice directives were not shared with the public before being signed by the board, and were sometimes poorly worded and unclear.

In levy collection matters, the CSOS had not been allowing interest to be raised on outstanding accounts that people had been ordered to pay, even though the STSMA allowed for this. How did the CSOS justify applying the law in terms of its own discretion with individuals having to approach the High Court on the basis of an error in law? What did the CSOS intend to do to ensure that individuals had recourse? There had been a lot of talk by senior officials within the entity, where it had been alluded that there was an imminent amendment in the pipeline to both the STSMA and the CSOS Act. The Committee was not aware of these imminent amendments. The public and industry stakeholders were being told about these imminent amendments. Could the CSOS clarify whether there were any currently planned amendments to either the STSMA or the CSOS Act? If so, what were these planned amendments? Had there been any public participation in respect of these planned amendments? It was necessary for the Committee to be aware of these plans so it could start clarifying with stakeholders.

Did the CSOS have any mandate to replace the current court system as the forum for collections of arrear levies from an institution in dispute of a sale in the execution of immovable property? No advisory committees had been set up by the board in terms of section 12 of the CSOS Act, notwithstanding that the entity had been operational for more than five years. She was aware that there had been an overhaul of the boards, but there were no current board members that had demonstrable sectional title and homeowner association expertise, which was creating a danger that the regulator did not actually understand the industry it was functioning in. She was also aware that Minister Kubayi had gone to great lengths across all entities of the Department to right-size the boards that had places where cadres had previously been placed. She understood that adverts had been placed in newspapers to try and address these issues. When did the CSOS anticipate appointing advisory committees that would assist the board in performing its functions? Had the CSOS received a mandate to utilise funds paid by homeowners in respect of the setting up of businesses for previously disadvantaged persons? If so, where and what oversight would be implemented on the utilisation of such funds? Where did CSOS receive this mandate? How was CSOS justifying the turnover of adjudicators and the appointment of adjudicators that clearly had no relevant expertise or knowledge?

Ms S Mokgotho (EFF) said the NHFC had stated that invoices were being paid on time, but there were instances where some invoices were paid after 30 days due to them being received after 30 days. What processes had been put in place to address these challenges? The NHFC said the recruitment of SCM posts would probably be done by end of the month, of which it was uncertain. In the absence of a permanently appointed CEO and supply chain management, how would the NHFC curb the risk of not following the correct SCM processes when awarding a tender to service providers?

Ms Sihlwayi appreciated the recovery plan made by the CSOS, as the Committee knew the history and how the CSOS had been struggling to get to grips with the programme. She noted the appointment of the new board as a positive step. The establishment of a loss control committee would also be of assistance. She suggested the strengthening of their programme. She emphasised the importance of a quality profile for the CSOS and a clear strong identity. The presenter had raised an issue that in the process of registration, what had lacked was an enforcement mechanism. She hoped that the CSOS would tell the Committee how it would deal with this enforcement. The CSOS’s programme was a unique and transformative programme for redress. The patience that the Committee had in improving its processes was informed by this programme. Poor people were historically not given any opportunity to participate in schemes like this because they were not bankable, but the CSOS programme was very transformative, and the way the entity was trying to address the issues was appreciated. The programme required networks to observe how other countries carried out programmes of this nature and solved their weaknesses.

Referring to the NHFC, she said the issue of invoices paid after 30 days had been a talk in the Department for years. Could the Committee get a presentation of a sequential procedure of the 30 days? Now that the NFHC said it was winning the war of the 30 days issue, what had it put in place? What was the evidence to ensure that it was achieving the objective of paying people within 30 days? Late submissions by business partners required the NHFC to have a programme to educate them on processes, as the government was a government for all. Just because they were businesses did not mean they knew everything. It was important that there be a programme to educate and engage them on how they could ensure better business.

On the issue of the stolen money, she noted that it had not been stolen internally. Could the Committee get a report on the matter, informing the Committee where the money had been stolen from? She pleaded for the NHFC to strengthen its systems so they could be effectively monitored, especially in such cases where money was stolen. She said the money could not have been stolen over a day, and there had to have been a process to steal that amount of money.

