Oversight Process: briefing by National Treasury & Assessment of Department’s 2005/06 Annual Report

CORRECTIONAL SERVICES PORTFOLIO COMMITTEE
20 October 2006
OVERSIGHT PROCESS: BREIFING BY NATIONAL TREASURY & ASSESSMENT OF DEPARTMENT’S 2005/06 ANNUAL REPORT

Chairperson: Mr D V Bloem (ANC)

Documents handed out:
Department of Correctional Services Annual Report 2005/06 (available later at www.dcs.gov.za)
Summary and Analysis of Department Annual Report 2005/06 - Parliament Research Unit
Legislative Oversight through Annual Reports
Guideline for Legislative Oversight trough Annual Report

SUMMARY
National Treasury briefed the Committee on the oversight role of various bodies, including the Parliamentary Portfolio Committees. Various indicators were given as to what should be included in departmental Annual Reports, and how the different bodies should examine, interact and interrogate them. Committees should share information, and cluster committees should consider holding joint hearings. The aim of the oversight process was summarised, and the time lines and the possible areas to be interrogated set out. He indicated how targets should be set out and tied in with service delivery and plans. Members asked about performance bonuses and performance management systems, and whether the executive had also received guidelines from Treasury. Mr Concern was expressed about the qualified audit reports. It was suggested that a full-day workshop on oversight be arranged.

The Parliament Research Unit (PRU) presented a summary and analysis of the Annual Report of the DCS, focusing on technical problems, the alignment of Departmental activities with governmental priorities, the performance of the Department for 2005/06, and financial performance and the report of the Auditor General for 2005/06.  The Annual Report had been selective in scope, had contained some information gaps, and fell short in target reporting. There was some concern on vacancy rates and equality issues. The qualified audit report, for the fifth year in a row, was of enormous concern. It was feared that processes for management of both financial and performance were questionable. The Department had underspent on its voted budget.  Members were concerned about the affirmative action and gender equity, and it was stressed that the Committee needed to identify areas and assist the Department in correcting its shortcomings.

MINUTES
Oversight Role of Parliament: Briefing by National Treasury
Mr Nols du Plessis, Chief Director, Public Finance Management Act (PFMA) Implementation Unit, National Treasury, gave a briefing on the oversight role of Parliament in relation to Annual Reports from departments. The PFMA set out requirements for the tabling of Annual Reports, and the reasons and content of those reports were set out. The proposed Oversight Process was tabled, with the dates clearly indicated. Mr du Plessis set out went on to deal with the roles of the portfolio committees and the Public Accounts Committee. He stated that the Select Committee on Public Accounts (SCOPA) had a specialized role as public funding protector, and listed its focus areas. He then compared the role to be played by the Portfolio Committees, who were to close the accountability loop by exercising oversight of service delivery, and detailed their areas of focus. He indicated that committees should share information, that cluster committees should consider holding joint hearings, and that SCOPA and the portfolio committees should provide information to each other on important issues identified. He explained the input by the other role players, setting out the role of the Auditor General, the national Treasury, and Constitutional institutions. Committee researchers, stakeholders and the public also had a part to play.

Mr du Plessis detailed the Annual Report Oversight Process, and explained the timeline in more detail, indicating the responsibilities of Committee staff, members, and the Committee’s duties prior to hearings. He set out the oversight hearings phase, and indicated that various options were available for structuring the hearings. Each Committee was to prepare an oversight report, which should deal with the compliance aspects, comments on performance, human resources, key issues and other recommendations. The reports were to be tabled by 14 November. The House could consider a debate but once accepted the Reports were to be sent to the Minister. There would then be a follow up phase.

Mr du Plessis outlined the aim of the oversight process and how the Committees could be prepared to exercise oversight. He stressed that the oversight should not be confused with party politics, but was about the legislature exercising oversight, as a whole, of the executive. He set out the considerations to be taken into account by Committees, separating out technical quality, and oversight of performance and listing some typical focus questions. In evaluation performance, he indicated that there should be background information provided, and there should be presentation and explanation on organizational concerns and options, the evaluation of past performance, future performance, efficiency of performance, and human resource development. Once again he listed the main points which the Committee should consider and interrogate.

Mr du Plessis summarised that the aim of the oversight process was to focus was on how the entity could deliver services better in future. It was important for National Treasury to make recommendations as to how the entity could improve service delivery. For this purpose, targets must be identified in the departmental strategic plans. He indicated that some Departments tended to repeat the same information and that it was important also to monitor that actual targets had been set and reached.

The Chairperson thanked Mr du Plessis for his briefing, which set out the heart of the Committee’s work. Parliament was constantly changing and improving and each portfolio committee must take the Annual Reports seriously and monitor properly the functioning of the Departments.

Discussion
Mr N Fihla (ANC) agreed with the Chairperson that indeed the presentation had empowered the Committee. He asked what was the purpose of performance bonuses stated in the DCS Annual Report, and whether these should be given if there was no efficiency.

Mr du Plessis responded that the Performance Management System (PMS) in government required all management to sign performance agreements. Bonuses should be given if people had achieved substantially more than the performance agreement has stipulated. They should not be paid to managers who had not achieved the objectives and targets.

