DPE & SOEs APP audit outcomes: AGSA Briefing

Meeting report

The Chairperson welcomed the attendees. The meeting was the Committee’s regular Wednesday 10:00 meeting.

He asked the Committee Secretary for apologies.

The Committee Secretary was experiencing technical difficulties. He noted an apology from Ms R Komane (EFF), who would not be in attendance due to a bereavement.

The Chairperson said the meeting was starting and asked the Committee Secretary to position himself in a conducive environment.

The Committee Secretary noted that Ms C Phiri (ANC) would be late and Mr N Kwankwa (UDM) would not be in attendance.

The Chairperson welcomed the delegation from the Office of the Auditor-General of South Africa (AGSA). The Committee would move straight to the AGSA’s presentation.

Mr G Cachalia (DA) notified the Chairperson that he and Mr F Essack (DA) would have to depart the meeting early due to another engagement. He hoped most of the meeting’s business would be concluded by 12:00.

The Chairperson hoped the meeting would be finished by then and invited the AGSA to begin the presentation.

Ms Madidimalo Singo, Acting Business Executive, Auditor-General of South Africa, greeted and thanked the Committee for the opportunity to brief them on the Annual Performance Plan (APP) outcomes for the Department of Public Enterprises (DPE).

Ms Singo introduced herself and noted that she led the portfolio responsible for Public Enterprises. Her team included Mr Bongumusa Thabethe, Senior Manager: Auditor-General of South Africa, and Ms Nomthandazo Ndlovu, Business Support Manager: Industrial Development Corporation of SA Ltd. (IDC). Mr Thabethe would present.

AGSA Introductory Remarks

Ms Singo said the presentation concerned a review of the outcomes of the DPE’s APP. Before this would be done, the AGSA felt it was important to share their cultural shift strategy, which concerned the journey the Office would be undertaking following Ms Tsakani Maluleke, Auditor General of South Africa, coming into the Office.

Ms Singo said the strategy spoke to the aspiration of the AGSA to make improvements ensuring performance, accountability, and transparency. In sharing the strategy, the AGSA believed the Committee and Parliament were critical to ensuring a collaborative effort towards improving the current state of government and the auditees that the AGSA oversaw.

Ms Singo said there was a lot of work the AGSA could do to strengthen the relationship with the Committee. Strengthening this relationship would also allow the AGSA to identify the best ways to support the Committee’s work, and work together as long term strategic partners in improving government.

Ms Singo said part of the presentation would be taking the Committee through the culture shift strategy which linked well to the work the AGSA had done under the review of the APP report for the DPE. The APP that the AGSA reviewed was a draft presented by the Department. These observations were shared with the Department in hopes that, in finalising the APP, the AGSA’s inputs would be included.

Ms Singo said the review concerned several matters that she would introduce before the main presentation. The AGSA looked at whether the indicators and strategic objectives included in the documents were complete and related properly to the core functions of the mandate and the service delivery expectations of citizens.

Ms Singo said the AGSA also looked at whether the indicators and objectives were measurable, relevant and of quality, and if they, in fact, assisted the Department in ensuring the achievement of its mandate. The AGSA also looked at the revision process of the APP and how it aligned with key strategic government priorities included in the Medium-Term Strategic Frameworks (MTSFs), State of the Nation Address (SONA), or other communications made by the Presidency.

Ms Singo said from this perspective, the AGSA looked to see when certain announcements were made and how they found expression in strategic planning documents for the government.

Ms Singo said this was undertaken from the perspective that for things to “get done”, people needed to be held accountable by ensuring they were included in such documents. The Office also looked to see if the prior material statements relating to the AGSA performance audit had been factored into the current plan. The process the AGSA took was to brief the Department and then brief the Chairperson of the Committee to ensure that there was alignment moving into a new financial year. The AGSA tried to do this before the end of the financial year to ensure that the DPE started the current year by incorporating the AGSA’s input.

Ms Singo said it was important to note that the current review of the APP was forward-looking as it dealt with the current year’s APP. It was important to ensure that the DPE took into account the Office’s inputs as they finalised the APP and ensured their implementation in the coming year. The AGSA would review this as part of the audit outcomes for 2023/24.