The Chairperson congratulated the CSOS and NHFC for their action plans in responding to the outcome of the AG’s report. She acknowledged that the entities had adhered to the Committee’s calls to deal with the root causes of the AG findings. She hoped that these findings would not be repeated in the next audit report. The Committee would be shocked if the entities had any repeat findings after the AG’s report. She hoped she could rely on the entities to address the root causes.

In terms of the processes and systems being strengthened, particularly with CSOS, were they winning in that regard? It had been observed that there had been repeat findings, despite the CSOS saying it was improving its policies and systems. The Committee wanted an assurance that it was going to see improved accountability and compliance in terms of the law of the country.

She raised the issue of the wrong investments by CSOS. The issue of the VBS was a worrisome concern in the country, and it should not be hidden within the wrong investments. What the CSOS was doing to get that money back had to be talked about and appreciated, and it had to be clarified as to what had happened to the people who had wrongly invested in VBS. At some point, it would be important to return to the issue of how much was being spent on legal battles by entities and the Departments in trying to implement programmes. On the NHFC’s stolen money, the Committee wanted a proper report on what happened, and a promise that such an incident would not happen again. The Committee welcomed the fact that the supply chain manager had been dismissed as part of the correction of issues raised by the AG in terms of consequence management. It was imperative that the NHFC fixed its systems so that it did not open up loopholes for repeated mistakes.

CSOS’s response

Adv Mkhize began by stating that the CSOS had generally performed poorly in that past, and had had a chequered history in terms of the record of service delivery, responsiveness and efficiency. This was an issue that it could not run away from, and was an unfortunate past. It was working tirelessly to reverse the order of things in this regard. It had launched a service charter which was its pledge and commitment to the public that the CSOS would ensure that efficiency was built into the system. It was also attending to the issue of capacitating the organisation in such a way that was aligned with the strategy of the organisation.

The CSOS was already starting to see the fruits of its tireless efforts, starting from the levels of performance, which had risen to above 80% from the previous below 50%, but he noted that on issues of service delivery and complaints from the public, the nature of the organisation was such that it could not satisfy everyone. In some cases, people complained not so much because of inefficiencies, but simply because there had been adverse findings against them while they had hoped for a positive finding. These situations needed to be understood as not suggesting a failure in the CSOS’s systems per se, but simply a reflection of the frustrations of some.

In terms of the section 36 issue around the practice directives, the practice directives could not, in and of themselves, create a separate legal mandate for the CSOS -- they needed to be derived from the provisions of the Act. The CSOS was not aware of any practice directive that was inconsistent with the provisions of the Act. It would be happy to engage in a conversation in terms of practical examples in this regard and engage the Member in relation to those issues. However, in terms of the practice directives it had issued, it had been careful to maintain these within the confines of the legislative mandate that the CSOS enjoyed, and to ensure harmony and enhance its practices and the experiences of its stakeholders.

The CSOS was addressing the issue of sticking to the timelines. It had cleared the backlog of the matters and was now trying to push for matters that were current so that these were finalised within the period of 90 days. Additionally, in terms of the adjudication processes, the CSOS was instituting a process where at every stage of the process, the complainant or respondents would be advised of the progress of their matter. This was to ensure that people were kept informed. It had instituted a system whereby inquiries were responded to on a first-come-first-serve basis, and on an immediate basis. The previous delays were a result of backlogs. These had now been cleared and the CSOS was ensuring the fast-tracking of processes, so that some matters had been concluded in a space of within 30 days as opposed to the 90-day target which it had as part of its service standards, given the complexity of the legislative environment.

On the EMAs, it was incorrect to suggest that any scheme had been compelled to engage executive black managing agencies. In terms of the CSOS’s mandate with regard to this issue, section 5 of the CSOS Act provided that the Minister must conclude a written mandate with the CSOS. That mandate must, amongst other things, contain directions regarding the utilisation of any surplus revenue, contain specific delivery targets that the service must attain, and contain operation and performance indicators that the service would be measured against. Having said that, it was important to note that section 5 was synchronised with the DHS's strategic mandate and its annual performance plan, in particular page 24 which identified “transformation of the property sector and increased participation of designated groups” as one of its priorities. So this was a strategic mandate that flowed not only from the DHS, but also a government-wide and nation-wide concern in terms of addressing inequality and poverty.

