Adoption of resolutions

Meeting report

STANDING COMMITTEE ON PUBLIC ACCOUNTS
5 February 2003
ADOPTION OF RESOLUTIONS

Chairperson: Mr F Beukman

Documents handed out:
Suggested SCOPA annual oversight
Copies of the resolutions
Committee Report on Zoological Gardens of South Africa (Appendix 1)
Committee Report on War Museum of the Boer Republics (Appendix 2)
Committee Report on South African Heritage Resource Agency (Appendix 3)
Committee Report on Business and Art in South Africa (Appendix 4)
Committee Report on Englenbergen House Collection (Appendix 5)
Committee Report on Freedom Park Trust (Appendix 6)
Committee Report on Pan-South African Board (Appendix 7)
Committee Report on South African Bureau of Standards (Appendix 8)
Committee Report on Financial and Fiscal Commission (Appendix 9)
Committee Report on Financial Services Board (Appendix 10)

MINUTES
The following draft resolutions were presented and adopted

Draft Resolution on Zoological Gardens
This resolution was adopted without amendments

Draft Resolution on War Museum
This resolution was adopted without amendments save that there were grammatical errors that had to be rectified.

Draft Resolution on South African Heritage Resource Agency
This resolution was adopted without amendments save that there were grammatical errors that had to be rectified.

Draft Resolution on Business and Art in South Africa
This resolution was adopted without amendments

Draft Resolution on Englenbergen House Collection
The resolution was adopted without amendments

Draft Resolution on Freedom Park Trust
The resolution was unanimously adopted

Draft Resolution on Pan-South African Board
The resolution was unanimously adopted without amendments

Draft Resolution on South African Bureau of Standards
The resolution was adopted without amendments

Draft Resolution on Financial and Fiscal Commission
This resolution was adopted without amendments

Draft Resolution on Financial Services Board
The resolution was adopted

The meeting was adjourned

Appendix 1 : Zoological Gardens of South Africa

First Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Commmittee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Zoological Gardens of South Africa for the year ended 31 March 2002, tabled on 5 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the Zoological Gardens of South Africa for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified. The Committee, however, notes that the Auditor-General has raised several issues of concern.

2. Investments The Committee notes that the Zoological Gardens incurred a loss on an investment held in a private bank, which was subsequently placed under curatorship. Through intervention of the South African Reserve Bank, the loss was reduced to R60 277 at 31 March 2002. The Zoological Gardens received an interim distribution of 44 cents in the Rand on 8 April 2002. The Committee recommends that the management make every attempt to recover the outstanding balance from the appointed curator, and that funds be securely invested in future.

3. Tabling of Annual Report The Committee notes that the Annual Report and Financial Statements were tabled in Parliament on 5 September 2002. This late tabling constitutes non-compliance with section 65(1)(a) of the Public Finance Management Act. The Committee recommends that the management of the Zoological Gardens strictly adhere to the relevant sections of the PFMA at all times.

4. Going concern The Committee also notes that the Zoological Gardens is totally dependent for its funding on the Department of Arts, Culture, Science and Technology. They must explain by 30 April 2003 why funds cannot be generated from patrons of the Zoological Gardens.

5. Decision on hearing Because the audit opinion is unqualified, the Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 2 : War Museum of the Boer Republics

Second Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Commmittee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the War Museum of the Boer Republics for the year ended 31 March 2002, tabled on 4 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the War Museum of the Boer Republics for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Tabling of Annual Report The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Decision on hearing Because the Auditor-General has not cited any issues of concern, the Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 3 : South African Heritage Resources Agency

Third Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the South African Heritage Resources Agency for the year ended 31 March 2002 [RP 125-02], tabled on 4 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the South African Heritage Resources Agency for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified. The Committee, however, notes that the Auditor-General has emphasised several issues of concern.

2. Tabling of Annual Report The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Late submission of financial statements The Committee notes that signed financial statements, submitted to the Auditor-General's Office on 14 June 2002, contained several over- and understatements, which were referred back to the management. These were subsequently adjusted and resubmitted on 26 July 2002. The Committee recommends that management avoid a recurrence of this lapse in 2003.

