Department of Home Affairs Annual Report 2005/06

Meeting report

HOME AFFAIRS PORTFOLIO COMMITTEE
29 May 2007
DEPARTMENT OF HOME AFFAIRS 2005/06 ANNUAL REPORT

Chairperson: Mr H Chauke (ANC)

Documents handed out:
Department of Home Affairs PowerPoint presentation

Relevant documents
Department of Home Affairs 2005/06 Annual Report available at www.dha.gov.za
Department of Home Affairs Annual Report: Erratum reviewed by the Committee on 5 June

SUMMARY
The Committee received the presentation that had been scheduled for the 22 May and which focused on the Department of Home Affairs’ finances in the 2005/06 financial year. Members were unconvinced that the Department was taking the necessary steps to address the financial accounting problems that continued to plague it. Members’ questions focused on internal controls, the Basic Accounting System, and some of the irregularities the Auditor General had identified. The areas of qualification the Auditor General had identified included matters related to departmental revenue, irregular expenditure, funds to be surrendered and fraud and error.

The Chairperson made clear that the Department’s long history of qualified and disclaimer audit reports had to come to an end – Parliament could not continue approving allocations that could not be accounted for. The Committee regretted the Accountant General's inability to appear before the Committee, as he would be better able to shed light on these problems. The Chairperson thought that the time for calling on the assistance of the National Treasury and even the Minister of Finance had arrived. Mr Mavuso Msimang, the newly appointed Director General reminded the Committee that he could not be held responsible for matters related to the years before his appointment.

MINUTES
Opening remarks
The Chairperson reminded the Committee that at their 22 March 2007 meeting with the Department of Home Affairs (DHA), the Committee had expressed dissatisfaction with the presentation on the Annual Report it had received. Members had felt that the presentation was unrealistic and painted an inaccurate picture of what was in fact happening within the DHA. It created the impression that the Department "was run by angels" and was a very different view of the DHA that others knew. Informed by their oversight work as well as the reports of provincial managers, the Committee requested the Department to, at a later stage return with a report that was a true and accurate refection of the realities the DHA was faced with. The Committee would that day receive that report. The Committee had already dealt with the strategic plan for 2007/08.

The report of the Accountant General was also still outstanding. During the last budget vote, concerns had been raised about the more than R560 million that had not been accurately accounted for, as well as lost documentation necessary to balance books. The Department had received a disclaimer from the Auditor General and the decision was taken that the two intervention teams, led by Ms Odette Ramsingh, Director General of the Pubic Service Commission (PSC), and Mr Freeman Nomvalo, Accountant General: Treasury, would update the Committee and then submit a final report on the findings of the intervention. While the Committee had received the report from Ms Ramsingh that dealt mostly with the administrative issues, it had been at pains to receive the Accountant General’s report. The Committee had received only a slide presentation, which Members had felt was inadequate. Parliament’s Committee Section had been informed that Mr Nomvalo would only be available in the following week. The DHA’s budget vote would take place on 7 June and the Committee needed to conclude the budget process. The Committee needed to have all the information when it led the budget debate so that there would be no need to inform the National Assembly (NA) that some issues were still outstanding.

It was clear that the Committee would not receive the Accountant General’s report that day. The DHA was accountable to Parliament via the Portfolio Committee who had done everything it had to do. The onus was on the Accountant General to come and present his case and the Committee had tried to reorganise its programme so as to accommodate that interaction.

The Committee would request the Director General, Mr Mavuso Msimang’s intervention as far as certain areas that were proving to be problematic. One of these related to the Government Printing Works (GPW) whose Chief Executive Officer had informed the Committee that he would only be available to appear before the Committee on 12 June. It was unacceptable that the GPW would only be available to present their strategic plan after the budget vote. He thought it necessary that it be communicated that when the Committee called on them to appear before them they should do so. The Electoral Commission would appear before the Committee on 5 June.

Mr S Swart (ACDP) shared the Chairperson’s concern about the Accountant General and the GPW not appearing before the Committee prior to the budget vote.

