National Treasury Portfolio Audit Outcomes: AGSA briefing; National Treasury & SARS 2021/22 Annual Report; with Deputy Minister present

Meeting report

The Chairperson observed that the Committee was supposed to have a meeting the previous week but could not do so because it was preparing for the State of the Nation Address (SONA) debate.

The Chairperson asked Ms P Abraham (ANC) to take over as Acting Chairperson if he had problems with his network. If she had challenges in turn, then Mr G Skosana (ANC) would be the Acting Chairperson.

He remarked that it was “something undesirable” that at the time the Committee was supposed to be dealing with the budget, it also had to process the Budgetary Review and Recommendations Report (BRRR) from the Auditor-General (AG). It was something that the Committee should have done the previous year, but the issue of timing recurred. He hoped that it would be avoided the following year. He had seen the Dispute Resolution Mechanism (DRM) Policy submitted by the AG. The sooner that the AG dealt with the issue of disputes, the better. Many other committees had already dealt with the BRRRs. The Committee was dealing with BRRRs late in the year when it was supposed to be processing the SONA, and also the national budget. He appealed to entities to do things differently this year, as it was causing “serious inconvenience” to the programme of Parliament.

Budgetary Review and Recommendations Report (BRRR): Auditor-General of South Africa (AGSA)

Ms Nompakamo Matanzima, Business Unit Leader: Finance Portfolio Audits, AGSA, made opening remarks. She introduced her colleagues: Ms Kumari Naicker, Deputy Business Unit Leader: Land Bank and Insurance Entities; Mr Nicholas Mokwena, Deputy Business Unit Leader: Land Bank and its Entities; and Mr Lwazi Kuse, Senior Manager: National Treasury Audit and its Entities, AGSA. There were also numerous senior managers present on the platform.

She acknowledged that the accountability oversight process was delayed. The main reason was due to the finalisation of National Treasury’s (NT) audit, which was not finalised on time. A dispute was launched by the NT, and this dispute was dealt with by the AG in accordance with the DRM that was in place then. The main dispute related to the treatment of the annual technical support and maintenance payments that are being paid annually by the NT, relating to the integrated financial management system (IFMS) project. The dispute related to the treatment of those payments, specifically whether they were fruitless and wasteful expenditure as defined. The AGSA acknowledged that that agreement was not new. However, the NT usually disclosed that as fruitless and wasteful expenditure. What was new in the 2021/2022 financial year was that the NT decided to remove the previously disclosed fruitless and wasteful expenditure relating to those payments. In the AGSA’s view, that was incorrect. In turn, it resulted in the NT being qualified on the completeness of the fruitless and wasteful expenditure disclosed on its annual financial statement. To prevent those delays going forward, the AGSA revised the dispute resolution process to ensure that further delays were not experienced by the committees in Parliament. The new policy had been shared with the Committee, and it would allow the AGSA to expedite the process going forward and ensure that it minimised the delays in the process. The policy had been taken to the Select Committee on Appropriations (SCOAG) for consultation, as required by the Public Audit Act. Going forward, those kinds of delays would be prevented.

When looking at the Finance portfolio, the AGSA found that overall, portfolio audit outcomes had regressed. However, there were entities that improved, such as the Independent Regulatory Board
for Auditors (IRBA) and the Land Bank (LB), which received clean audit opinions. The LB performance information was not subjected to audit. The LB was granted an exemption by the executive authority not to do so. It was mainly as a result of the default position that the LB was currently resolving with the lenders. Ms Matanzima acknowledged that it was a key priority of the Committee that that liability solution was being finalised.

There was also progress in filling the key strategic positions in the Finance portfolio subsequent to the financial year-end, which was commendable. The position of Accountant-General had been filled. Other positions filled included: the Chief Procurement Officer for the NT, the Chief Executive Officer (CEO) of IRBA, and the CEO of the Government Pension and Administration Agency (GPAA). There were also various board appointments within the finance entities. There were still some positions at key entities that also needed to be filled. The Committee would have been appraised of that situation via the quarterly audit action plans that were being reviewed by it. The plans did have some fruitful results. The AGSA had also adopted its culture-shift strategy. The strategy aimed at shifting a critical mass of its auditors towards a culture characterised by performance, accountability, transparency, and integrity. In the current financial year that the AGSA had audited, the focus had shifted to ensure that the entities in the Finance portfolio were delivering according to their core mandate, and to where entities were achieving and not achieving their key targets as per their core mandate. The Development Bank of Southern Africa (DBSA), for example, was tasked with implementing some of the key culture initiatives including the Infrastructure Fund. The AGSA noted some non-achievement within the Infrastructure Fund. The AGSA also noted some of the auditees that achieved more than 70% to 80% of the key targets that related to their core mandate. The AGSA’s main focus was to ensure that an unqualified audit opinion, or a clean audit opinion, did translate to the service delivery and lived experiences of the South African citizens. That was what the AGSA wanted to see with the culture shift in the public sector.

Another area of focus in the previous year related to the coordinating ministry role formed by the NT i.e. the role the NT played in providing support and exercising oversight over the local government sphere. The AGSA assessed the effectiveness and the impact of the NT in delivering its mandate, while at the same time appreciating the inherent limitations in the NT’s role. The AGSA ensured that whatever initiatives or interventions had been deployed to ensure there was an improved state of local government.

Mr Kuse presented. He would be taking the Committee through the presentation and the outcomes. He observed that what was commendable for the Committee is to see that its messages resulted in action, particularly on the part of the Minister and others. The previous year, the Committee resolved to follow-up action plans on a quarterly basis to ensure that the audit findings the AGSA was reporting were addressed. The AGSA has seen that in as much as the overall audit outcomes might not yet reflect that picture, but it had seen a shift insofar as its auditees paying particular attention to those action plans and ensuring that control deficiencies were addressed. He would be highlighting those areas of improvement in the presentation. He would also highlight the areas where there was limited or no movement.

Regression in audit outcomes over administration terms

In the financial year 2020/2021, there were seven unqualified audits with no findings (clean) and eight with findings, out of 16 audits. In 2021/2022, there were six unqualified audits with no findings (clean) and seven with findings out of 16 audits. Both of those years had one qualified audit with findings.

Movement from 2021

The IRBA and LB improved, while one of those that regressed was the Financial Intelligence Centre (FIC).