4. Property, plant and equipment * The financial statements do not disclose the movement of assets, as required in terms of GAAP. * Depreciation for additions were calculated for the full year, irrespective of the actual purchase date. The Committee recommends that management ensure that GAAP requirements are adhered to and that depreciation is calculated correctly.

5. Decision on hearing The Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 4 : Business and Arts South Africa

Fourth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of Business and Arts South Africa for the year ended 31 March 2002, tabled on 9 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of Business and Arts South Africa for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Tabling of Annual Report The Committee notes that the Annual Report was tabled in Parliament on 9 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Decision on hearing The Auditor-General has not cited any issues of concern which would warrant further consideration. The Committee therefore recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 5 : Engelburg House Art Collection

Fifth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Engelburg House Art Collection for the year ended 31 March 2002, tabled on 30 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the Engelburg House Art Collection for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Late submission The Committee notes that the Annual Report was tabled in Parliament on 30 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Internal audit The Committee notes that, due to the limited activities of this organisation, an internal audit department and an audit committee were not established for the past two financial years. This is contrary to the provisions of the Public Finance Management Act. The Committee recommends that management attend to this issue urgently and that the Auditor-General report thereon in his next Report.

4. Decision on hearing The Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 6 : Freedom Park Trust

Sixth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Freedom Park Trust for the year ended 31 March 2002 [RP 141-02], tabled on 4 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the Freedom Park Trust for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Tabling of Annual Report The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Late submission of financial statements The Committee notes that signed financial statements were only submitted on 12 July 2002, and not 31 May 2002, as prescribed by the PFMA. The Committee recommends that management avoid a recurrence of this matter in 2003.

4. Decision on hearing The Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 7 : Pan South African Language Board

Seventh Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Pan South African Language Board for the year ended 31 March 2002 [RP 166-02], tabled on 16 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the management of the Pan South African Language Board for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Tabling of Annual Report The Committee notes that the Annual Report was tabled in Parliament on 16 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Decision on hearing The Committee recommends that no hearing be held for the financial year under review.

Report to be considered.

Appendix 8 : South African Bureau of Standards

Eighth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements and Group Financial Statements of the South African Bureau of Standards for the year ended 31 March 2002, tabled in Parliament on 12 September 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the accounting authority for the unqualified audit opinion expressed by the Auditor-General in respect of the financial audit as well as the audit of performance information. The Committee trusts that audit opinions in future will be equally unqualified.

2. Tabling of Annual Report The Committee notes that the SABS Annual Report and Financial Statements were tabled in Parliament on 12 September 2002. This late tabling constitutes non-compliance with section 65(1)(a) of the Public Finance Management Act.

3. Accounts receivable (SABS) The Committee notes with concern that: * Accounts receivable are not followed up on a regular basis to ensure timeous recovery thereof. * 67% of the accounts receivable were outstanding for longer than 120 days, whereas the SABS normal repayment terms are 30 days only. * The provision for doubtful debts is currently in excess of R10,5 million, which represents 49% of the total outstanding amounts and which seems unacceptably high to the Committee. The Committee recommends, in terms of section 51(1)(b)(i) of the PFMA, that the accounting authority take effective and appropriate steps to collect all amounts timeously. The Committee further recommends that the accounting authority furnish Parliament with a progress report on the above recommendation by 30 April 2003.

4. Hearing Having considered the Report, the Committee recommends that no hearing be held on the South African Bureau of Standards for the financial year under review.

Report to be considered.

Appendix 9 : Financial and Fiscal Commission

Ninth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Financial and Fiscal Commission for the year ended 31 March 2002 [RP 132-02], tabled in Parliament on 28 August 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the Chairperson and management of the Financial and Fiscal Commission (FFC) for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Emphasis of Matter The Committee notes that the Auditor-General has raised one issue of concern under "Emphasis of Matter". This issue requires the attention of management, and the Committee deals with it in paragraph 4 below.