Mr F Beukman (ANC) thought it important that the Accountant General’s report be received as soon as possible because, without it, it would be difficult to make an assessment of the current status of the DHA’s finances.

The Chairperson realised that Mr Msimang had just been appointed but trusted that the DHA Chief Financial Officer, Mr Paul Nkambule, had briefed him as far as the Committee’s difficulties in receiving the Accountant General’s report.

Director General’s comments
Mr Msimang was sorry to hear that the GPW had said that it would be unable to appear before the Committee prior to the budget vote and assured members that the matter would be addressed.

As far as the Accountant General’s report, he reminded the Committee that the DHA had no authority over that office. Although he realised that it would be a poor substitute for the report, he would request Mr Nkambule to share a summary of an aspect of their findings.

The DHA would that day present their 2005/06 Annual Report. He reminded the Committee that the Intervention Task Team started its work after the end of the 2005/06 financial year and their work would thus not be covered in the report.

The Chairperson felt that the DHA should not make any comments on the Accountant General’s report. The matter would be dealt with on 5 June when the Committee received the report.

He understood that the Annual Report would not speak to the work of the Intervention Task Team. The committee had already received their report and now needed to focus on the implementation of its recommendations. The Committee needed receive and adopt the 2005/06 Annual Report else the DHA might not receive their allocation.

Department of Home Affairs Presentation
Mr Nkambule made the presentation, which was aimed at briefing the Committee on the Department’s annual financial statements as reflected in the 2005/06 Annual Report. The presentation took the Committee through the Auditor General’s report, the appropriation statement, the financial performance and financial position statements as well as the Department’s budget performance.

Discussion
Mr Beukman realised that one could not do much about the past. He wondered whether everyone within the Department knew what their respective areas of responsibility and accountability were. The interaction the week before had reflected that the CFO felt that certain directors and chief directors were responsible for the failure to spend of capital budgets. He asked whether ultimate accountability did not perhaps lie with the CFO. The Committee needed the assurance that the measures were being put in place to deal with the problems that continued to plague the DHA and that were raised by the Auditor General.

The Chairperson asked what measures the DHA had put in place to turn the tide as far as the qualified audit reports it received year after year. There were a number of issues that needed to be addressed. The Committee had on numerous occasions voiced its concern about the Department’s apparent lack on internal controls for example. Members never received clear answers in this regard. A third of the officials in Internal Controls had been suspended, yet this had not been reflected in the report. He echoed Mr Beukman’s comment that there should be clear lines of accountability. The Accountant General’s report would provide the Committee with the valuable insight into the challenges the DHA’s was facing, that interaction with the officials seldom did. He added that it should be agreed that the DHA would not again receive a qualified report. Problems needed to be addressed.

Mr Nkambule responded that financial management was a management responsibility. The Accounting Officer was ultimately responsible for financial management and ensuring that financial controls were in place. The CFO had to ensure that internal control measures were in place and that the requirements of the Public Finance Management Act (PFMA) were adhered to. Each and every manager in turn was responsible that adequate supervision took place.

As CFO, his responsibility in terms of Section 38 of the PFMA, was to alert the Accounting Officer as soon as he became aware of any irregularities such as irregular or unauthorised expenditure. Section 45 of the PFMA indicated the responsibilities of the other players in the chain of command.

The various management levels got allocated a budget, and programme managers (at deputy director general level) of each branch took responsibility for its spending. The sub programme manager or chief director was responsible for the chief directorate within each branch. None of these role players "could be exonerated from exercising proper financial administration". The internal audit, to ensure adequate risk management, assisted the CFO in identifying irregularities. An internal audit team assisted regions where irregularities were found. The CFO and management were responsible for ensuring that the recommendations of the internal audit were adhered to.

The DHA had tried to strengthen the Department by making doubly sure that all officials at Senior Management Service (SMS) level were aware that ensuring proper financial management fell within their key performance areas stated in the performance contract. The letter of appointment also made this responsibility clear.