Ms W Ngwenya (ANC) commented favourably this document had assisted her greatly in finding the focus areas for interrogation. There was some perception that the Committee was harsh with the Department when asking questions. She agreed that a workshop for Committee members would be very useful.

Mr N Fihla asked whether it was possible to give performance bonuses if there were criticisms around the areas of responsibility.
Mr du Plessis responded that the head of a department was the Accounting Officer for the whole Department, and if there were certain problems within a department, its Head should be accountable, and this could indeed affect the granting of performance bonuses. It was important that the payment of bonuses was linked to the performance measures within the departments.

Mr S Mahote (ANC) enquired who was doing an assessment and awarding performance bonuses. He commented that bonuses should also apply to people at the lower level, who were often the ones doing great jobs.

Mr du Plessis replied that the performance bonuses were not only applicable to Senior Managers, but also to those at a lower level.

Mr M A Cele (ANC) asked whether the executive was aware of the legislative oversight guidelines. Often when the Committee met with the officials from the DCS, it seemed that they were not understanding what the Committee was doing. 

Mr du Plessis said that the guidelines were issued to the Speaker of Parliament and then to Parliament, Portfolio Committees and governmental departments. Therefore, the executive should be fully aware of those guidelines.

Mr L Tolo (ANC) said that all the problems identified by the Auditor General had been identified and discussed by the Committee before.

Mr du Plessis responded that it was the duty of the Committee to question the Department about the key issues raised in the Auditor General’s report, which at times pointed out irregularities and technical problems. The Committee must ensure that the heads of departments were working in line with the resolutions taken in the Cabinet. The powers of the Portfolio Committees in ensuring accountability of the Accounting Officers were unlimited. The principle applied to this very Committee.
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Mr Fihla mentioned that there were three types of audit statements - qualified, unqualified, and disclaimers. He asked what should be done if the Auditor General continued to give qualified statements.

Mr du Plessis responded that National Treasury was striving towards clean reports for all departments. The Auditor General’s Report did not only deal with positive issues but it needed to be a combination of issues.

The Chairperson said that the question on qualified reports raised some serious concerns because the Committee had been getting qualified reports for the DCS for the past five years. He agreed that the briefing had been vital and invaluable. The issue of a full-day workshop would be considered.

Briefing by Parliament Research Unit: Summary and Analysis of the DCS 2005/06 Annual Report
Ms Nadia Dollie of the Parliament Research Unit (PRU) presented a summary and analysis of the Annual Report of the DCS. There were four main issues. Firstly, there were technical problems with the Annual Report. Secondly, the summary looked at the extent to which the Department’s activities for 2005/06 were aligned to governmental priorities. Thirdly, the PRU had summarised and analysed the extent to which the Department achieved its targets set for the same financial year, and identified some concerns and questions around the performance of the Department for 2005/06. Lastly, it summarised and analyzed the Report of the Auditor General for 2005/06 and the financial statements which focused on the financial performance of the Department.

It was highlighted that the Annual Report was very selective, in that it did not report on all the targets that were in the Strategic Plans. The report was also very reliant on tables, so that there were many information gaps. The targets were not the ones that appeared on the Estimated Expenditure and Strategic Plans, and there was no indication where the targets had in fact been drawn from. The DCS did not achieve many of its targets but the way the information was presented in tabular form made it appear as if they had indeed been reached. The DCS Annual Report did not indicate specifically whether the targets were met or not. It was thus unclear, for instance, as to what the targets were for gender and racial equity in the DCS. The overall vacancy rate for the DCS was 7.8% for 2005/06, which was an increase from the previous years. This meant that the DCS had not managed to decrease the vacancy rate. This was particularly so for the Care Programme. With regard to performance rewards and promotions, an interim promotion model was developed, negotiated and implemented. Approximately 6 700 Custodian Officials were promoted and this was a huge improvement to the previous year where only 141 Custodian Officials were promoted. About 22% of employees across various occupations within DCS received performance rewards in 2005/06.

The DCS had received a qualified audit for the fifth year in a row. This was an enormous concern to the Committee. The concern was that if the DCS processes for management of its financial information were faulty, then its processes for managing performance information might also be faulty. This meant that the performance information provided in the Annual Reports was questionable. The DCS underspent on its voted budget in 2005/06, spending only 97.2%, and leaving an amount of R257 million was unspent.

Discussion
The Chairperson thanked Ms Dollie for her well researched presentation. Ms Ngwenya believed Ms Dollie`s presentation was very clear.

Mr Tolo commented on Affirmative Action and Gender Equity within the DCS, noting that both were very important. Gender Equity was going well but affirmative action was problematic. It seemed that individual recruiters within the DCS were discriminating.

Mr Tolo asked Ms Dollie whether in her research she had identified the trends of white employees in higher Management positions

Ms Dollie responded that she was not in a position to answer that question.

The Chairperson said that the purpose of the meeting was to prepare the committee for its meeting with the DCS. The documents by Mr du Plessis and Ms Dollie had given the Committee a guideline and hopefully the committee members had been empowered to do their oversight tasks effectively. The Committee must help the DCS, not point fingers at areas where it had fallen short. The Committee must identify and indicate areas that needed improvement, and assist it out of its difficulties that it had experienced over the past five years. 

He announced that a meeting was set with the Auditor General for Monday, and urged the Committee members to attend.

The meeting was adjourned.