Portfolio Overall Message

The overall audit outcomes in the portfolio have regressed when compared to the prior year. The portfolio has six audits (DBSA, Financial Sector Conduct Authority [(SCA), Land Bank Insurance SOC Limited (LBIC), Land Bank Life Insurance SOC Limited (LBLIC), LB, IRBA) that have achieved an unqualified audit opinion with no findings (clean), representing 38% of the audits in the portfolio. This is a regression from the seven (44%) clean audits achieved in the prior year. Of concern is the department (NT) that regressed from an unqualified with findings on compliance opinion to a qualified opinion with findings. Three entities (FIC, Office of the Pension Funds Adjudicator (OPFA), Office of the Ombud for Financial Services Providers (FAIS) also regressed from a clean opinion to unqualified with findings on compliance with legislation. Whilst we commend IRBA and LB on improving and achieving a clean audit in the current year, as well as the accounting authorities, management and the executive authority for the four audits that continue to maintain clean audit outcomes.

These entities that managed to maintain their clean audit outcomes have a strong leadership culture, sound financial and performance management processes, and effective governance. These entities have effective governance structures that ensure that actions are taken to address audit findings and are supported by adequately resourced and skilled officials. The remaining entities within the portfolio
should look at the good practices implemented by these entities to improve outcomes.

The six audits that achieved an unqualified audit opinion have achieved between 69% and 83% of their core mandate targets. As these entities have been able to achieve clean audit outcomes, it is important to ensure that this also translates into service delivery to the citizens. Going forward, the focus on these entities should be to ensure that they do not only achieve clean audit outcomes, but also ensure effective and efficient delivery of services in line with their respective mandates.

Nine auditees - CBDA (Co-operative Banks Development Agency), FAIS, FFC (Financial and Fiscal Commission), FIC, OPFA, SARS (South African Revenue Service), GTAC (Government Technical
and Advisory Centre), GPAA, PIC (Public Investment Corporation) - which represents 56% of the auditees in the portfolio, received a financially unqualified audit opinion with findings and one auditee (NT) received a qualified opinion with findings. These auditees continue to struggle with compliance with legislation as prior year action plans failed to adequately address significant internal control deficiencies. The prevalent instances of non-compliance are in the areas of expenditure management (GPAA, NT, FFC, OPFA), supply chain management (GPAA, FIC, FAIS, FFC, OPFA), consequence management (GPAA, FFC) and material misstatements identified in the financial statements submitted for auditing (GPAA, SARS, NT, PIC, CBDA, FFC, OPFA). The department (NT) received a qualified opinion with findings resulting from incomplete disclosure of fruitless and wasteful expenditure relating to the IFMS technical support and maintenance of licences expenditure.

The AGSA was also seeing that the majority of the entities in the portfolio, especially the larger ones (NT, SARS and PIC) continued to struggle to achieve clean audit outcomes. The key root causes are vacancies in key positions and lack of adequate review and monitoring controls over the preparation of the financial statements and performance reports.

These challenges are similar to those reported in the prior year, and may be indicative of ineffective audit action plans and inadequate consequence management in some entities in the portfolio. In the current year, there has been a stagnation in most of the areas of compliance with legislation (number of entities) but regression in the areas of supply chain management and quality of financial statements.

Material findings on the usefulness and reliability of reported performance information were reported in the current and prior year for GTAC and CBDA. We also identified material misstatements in the annual performance reports submitted for auditing (NT, DBSA and PIC). As management subsequently corrected the misstatements, the AGSA did not raise any material findings on the usefulness and reliability of the reported performance information.

The AGSA will further unpack the outcomes of the portfolio and the drivers of these outcomes in the following nine focus areas: performance against Medium Term Strategic Framework (MTSF) targets and annual performance, governance and stability, expenditure management, material irregularities, consequence management, quality of submitted financial statements and annual performance reports, financial health and information technology.

Performance against MTSF and annual performance

The entities in the finance portfolio play a direct role in all seven priority areas of the MTSF. The AGSA noted that all the strategic plans and annual performance plans (APPs) of the entities in the portfolio are aligned with government priorities as contained in MTSF and the National Development Plan (NDP) 2030.

Six (38%) of the entities in the finance portfolio achieved more than 80% of their targets as per the annual performance report for the 2021-22 financial year (NT, FFC, FIC, GTAC, FAIS, FSCA) and we commend the management of these entities for this achievement.

Eight (50%) of the entities achieved more than 60% of their targets (SARS, PIC, IRBA, GPAA, CBDA, LBLIC, LBIC, DBSA) and only one (6%) entity (OFPA) achieved less than 60% of their targets. The reasons for the non-achievement include the lingering impact of Covid-19 restrictions on the effectiveness of operations and the delays in implementing the necessary initiatives on the planned target.

It further noted that the indicators in the FFC strategic plan were not aligned with the core legislative mandate of the commission. This is due to inadequate reviews of the strategic plan by leadership. In order to improve delivery of services and the realisation of the MTSF priorities the AGSA recommends that strategic planning documents should be reviewed by the accounting officer (AO)/accounting authority (AA) in order to ensure alignment with government priorities and commitments, and that there should be regular monitoring over service delivery. There should also be effective consequence management for non-achievement.

Governance and stability

Although the portfolio is stable as most of the auditees have fully constituted boards/accounting authorities and key positions at executive level are filled, the AGSA reported vacancies in critical positions in the portfolio which impacted the overall audit outcomes. Some of these vacancies are one of the root causes of the overall stagnation of audit outcomes as they impact the effectiveness
of the developed action plans.

The AGSA notes the appointment of the IRBA and LB boards. These appointments will ensure the continued stability in the portfolio.

The following vacancies for the current year were reported:
• Vacant accounting officer positions remain for (GTAC, GPAA), chief executive officer (CEO)/managing director (MD) for (CBDA, LB, IRBA), and chief financial officer (CFO) positions for (NT, GPAA, PIC, IRBA) were vacant and filled with acting incumbents.
• NT has made progress in filling vacant positions that were reported in the prior year but the positions of the accountant-general, chief procurement officer (CPO), and chief audit executive remained vacant during the year under audit. Subsequent to the financial year-end, the AGSA has noted that the director-general (DG) position at the NT became vacant. The new Accountant-General and CPO were appointed after the financial year-end and resumed duty during the 2022/23 period.
• At PIC the AGSA noted the appointment of the chief investment officer (CIO) and the precautionary suspension of the chief operating officer (COO) due to an allegation of misconduct subsequent to year-end.
• The IRBA CEO was also appointed in September 2022.

To ensure continuity of stability and an improvement to audit outcomes, the AGSA recommends that the vacant positions be filled with appropriately qualified personnel.

The NT’s report also covered the areas listed below, with notes on which entities had challenges in those areas:
- Expenditure management (NT, GTAC, GPAA, FFC and OPFA);
- Material irregularities (NT and the DBSA);
- Consequence management (GTAC, FFC and GPAA);
- Quality of submitted financial statements (GPAA, SARS, FFC, CBDA, NT, PIC, OPFA);
- Quality of performance reporting (GTAC, CBDA, PIC, NT and DBSA);
- Financial health (NT, Sasria and LB);
- Information Technology (IT);
- Integrated Financial Management System (IFMS).