One of the DHA’s major challenges as far as revenue collection related to non compliance with systems such as Basic Accounting System (BAS) – officials still failed to capture receipts and there were also incidents of fraud in offices where money was collected. The DHA was exploring initiatives that would remove cash from its offices and link up with banks and post offices so that citizens could make their payments at such points and then present the DHA offices with proof of payment receipts. This would go along way to addressing cash management issues and theft.

Where officials failed to follow the necessary procedure in terms of finances disciplinary action had to be instituted. The DHA had been faced with serious capacity shortages in the employee relations division and this posed a problem. The sooner disciplinary action was taken, the fewer the incidents became. Some cases took very long due to investigation related issues.

He was not sure whether the DHA would avoid getting any more qualified audit reports. As CFO he always hoped for and worked towards a clean audit report. He felt that in areas such as revenue collection a significant improvement might not be immediately evident. There was an improvement in receipt capturing, and he felt that removing cash from the offices would significant improve the DHA’s track record in this regard. Relying on officials in this regard was an "uphill battle". He could not be 100% certain that the next audit report would be unqualified.

Mr Beukman was not satisfied with the explanation since the Committee had heard it before. The response was an exposition of the PFMA but mentioned nothing of proactive steps the DHA had taken to address the issues. There was no indication of line function control and coordination. He wondered whether the national department visited the regions and regularly met with the stakeholders. The Committee wanted clear, exact and concise responses that reassured them that improvement were being made.

Mr Nkambule pointed out that the DHA in collaboration with the office of the Accountant General taken "drastic action" to address the challenges it was faced with. They had had joint workshops with National Treasury and the different revenue collection offices to find out why they failed to comply with the procedures for revenue collection especially as far as the capturing o receipts were concerned. They also did an analysis of the staff requirements at all their offices. The DHA had also communicated with the relevant banks for their assistance in verifying that moneys were accurately accounted for.

National Treasury was developing was developing a cash forecast system that would enable each and every provincial managers a system to ensure that day-to-day banking was taking place. When it was found that bank statements were not being captured the CFO set up a team that visited each province in order to rectify the problem. The provinces had been warned that the practice of not capturing receipts would not be tolerated. This interaction with the province had also revealed that capacity constraints contributed to the problems. The relevant managers submitted monthly reports accounting for their expenditure of lack thereof. These reports were followed up.

The Chairperson requested an explanation for the DHA’s failure to comply with the disclosure requirements contained in the PFMA and the Treasury Regulations. (See page 94 of the Annual Report)

Ms Kalyan noted that the Auditor Genera’s report indicated that there had been irregular spending to the amount of R19 million. She wondered why the DHA had ailed to mention that and what the money had been spent on.

Mr Nkambule explained that in 6.1.6 the Auditor General raised a general concern about the DHA’s vacancy rate especially within the finance department. 12 officials had been suspended during that financial year and in his branch, as was the case within the entire department, there had been unfunded positions. The Auditor General had listed this as a matter of emphasis and found that the vacancy rate was due to the positions not having been funded and this was what had resulted in the problems with the finances. The DHA had since done a revision of the establishment and he had just had discussions with the Director General. Most of the posts had been filled.

He explained that the DHA’s less than 100% compliance with the laws and regulations could be attributed to the new reporting method requiring additional disclosures.

He had raised the issue related to R19 million Ms Kalyan referred to at the Standing Committee on Public Accounts (SCOPA) too. The DHA had through the normal supply chain management procedure deviated from the normal tendering procedure. Treasury regulation 16(a)(6)(4) stated that where it was impractical the Accounting Officer could authorise deviation from the normal practice as long as that deviation was recorded. The DHA had felt that it had acted within what the regulations allowed.

The auditors in their assessment had however questioned the Accounting Officer’s discretion. In their assessment the DHA, had it done the necessary planning, could have gone out on tender. The DHA had not disclosed the matter because they felt that they had acted within the prescripts of the regulation.