Ms Singo briefed the Committee on the state of the material irregularity process which was referred to as the extended powers of the Auditor-General (AG). There had been an update on the areas where material irregularities were identified, how many there were, and how many were in progress. She said the Office hoped there would be an opportunity in future meetings to go through material irregularities that had been identified and brief the Committee in an in-depth manner on the matter of extended powers.

Ms Singo asked to hand over to Mr Thabethe, who would lead the presentation. After the presentation, she would respond to the Committee's comments and questions.

Mr Thabethe thanked the Chairperson and greeted the attendees. He appreciated the opportunity to present the culture shift strategy and the AGSA’s review of the DPE’s APP.

AGSA Presentation: Cultural Shift Strategy 2030 

Status and functions of the Auditor General (Public Audit Act) 

The AG had the power to:

• Perform an appropriate audit to…determine whether appropriate and adequate measures had been implemented to ensure that resources were procured economically and utilised efficiently and effectively.
• Take any appropriate remedial action, and;
• Issue a certificate of debt…where an AO or AA had failed to comply with remedial action.

African SAIs also help improve the lives of people

Supreme audit institutions (SAI) counterparts on the African continent have also been paying more attention to how their work in the audit office touched and influenced improvement in the lives of citizens.

Reflections on the state of the public sector

Limited progress has been made on audit outcomes, especially at the coalface of service delivery in local government and SOEs. 

Persistent weaknesses in systems of transparency, accountability and performance were a significant concern for the citizens of South Africa. 

What tended to be overshadowed by the headlines was the impact on the lived reality of ordinary South Africans, represented by the numbers, findings, and audit outcomes. 

A persistent pattern of regressing audit outcomes also impacted public confidence in the AGSA and the medium to long-term ability to strengthen democracy through auditing and reporting as required by the mandate. 

Culture Shift 2030: Making a difference in the lives of our people  

Over the next eight years, the AGSA committed to making a more direct, consistent, and meaningful impact on improving the lives of ordinary South Africans. Strategic aspirations included having a stronger, direct, and consistent impact on improving the lived reality of ordinary South Africans. Theory of change was to shift public sector culture sustainably and efficiently through insight, influence, and enforcement. The accountability ecosystem would strengthen the broad-based, effective network of stakeholders driving seeping public sector accountability.

Only a small number of auditees could currently be classified as “Doing Good” in terms of their developmental impacts and predominant culture in auditees’ environments. In 2030, a critical mass of auditees aimed to move towards cultures characterised by performance, accountability, transparency, and integrity. 

Working together to improve the public sector 

Accountability in the Ecosystem requires a broad-based, effective network of stakeholders driving and deepening public sector accountability. 

Accountability Ecosystem Partners included:

• Political parties
• Accounting officers/authorities
• Audit function
• Chapter 9 institutions
• Law enforcement agencies 
• Citizens/media/civil society organisations (CSOs)
• Coordinating ministries and strategic partners 
• Executive authorities 
• Oversight
• Professional organisations 

Overview of the Department of Public Enterprises 

Reflection of performance 

Over time, DPE presented the achievement of targets set during that year. However, the status of SOEs continued to deteriorate; as a result, the AGSA was of the view that the performance target did not reflect the execution of the DPE mandate, and the effectiveness was a concern.

There was a greater need for alignment between the DPE mandate and the performance target included in the APP.

Desired outcome 

Desired outcome(s) included:

• Improved Governance and accountability.
• Improved independent financial sustainability of SOCs.
• Increase the contribution of SOCs to support the transformation of the South African economy.
• Supply of Energy Secured.
• Increase access to an affordable and reliable transport system.
• Just transition to a low-carbon economy system.
• Role of policy development – speedily process the bill.
• Role of DPE minority.

Key risks identified

• Lack of transparency – by not reflecting activities linked to the mandate. 
• Weakening oversight process – as no direct recommendation and intervention could be made if the status of SOEs was not reflected.
• The public could lose confidence in financial and performance results.

Response to the risks

• Refer to findings on APP 2023/24 and the current audit approach included evaluating the relevancy and completeness of the indicators and targets. 
• DPE had also been scope-In for MI 
• Some liaisons with other SOE auditors were required to ensure that common concerns were shared.
• More interaction with management was required to ensure responses to key gaps being identified. Unaddressed concerns would be shared with oversight structures.