Further, the DHS on page 74 of its APP had a performance target for the CSOS which said “community schemes sector value chain transformed.” In terms of the mandate of the National Development Plan (NDP) 2030 Chapter 8, it directed that planning in South Africa would be guided by a set of normative principles to create spaces that were liveable, equitable, sustainable, resilient and efficient, and supported economic opportunities and social cohesion. This was derived from page 17 of the CSOS APP. In terms of the medium term priorities identified by the President in his State of the Nation Address (SONA) in 2019, page 18 in the address indicated that economic transformation and job creation would be one of those key priorities. In terms of item 6.1.1 of the CSOS outcomes, outputs, performance indicators and targets, the CSOS had targeted to procure at least a 70% equivalent of its procurement spend from majority black-owned entities. This was on page 33 of the CSOS APP for 2021. These plans had been shared widely with the Committee and they had been approved as marching orders for the CSOS to create a particular mandate around the issue of transformation of the community schemes.

The initiative of the executive black managing agents was meant to do nothing but advance the socio-economic transformation objectives of the government and its officials. It was incumbent to address the social and economic ills, the lack of opportunity and the aspects that had been created by a system in the past that had prevented others from participating fully and meaningfully in the economy of the country. The CSOS had been transparent, and the process through which these agents were appointed was a national process whereby it was advertised in the public space for emerging managing agents that were drawn from historically disadvantaged communities to participate in the panel. The CSOS had accredited them because they had gone through a particular selection process. Everybody had had an opportunity to respond to the advertisement, and therefore the issue of one entity responding in the Western Cape had not been of the CSOS’s doing, as it had no control over this. It had been clarified that no one was compelled to appoint any of these EMAs on their panel, but those corporate citizens who were committed to transformation of society and the economy would grab the opportunity with both hands to advance socio-economic transformation. In the previous two weeks, he had been meeting with the CEOs of the big EMAs to engage them to equally participate in the advancement of the transformation agenda of the country, and ensure that the black executive managing agents were capacitated and supported.

The CSOS had clearly indicated that there was opportunity for big entities to participate in giving back to the community, but not as panel members if they were not historically disadvantaged. The CSOS had been warmly received by the CEOs of the big entities in this regard who saw a genuine opportunity to contribute towards socio-economic advancement. It was thus incorrect to suggest that the EMAs that had been appointed and accredited on to the CSOS’s panel were being forced down the throats of schemes. It was the responsibility of the schemes themselves to make that call. The CSOS was interested only in ensuring good governance principles.

On Ms Powell’s concerns about the POPIA and documents that had not been shared, he asked what documents were being referred to and how they had been accounted to the POPIA. It was agreed that POPIA’s principles had to be observed, and it was accepted that there were exceptions clearly articulated in the Act. If the documents referred to fell within the ambit and parameters of the exceptions, there would be no cause for the CSOS to withhold those documents, and they could be shared. However, if there were issues that fell outside of the exceptions, the CSOS would not violate provisions of an act of Parliament, as it would be undermining the essence of the rule of law of the country. Where it could be demonstrated that the documents required did not offend the principles of POPIA, the CSOS would happily share those. As part of the exceptions recognised in POPIA, the CSOS would not be in the position to share personal information pertaining to an applicant or respondent in a particular dispute before it, but each case would be looked into on its own merits and the CSOS would be happy to engage further in this regard.

On the issue around adjudication orders on appeal versus an internal process, there were pros and cons to introducing an internal review process. An internal review mechanism could be created to deal with things such as administrative errors, but two legal principles had to be highlighted. Firstly, there was the principle of functus officio, which meant that once one had ceased with a matter and made a decision, one had ceased the function in terms of that matter and therefore one could no longer pronounce oneself on that issue. This principle was supported by the legal principle that one could not be a judge in one's own cause, so these legal principles could work against an internal review mechanism. However, the CSOS was looking into a system where it could correct administrative errors and erroneous administrative issues in the adjudication orders.