Key root causes for outcomes in the portfolio in the internal control environment and recommendations were presented. The root causes were:
• Inadequate controls to prevent the noncompliance with procurement legislation.
• The accounting officer/authority did not implement adequate review and monitoring controls over the preparation of the financial statements and performance reports.
• The accounting officer/authority was not effective in developing and monitoring the implementation of action plans.
• Vacancies in key positions.

(See Presentation)

Discussion

The Chairperson noted that after having gone through item one on the agenda (apologies), he received a letter from the Minister to apologise, as he was busy preparing for the tabling of the budget the following day. There was also an apology from Mr Ismail Momoniat, Acting Director-General, NT, who was attending a meeting with the Financial Action Task Force (FATF) in the USA. The Committee dealt with the FATF the previous year, with the General Laws Amendment Bill, to make sure that South Africa complied with the FATF requirements.

Dr D George (DA) remarked that the NT was responsible for financial management, and the Constitution set out clearly what it needed to do. The NT had wide-ranging powers if entities did not comply with measures that it had put into place. He felt that the expectation that the NT should operate at a higher standard than most other entities was reasonable. It was disappointing when it did not do that because then it brought into question the NT’s ability to actually manage the public finances as effectively as the Committee would want it to do. That was something that needed to be improved on. Crucially, the issue of guarantees was mentioned. Did the AG and the NT know the total size of all of the guarantees from the Treasury to all of the various entities that it may have guaranteed? Because that was something that may very well “come back and bite us” at some point. It was mentioned in the report that a guarantee could be called on, and then needed to be paid. If it got too high, or unaffordable, it would crowd out service delivery to the detriment of the most vulnerable South Africans. Did the NT have that very clearly in mind and under control?

Dr George asked about debt obligations. The Members were aware that the Minister of Finance was about to take hundreds of billions of Eskom's debt onto the national balance sheet. He wanted to know whether Government knew what the full debt obligations were, of all of the entities that report to the Treasury? Did Government know the extent of all the debt obligations? Because obviously, if it lost sight of that, it could very easily get out of control.

Mr I Morolong (ANC) asked what the AG’s view was on how there had been no detail provided on the Jobs Fund. What was the AG’s take on the fact that there had been no detail provided by the National Treasury on the Jobs fund?

He also asked about the exemption of the LB by the executive – could the Committee be given some elaboration on the exact invocation of that law that would have been used to exempt the LB? He agreed with the AG with respect to municipalities; he believed that the intervention in the municipalities needed to be integrated. The interventions must be effective, and the technical support an auditor gives must be impactful. He agreed that there must be a meeting of minds and working together by the AG and the National Treasury to ensure that those interventions are as impactful as they should be.

Mr G Skosana (ANC) shared the same sentiments as Dr George. Since the National Treasury was a department responsible for financial management, Members’ expectations of it were very high, especially when it came to the issues of audit opinions and similar issues. He felt that all other departments were looking at the National Treasury, such as: Other spheres of government like municipalities who were facing serious challenges, but were also looking up to the National Treasury; and the state-owned enterprises (SOEs) were looking up to the National Treasury. Members were expecting the National Treasury as a department to do much better than everybody else. If the National Treasury was not performing as expected, then Members were all going to be disappointed. It looked like entities that fell under the National Treasury were performing even better than the National Treasury itself. That was “quite disappointing”. However, he thought that Members needed to congratulate entities that performed very well, especially those that received a clean audit. This year, there were six entities that received a clean audit. There were also those that received an unqualified opinion with matters, of which there were nine. He felt that that was also a good outcome. Members hoped that in the next year, those entities would also receive a clean audit.

On the issue of an audit action plan, Mr Skosana asked the AG about its role in monitoring the audit action plan of any department or entity. For instance, if one looked at GPAA, the AG indicated that the entity, in the period under review, had a new instance of irregular expenditure, on top of what it had in the previous year. After the issuing of audit opinions was concluded, there would be audit action plans done by various entities or departments. To what extent was the Auditor General monitoring those audit action plans? He felt that if there was thorough monitoring, then he would not expect the recurrence or continuous negative action from such entities. For instance, if GPAA had irregular expenditure, which was a finding, then it was told to work on that, but in the following years, there was a new irregular expenditure. To what extent was the AG doing monitoring on the audit action plan?

The Chairperson echoed other Members’ acknowledgement of the progress with the LB because it “would not be proper '' to keep quiet when the LB had so many problems in the past, but did well this time around. He wanted to congratulate the board, the management and all the staff of the LB. The same applied to IRBA, which has done so well in terms of a clean audit. As Mr Skosana alluded, there were also commendations of the work done by those entities that had received an unqualified audit, because that in itself showed that the management and the board of those entities had done well under difficult circumstances. He agreed with expressing disappointment with the regression when it came to other entities, including the Department itself.

Ms Matanzima responded. She noted Dr George and Mr Skosana’s comments that NT should lead by example.

On total guarantees in terms of the NT, the total that had been disclosed on the consolidation of financial statements of all the public entities was R400 billion.

On the AGSA’s role in the audit action plans, the AGSA played a critical role in reviewing the audit action plans. Every auditee normally provided the audit action plans for the AGSA to review, to ensure that it was root cause-based and addresses what its findings were. Although there should be an action plan in place to address the findings, what was really important is for the auditees to have preventable internal controls that should be in place to ensure non-recurrence Those internal controls should be embedded as part of auditees’ day-to-day operations.

Mr Mokwena explained that the Minister had exempted the LB in terms of section 92 of the Public Finance Management Act (PFMA) from complying with section 52 of the PFMA. Section 52 required public institutions to submit a corporate plan, meaning that the Minister had exempted the LB from submitting a corporate plan. The reason given was that the LB should focus on curing the default, meaning that it should finalise the dissolution, so that they can like they can [unclear 1:52:00-1:52:02]. That should be the priority. The LB had been exempted from submitting a corporate plan in terms of section 52 of the PFMA.

Mr Kuse explained that the Jobs Fund was a project that was now at its tail end. There was a period where there were various projects that were approved, there were targets for the number of jobs to be created. The NT had exceeded those targets. Since the project was at the tail end, it was a question of closing on the financial commitments or contractual commitments that existed for those projects. If one reflected on the annual report of the Department, as well as the indicators that were there, the indicators were then limited to the financial claims that need to be settled and the targets associated with that.