Annual Performance Plan – Proactive Review

Findings of APP 23/24 reviews – Culture Shift

The review of the APP for 2023-24 revealed the following findings that management had committed to addressing. It was important to note that the revised APP did not have to be reassessed by AGSA; it remained the Department’s responsibility to implement the findings in 2023-24.

1. The indicators did not correlate with the annual target and desired performance.  
2. Some set targets did not achieve the intended outcomes and it did not address the oversight role and the effectiveness of the Department or the performance of the SOC in the areas to be measured.
3. The indicators and targets included in the APP had no technical definition to define them properly and how the results were to be delivered. There was a risk that indicators may not be measurable. 
4. Targets for the outer years were not well-defined or measurable in some cases. 
5. There was a repeat of the prior year’s target, thus the APP was not fully reviewed to ensure that it was linked to 2023/24 activities.
6. Performance assessments did not reflect the number or names of SOCs that were not included in the assessment of the target.
7. There were inconsistencies in the wording and frequency of reporting within APP tables.
8. Several support functions activities were not reported in the APP, including the support functions that assist SOCs.
9. Completeness – Some key initiatives planned for 2024 following the ENE commitment, SONA, and other reporting documents had not been measured or included in the APP.

Material Irregularities

Changes to enabling legislation came into effect on 1 April 2019. Several fundamental amendments addressed long-standing concerns about failing to act on findings and recommendations, specifically regarding fruitless, wasteful, and irregular expenditure. The amended PAA aimed to encourage those charged with accountability for public resources to act decisively and follow the law to prevent or recover the loss of public resources. Where recommendations and messages had not been addressed, the AGSA had the power to trigger consequences.

Why were our powers extended and what does it mean?

Public outcry for increased accountability and transparency saw calls from parliamentary oversight structures, civil society, organised labour, media, and the public at large for the AG to be empowered to hold accounting officers entrusted with public funds accountable for their actions. 

Status of SOEs – 31 March 2023 

Number of SOE audits: 34

MI Implementation SOEs (SOE sector): 29

SOE sector:

• Active (audits in progress) – 23
• Frozen (audits on hold) – 6

MI Notification 

• SABC issued 2 MI notifications.
• SAPO issued 3 MI notifications.
• Postbank issued 4 MI notifications.
• Transnet issued 2 MI notifications.
• KLF issued 1 MI notification.
• IDT issued 1 MI notification.

Conclusion

The new strategy was ambitious, its intention was noble, and its implementation would be challenging. Throughout the journey, the AGSA would continue to provide citizens and the public sector players with the products and services we are known for but in a better way and with higher purpose and intensity.

Closing presentation remarks

The Chairperson thanked Mr Thabethe and asked if Ms Singo wished to add anything.

Ms Singo said Mr Thabethe’s presentation was comprehensive and at the core of it was the culture shift strategy which sought to improve the experience of South African citizens. The AGSA wanted to see a change in performance from state institutions. The Office could not achieve this alone and needed assistance from stakeholders which had been referred to as the accountability ecosystem in the presentation.

Ms Singo said the AGSA always worked around performance information, but with the implementation of this strategy, there would be a deeper focus on the institution’s mandate and whether the institution’s respective strategic documents ensured that the set target indicators spoke to the mandate.

Ms Singo said that the key was that the AGSA needed to start seeing the impact. Over the years, institutions had presented their APPs to the AGSA in which they stated they had been performing, but the impact could not be seen. Impact in terms of where it affected citizens as it related to the economy and job creation. This was even threatening South Africa’s democracy, as alluded to in the presentation.

Ms Singo said the AGSA’s focus was also getting commitments from the Committee concerning the areas the Committee believed there could be collaboration with the AGSA. She asked which commitments the Committee wished to share with the Office that would allow them to work together to ensure accountability and transparency.

Ms Singo said the purpose was to align in terms of the direction the strategy needed to take and what their respective roles would be. The presentation was comprehensive. She hoped what had been shared empowered the Committee to ask departments the right questions. If the Committee required additional information, the AGSA would be more than happy to share it.

Ms Singo said that on material irregularities which spoke to the extended powers of the AGSA, the Office wanted the opportunity to return to the Committee and have an in-depth discussion on the issue. She believed that the issue was an area the AGSA could work with the Committee to see improvements in the public sector cultures.

Ms Singo said the AGSA was happy to respond to any concerns the Committee shared.

See attached for full presentation

Discussion

The Chairperson asked the Committee to engage with the presentation. He thanked the AGSA for the comprehensive presentation.