He noted the concern that the STSMA might be interpreted incorrectly in certain instances by adjudicators. This would be the subject of the court’s determination on appeal, when they would either confirm the adjudication order or set it aside. Interpretation and misinterpretation happened on a daily basis in courts, and sometimes the high courts arrived at different decisions from the lower courts. This did not suggest anything untoward. The CSOS accepted that there could be instances where the adjudication order did not correctly interpret the law, in which case the remedy was to have it set aside through the process of an appeal.

The CSOS did not share practice directives with the public prior to issue. Practice directives were meant to guide the schemes and stakeholders. The practice instituted now was to engage with industry associations in quarterly briefings and meetings to share developments in their regulatory environment. This practice was found to be helpful, and the CSOS had received constructive inputs in this regard.

There were no secrets regarding talks about imminent amendments to the CSOS Act and the STSMA, as they were grossly inadequate. There were inconsistencies in certain respects, and the CSOS was not happy with the legal framework. It was therefore working to seek adjustments to the current legislative framework. The CSOS did not have authority to change any act, because the process was driven by Parliament and the executive authorities. The process started at a conceptual level, where policy issues, practical implications and issues of the current prevailing legislation and how those inhibited the entities’ ability to be efficient and effective in their legislative mandates, were looked into. The CSOS was busy with this conceptualisation work and would put up draft concepts and engage with the legal unit of the Department in this regard. It would also engage with the Director-General, the CEO’s forum and Ms Ngxongo, who was responsible for these issues, to start socialising the idea of possibly effecting adjustments to the legislative framework. In due time, the process would go through the relevant structures for the adjustments to be properly considered. Therefore, the amendments could not be said to be imminent without going through the relevant structures. He suggested that the amendments be addressed in detail in a separate meeting in the interests of time and nature of this meeting.

The CSOS did not have the authority to replace or alter court actions or court judgments when considering the issue of levies or payments. Regarding the question on the appointment of advisory committees, in terms of the STSMA, there was a council that needed to be set up, and that process was under way.

He could not comment on the issue of the expertise and qualifications of the members of the board relative to the issue of the sectional title schemes, but assured the Committee that these decisions were taken by the executive authority. He further assured it that all the CSOS board members had the necessary aptitude, qualifications, experience and good corporate governance, and he did not think that the executing authority had made a mistake. He was uncertain as to what aspects of concern had arisen in this regard.

On whether the CSOS had received a mandate to utilise funds paid by homeowners for BEE, he reiterated his earlier comments regarding the mandate to pursue transformation in the sector, and the CSOS was also engaging with National Treasury in this regard. He was not aware of any adjudicators who had been appointed without experience. The CSOS had set criteria for the appointment of adjudicators who were selected through a rigorous process. There may have been complaints that the CSOS had appointed more adjudicators from historically disadvantaged communities, but these were not token appointments. They consisted of admitted attorneys and advocates who had the necessary aptitude and experience to function as adjudicators. Some were even more qualified than those not from historically disadvantaged backgrounds. Therefore it was incorrect to suggest that inexperienced adjudicators had been appointed. New adjudicators had been given the opportunity to apply their trade and understand how the CSOS functioned There were bi-weekly training sessions to ensure that they were ingrained in the processes of the CSOS.

In response to Ms Sihlwayi’s concern on the lack of enforcement mechanisms, the issue flowed from the weaknesses in legislation. In due time, the CSOS would present proposed improvements to help with the enforcement regime. There were very few powers and consequences in legislation to help them with enforcements. He agreed that coordinated systems had to be established. For this reason, the CSOS had embarked on a massive digitisation programme called the Business Automation Solution. As at end of March 2022, two models would be created that would enable online web-based registration by schemes. The CSOS would be coming out with other models -- for example, one dealing with customer relationship management, and a dispute management system that was going to address issues. The billing model that had been established as part of the CSOS’s enterprise resource planning (ERP) programmes would enable billing of the schemes and ensure that statements of accounts were issued. That ERP package was going to include support functions for SCM, human resources (HR) and other support functions.

