Quarterly Financial Performance and Human Resources Reports: Department briefings

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
13 September 2006
QUARTERLY FINANCIAL PERFORMANCE AND HUMAN RESOURCES REPORTS: DEPARTMENT BRIEFINGS

Chairperson: Ms C September (ANC)

Documents handed out:
Quarterly Financial Report
Turnaround Strategy for HR slide presentation
Business case for the establishment of DWAF’s Learning Academy
Minutes of Proceedings of PC on Water Affairs & Forestry

SUMMARY
The Department of Water Affairs and Forestry briefed the Committee on changes to its Human Resources component and its quarterly financial performance report. The Committee was impressed with the improvements in Human Resources, but asked for quantitative figures to enable a better assessment. However the Committee was very concerned about repeated qualified audits and did not feel that the situation was improving. Consensus was reached that both the Committee and the Department needed to work closely together to formulate a strategy to resolve this problem.

MINUTES

Department of Water Affairs and Forestry (DWAF) presentation on Human Resources (HR) Turnaround Strategy

Ms Nobubele Ngele (Deputy Director-General) made a presentation about HR improvements at DWAF and pointed out the challenges that they are currently facing and working on.  There have been major changes like the implementation of skills training required at all levels of staff.  Also, accurate records of staff members in the various regions are being kept and monitored so as to avoid fictitious employees being paid monthly salaries. There was an improvement in the bursary scheme run by DWAF. Bursars are currently put into training programmes that enabled them to further develop their science and engineering expertise while at the same time being mentored in life skills.  DWAF has also reorganized the HR structure. Their focus has shifted away from being position-based to a structure that is service driven. This was done in order to comply with the President’s call for all departments to put more emphasis on service delivery.  The Department was however struggling with information management and improving HR within the targeted time period.

Quarterly Financial Report presentation      
Mr T Balzer (Acting Chief Financial Officer (CFO)) reported that a significant improvement in the Department’s financial systems was the change from using a cash basis to an accrual basis of accounting. DWAF reported a restructuring in its Head Office, which resulted in the separation of the Trading Account and Main Account activities. Mr Balzer said that assistance from a national accounting firm made a difference in providing better information to the Auditor-General for the audit process even though DWAF’s Main Account audit was qualified. Other results of the audit included the Water Trading Account and Equipment Trading Account being subject to disclaimers and the Forest Recreation and Access Trust receiving a ‘matter of emphasis’ report. The major problems reported by the auditors were the lack of a sound system of asset management within DWAF and some of the results not being prepared according to Generally Accepted Accounting Practice (GAAP). Various steps have been taken to try and comply with GAAP one of which is the implementation of SAP as the preferred Enterprise Resource Planning (ERP) system. For better asset management, a strategy has been devised which includes revaluation of all existing assets within the Department.

Discussion

Mr J Arendse (ANC) opened the discussion by suggesting that the Department and the Committee should work together in obtaining more information about the financial performance of the Department, as there was no time to do this in the meeting. He raised concern about the repeatedly qualified audits of the Department and mentioned that it was actually embarrassing now. He asked when the Committee should expect a turnaround in this regard. He also asked if the majority of departmental posts were still filled by officials in an acting capacity.

Mr P Ditshetelo (UCDP) asked whether the Department had made sure that there was no overlap between its directorates and whether they had also ensured that there were enough jobs for each directorate. He asked how the recruitment drive impacted on existing staff and whether or not it brought about uncertainty among the staff. Lastly, he asked what steps the Department would take to ensure that the interns developed a passion for water affairs.

Mr T Ramphele (ANC) said the implementation of the principle of Batho Pele was interesting but how will the Department go about the implementation process? He also raised concerns about the large sum of money that was incorrectly used and further asked if the Department had the capacity to analyse expenditure and budget votes. Lastly, he asked whether asset management would be improved as it was one of the biggest budget items.

Mr M Sibuyana (IFP) requested that the initiator of the HR restructuring plan should not leave the Department until the initiative bears fruit. The initiator should be around to monitor and assess the Department’s weaknesses. Mr Sibuyana wanted to know how much revenue the Department had received from the Board of Surveyors.

The Chairperson reminded Members that the purpose of the quarterly reports was to do frequent checks on the Department’s progress as the Department has always reported qualified audits. She asked if Members still considered the quarterly reports to be appropriate or whether they wanted more frequent feedback or less. This topic would be on the agenda for the Committee workshop to be held soon.

The Chairperson agreed with Mr Arendse’s idea that the Department needed to start quantifying the progress they have reported. The Department had mentioned that one of the challenges they were facing was a capacity problem and she asked for more detail about this. She also asked the Department how they were involving the Public Service Commission in their activities. Lastly, Ms September asked how bursaries were being awarded and how they were linked to performance agreements in DWAF.

Ms E Lishivha (ANC) asked whether the regional departments had their own budgets and who was monitoring their budgets.

Ms Ngele said that one of the challenges they faced while preparing the presentation was how to prove to the Committee that there has been an improvement. She also said that four of the five senior management positions had permanent staff members and that the position of the CFO was an acting one still because that involved a pending court case.

She continued that appointments and skills levels were sometimes a mismatch which presented the Department with a big management problem. Monitoring would occur weekly and that would help the Department in setting quantifiable performance indicators. In order to create passion for water affairs, robust programmes at primary school level were needed. In addressing the issue about recruitment, Ms Ngele said that the challenge was using the right selection tool, as the Department cannot stop existing staff from applying for positions for which they are not competent.

Ms Ngele said the Department needed to assess if they were ready to embrace restructuring and determine whether they had the knowledge that will be required for restructuring. In response to the principle of Batho Pele, Ms Ngele said that they would be working closely with the Minister by having team building and skills development workshops.

Ms Ngele said that there was a monitoring structure within the Department that monitored HR improvements and weaknesses.

She added that the DWAF needed to work on accurately measuring how its filled staff positions impacted on service delivery. Bursaries were being awarded to at least ten students in each province. She requested that the Committee forward the names of schools that they thought DWAF could approach to offer bursaries to students. DWAF still needed to work on how they were going to use students to market water projects to the entire nation. The issue of performance management was problematic. The Minister and DWAF were at odds because the Department had received qualified audits but officials were still receiving performance bonuses.

Mr Balzer responded to the questions regarding the Quarterly Financial report by firstly emphasising that audits did not address financial issues only and the Committee should note that there are many other non-financial issues covered in audits. DWAF had five PSP groups in place that are currently being used. Mr Balzer urged Members to look at the balance sheet to see the revenue derived from the Board of Surveyors, but added that this was not a large amount.

The Chairperson said the suggestions made at the meeting should be taken on board by DWAF and that the Committee would like some feedback on the proposals that were made. The Committee resolved that because DWAF management was permanent appointees, senior managers should start coming to the meetings to report to the Committee.

Meeting adjourned.