The total debt sat in various places. The answer to that question would require one to embark on an exercise because one had debt that was sitting at the National Revenue Fund level, which was the direct borrowings that the government would make, where in particular, one had budget deficits or specific projects. But similarly, there was debt in various then-public entities. One would have to consolidate that. The challenge currently was that the AGSA did have a consolidated set of financial statements for public entities, but the overall opinion it issued as the AGSA on those financial statements was a disclaimer. That then became a limiting factor for the AGSA in terms of providing a reliable number on how much debt South Africa had at the country level. Mr Kuse said that the AGSA could provide an indication but it would not be an accurate or complete value.

Dr George had a follow-up question on debt. He thanked the AGSA for the information on the guarantees; that was very useful. He agreed with the AGSA that the question of debt was complicated, because of the fact that the financials were disclaimed. One did not know whether that was actually an accurate reflection. But all knew that the issue of debt was an enormous one, and it was exceptionally troubling to think (he felt that anybody in South Africa would agree with him) that South Africa did not know how much debt it actually had. It was like having a household, and one did not know how much debt one had. That was not prudent fiscal financial management by a long shot. He was pleased to hear, though, that it would be possible for the Committee to get an indication of approximately where that number was, despite the fact that some might be disclaimed. That was vitally important because it seemed likely that it was quite high. He wanted to get that number because he thought that would be very instructive for the Committee to exercise its oversight effectively.

Ms Matanzima said that the AGSA would definitely share that information relating to the debt obligations of all of the country after the meeting.

Briefing by the National Treasury on the 2021/22 Annual Report

Dr David Masondo, Deputy Minister of Finance, introduced the presentation. In addition to the Minister's apology, and that of the Acting DG, other DDGs were also not present due to the preparations for the budget the following day. The Deputy Minister was accompanied b  Dr Duncan Pieterse, DDG: Asset and Liability Management (Acting Director-General for that day’s meeting in Mr Ismail Momoniat’s absence), NT; Ms Laura Mseme, Acting Chief Operating Officer (ACOO), NT; and Ms Dikeledi Lebea, Chief Director, NT.

The Deputy Minister noted that the presentation would also deal with the issue of South Africa’s debt, which was a question asked by Dr George. The Minister would say more about that the following day. The NT would not get into the details of the current debt situation until the Minister had presented the budget the following day. The NT had been reporting continuously on South Africa’s debt situation as the sovereign, including the contingent liabilities arising out of the state-owned enterprises (SOEs).

The Deputy Minister asked to be excused from the meeting later on so that he could attend to some of the budget preparation tasks.

Dr Pieterse noted that Mr Ismail Momoniat, Acting DG, was unable to join the meeting due to travelling. He introduced himself as the Acting DG.

There was a question on whether the NT knew the full debt obligations of the state as well as the SOEs. It was an important matter. The full details would be provided the following day. It was also important for Members to be aware that in chapter eight of the Budget Review, the NT had a table labelled 8.2 that gave detail of the borrowing requirement of the major state-owned companies (SOCs). Such detail would be part of the budget review that would be published the following day. In that table, Members would be able to get a sense of the domestic loans (short-term and long-term), as well as the foreign loans that SOCs were currently exposed to, and their future borrowing plans. He did not want to create the impression that information on debt was not published and not available. An update on that matter would be provided the following day.

There was also a question on the size of total guarantees. Similarly to the gross borrowing requirement of the major SOCs, the NT had a table in the Budget Review, labelled 7.10, that also articulated in detail the government guarantee exposure, both for public institutions (e.g. Eskom, the South African National Roads Agency (SANRAL), etc.). There was also information on the government guarantee exposure relating to the independent power producer (IPP) programme, and relating to any public-private partnerships.

Dr Pieterse noted that Ms Laura Mseme would also speak to the issue of the Jobs Fund, which was another question that was raised. The presentation would go into detail on the NT’s performance and offer some perspective on the IFMS issue. The NT agreed with Members that it did have a responsibility for excellence in that regard when it came to financial oversight, and it did take that responsibility very seriously. The NT agreed with the AG that insofar as the IFMS was concerned, the programme did offer long-term benefits for both the NT and Government as a whole. The presentation would give the context of the IFMS programme, acknowledge some of the challenges that the NT had experienced along the way, and then focus on the way forward on how the NT planned to deal with that project. It would also state how it planned to rectify the current situation.

NT Audit Performance

NT received a qualified audit, with the AGSA being of the view that the department did not record R68 million in respect of IFMS-related payments for technical support and maintenance. Also, that the balance was incorrectly removed resulting in an understatement of R400 million.
• Since 2016/17, the National Treasury has been in dispute with the AGSA regarding its approach of finding legitimate expenditure that is incurred in line with a contractual commitment for annual support and maintenance of the IFMS as fruitless and wasteful. In National Treasury’s view, the payment is not made in vain as failure to do so would result in legal and financial implications for the Department. It should be noted that to date, none of the expenditure in this respect has been regarded by the AGSA or any of the forensic investigations conducted as suspicious or inappropriate from a criminal law perspective.
• The license support and maintenance fees are paid annually to ensure that the IFMS project has automatic access to updated versions of licenses and software patches, including security patches and updates as well as specialised technical problem solving when required in preparation for the full
implementation of the IFMS. In addition, if the license support and maintenance fee is not paid, discounts will be lost, and penalties and back payments will be incurred.
• The Department has provided evidence of utilisation of licenses as well as support and maintenance. The AGSA has calculated the Department’s performance on the utilisation at the time of full rollout of IFMS which is planned for 2023.
• Given that the AGSA agreed in this audit that the IFMS software licences should be treated as work in progress, the Department is of the view that so should the support and maintenance be reclassified.
• An unsuccessful procurement process was initiated for the third time since 2018/19 in May 2021 through the State Information Technology Agency (SITA) for the appointment of a service provider to implement the IFMS pilot to establish the basis for its national roll out. The State Information Technology Agency Act (Act No. 88 of 1998) (SITA) requires departments to procure information and technology goods and services through SITA. Considering the current antiquated legacy systems, such as PERSAL and BAS, the National Treasury believes that Government has no alternative but to successfully implement the IFMS. The National Treasury has initiated mitigating measures to ensure the implementation of the critical modernisation and automation of financial management systems
• In respect of the IFMS-related expenditure on technical support and maintenance, the Department is exercising their rights in respect of the audit objection process as well as obtaining legal advice in the interest of government-wide treatment of such large, co-managed, multi-year projects.
• NT incurred irregular expenditure of R30.7 million due to not following a proper tender process and not properly approve expenditure. This is a reduction from the previous year’s R66.175 million.
• A misstatement in the Annual Performance Report submitted for auditing was found. As management subsequently corrected the misstatement, there were no material findings.