Some of the money had been spent on the acceleration the acquisition of the four refugee backlog sites. Service providers had to refurbish some of the buildings. The DHA first used the Department of Public Works’ supplier database but only received three quotations. They then requested the deviation.

Ms Kalyan wondered whether the facilities were now in use.

Mr Nkambule explained that the Minister of Home Affairs had launched the four sites in June 2006. They were fully functional. They were situated in Crown Mines, Port Elizabeth, Durban and Cape Town.

The Chairperson asked him to explain what else the money had been spent on.

Mr Nkambule could not recall off hand what all the money had been spent on. Some of it had been spent on acquiring the ICT equipment and toilets of the mobile units.

The Chairperson said that the Committee would address the issue of the mobile units at a later stage. Members still expected to receive a briefing in that initiative. The DHA and the company responsible would be requested to appear before the Committee to account for some of the issues that had been identified.

Ms Kalyan wondered under what line item the expenditure of the R19 million would have appeared had it been recorded.

Ms Kalyan noted that BAS was not yet operational across the country and wondered how many offices were not yet in compliance with it.

Mr Nkambule responded that it would mainly be found under ‘goods and service’ and ‘payments for capita assets’.

Ms Kalyan asked whether the Internal Audit Committee was functional and was curious as to how often it had met since the last time the Task Team insisted that it did so.

Mr Swart thought it necessary to understand the difference between the internal audit and the Audit Committee. He wondered what the DHA was doing to address the deficiencies it within these two functions.

Mr Nkambule said that the Audit Committee was expected to meet at least three times a year but had only met twice. The internal audit had been plagued by a capacity problem. This had been reported on regularly. The structure had been revised to include a chief directorship and in order to improve the unit’s functioning. In addition the DHA had signed a co-sourcing agreement with an accounting firm so that they could not only assist with some of the audit assignments but also to allow for skills transfer to the DHA officials.

The Chairperson was concerned about the fact that 14 officials had been suspended from this unit.

Mr Nkambule explained that the suspension were not from the internal audit unit.

The Chairperson asked whether those who were on suspension were from the Audit Committee.

Mr Nkambule said that the suspension had been lifted.

The Chairperson asked whether this was because the investigations had revealed nothing untoward.

Mr Nkambule confirmed that the investigations had been concluded. He pointed out that officials were not put on suspension because they were guilty, but when there was reason to believe that their staying in office would interfere with the investigation. The officials were back at work but the charges still stood.

Ms Kalyan said that she was still not convinced by the explanation Mr Nkambule had offered regarding the suspension of the officials. The reasoning made no sense to her and she thought it necessary that the Committee at some later point in time received greater clarity on the matter.

With regard to the forensic audit was concerned, Ms Kalyan wanted to know how many officials were currently on suspension and what the longest suspension period was.

Dr S Huang (ANC) noted that while the presentation indicated that in 2004/05 about R572 million had been spent on Goods and Services, the Annual Report indicated an amount of R162 million. The difference was quite substantial and he wondered which figure was correct.

Mr Nkambule was not sure what the Member was referring to.

Dr Huang repeated his question, while Mr Nkambule referred to the relevant pages. When he eventually found the figures he explained that he would have to consider the reports carefully to determine where the error was.

Dr Huang thought that the Annual Report, which was the official document, contained the inaccurate figure.

Mr Nkambule said that he would follow the matter up.

The Chairperson interrupted, pointing out that the Committee had to adopt the document and could not do so if there were outstanding matters.

Mr Nkambule pointed out that the figures were a replica of the 2004/5 Annual Report. He did not think that it had any relevance to the approval of the 2005/06 Annual Report.

Dr Huang was still concerned about the R410 million difference, which was quite substantial and could not merely be disregarded.

Mr Nkambule said that he would investigate and see how the figures in the 2004/05 report had been captured. He insisted that the he had presented the accurate figures.

The Chairperson said the matter would be noted.

Kgoshi Mathebe asked whether the DHA conducted regular reviews of the performance of the provincial financial officers against the departmental business plan. He wanted to know how often these were done and what the findings were.