Mr N Dlamini (ANC) greeted the attendees and said the presentation had been comprehensive. It raised issues that the Committee had also raised.

Mr Dlamini said it was interesting that the AGSA would comment on the relationship post giving shares to strategic equity partners. He was concerned with the movement towards establishing a shareholder company that would deal with SOEs. For example, he was concerned about an entity such as Transnet International that did not report to the Committee. Was Transnet International part of Transnet? Did it work on behalf of Transnet? What was the relationship between the two entities? The reason for raising this concern was that it appeared that the Transnet International entity did a lot of work in Africa, but its profits were not reflected in the books of Transnet. He asked if the mode used with Transnet and Transnet International would be followed.  

Mr Dlamini said he could not argue against the point made by the AGSA that there needed to be a relationship between performance and the strategic objectives of SOEs. For example, if it was stated that Transnet performed in certain areas, they had to be able to say how it improved an existing issue and whether there was a negative or positive impact on the economy and job creation. As the parliamentary term began its conclusion, these issues needed to be reflected on in terms of progress made and then ascertain how to set the tone for the forthcoming administration.

Mr Cachalia thanked the AGSA for a useful and honest presentation. The presentation rang alarm bells and he pointed to the fact that if the Committee did not work with the AGSA, they would be accused of fiddling while Rome burned. It was not a secret that many of the SOEs that fell under the Committee placed a huge burden on the fiscus, as well as the economic and social future of South Africa.

Mr Cachalia said the presentation spoke to the limited progress of outcomes which promoted continued misuse of state resources. He emphasised the word “continued”. The relevant information could be found on slide six of the presentation.

Mr Cachalia said slide eight pointed to the current state of auditees. It was stated they predominantly were either classified as “doing harm” or “nothing”. On slide 12, it was stated that in terms of the mandate and the alignment with performance, it was not improving but deteriorating despite the assertion that targets were being achieved. This resulted in decreased transparency, oversight, and public confidence, as targets could not simultaneously be achieved whilst mandates and performance alignment deteriorated.

Mr Cachalia said slide 14 spoke to there being no correlation between targets and performance and referred to “box-ticking” exercises in crucial areas such as vandalism and cable theft, that affected SOEs across the board. It was also stated that the target told “no stories” and there were no technical definitions. The targets were not measurable.

Mr Cachalia said slide 16 painted a “very sorry story” about SOEs across the board. These were SOEs that the Committee was responsible for and oversaw. Slide 18 thankfully spoke to the consequences from the AGSA that were beginning to emerge in this regard. He said the Committee welcomed this and would be working together with the AGSA on the matter.

Mr Cachalia said that for as long as he had been on the Committee, he had pointed to many of the things that had resulted in “box-ticking” exercises and targets that were essentially “wish lists”. The phrase “wish list” had been used many times in the Committee. He was glad the AGSA was aware of this, and that things were changing. He said the Committee needed to “wake up”.

Mr S Gumede (ANC) agreed with the comments made by Mr Dlamini that the Committee had also raised some of the matters raised in the presentation.

Mr Gumede had picked up on the fact there was no correlation with what was being presented to the Committee. He was interested in the issue of the AGSA’s extended powers. Did these powers extend to reports that revealed criminal activities? He asked if the AGSA could report such.

Mr Gumede asked about the 20 days given for response. What actions would the AGSA take if no response was given during that timeframe?

Mr Gumede said in terms of the auditees, not all were performing, and with those classified as “not good”, there was an implication on the side of the work they did. What actions did the AGSA take regarding auditees not doing good work? He was unsure about identifying gaps because the APPs had already been conducted. The AGSA’s presentation stated that they had been analysing a complete report. What would be happening with this report and if it was suggested the APP was incomplete or needed to be redone? He said because it could be a reoccurrence for the next financial year especially as mentioned in the presentation, there was a repeat of things that were done previously.  

Mr Gumede said that would not be the case; they would find a situation where similar incorrect processes were being followed.

The Chairperson experienced technical difficulties and Mr Gumede was cut off.

Mr Gumede said he wanted to ask about the Department’s comments about the AGSA’s presentation to them. He said the question could be responded to by the Department and not the AGSA.

Mr Gumede asked if the APP as presented to the Committee was skewed or not. Was the APP authentic?