3. Tabling of Annual Report The Committee commends the management of the FFC for having timeously tabled its Annual Report, thereby complying with section 65(1)(a) of the Public Finance Management Act.

4. Internal audit The Committee notes: * That the FFC obtained Treasury approval on 22 October 2002 for sharing the internal audit function with National Treasury. * That the internal audit function was not operational during the financial year under review because National Treasury had obtained exemption until 30 April 2002. * That at the time of completing its Report (June 2002), the FFC was still waiting for Treasury to complete its internal processes of contracting an appropriate service provider. Since the Committee considers the establishment of the internal audit function as vital for the development of a fraud prevention plan, necessary for the detection and prevention of fraud, it trusts that this outstanding matter will be resolved speedily, and recommends that the Auditor-General report thereon in his next report on the FFC.

5. Matters arising from management report (a) State of financial affairs The Committee notes: * That the accounts reflect a net surplus of R422 963, which has been earmarked for capital expenditure during the 2002-03 financial year. * That estimates suggest a more sustainable budget level for the FFC to be in the region of R10 million per annum. * That a significant part of the expenditure is related to personnel, together with the contracting in of researchers, analysts and various experts, whose inputs are essential to the FFC. (b) IT-server network The Committee notes that the revamping of the FFC's IT-server network was originally earmarked for implementation during the 2001-02 financial year, but that the implementation will only be effected during the 2002-03 financial year. The Committee recommends that the Auditor-General report thereon in his next report on the FFC.

6. Decision on hearing Having considered the Report of the Auditor-General, as well as having dealt with the Matter of Emphasis raised by him, the Committee recommends that no hearing be held on the Financial and Fiscal Commission for the financial year under review.

Report to be considered.

Appendix 10 : Financial Services Board

Tenth Report of the Standing Committee on Public Accounts, dated 5 February 2003: The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Financial Services Board (FSB) for the year ended 31 March 2002, tabled in Parliament on 28 August 2002 and referred to it, reports as follows:

1. Audit opinion The Committee commends the Board of the FSB and the Executive Officer for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.

2. Emphasis of Matter The Committee notes, and welcomes the fact, that the Auditor-General has not raised any issues of concern under "Emphasis of Matter".

3. Tabling of Annual Report The Committee commends the management of the FSB for having timeously tabled its Annual Report, thereby complying with section 65(1)(a) of the Public Finance Management Act.

4. Insider Trading Directorate (ITD) The Committee notes: * That since its inception in January 1999, the ITD has logged 136 cases for investigation, of which 100 have been finalised, resulting in a decision to institute legal proceedings in 20 cases, of which 13 have been settled out of court. * That the FSB will increase its resources to deal with the backlog of outstanding cases. * That during the year under review, the ITD considered 22 investigation reports, of which four were settled out of court. * That in terms of the settlement, the FSB received R5,4 million which, after the recovery of costs, was distributed to investors prejudiced by insider trading. The Committee commends the progress made thus far and looks forward to the additional resources being allocated to provide further improvement in efficiency.

5. Chairperson's review The Committee notes that, in the environment of recent conglomerate failures and other factors, the shortcomings of corporate governance, more specifically the duties of directors, should increasingly receive attention from the FSB (also the responsibilities of auditors).

6. Internal controls The Committee notes and welcomes the following aspects in relation to internal controls: * That management maintains a comprehensive system of internal controls. * That these controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable assurance that assets are safeguarded and transactions executed and recorded in accordance with generally accepted business practices and the Board's policies and practices. * That these controls are implemented by trained and skilled personnel with an appropriate segregation of duties. * That monitoring by management includes a comprehensive budgeting and reporting system operating within strict deadlines and an appropriate control framework. * That the internal audit function conducts operational, financial and specific audits and co-ordinates audit coverage with the external auditors.

7. Decision on hearing Having noted the unqualified audit opinion expressed by the Auditor-General, the Committee recommends that no hearing be held on the Financial Services Board for the financial year under review.

Report to be considered.