Mr Nkambule explained that the DHA received monthly compliance certificates for revenue collection from the provinces. The DHA visited the provinces from time to time to review what was happening. Provincial departments, just as the national Department, set objectives in the strategic plan each year. All managers presented their targets and the reports were dealt with publicly.

The Chairperson interrupted the response to seek clarity on the comments the Auditor General had made on the risk management and internal audit within the DHA (p95).

Mr Nkambule explained that risk management was done to regulate the work that was done by the internal audit. Internal audit audited in areas where there had been high risk. The DHA in collaboration with National Treasury, had since completed a risk assessment review. The risk assessment had been done but had not been reviewed annually as was expected and this was the weakness the Auditor General had pointed out.

Kgoshi Mathebe noted that debt collection appeared to be a major problem. He wondered what measures had been put in place to make sure that related irregularities came to an end.

Mr Nkambule said that most of the debt resulted from airlines that failed to pay the fines they were charged for transporting people who were not properly documented. The DHA had since met with the relevant airlines, billed them and some of them were now paying. The 2006/7 financial statements would reflect a substantial improvement.

Ms M Maunye (ANC) sought an explanation for the fact that source documents were not adequately captured (p90) and that there had been an unallocated income of about R50 million (p91).

Mr Nkambule said that he had alluded to the difficulties the DHA had as far as revenue collection was concerned. Offices collected revenue and then banked the amount. The DHA found that often the bank statements reflected that the amounts had been deposited but there were no corresponding transactions reflecting the capturing of receipts or what the money had been received for. This information was meant to captured in BAS.

Ms Maunye sought an explanation for the discrepancy in the amount the DHA indicated it had surrendered to the National Revenue Fund, and the amount that was actually paid (p92).

Mr Nkambule said that under normal circumstances money that had not been spent should be paid back. There had been a "timing problem" but the full amount had now been paid.

Ms Maunye asked what the status of the alien bank account was. She noted that the treatment of the account was currently being resolved with the National Treasury and requested an update on the progress that was being made.

Ms Kalyan noted that to date the financial officer had not supplied the outstanding documents related to the alien account. This had also been identified as a problem in the previous report and she wondered why the problem persisted.

Mr Nkambule said that the method of accounting had been the problem in the 2004/05 report. The Auditor General had not accepted the financial statements the DHA had submitted because they had not been stated according to the Generally Accepted Accounting Practice (GAAP). They had thought that it was a trust account and ended up looking for National Treasury guidelines. When the financial year 2005/06 was audited the Accountant General issued guidelines that stated that the very same form that the DHA had followed in 2004/05, should stand.

Not wanting to continue fighting with the auditors and in the interest of honesty the last paragraph relating to the alien deposit account was never in a management report such as the ones auditors normally sent to managers for comment during the audit. During their review the auditors considered the issues raised the year before and if these had not been addressed they were listed as a matter of emphasis.

The listing of the account had come as a shock to the DHA because the Auditor General had never asked for documentation related to it but merely included it because in their opinion was an unresolved issue dating back to the previous year. He thought that was an oversight on the auditors’ part and not on that of the DHA and maintained that the Department’s records were in order and could be audited.

Mr Beukman noted that the CFO had raised 8 macro points, and that National Treasury was taking the lead in about five of them. The CFO had indicated that provincial capacity posed a problem. The KwaZulu Natal provincial director had referred to the internal audit challenges. The Member felt that head office as the lead actor should take charge of the situation and have regular follow up visits. If that had been the case the capital budget would have been
spent. The Committee wanted to see proactive activity. The DHA and not the National Treasury, should take the lead in the matters, if that was not the case, problems would not be resolved.

Mr Swart sought clarity on the role the DHA’s auditing form Pricewaterhouse Coopers (PWC) played. He understood that they were contracted to train the internal audit staff which he thought was a commendable effort. He wondered whether their being the external auditors too did not represent a conflict of interest.