Mr Gumede said the presentation had been good.

Mr Essack commended the AGSA for their informative " eye-opener " report. The takeaway was that there was a greater need for alignment between the DPE’s mandate and its performance targets included in the APP. This was because as he recalled in March, the AGSA had clearly pointed out a repeat of the prior year’s target, and the APP was not fully reviewed. It was not fully reviewed to ensure that it was linked to the activities of the new financial year 2023/24.

Mr Essack said there was an internal document referred to in the presentation called the “AOP”. There seemed to be no scrutiny within the Committee which was pointed out. He asked why certain key deliverables and issues were being kept internally. It was his opinion that it was up to the Committee to question this. It was important.

Mr Essack had raised the issue with Alexkor on various occasions. The Committee needed to be honest that nobody seemed to know what was going on in Alexkor. Alexkor was a “mess” and there were huge issues that needed investigation. A strong point raised by the AGSA’s presentation was that the Committee needed to ensure that AGSA’s report findings were incorporated in the APPs before accepting the Department’s budget vote.

Mr Essack said it was important to keep in mind that the Committee was the oversight body of the DPE. It was up to the Committee to ensure that the DPE addressed shortcomings within the APP. This was of cardinal importance.

Mr Essack concluded that his opinion was that the public had lost confidence in SOEs “across the board”, and it was up to the Committee to “pull up their socks” and interrogate the issues.

The Chairperson said he did not see Mr E Buthelezi (IFP), who was always not in attendance.

Ms J Mkhwanazi (ANC) agreed that the presentation was comprehensive and an “eye-opener” for the Committee to deal with the DPE’s APP. The report would assist the Committee in identifying key areas that needed work, such as the issue of the lack of transparency by the DPE in reporting on the targets. The presentation also identified issues with oversight that required the Committee to reflect on their oversight process and deal with the public’s lack of confidence in SOEs. The presentation would assist the Committee in moving forward and in dealing with the DPE’s APP in the coming weeks.

The Chairperson said before handing over to the AGSA for final comment, he needed to indicate that the matter of audit outcomes was something the Committee had raised. The issue of positive audit outcomes whilst, on the other side, there were poor audit outcomes presented by these SOEs. The Committee’s key responsibility was to oversee and assist SOEs, specifically on issues of accountability, spending of funds, and ensuring SOEs were efficient and profitable. The Committee was always uncomfortable with presentations showing that SOEs were not performing whilst the Department was performing positively regarding its audit outcomes. The Committee had consistently raised this issue.

The Chairperson said the Committee was mindful of the issues the AGSA had raised but he hoped next time the Committee would be in a position to invite the Department to be present and account for some of the issues in the presence of both the AGSA and the Committee. There were target indicators shown where, in most cases, it was found the entity had changed the targets in the middle of the financial year. This was due to sometimes finding that the set target would not be met. These were the reasons the Committee wanted the DPE to be present to account for such issues in the presence of the AGSA. The Department was not present in the meeting, but he hoped the Committee captured the issues so that when the Committee was dealing with the APPs, they would be in a position to raise these with the Department.

The Chairperson said that the statement that the public had “no confidence in SOEs” was not based on concrete facts and was perhaps an exaggeration and a political statement. He said people still had confidence in SOEs as mechanisms to address issues with unemployment and lack of transformation. These issues were not being addressed in the private sector, therefore there was no way people had lost confidence in SOEs. People still wanted them, which was why the Committee and Department were doing “all this work” to ensure these entities were efficient, accountable, and able to improve the quality of life of South Africans.

The Chairperson said the Committee had full confidence in SOEs and some people in the majority part (party?) did not think the private sector could create this quality as it did not possess the history.

Black economic empowerment was better implemented in the public. It was the public sector that employed black CEOs and worked in small and medium-sized businesses that were mostly black-owned.

The Chairperson said people interested in transformation had not lost confidence in SOEs. There were, of course, people who were critical of corruption and inefficiency, but confidence remained, and these people wanted SOEs to improve. This was why the Committee oversaw SOEs and " told them to do better”. There was interest in SOEs “not just for themselves” but the people of South Africa, particularly the historically oppressed. There was interest in SOEs and that was why energy needed to be spent in improving them and not selling them to the private sector. Selling SOEs would be a reversal of the gains made since 1994.