IFMS – Background and Dispute: Current Landscape of the Legacy Systems

National Treasury maintains four legacy systems for most National and Provincial
Departments with some related entities Developed based on the prescripts set by NT and
DPSA Some departments maintain their own legacy systems
• Personnel & Salaries System (PERSAL) – A salary and payroll administration system, including a human resource administration component Monthly pays 1.5 million salaries, South African Social Services Agency (SASSA) payment files for 12.6 million citizens.
• The Basic Accounting System (BAS) – An online, real time, custom built general ledger system aligned to National Government financial reform objectives and best practice 1.5 million daily transactions, 39 000 users.
• Logistical Information System (LOGIS) –  A provisioning and stock administration system 178 000 monthly transactions, 34 000 users.
• Vulindlela Management information warehouse system 45 000 monthly reports, 1 729 registered users.

The Challenge of the Legacy Systems

The importance of modernising and automating government’s financial procurement
human resources planning, monitoring and reporting systems has become more urgent
given the aged suite of technology currently being deployed including PERSAL and BAS
• Limited resources and skills available to support and maintain the current modified cash-based legacy systems.
• High cost of maintaining the systems.
• The current legacy systems are inflexible as such they can not be modernised to fully meet the needs of users.
• Suitable service providers have become reliant on the higher tier Commercial Off the
Shelf (COTS) products with custom and bespoke development within such systems becoming ever more uncommon.

IFMS Implementation Remains Necessary and Urgent

The NT has no choice but to implement IFMS, so it can modernise the financial management system within national and provincial government.
• Need to modernise human resource management, procurement and logistics within national and provincial government.
• To date, no evidence of even one cent lost inappropriately, despite all the many forensic, criminal and commission investigations (some investigations still ongoing after many years).
• Implementation is a joint responsibility, but spending accountability rests solely with Treasury only.
• Contractual payments: Fruitless expenditure if the NT does it, and fruitless if it does not.
• On advice of AGSA, NT is engaging with ORACLE to renegotiate contracts, and ensure fellow stakeholders are made accountable.

The presentation also covered the history of the IFMS, the various stakeholders involved in the IFMS, and the factors delaying the implementation of the IFMS.

Investigation and Audit Matters

• Zondo Commission: Closed – Investigation completed
• AGSA: Open – matter under dispute/ objection process
• Special Investigation Unit (SIU): Open – Investigation in progress
• Public Protector: Open – Investigation in progress
• Hawks: Open – Investigation in progress
• Forensic Audit investigation: Closed – Investigation completed.

2021/22 Annual Performance Achieved by Total Number of APP Indicators

• Combined Not Achieved: 22% (14.81% Partially Achieved + 7.41% Not Achieved).
• 77.78% Achieved.
The Budget Office and the Jobs Fund were two divisions where none of the targets due were achieved.


Programme 1: Administration

Achieved: 60%
- 90% of ICT service delivery standards met.
- Level 5 of the Risk Management Maturity achieved (which was above the planned 3.5).
- 4 quarterly reports on the implementation of the action plan on gender mainstreaming produced.

Partially Achieved: 20%
- 60% spend of the training and development budget. Below the planned 70%.

Not Achieved:20%
- 100% more findings than 2020/21 on non-financial performance information.

Programme 2: Economic Policy, Tax, Financial Regulation and Research

Achieved:100%
- 50 papers published through Southern Africa Towards Inclusive Economic Development (SA TIED) programme.
- Financial sector legislation submitted for tabling in Parliament.
- 4 economic forecasts developed.
- 4 research outputs related to the macroeconomic policy review and microeconomic reform agenda produced.

Programme 3: Public Finance and Budget Management

Achieved: 54.5%
- Appropriation Bill, ENE and Budget Review published in February.
- 2 Division of Revenue and Division of Revenue Amendment Bills published annually.
- 3 reforms introduced to enhance provincial and local government fiscal frameworks.
- 36 Infrastructure plans assessment reports produced.
- 60 catalytic projects approved in spatially targeted areas within metropolitan cities, secondary cities and rural towns. Above the planned 20.
- 8 quarterly financial reports published.
- 4 quarterly expenditure reports submitted to the Standing Committee on Appropriations.

Partially Achieved:27.3%
- Adjustments Appropriation Bill, AENE and MTBPS published in November and not in October as planned.
- 98% of Cabinet memos received commented on. Below the planned 100%.
- 73 technical advisors placed at National Treasury, provincial treasuries and municipalities through the Municipal Finance Improvement Programme (MFIP). Below the planned 80.
- R6 075 million value of grant funding disbursed (cumulative across the term of project). Below the planned R6 317 million.

Not Achieved:18.2%
- 0% of requests to draft financial recovery plans responded to within 90 days of receipt. Below the planned 100%.
- 0 township economic development strategies implemented. Below the planned 5.

Programme 4: Asset and Liability Management

Achieved: 92.3%
- 100% of complete corporate plans received from Schedule 2 and 3B public entities reviewed.
- 100% of annual reports received from Schedule 2 and 3B public entities reviewed.
- 100% of complete review requests of borrowing limit applications relating to Schedule 2 and 3B public entities reviewed.
- 100% of complete guarantee applications received from Schedule 2 and 3B public entities reviewed.
- 100% of complete remuneration review requests of executive and non-executive directors received from Schedule 2 and 3B public entities reporting to the Minister of Finance reviewed.
- 100% of complete board appointments recommendations received from Schedule 2 and 3B public entities reporting to the Minister of Finance reviewed.
- 100% of received MFMA submissions relating to tariff adjustments received from Schedule 2 and 3B public entities reviewed.
- 100% of government’s annual gross borrowing requirement met.
- 100% of interest and redemptions met.
- 100% of government’s liquidity requirements met.
- 100% compliance with market and refinancing risks benchmarks.
- 1 report on the management of government’s contingent liabilities.

Partially Achieved: 7.7%
- 86% complete PFMA Section 51(g), 52, 54(2), 55, and 92 applications received from Schedule 2 and 3B public entities reviewed. Below the planned 100%.

Programme 5: Financial Accounting and Supply Chain Management Systems.

Achieved: 66.7%
- 50 governance reports produced. Above the planned 16.
- 20 public finance management capacity development programmes progress reports produced. Above the planned 16.
- 100% availability of transversal systems. Above the planned 98%.
- 21 statutory reports produced. Above the planned 10.
- 4 quarterly compliance report produced.
- 100% of SCM directives approved.
- 100% of support implementation plan on identified or prioritised institutions in order to improve SCM performance.
- 35 transversal term contracts implemented. Above the planned 21.

Partially Achieved: 25%
- 5 norms and standards developed. Below the planned 8.
- 93% implementation of the strategic sourcing opportunities plan. Less than the planned 100%.

