SALGA & IEC Budgets and Financial Statements

Meeting report

Hearing on the financial statements of the Independent Electoral Commission (IEC)
The IEC was represented by Dr Brigalia Bam (Chairperson, IEC), Mr Mosotho Moepya (Deputy Chief Electoral Officer: Electoral Operations), Mr Zolisa Mafuya (Chief Financial Officer) and Mr Stephen Langtry (Manager: Office of the Chief Electoral Officer).  The apologies of the Chief Electoral Officer, Adv Pansy Tlakula, were tabled.

The IEC’s audited annual financial statements for the 2006/07 financial year were included in the Commission’s Annual Report for 2007, copies of which were made available to the Committee.

Discussion
The Chairperson welcomed the delegates and opened the discussion to questions from the Members.

Mr E Trent (DA) welcomed the Auditor-General’s (A-G) comment that most of the issues reported in the previous year’s audit had been resolved.  He said that the Committee’s main concern was to ensure that the IEC was ready for the forthcoming elections and had resolved the problems identified in previous discussions.  He said that the strategic objectives outlined in Section 3 of the Annual Report (pages 12 to 17) were a narrative of achievements rather than the measurement of performance against the objectives set.  He referred to the A-G’s audit finding no. 18 on page 49 of the Annual report that the IEC’s strategic plan did not include measurable objectives and targets as required by Treasury Regulations.  He was concerned that the IEC may not be able to obtain sufficient funding as a result of its inability to comply with the regulations.

Mr Moepya replied that the A-G’s comments were noted by the IEC and discussed with members of the audit team during the audit.  An understanding was reached that certain items fell outside the control of the IEC and could not be measured.  The number of voters who registered was an example.  Measurements suggested by the A-G were included in the strategic objectives presented to the Portfolio Committee on Home Affairs at a briefing held during the previous week.

Mr Trent requested comments on the IEC’s readiness and ability to obtain sufficient funding for the forthcoming elections.

Mr Moepya replied that the IEC was confident that sufficient funds would be made available by National Treasury to achieve the strategic objectives that were set.

Mr V Smith (ANC) referred to the A-G’s comments on the security of the IT system used by the IEC. He asked whether the concerns over unauthorised access to the system were resolved and what the status was of the IT system security.

Mr Moepya replied that the IT policy was extensively reviewed.  A new IT policy was approved and made available to the A-G.  All the issues raised were addressed and the systems were tested.  No security breaches were found and the IEC was satisfied that the system was secure.  The IEC planned to invite systems auditors from the participating political parties to test the system and will provide documentation on the system’s application.

Mr Smith noted that the expenditure on conferences and workshops declined from R13 million to R9 million during 2006/07.  He asked whether enough was done about voter education or if the decline in expenditure was attributable to the fact that no elections took place during the year.

Mr Moepya explained that expenditure during 2006 included expenses incurred on training and democracy development during the previous elections.  The program was continued during non-election years.  The expenditure on training and development was expected to increase during the current financial year.

The Chairperson commented that voter education was a key aspect of democracy development and was essential in the voting process.  He was concerned that voter education was not perceived to be central enough and that the IEC’s efforts were not visible enough.  He asked what the impact was of the pamphlets and flyers that were distributed.  He said that there was room for improvement in voter education.

Mr Trent asked if the audit comment on the need to obtain approval from National Treasury for insurance on vehicles worth more than R250000 was resolved.

Mr Mafuya confirmed that the matter was resolved.

Mr Trent referred to the strategic objective that was set to ensure maximum participation in elections.  He considered maximum voter turnout to be an outcome rather than an objective as the percentage of voting cannot be predicted.  He asked what specific objectives were set to improve participation by voters.

Mr Moepya replied that the strategic objectives were reconsidered and refined in the wake of the A-G’s report.  The IEC reviewed the statistics and included measurable objectives in the business plan that was presented to and approved by the Portfolio Committee on Home Affairs at the briefing held during the previous week.

Mr Trent said that the audit comments were made some time ago and were out of date.  The audit report on the current financial year may not be received in time for discussion before the elections.  He wanted the assurance of the IEC that all the audit comments were attended to during the current financial year.