Mr Nkambule explained that the Auditor General was their external auditor. From time to time the Office of the Auditor General contracted and a firm called Gobodo had done the DHA’s auditing for the past two financial years. In 2006/07 KPMG would be auditing the DHA. There was no conflict of interest. PWC merely supported the DHA’s internal auditing.

Mr W Skhosana (ANC), making specific reference to the Government Garage, asked the CFO to share whether he would be able to address the challenges the DHA was faced with.

The Chairperson said that the Committee still needed a detailed explanation for matters related to the Government Garage that dated back to the last financial year. Aspects related to the contract between the Department and the Gauteng Government Garage. He thought that part of the explanation would lie in the Accounting General’s report. Some cars had not been delivered to the Department. He thought the question relevant but felt that the Accountant General might be able to respond to the question.

Mr Nkambule said that one of the Government’s major constraints was system related. The transversal systems, especially BAS and LOGIS (provisioning and procurement system), posed a major challenge. Asset management could not be done without human intervention. Once purchased an asset could not be immediately registered on the asset register. The DHA thus had two separate systems for running assets and payments. In the private sector systems were integrated which gave companies peace of mind. The Integrated Financial Management System had been in the pipeline for the past three to four years and National Treasury now said that it would only be available in 2011. If the DHA had it their way they would get their own integrated system but that was not allowed. Only entities such the Film and Publication Board (FPB) could use such systems. Banks could recommend better systems but in most cases they had to interface with the transversal system and that often posed a challenge.

When it came to financial management, the provinces were "grossly incapacitated". Not a single province had a financial unit consisting of more than 6 people. At head office, finances were centralised. When one had capacity, one could delegate. He added that the Rand could simply not be stretched any further to provide for the officials it would need to perform optimally.

The Chairperson asked how many Home Affairs offices there were in the country.

Mr Nkambule tried to give an approximate figure but the Chairperson insisted on an exact one.

Mr Nkambule said that he did not have the exact number but there were about 400 office country wide.

The Chairperson said that he was disappointed that the CFO did not know how many offices there were.

Ms Kalyan agreed that the fact that the CFO did not know the exact number was a problem. At head office there should be nine officials who were dedicated to each of the provinces. They should each day be able to indicate how much revenue that province had brought in.

The Chairperson said that the CFO ought to know how many offices there were as he was responsible for the allocations. He should also know how many of the offices were connected to BAS. Provincial managers indicated that most of the offices were not connected to BAS. It was clear that that was where the problem lay. He wondered why DHA always had problems with the systems government provided while other departments did not share that difficulty.

Mr Nkambule said that his inability to answer, related to the manner in which the Chairperson had asked the question. Had he been asked how many revenue collection offices there were he would have been able to respond.

The Chairperson was not convinced and said that the question was simple enough. He merely wanted to know how many home affairs offices there were across the country. He quipped that the CFO should leave the politicking to the politicians. If he did not know the exact figure someone could find out what it was.

Mr Nkambule said that there were between 400 and 500 offices in the country of which 176 collected revenue. 146 of the revenue collecting offices were connected with BAS and the remaining 30 offices would be connected in the current financial years.

Dr Huang noted that the presentation indicated that in 2005/06 under Goods and Services a figure of –R162 018 million had been recorded under variance. The Annual Report however indicated an amount of –R27, 013 million. He sought an explanation for the discrepancy.

Mr Nkambule referring to the member’s earlier question explained that he had now verified that the figure in the 2004/05 Annual Report was the same as the one contained in his presentation. The figure contained in the 2005/06 Annual Report was incorrect.

The Chairperson asked whether this error would be corrected.

Mr Nkambule said that the Report would not be reprinted because normally one included Errata on whatever was inaccurate.

Dr Huang pointed out that this was not a response to his question.

Mr Nkambule said that the figures were not correct and that an Errata would be prepared.

Adv Mukesh Vassen, Parliamentary Legal Advisor, confirmed that there was no official procedure for correcting errors, and that Errata were the accepted way of going about it.