Not Achieved: 8.3%
- Functional and technical specifications of IFMS system not developed. IFMS Generic template not completed and accelerated implementation of i-Recruitment Rollout of i-Recruitment at Lead Sites not achieved.

Programme 6: International Financial Relations

Achieved: 100%
- 100% of economic surveillance reports responded to.
- 1 advocacy forums hosted for uptake of development finance.
- 3 country partnership framework progress reports produced.
- 1 of analysis reports on the outcomes of South Africa’s engagements in regional and global forums produced.
- 100% of policy positions developed.

Programme 7: Civil Military Pensions, Contribution to Funds and Other Benefits

Achieved: 100%
- 99.9% of benefits validated for payment paid within liable dates. Above the planned 99%.
- 100% fewer fraudulent claims than 2020/21. Above the planned 90%.
- 100% integrity of client data. Above the planned 95%.

Human Capital

- Vacancy Rate of 13.69% achieved (headcount of 1065 which includes contractors and additional to staff establishment).
- Total Staff Complement of 1 065 of which 89% are black, 59% female and 1.13% of the NT total staff complement are persons with disabilities as at 31 March 2022.
- A total of 44 promotions were made.
- 98.80% of Senior Management Services (SMS) members entered into performance agreements. Those who did not sign a performance agreement were issued with letters of intention to institute disciplinary processes and will not be eligible for any performance reward.
- 24% of employees participated in skills development and leadership programmes.

2021/22 Spending Outcome

The Department is projected to spend R63.647 billion as of 31 March 2022. The actual expenditure amounted to R62.370 billion, which is R1.277 billion or 2 percent lower than the projected spending for the period under review.

The largest variance occurred in the areas of compensation of employees and goods and services.

(See Presentation)

Discussion

Ms Abraham briefly stood in as Chairperson.

Mr Morolong asked if the NT could give the Committee a sense of what the future of the Jobs Fund was. What was the impact of the financial markets of the NT having received a qualified opinion, particularly on the cost of debt? Could the Committee get a sense of what the roadmap was towards the completion of the IFMS system? What was the Zondo Commission conclusion on that matter, and had any subsequent recommendations been carried or implemented?

Mr Skosana observed that the overall achievement in terms of the APP indicators was almost at 78%, which was very good. It meant that targets that were not achieved were only at about 22%. He felt that the Committee appreciated that from the NT’s side.

With the AG presentation, there was the issue of the qualified audit opinion. It looked like the IFMS project had caused the qualified opinion. Aside from the IFMS project, what were the other findings from the AG in relation to this audit opinion? Was it certain that if it was not for the IFMS project, the NT would not have gotten a qualified audit opinion?

On the issue of the enhancement of municipal support and oversight by the NT, how far had it gone in terms of supporting municipalities in playing an oversight role? The Committee had seen year in and year out, when the AG gave the audit outcomes, that the sphere of local government was “very bad”. How far had the NT gone in giving support and oversight in that particular regard?

Dr George wanted to ask about the dispute that there was between the AG and the NT. It was quite unfortunate that such a thing did in fact happen. One would expect that it was clear what the rules were, how they would be interpreted and how they would be applied, etc. He supposed that those things did happen. Was that all clarified now, because there had been quite a long delay. It did not look good. What was the status of the dispute now? Had there been a meeting of the minds and was the Committee going to see that going forward? What was really the state of play?

Ms Abraham observed that the Members seemed to have similar concerns regarding what was happening now when it came to the IFMS in as far as it affected the relations between the NT and the AG. She felt that Members would like to get confirmation on where things were in relation to capacity-building, and whether the Committee was going to be embarrassed, and not be able to present or talk to its own BRRR. She asked the NT to unpack the issue of capacity constraints in the supply chain. Did it mean that officials who were there did not have the capacity? Because at the same time she heard that there were some capacity building programmes that were happening. Was that the case, or was it a case of vacancies? The Committee also heard that the Department (the NT) was in the process of dealing with those vacancies. Ms Mseme talked of employment that was created all around the country, and there were big numbers, such as 23 000, etc. How was the NT impacting the current unemployment rate in South Africa? Just for the future, when the NT dealt with the issue of jobs and job creation, since Members represented various constituencies, it would be prudent if the Committee could get a sense of where those jobs were. She was happy that the NT was also able to differentiate between long-term and short-term job opportunities. However, the Committee wanted to know exactly where those jobs were created, and how it affected South Africa’s rate of unemployment.

Deputy Minister Masondo said that the NT agreed with the Committee that it and the Finance portfolio as a whole should be the best in financials as well as the performance information. The NT would seek to continuously improve in that regard. The NT was committed to finding a solution insofar as the IFMS was concerned. His colleagues would deal with the details of how the NT was seeking to deal with that issue, including dealing with the questions that had been asked.

The Deputy Minister asked to be excused so that he could also undertake certain tasks related to the budget speech the following day.

Dr Pieterse replied to the question about the potential impact of the audit finding by the AG on financial markets and things such as the cost of borrowing, and so on. As Mr Kuse indicated in his presentation, part of the practice in a situation like that was to inform management of that decision before the audit finding was concluded. Upon receiving that information and as part of the NT’s engagements with the AG, it then also verified with various institutions whether that finding would have a material impact on things such as the cost of borrowing in the financial markets. Especially given that many of the NT’s funding instruments, such as its bonds, were listed instruments. It did that work, and it was satisfied that there would not be any large material adverse consequences relating to that particular audit finding. The NT tested it with various institutions, and it also did its own work.

On support to municipalities by the NT, it had various initiatives in that regard, including one of its most significant programmes, which was the City Support Programme. It would work in particular with metros on various support initiatives. One of the issues the NT would be emphasising in the following day’s budget review (and that the Minister would speak to in his speech) was around the work that the NT was doing on municipal revenue enhancements, and the importance of that work in light of the distress situation that many municipalities found themselves in.

On the supply chain management issues, one of the challenges the NT had, particularly at the beginning of this particular financial year, was around capacity. As Ms Mseme indicated, those capacity constraints had now been resolved in the supply chain management space. The NT had also appointed a new Director of Supply Chain management in the Corporate Services Division. The new Director had helped the NT in “steadying the ship”, and in doing the work required to deal with some of the capacity challenges. It remained a focus area for the NT because of the manner in which it impacted the rest of the divisions and its ability to deliver.

On jobs: Dr Pieterse assumed that that was related to the work done by the Jobs Fund. The NT would make those details available to the Committee.

On the IFMS matter, he wanted to echo the words of the Deputy Minister and the point he made at the beginning. The NT did take its responsibility for excellence in financial oversight and management very seriously, which was why it was working with the AG to make sure that it could resolve all matters relating to IFMS as soon as possible.