He said the Chairperson was indeed correct about the issue of improved policies. The CSOS was registering progress beyond just the establishment of policy frameworks. There were tangible and practical victories that were being seen upon which these policies were embedded. With regard to the issue of the repeat findings, the CSOS was doing its best to deal with the issues of internal controls. The issue of repeat findings was tricky, because the entity needed to understand the nature and the context of the issues that had been raised and the extent to which they had a potential for replication, based on things that may be beyond its control. However, it was doing its best to prevent, mitigate, and minimise recurrence of these issues.

Having institutionalised some quality assurance measures in place, even in terms of its procurement, the 30-day invoicing processes were on point. The consequence management issues were being implemented. On the VBS matter, the people involved had had their contracts terminated. The CSOS was in constant liaison with the Hawks, who had assured it that there was now a draft report that had come out that would indicate the movement of the flow of funds. The CSOS was hoping that out of that report, it would be able to institute mechanisms such as asset forfeiture, if there were any assets that could be pursued or attached in order to satisfy the debts based on the flow of funds identified in terms of this report. It was still waiting for the Hawks in this regard. It had enlisted its interest as creditor of the VBS, but no assets could be recouped in this regard. The CSOS’s audit and risk committee had done everything in their power to try and recover the losses. If those efforts did not yield fruit, it would be forced to seek condonation for the right of that particular debt. At this stage, the entity was still trying to pursue engagement with the Hawks to pursue those debts.

NHFC’s response

Mr Gordon responded to Ms Mokgotho’s question about the processes to address late payments. The NHFC was setting up a centralised email address, where all invoices could be sent directly to the finance department. They would then have a register of when they were received and ensure they were addressed by the relevant department and paid within the 30 days. He said it was annoying that the NHFC did not pay everyone on time, given that with the SMMEs in its rental repair programme, where it was managing for the City of Cape Town, it guaranteed payment within 14 days and managed to make most of those payments within seven days. Therefore it was unacceptable that it could not pay within 30 days, and this issue would be sorted out.

He confirmed the appointment of an SCM manager by the end of March 2022. The NHFC had very competent people internally who could be appointed, and the entity did not need to go outside of the organisation and procure employment agencies. He firmly believed that recruiting internally was the best way to find people good for the organisation. With individuals in acting positions, compliance would be ensured, as these were highly capable people. The acting SCM manager had a degree in supply chain. and was very capable and strict. This was giving the NHFC great compliance, particularly in its tender processes. The NHFC had some large tenders at the moment, with the IT programme it had in the works.

The entity would be happy to submit a report regarding the stolen R57 million. An affidavit had been submitted to the Hawks and could be submitted to the Committee if needed. Regarding what went wrong, it was not the NHFC’s systems that had failed -- it had been ABSA’s responsibility, so the NHFC was refunded all the money.

Regarding the dismissal of the previous SCM manager, he had departed in late 2021 and the NHFC had found that a lot of the root causes were that he did not seem to understand the systems and processes, and the entity was now implementing changes to these. The loss control committee’s primary goal now was to ensure that the root causes were addressed. It was originally set-up to make sure that consequence management was implemented, but consequence management was something that happened after an event while loss control occurred before the event, where root causes were addressed. The NHFC was addressing this and improving its reporting on irregular expenditure as well.

Deputy Minister Tshwete agreed with Adv Mkhize that some of the questions that were asked by Ms Powell were not part of the AG’s report, but if the Member felt that some of the questions were not answered in the way she liked, she could put them in writing. She emphasised the query regarding the qualifications of board members, and said there were processes to appoint these board members and the question was undermining the board members that were qualified and experienced. She gave an assurance that the current board was 100% qualified and experienced. All Committee concerns and comments had been , and if there was a need for further clarification, responses could be put in writing. The Department’s aim was to put in place preventive controls for long term results, but mostly to avoid recurrence of the same issues in future. Naturally, the Department strived for effective cooperative government, which would guarantee unqualified audits. However, it was an insult to say that members of the board that were appointed by the Minister were not qualified. These board members would stay until their term expired.