Mr Essack accepted what the Chairperson had said but assumed the sentiments he had raised were his own and not those of the Committee. He asked that it be put on record.

The Chairperson said he was raising the sentiments of the majority Members of the Committee and not the DA’s.

Mr Essack said the sentiments were not of the Committee as a whole.

The Chairperson said he was reacting to an ideological position of the DA and the ANC, as a majority still wanted SOEs because they were driving transformation that was not happening in the private sector.

Mr Essack said with “due respect” that these were personal sentiments of the Chairperson.

The Chairperson said he would cut off Mr Essack as he was interrupting him. He said he had allowed Mr Essack to make his point, but he did not allow the same for him. He rejected a position stated by the DA as a minority party. The ANC was the majority, and the DA was a minority represented by two people in the Committee.

The Chairperson asked the AGSA to respond.

Mr Cachalia interrupted Ms Singo as he had his hand up.

The Chairperson said he would return to Mr Cachalia at a later stage.

Mr Cachalia said that the Chairperson could not be so dictatorial. He said his hand was raised.

The Chairperson said he did not want to cut people out of the Committee. He said Mr Cachalia’s hand was noted.

Mr Cachalia said the Chairperson had noted his hand and moved to the next item.

The Chairperson said he would not give Mr Cachalia a platform and would allow the AGSA to speak.

Mr Cachalia said his hand was up before the Chairperson asked the AGSA to speak.

The Chairperson said he was aware of Mr Cachalia’s hand being raised before asking the AGSA to speak, but it did not matter. He did not have to allow Mr Cachalia to speak even if his hand was raised.

Mr Cachalia said the entire country would note the Chairperson’s dictatorial behaviour.

The Chairperson said that it could be noted.

Mr Cachalia said it would be noted “with disgust”.

The Chairperson said that Mr Cachalia could “go with his disgust”. He then asked the AGSA to proceed.

AGSA Responses

Ms Singo thanked the Committee for their reflections on the presentation. The Committee was correct in stating greater alignment between the mandate, indicators and targets that had been set for these instructions was needed. More importantly, what was needed was these institutions performing in terms of their respective mandates.

Ms Singo said the sentiment the AGSA communicated was the critical areas as they went through the process of reviewing the APPs. It was critical in terms of really looking closely at the APPs and the Committee saying how closely aligned the APP being presented was to the mandate. This was one of the biggest takeaways the AGSA communicated in the meeting.

Ms Singo said in terms of the accountability ecosystem, the AGSA had shared the information and it was up to the Committee to take forward. This was the reason the AGSA spoke of how, as an Office, they could work together with Parliament and other stakeholders to ensure improvements.

Ms Singo said that on the AGSA’s side, a review had been made of the APP which was shared with the Department and not it was up to the DPE to ensure the AGSA’s recommendations were interrogated, analysed, and incorporated into their documents.

Ms Singo said in terms of those charged with oversight, such as the Committee, it was for them to ascertain how to take the matter forward and check that the insight shared was incorporated into the document. Everything should culminate in how closely linked it was to the mandate and, more importantly, it needed to speak to the desired impact. If several progress reports were done on a topic, this needed to be accompanied by the impact, the DPE’s oversight responsibility, and what the Committee should be doing. This was the broader context of the conversation that was important to state before dealing with the Committee’s concerns.

Ms Singo responded to the question of the role of shareholders in their movement towards strategic equity partner arrangements. She said in instances where government was a minority shareholder it became a question of what was the legal framework in which government would operate within that would influence how these entities continued to step in the South African economy. This was a policy matter that needed to be addressed. The Office had raised the issue regarding the SEO Bill and needed to finalise the issue as quickly as possible. 

Ms Singo said Transnet International was 100% a subsidiary of Transnet. In reviewing Transnet, the AGSA looked at its mandate and how the subsidiary would then fit into the mandate. The AGSA then equally reported on it in terms of the mandate.

From an oversight perspective, depending on the role of the subsidiary or division that would find expression in the APP, the AGSA would still do work on it. When it found expression in the financial statements, the AGSA still did that work and then reported accordingly.

Ms Singo thanked the Committee for their reflections and said that the message they shared echoed that of the AGSA that “more needed to be done”. What was needed moving forward was a discussion on the next steps to be taken and what the Committees needed to do to see improvements in performance, accountability, oversight, and consequence management.