On the Jobs Fund, Ms Mseme observed that the NT had, in principle, approved the recapitalisation of the Jobs Fund. This would now need to be operationalised. In particular, a decision would be made on the extent to which the jobs plan would be recapitalised. It would also need to make a decision on the location of the Jobs Fund because that was an opportune time to do such evaluations. The Jobs Fund was undertaking its own evaluation. The NT would be evaluating the Jobs Fund location. Given that the Jobs Fund had now completed its original scope, the NT would look at the nature and types of support the Jobs Fund would be providing. Now that the Jobs Fund had finished that part of its lifespan, and given its significant contribution, the NT could do a presentation specifically on the Jobs Fund. The presentation could also include the innovations, learnings, and knowledge that it had gained out of implementing the Jobs Fund. In terms of the impact specifically, it could provide that to the Committee both in writing and in that presentation. It was important for the Committee to note that not only was the Jobs Fund only one contribution to South Africa’s enormous challenges of addressing unemployment, but the manner in which the Jobs Fund was established, in particular the match funding, had made a significant contribution to the NT’s understanding of those kinds of grants.

On the IFMS roadmap, the NT remained committed to the implementation of the IFMS as per its plan as articulated in the targets of the MTSF, which was in full rollout by 2023/24. It was for that reason that the NT was spending significant time, energy, efforts and resources to unlock the challenges of implementation that it had been experiencing, including engaging with Sita. In the event that procurement could not be enacted, the NT would do it itself. The Zondo Commission found there were no findings on the IFMS in the investigation of the Zondo Commission. In fact, whilst the NT awaited the SIU, the Public Protector, the Hawks, the NT’s own forensic investigation equally, those were the only standing findings that it had that referred in the main to weaknesses that the NT had since addressed, and continued to increase in its administrative processes, contract management, administration, and supply chain administration. Those matters were being addressed.

On the status of the IFMS around the audit, one of the reasons why the NT took the extreme decision of not declaring the payment as fruitless and wasteful, was because that matter needed to be resolved. It had long been a dispute, and the NT needed to apply all mechanisms available to it in order to assist both the AGSA as well as itself and other government departments that run such large complex projects in resolving these kinds of challenges with these projects. It was in the interest of ensuring that it did not continue that dispute, and actually come to a resolution. The NT would not have received a qualified audit but for the IFMS. The AG was very clear and indicated such to NT. If the NT had, as it did previously, accepted the fruitless and wasteful expenditure finding and it had done that previously.

[The discussion is incomplete as the audio cut out 2:54:21]

SARS Annual Report 2021/22
Prof Edward Kieswetter, Commissioner, SARS, presented parts of the presentation. Dr Rebone Gcabo, Exco Member, SARS. Mr Intikhab Shaik, Head: Technology and Delivery Solutions, SARS, presented the section on modernising SARS’ systems, and resource stewardship. Mr Johnson Makhubu presented the section on building trust and confidence in the tax administration system. Mr Khutjo Mabetwa, Regional Director: Gauteng North, SARS, presented the service charter index achievements (pages 38 to 39).

Revenue Performance

Revenue performance increased compared to the previous financial year, where the 2021/22 net revenue collected was R1 563.8 billion, compared to R1 249.7 billion in 2020/21.

Compliance Revenue

•  Whilst voluntary compliance is SARS’s strategic intent, without targeted efforts of enforced compliance the total revenue reported would fall short of the requirements.
• Compliance-related revenue contributes 13.8% to overall revenue in the financial year (FY) 2021/22.
• Compliance Revenue - up R43.5 billion from the previous year (PY).

SARS’s audit outcomes for 2021/22 were as follows:
• Unqualified audit reports for Own Accounts, Performance Audit, as well as Revenue Accounts.
• Audit findings in Revenue Accounts reduced from 22 in 2020/21 to 10 in 2021/22.
• Audit findings in Own Accounts reduced from 23 in 2020/21 to 12 in 2021/22 and no findings were raised in the Audit of Performance Objectives for 2021/22.
• No audit findings raised for fruitless and wasteful or significant irregular expenditure and therefore not reported in the Audit Report.

In sum, SARS achieved a clean audit report from the AG on Predetermined Objectives.

Compliance with Laws & Regulations

In the year under review whilst ensuring compliance with various pieces of legislation, additionally SARS particularly focused on the following areas:
• SARS has developed and approved a Regulatory Compliance Risk management framework that will ensure that SARS complies with all applicable laws.
• SARS embarked on a program to implement and ensure compliance with the Protection of Personal Information Act (POPIA).
• Appointed a Corporate Compliance Officer to drive and ensure regulatory compliance across the organisation.

SARS Governance – Updates on the Nugent and Zondo Commissions

• The Nugent Report expressly records 16 recommendations that break down into 27
sub-recommendations:
• 17 relate to governance in SARS (SARS’s responsibility)
• 10 relate to governance of SARS (NT responsibility).
• SARS has finalised 13 of the 17 sub-recommendations and of the remaining 4:
• 2 are work in progress (recovering the moneys paid to Gartner and Grant Thornton and the appointment of high level IT and Data Management officials)
• 2 are in the justice system: the BAIN matter referred for investigation by the NPA and civil litigation for fruitless expenditure involving a former SARS official
• Bain was restricted for 10 years from tendering for Government tenders upon SARS’s request to National Treasury.
• Zondo Commission of Inquiry (COI):
• Presidential Plan for implementation of Zondo COI: SARS has implemented 8 of the 12 SARS-specific recommendations. 4 are work in progress.

In the conclusion of the presentation, SARS noted (among other points) that the Auditor-General SA outcomes show areas of improvement in reducing the number of findings and provide room for further improvements. The 68.75% overall achievement on performance objectives provides for an area of improvement.
 

(See Presentation)

Discussion

Mr Skosana took over as the Acting Chairperson.

Dr George saw that SARS was progressing from a few years ago. Prof Kieswetter touched on the issue of tax morality and compliance, and the narrative on tax revolts, etc. He also mentioned that SARS measures the perception that the taxpayers have of SARS and of the Government separately. The entities are different – SARS was the tax collector, and the Government spent the money. There was a view that tax was theft if Government was misappropriating that money. He suspected that SARS would be seen more favourably in the measurements of public perception. There was limited influence of SARS. Did SARS have a communication channel where it was able to provide that feedback? It mattered materially to the ability of SARS to function.

The presentation also mentioned low compliance. South Africa has a very large informal sector, and it was probably bigger than one thought. If the informal sector became more formal, it would be able to enter the tax net effectively, and SARS would be able to get more revenue. What was SARS doing to accelerate that process? I.e. to get the informal sector that was operating (and possibly flourishing) into the tax net.