She thanked Mr Gordon and Adv Mkhize for their responses. She put it on record that the Minister would not be part of the Committee meetings unless there were no Cabinet meetings, which took place on Wednesdays. As the Deputy Minister, she had been invited to the Cabinet meeting, but the Minister had requested she come to this meeting as they did not want both to be absent from the meeting. It was not the Minister’s intention to undermine or disrespect the Committee.

Further follow up

Ms Powell noted Deputy Minister Tshwete’s response in respect of written responses. She thanked Adv Mkhize for his robust responses and noted his efforts to answer every question. She reaffirmed the Committee’s support for transformation, especially in the property sector. Of concern was the application of the law. On the EMAs, Mr Mkhize had quoted internal documents that addressed performance and spoke about the ministerial mandate. In terms of the CSOS mandate, the ministerial mandate had to use surplus funds. Did CSOS have any surplus funds? Regarding the directives in terms of the BEE criteria, in the Western Cape for example, only a single EMA had been appointed. Was the CSOS confirming that there was only one bid that met the specifications for the appointment of an EMA in the Western Cape? How could the CSOS be tasked with transformation, but use stakeholder funds? In the recent Constitutional Court ruling between the Minister of Finance and Afribusiness, the court stated that “regulation-making power does not enable the authority by regulations to extend the scope or general operation of the enactment, but is strictly ancillary. It will authorise the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provisions”. The CSOS was established in terms of the CSOS Act, so it could not come before Parliament and answer questions in respect of internal performance plans that had been developed internally and that were not spoken about in either ministerial mandates where there were not surplus funds or in terms of internal APPs. What impact did the recent Constitutional Court judgment on preferential procurement regulation have in terms of the bids that were offered on the EMAs, for example? This was asked within the context of the Committee having general support for transformation but being concerned with the application of the law in the entities that account to the Committee.

On the issue of POPI, what CSOS was informing schemes to do was going to end up in the courts. What she understood was that CSOS’s stance on the application of the POPIA was informed by instructions from the Information Regulator. The CSOS had been in discussions with the Information Regulator, and was of the view that the contact details of owners within schemes could now be made available to other owners within the same scheme only upon the consent of the owner whose details were being requested. In the context of sectional title, this was massively problematic because it could potentially prevent owners from calling general meetings, as was their right in terms of management rule 17(4)(a). Body corporates simply could not function if members could not get the names and the contact details of their owners. She drew attention to section 11(1)(f) of the POPIA which applied to trustees and members of all body corporates. The Act listed a whole bunch of exemptions in terms of the extent of its application. Legislation on a concomitant level could not vary existing legislation without it being repealed. Therefore, the POPIA could not be used as a justification by CSOS and their adjudicators, hence the concerns raised in respect of the training, expertise and industry knowledge of the adjudicators appointed by CSOS. POPIA could not be used as an excuse by schemes not to provide owners and members with information that they needed to function in terms of the entire purpose of the CSOS Act.

The Committee was well versed in the process that was followed in developing, passing and promulgating of legislation. The query and the concern were not that the CSOS did not have the mandate to start looking at amendments, but rather that the public was being told that amendments to these Acts were imminent and forthcoming when in reality it was still in the initial phases. She suggested that the senior executives at CSOS refrain from making emboldened statements in respect of potential amendments and rather say that they were looking at varying the legislation to avoid spooking industry players. She thanked Adv Mkhize for the lesson regarding the passage of legislation.

CSOS’s further response

Adv Mkhize acknowledged that Ms Powell was pro-transformation and that there was recognition that the property sector required extensive transformation. The Minister had a mandate in respect of the sector that she led, to issue certain directives and impose targets in terms of the CSOS Act. That authority of the Minister could not be questioned. It was also derived from other national imperatives that had been alluded to earlier on, but it was a cascading system and each of the entities had to take those mandates and apply them in their own context to address the transformation and national imperatives. Hence this was being reflected in the APPs. Notably, section 5 of the CSOS Act gave the Minister that authority.

He confirmed that the CSOS did have surplus funds, and those surplus funds could be utilised in a manner as directed by the Minister to advance programmes as articulated in the legislation. There was no expansion of the power of the Minister in this regard.