Mr Nkambule indicated that the figures in his presentation were correct and reflected the figures on his system. The errors Dr Huang had identified should not be seen as a deficiency on his part, but were a printing error.

The Chairperson asked whether the CFO did not go through the document after it was printed and before it was distributed.

Mr Nkambule indicated that he had not. Not wanting to argue the matter further he indicated that the Auditor General gave the go ahead with printing. The Chairperson felt that the CFO still had a responsibility to go through the final product.

The Chairperson said that it was clear that the DHA’s was still plagued by challenges. The CFO was responsible for the finances and using the systems that Government made available he should make sure that BAS operated. The DHA could not go through the same process year after year. He wanted to put on record that when the DHA had received a disclaimer report the Committee had supported the Minister’s initiative to call in National Treasury’s Intervention Task Team. If that had not been done, the Committee would have asked the DHA management to be removed and for National Treasury to take over the Department’s finances.

The disclaimer and qualified reports could not be repeated year upon year. The Committee understood the challenges the DHA was faced with. The newly appointed Director General would have to address the issues urgently. The Committee would not tolerate negative audit reports any more. He asserted that "if someone somewhere was not doing his work that person was not needed".

Mr Msimang pointed out that he bore no responsibility for the 2006/07 financial year.

The Chairperson felt that the Accountant General and National Treasury would have to address the Committee on the problems the DHA was faced with. He felt that if DHA could not account for the money they spent, there was no point in allocating any to them. Qualified reports indicated that moneys allocated by Parliament could not be accounted for. The matter would be shelved until 5 June when the Accountant General, National Treasury and if need be the Minister of Finance, could shed some more light in the matter. Considering the level to which the DHA’s problems had escalated, it would not be inappropriate for the Committee to call Minister Manual to appear before them to give his view. In the last financial year there was R500 million that could not be accounted for and the Portfolio Committee could not allow it.

Kgoshi Mathebe felt that Mr Joel Chavalala who had been the acting director general for quite some time, should perhaps accompany Mr Msimang when the DHA appeared before the Committee.

The Chairperson could not understand why, considering the problems prevalent in the DHA, the National Treasury and the Accountant General had not addressed the matter. He added that if the Committee was not satisfied, he was not sure that Parliament would be able to allocate moneys to a Department that could not account for it.

Mr Beukman thought it might be useful if the DHA could also present the Committee with the measures they would be implementing to improve financial management and address the weakness the Intervention Task Team had identified.

Dr Huang asked the CFO to explain why the R57 458 000 transferred from machinery and equipment to software and other intangibles (p94) was not reflected in the presentation.

Mr Nkambule said that the amount would be reflected in the over expenditure under goods and services. The capital amount had been set off against the R162 million mentioned above.

Dr Huang still could not understand the transfer.

Mr Nkambule was at pains to explain that there was a budget set aside for software and one set aside for machinery. Software was part of Goods and Services, while machinery and equipment was part of the CAPEX. The financial statements dealt with the high level amounts and the finer breakdown would not be reflected there.

The Chairperson said that at the meeting of 5 June the DHA would have to present the Errata mentioned above. The Committee would not adopt the Annual Report if there were outstanding matters. He urged Mr Msimang and Mr Nkambule to ensure that the necessary corrections would be made by then and that the Accountant General would be present at that meeting.

Mr Nkambule asked whether the Chairperson felt that it was the DHA’s responsibility to call upon the Accountant General.

The Chairperson pointed out that the Committee had invited the Accountant General, but since the DHA worked with him they should encourage him to appear.

Mr Nkambule pointed out that the Accounting General did not report to the DHA.

The Chairperson assured him that the Committee would remind the Accountant General of the invitation. He had merely thought that considering that the Accountant General was in the DHA offices at present, the message could be relayed to him.

The meeting was adjourned until after lunch when the Committee would hear the presentation by the legal drafters on the draft Films and Publications Amendment Bill.

Note: The Committee reviewed the errata on the 5 June 2007.