The Chairperson said that he would take the invitation extended by Prof Kieswetter to create space and time to have a Committee meeting in Tshwane, where a state-of-the-art IT hub had been established. He had been there as part of a Committee delegation when SARS was celebrating its 25th anniversary in 2022. It would be important for Members to see what SARS had done. He urged the Secretariat to create space, and if the first quarter programme was full, then probably in the second quarter. The Committee could visit SARS and have a meeting to deal with other things whilst it was there.

He felt that it was “improper” to leave it on the record to say that the state was “stealing money from SARS”. He urged Members not to use concepts that were “not acceptable”. SARS was an independent organ of the state responsible for collecting revenue. Therefore, it could not keep money for itself because that was not what it was established for. SARS had been established by the Constitution and an Act of Parliament to perform specific responsibilities on behalf of the state. If the state used the revenue collected by SARS and other organs of the state, it was not stealing. SARS was the organ that the state had established. He did not want that view of “stealing” to go on record as a position of the Committee. 

Mr Morolong asked when SARS expected the windfall from the commodity boom to flow. He echoed the statement from the Chairperson correcting a position that was “not of the official Standing Committee” with respect to money being stolen.

Mr Skosana tried to say something, but he had difficulty with his network.

Dr George said that he could not hear Mr Skosana.

Dr George emphasised that he did not wish to be misquoted, or for people to put words into his mouth. He originally said that “tax is theft if Government is stealing your money”. He did not say that the government was stealing the money. He said that “tax is theft if Government is stealing your money”, and that it then impacts perceptions if there was a perception that that was happening.

Prof Kieswetter said that tax morality was an important measure for SARS. As he had said, it did means that sometimes SARS measured itself as a standalone. But in many of the public surveys, SARS was measured as an entity in Government, and that then had an impact on SARS from the perspective that citizens have a social contract with Government. The feedback went to the whole of the Government. Independently, he continually engaged his colleagues and reminded them that the way money was spent, the level of efficiency, wastage, the Covid-19 procurement incidents in South Africa, etc. ultimately affected the ability of SARS to collect revenue. All of that feedback was available to Government.

On the informal sector, it was important that the Committee realised that SARS addressed all sectors and segments of society. It did not target any taxpayers. It followed a risk-based approach to select which taxpayers would be selected for audit or further investigation. With respect to small businesses and the informal sector, in SARS’s reorganisation, it established an executive position where it had an executive responsible for helping it to better understand that segment, and to help SARS develop an engagement platform for taxpayers from the informal sector of society. It was increasingly using data from third parties to identify taxpayers, whether it was via a bank account, on the companies register, or the population register. SARS also had access to other asset registers in South Africa, such as the stock exchange, the deeds office, and the motor vehicle registration platform. That morning, Prof Kieswetter met with the Minister of Small Business to establish a partnership. SARS believed that many of the informal and small business operators were either not fully aware of their tax-paying obligations or it was something intimidating. Thus, there could be an instance where some people ignored the situation and hoped it would go away. SARS’s position was to help educate, and so the meeting that morning with the Minister of Small Business was on how SARS and the ministry could work together to bring more of the informal operators onto the tax register. SARS welcomed the visit that the Chairperson alluded to. It looked forward to hosting the Committee.

[Ms Abraham wrote in chat: Is SARS aware of South African widows' grievances about taxes on their husband’s income?]

Prof Kieswetter responded to Ms Abraham. SARS was aware of this. It was not only widows but also the type of taxpayer who had multiple sources of income, none of which may be triggering a tax obligation on their own. A person might be getting a pension from their deceased husband, interest from a savings account, and doing some work themselves. Those sources by themselves could be under the tax threshold, but if one added them together, then one would find oneself having to pay tax. That phenomenon applied to widows, and also to taxpayers who might be retired or semi-retired.

Mr Franz Tomasek, Head: Legislative Policy Tax, Customs and Excise, SARS observed that the difficulties that the kind of taxpayers with multiple sources of income would have are that they would get an assessment at the end of the year that showed that they have a liability. Such taxpayers had not had any Pay As You Earn (PAYE) deducted during the course of the year. SARS has created a system whereby it can interact with the pension provider to tell them what the correct rate of tax they should be deducting so that that problem did not come up at the end of the year. That then would be the choice of the pensioner; the pensioner could accept that slightly higher rate so that the problem did not arise, or they could say they did not have a problem paying tax at the end of the year. The latter type of taxpayer would then stick to what the tax tables would normally require and sort out their own taxes. SARS had put the choice in the hands of the pensioner involved and had assisted in trying to create a mechanism that ensured that that problem did not arise at the end of the year.

Consideration of letter from Independent Commission for the Remuneration of Public Office Bearers: Draft Job Profiles of Commissioners of the FFC

Ms Teboho Sepanya, Committee Secretary, presented. She had sent the letter to the Committee. The letter was from the Office of the House Chairperson, Mr Cedrick Frolick, who explained that the Committee needed to look at the job profiles and write him a report. Mr Frolick could then combine that with reports of the other Chapter Nine institutions.

Mr Skosana asked what the report needed to include.

Ms Sepanya replied that the Committee needed to look at the job profiles of the part-time commissioners, chairperson and the deputy chairperson and see if it was happy with what had been formulated. The Committee would then write a report to give to the Office of the House Chairperson.

Mr Skosana relayed that Ms Abraham suggested that the consideration of the letter should be in another meeting.

Ms Sepanya observed that the letter was supposed to have been part of the previous week’s meeting, but the meeting was cancelled.

Mr Skosana observed that the Committee was supposed to look at the letter, then write a report to the House Chairperson, and express its views on that particular matter of the remuneration of public office bearers in relation to the FFC commissioners.

[In the chat box, Ms Abraham proposed a postponement of the item for seven days.]

Mr Skosana asked if there was a particular due date for the Committee’s comments

Ms Sepanya said that the House Chairperson would appreciate it if the Committee got back to him as soon as possible. The House Chairperson needed to incorporate this information and that from the other Chapter Nine institutions into the report that he must compile.

The Chairperson agreed with Ms Abraham so that the Committee could give that matter the attention it deserved. He had not yet gotten deep into studying the job profiles. He had only read the letter. If it was allowed, then he suggested dealing with the item the following week, as much as the Committee would be dealing with the budget. It could look at the letter either before or after the briefing on the budget.

Ms Abraham was proposing a postponement to next week so that the Committee did not delay, but at the same time got an opportunity to interact with both the letter and the writers of the letter. The Committee would then be clear on the way forward.

Mr Skosana noted that the proposal was seconded. The matter of the letter would be put in the programme for the following week so that the Committee could give it the necessary attention.

The meeting was adjourned.