He took note of the issue of the Constitutional Court judgment in terms of the regulation powers not superseding those of the legislative frameworks. That was not was being done in this case. The authority of the Minister was being exercised within the confines of the legislation. There was no contradiction whatsoever and therefore the Constitutional Court judgment reference would not apply in this regard. The Minister had not extended her powers beyond legislation, and she had not published regulations that could be deemed to be inconsistent with the empowering legislation.

There had indeed been only response from one EMA in the Western Cape. It was not of CSOS’s doing, and it continued to solicit more participation as the economic transformation agenda was about mobilising and ensuring that there was mass participation. He did not think that understood contextually, the Constitutional Court judgment was saying there was no cause for transformation or BEE or advancing those who were historically disadvantaged. The Constitution actually provided for unfair discrimination, and made the distinction that there could in fact be fair discrimination in the form of legislation enacted to address the legacy of the past, with employment equity being one such piece of legislation. The Constitutional Court in its judgment was concerned about the manner in which transformation was done in that particular instance. The CSOS did not find that there was any discord between what it sought to do in advancing the cause of the previously disadvantaged in the property sector, in line with the ministerial directives and national imperatives that had been set.

He undertook to look into the implications of the POPIA regarding members and admitted that Ms Powell was correct in her concerns about details being required to pursue a legitimate purpose. The CSOS needed to look into their practices with regard to the arrangements that the members of the various schemes subjected themselves to in the form of their constitutions, scheme rules and anything that sought to regulate annual general meetings and related issues, and the extent to which those may be frustrated if there was strict adherence to POPIA in terms of withholding information. However, where consent had not been provided, it was important to understand that those issues could not be overridden.

On the issue of imminent amendments, he was not sure who Ms Powell had listened to and why that messaging should be taken as the correct position. The suggestion that executives were talking about imminent amendments could not be upheld, because there were processes to follow. These could be discussed at a later stage. The CSOS was happy to engage if there were any practical difficulties that the scheme members might be experiencing, including in regard to the POPIA. The CSOS would be willing to issue clearer practice directives around that area of the POPIA.

Ms Powell, in the chatline, asked Adv Mkhize as he was responding whether in terms of preferential procurement regulations, strict BEE criteria were being used for EMA’s and fund expenditure. Regarding the Constitutional Court judgment, she agreed that this was not the forum for debate on this. She thanked Adv Mkhize for addressing the issue of POPIA and his commitment to looking at and addressing it.

Ms Ngxongo said that the Department had taken note of areas for improvement, as guided by the Committee. It was comfortable with the stability that the Minister was providing at the entities, and the entities would live up to expectations, starting from the appointment of the boards and executives. The entities had the full support of the Department to improve in all the areas that the AG had highlighted. It was committed to addressing the root causes so that there were no repeat findings.

Deputy Minister Tshwete thanked the Chairperson for the opportunity to present. She thanked the presenters of the two entities. Every time the Department came to the Committee, there was something that they learnt and it would adhere to all the comments made by the Committee and improve. Questions and comments raised were being taken seriously and the comments made that were not in the AG's report would be responded to in writing if needed. Sometimes mistakes were made on the way, and they would be corrected. She thanked the team from the Department.

In the chatl, Adv Mkhize thanked Ms Powell and asked her to share the POPIA challenges with him via email.

Ms Powell said she would collate what she had, and send a file.

The Chairperson thanked Deputy Minister Tshwete, NHFC and the CSOS for their responses. She thanked AGSA for staying throughout the meeting. The Committee was doing what they promised to do, which was to make sure that entities got clean audits through hard work. The Committee was still going to engage with other entities, and urged the entities not to wait for the Committee to call them before continuing their work. The Department had to continue assisting entities in dealing with issues that the AG had raised, as they were fundamental in ensuring accountability and service delivery. She emphasised that legislation passed by Parliament was to be taken seriously, to ensure compliance and its implementation by the Committee. It was the responsibility of the Committee and the Department to ensure compliance with legislation and service delivery. She said the NHFC and CSOS should continue to correct themselves. When the entities came to present their strategic planning, the Committee would discuss further issues raised by Members.

The meeting was adjourned.