Ms Singo said regarding the question on the AGSA’s extended powers and criminal activities, that when one looked at the definition of material irregularities, a part of the definition spoke about if fraud was identified in the audit process, there was a responsibility to report it to the necessary authorities. She said the AGSA did not have the expertise to investigate criminal activity so where it was believed that criminal activities were taking place the matter had to be referred to the necessary authorities. This also spoke to the accountability ecosystem where material irregularities were identified. In cases where the accounting officer was notified of irregularities within 20 days, if the officer did not take appropriate action to address the matter, the AGSA would then review their actions and where it is found adequate steps were not taken, the AGSA did a couple of things. The first was the AGSA made binding recommendations similar to those of the Public Protector. These recommendations were sent to the accounting officer. If the accounting officer took no further or appropriate action after receipt of the binding recommendations, the AGSA had the option of referring the matter for further investigation. Ms Singo said if the accounting officer failed to take action and adhere to the recommendations made, there was an option for the AGSA to consider issuing a certificate of debt.

Ms Singo said that regarding material irregularities, the Office owed it to the Committee to return to give feedback on what actions they believed were appropriate, how many referrals had been made and how many were still sitting in the recommendation. Also, what the Committee’s role was in responding to material irregularities.

Ms Singo said the role of the Committee needed to be amplified in supporting the AGSA’s extended powers to have the desired impact. The AGSA was committed to returning and sharing more information with the Committee.

Ms Singo said in terms of the comment on auditees, the audit was done, and the outcomes were shared from a compliance, financial statement, and performance perspective. Regarding the recommendations made, she would again reference the accountability ecosystem. There was an audit committee, internal audit and accounting officer responsible for ensuring, in light of the AGSA’s recommendations, that a proper plan and adequate oversight were in place. It was important for the Committee to get the SOEs or the Department to present this plan and the Committee could then oversee these plans. Along with plans, certain commitments needed to be made and the Committee had to continuously track whether progress was made in this regard.

Ms Singo said one of the AGSA’s recommendations was that the Committee, as part of their oversight and holding the entities accountable, needed to ask for the action plans and the progress made thereof. The Committee needed to satisfy themselves as this was the only improvement that would be seen.

Ms Singo said the Committee spoke of the greater alignment between the mandates and the indicators, which was at the core of the AGSA’s message. In terms of the areas that the AGSA had identified, for example, Alexkor and other issues, there was a need for the Committee to say who needed to come before the Committee and account. Concerning Alexkor, the AGSA was “busy” and would probably plan to finish the outstanding audit in June/July 2023. She said it would be good for the AGSA to return to the Committee to provide feedback on that. The Committee could then see what additional steps needed to be taken.

Ms Singo agreed with the Committee at large that there needed to be a reflection on the performance of the SOEs and improvement in terms of the public’s confidence. Part of the AGSA’s cultural shift was their work needed to improve public confidence. There was alignment here with the Committee. What she understood from the Committee was there was a need to improve public confidence as it related to the Public Enterprises Portfolio, which was welcomed.

Ms Singo said in terms of the DPE and the issues of accountability, transparency, and effectiveness of the oversight, the message that the AGSA communicated was whether they were seeing impact and appropriate oversight being taken to the extent that it was clear what the next steps were.

Ms Singo encouraged the Committee to share what the four or five things presented by the AGSA would be taken forward to ensure accountability and transparency. The AGSA continuously looked at the performance of the Department and stated to the extent they were not performing that these issues needed to be elevated to the audit report. She agreed with the Chairperson that energy needed to be put into improving the state of SOEs. When SOEs achieved their mandates, there was a huge impact on the lived experiences of South Africans; from this perspective, this was why improvement was needed.

Ms Singo asked the Chairperson to allow her colleagues to respond to additional concerns.

Ms Ndlovu said that Ms Singo had covered most of the Members’ questions. She wished to reiterate the issue of the review of the APP and that she had seen that the one that had been sent to the Committee had already been signed. She asked the Committee to consider this together with the findings that the AGSA noted to ensure alignment between the two documents. It would assist the AGSA greatly in saying that the work they had done had been taken into account to ensure there was greater alignment between the mandates and the APP and that the other issues that had been presented were addressed.

Ms Ndlovu said the AGSA would also appreciate that before the meeting ended the Committee could share, based on the findings presented, their plans moving forward.