The Chairperson pointed out that the responses from the IEC indicated that all the issues were addressed and that a presentation was made to the Portfolio Committee on Home Affairs.  The implication was that there will not be further comments from the A-G.

Mr Trent asked for the assurance that the necessary information was available to allow the A-G to conduct an audit on the non-financial issues.

The Chairperson said the matter can be considered after the next audit report was received.

Dr Bam said that the number of registered voters on the voters’ roll was of particular concern to the IEC.  Since 2006, there has been a decrease in the number of registered voters.  It was a challenge to increase the number of registered voters as much depended on whether voters received their identity documents in time to register.  Voter registration for the elections held in 1994 and 1999 was very good but the IEC was concerned that the enthusiasm to register would be maintained.  Registrations and the percentage turnout decreased during the last Local Government elections.  She said that the IEC hoped to sustain voter enthusiasm for the upcoming elections.

The Chairperson said that the issuing of identity documents was the responsibility of the Department of Home Affairs.  Political parties and candidates were also responsible for encouraging voter registration during November 2008 and February 2009.  He said that all were involved in ensuring the success of the democratic process in the country.

Hearing on the financial statements of the South African Local Government Association (SALGA)
The delegation from SALGA included Councilors Sakhumzi Somyo (Chairperson: Municipal Labour and HR Working Group), Speedy Mashilo (Chairperson: SALGA Mpumalanga), Ms Sophie Molokoane-Machika (Chairperson: Finance Working Group), Mr Xolile George (CEO), Ms Josephine Meyer (CFO), Mr Lance Joel (Executive Director: Governance and Inter-governmental Relations), Mr Nceba Mqoqi (HOU) and Ms Retha Stoltz (Head: Legal and Compliance).

Discussion
The Chairperson expressed concern over the serious nature of the comments made by the A-G on SALGA’s financial statements.  The A-G continued to raise concerns despite the engagements SALGA had with the Committee.

The Committee appreciated the role that SALGA was meant to play and considered the organisation to be at the coalface of civic delivery in the country.  The recent incidents of xenophobia illustrated the people’s frustrations with Local Government and put pressure on Local Government to increase the pace of service delivery.

The Chairperson expected the political and administrative leadership of SALGA to appreciate the Committee’s view that SALGA played a strategic role in improving the living conditions of communities.  Local Government was not rising to the challenges as effectively and efficiently as expected by the people. The financial statements of SALGA were cause for serious concern and the Committee therefore made time for SALGA to brief Members on the challenges that were faced by Local Government.

The Chairperson said that the date of the briefing was timeously communicated to allow adequate time for preparation by SALGA.  The state of the organisation and the serious nature of the issues at hand demanded that the delegation from SALGA was led by the most senior political leaders.  He pointed out that most Members were present at the briefing and he was very unhappy when Mr George’s letter of 19^th May 2008 indicated that the senior leadership of SALGA was unable to attend.  The Chairperson immediately replied to Mr George and requested the presence of The Chairperson of SALGA, Clr Amos Masondo, and the three Deputy Chairpersons, Clr Obed Mlaba, Clr Hazel Jenkins and Clr G Mothupi at the briefing.  He asked for confirmation by 20^th May 2008 but no response or acknowledgement was received.

The Chairperson said that his expectations were not met by the SALGA leadership and requested a response from Clr Somyo on the matter.

Clr Somyo apologised for the failure of SALGA to respond in the manner indicated by the Chairperson.  He explained that the month of May was an awkward time in Local Government as the senior personnel had to submit their budgets.  He acknowledged receipt of the correspondence from the Chairperson and personally urged the four Councilors to attend the briefing. He regretted that the Councilors involved had prior commitments and were unable to attend.

The Chairperson said that May was an awkward time for everyone in Government.  It was not made clear in the correspondence received that the officials concerned were unable to extricate themselves from their commitments in order to attend the briefing.  He said that Clr Masondo did indicate that he considered SALGA to be adequately represented at the briefing.