Mr Thabethe said his colleagues had covered a lot. In terms of the Department’s reaction to the findings, the Department accepted the findings. The DPE also committed to making changes to the APP. He said the APP that the Committee had included updates based on the findings that were raised to the DPE by the AGSA.

Mr Thabethe said that the AGSA had not checked if all of their feedback had been fully implemented. He said there were some issues based on the feedback from the team. The Department could immediately see the questions the AGSA was raising around specific indicators.  

Mr Thabethe said it was suggested that it would be best if the Committee asked the DPE for reactions to the findings and to what extent they had addressed them or had planned to address them. These oversight questions would assist the Committee in ensuring the DPE could account not only for the AGSA but the accountability ecosystem too.

The Chairperson experienced technical difficulties. He said he would now allow Mr Cachalia to speak.

Mr Cachalia said the importance and timing of what he wanted to say had passed as a result of the actions of the Chairperson. He had nothing further to say.

The Chairperson asked if any other Members had follow-up questions.

Mr Cachalia said it was a pity the Committee had not been appraised with who from the Department and Ministry was present for the presentation.

The Chairperson said no one from both the Department and the Ministry was present.

Mr Cachalia said that was a “crying shame”.

The Chairperson said that the Department was not usually invited to such proceedings, which was why he had asked if this would be the correct thing to do. It had been a similar case when the Committee had previously met with the AGSA, and the Department had not been invited. The issue was not from the side of the Department, but the Committee’s, as they had not invited the Department. He asked the Committee Secretary to clarify this issue as he did not want to assume.

In the absence of the Committee Secretary, Mr Lebohang Tekane, Parliamentary Liaison Officer, Department of Public Enterprises, responded to the Chairperson’s question. He said that the DPE understood that the engagement was in preparation for the meeting the Committee would have with the DPE the following week. Therefore, the DPE had not thought their presence was required in the current meeting. There were, however, some people from the DPE present in the meeting, but their presence was to follow the proceedings, rather than engaging. That was the DPE’s understanding and was the way things had been done in previous years.

The Chairperson agreed with Mr Tekane’s clarification. Usually, the engagement with the AGSA was done in preparation for the meeting the Committee would have the following week with the DPE and the Ministry. The meeting pertained to the DPE’s APP.

The Chairperson said there were no more comments and thanked the AGSA for their presentation and engagement. He released the AGSA from the meeting.

Ms Singo thanked the Committee for the opportunity to present and for their engagements. She also thanked the Committee for working together with the AGSA in striving to improve the state of the auditees.

Ms Singo said that on the recommendations made by the AGSA, she hoped the Committee would take the matter forward. The recommendations would empower the Committee in the following engagement. Once the Committee had deliberated on the recommendations that the AGSA had made that, through the Chairperson, the AGSA could reflect on the commitments that the Committee would make. The Office would touch base with Chairperson once those commitments were made. The AGSA would then look at how efforts could be made to ensure the work of the Committee was supported and the Committee was empowered with insights from the AGSA’s audit work.

The Chairperson checked if the Committee Secretary was back on the meeting platform.

Ms Lee Bramwell, Committee Researcher, said that the Committee Secretary had notified her that he continued to have network issues and was not present at that moment.

The Chairperson announced that according to the Committee’s plans, that coming Friday, there would be a meeting dealing with the complaint from the DPE’s Director-General. The matter had been referred to the Committee to deal with. The meeting was meant to be on Friday to begin the process of dealing with the matter. The Committee was also meant to invite Mr Pravin Gordhan, Minister of Public Enterprises, to provide his response (which was already written). The Minister was meant to make a presentation to which the AGSA needed to respond to, and the Committee needed to engage with it thereafter. This would result in the Committee deciding on how the matter needed to be dealt with. The decision would be made that Friday following the initial engagement. The Committee needed to decide so that it could report to the Speaker of the National Assembly. This had been the plan, but the Committee had been informed that Minister Gordhan would be out of the country until 13 May 2023. This meant that, to allow all parties to present their sides of the story and keep things fair, the meeting would not be held as scheduled on Friday. The Committee would look at alternative dates where the Minister could be present.

The Chairperson wanted to make this known to the Committee so that people could not accuse them of attempting to delay the matter, as that was not the case. He said the Committee wanted to deal with the matter as soon as possible.

The meeting was adjourned.