Mr Smith supported the sentiments expressed by the Chairperson.  A situation can not be allowed where a Government institution had received qualified audit reports for two consecutive years and were not held accountable by Parliament.  The lack of high level representation at the briefing can not be tolerated.  The Committee gained the impression that the senior officials of SALGA were unwilling to account for their performance against the previous year’s budget.  He trusted that SALGA appreciated the Committee’s difficulty in approving the budget for the new financial year when there were serious problems with the previous budget.

Mr Smith pointed out that Government finances were governed by the PFMA and no laxity in the application of the Act was allowed.  Section 50 of the PFMA governed the protection of assets and records by the accounting authority.  In the case of SALGA, the A-G reported on a lack of protection of assets and records for three consecutive years.  The accounting authority was held responsible by Parliament and was required to account for its actions to the Committee.

Mr Smith said that the responsibilities of the accounting authority were set out in Section 51 of the PFMA.  The A-G’s audit comments included significant problems with internal controls, procurement, financial systems and IT systems.  If the accounting authority did not hold itself accountable to the Committee and to Parliament, it was a serious problem.

Mr Smith said that the absence of one of the senior officials was understandable but the absence of four officials was unacceptable.  He proposed that the hearing was postponed to a date when all four senior officials would be able to attend.  The senior leadership had a responsibility to get their budget approved by the Committee and an effort had to be made if they wanted SALGA’s budget approved.

Mr M Stephens (DA) supported the comments made by the Chairperson and by Mr Smith.  He said that it was unacceptable that the political leadership of SALGA was not present at the briefing.  In his opinion, SALGA received the worst audit report from the A-G he had ever seen and should be ashamed of it.  Under the circumstances, the absence of the senior officials was arrogant and an insult to Parliament.

Mr Stephens said that the date of the briefing was arranged well in advance, in writing.  He wondered if the absence of the officials was knowingly contrived to avoid their attendance at the hearing.  The A-G repeatedly commented on problems with the attitude displayed towards the keeping of accounts and records.  He said that the absence of the senior officials was another example of the negative attitude the A-G had remarked on. 

Mr Stephens supported the motion to postpone the hearing to a date when the senior officials of SALGA can be present.

Mr T Mofokeng (ANC) supported the comments made by the other Members.  He referred to the recent incidents of xenophobic attacks and said that the Committee needed to establish the root causes for the incidents as a matter of urgency.  He recently visited several remote rural areas where the failure of service delivery was apparent.  He proposed that the Committee postponed approval of SALGA’s budget.

The Chairperson hoped that Members’ comments were noted by the representatives from SALGA.  An opportunity to respond will be given but unless the four senior officials appeared at the briefing, anything said by the delegates may not be accepted by the Committee.

Mr Trent remarked that the A-G’s report was dated December 2007.  The Committee’s schedule allowed for the briefing to be held at the earliest by the end of the fourth quarter.  He said that SALGA was aware of the Committee’s schedule.  He also noted that the Chairperson of SALGA did not date his acceptance of the organisation’s Annual Report.

Mr Trent supported the earlier comments made by Members.  The amounts in budgets tended to increase every year and supported the suggestion that approval for the new budget was delayed.

Mr B Pule (UPSA) remarked that the Committee will have failed in its duty if it did not hold SALGA accountable.  He noted the A-G’s accentuation of the negative attitude towards accounting issues displayed by SALGA’s management.

Mr P Gerber (ANC) noticed a tendency by persons who were requested to appear before Parliamentary Committees to absent themselves for reasons of illness or other engagements.  He suggested that the hearing was postponed by one week.

Clr Somyo responded that the comments made by the Chairperson and the Members were understood.  It was clear that the presence of the Chairperson and Deputy Chairpersons of SALGA was required at the briefing.  He assured the Committee that it was not the intention of SALGA to create the impression that the organisation was uncooperative.  Every effort will be made to ensure that the senior leadership of SALGA attended the briefing at a later date.

The Chairperson said that the Committee was in agreement that the briefing will not be proceeded with due to the absence of the senior leadership of SALGA.  The hearing was postponed to 9.00 a.m. on Wednesday 28 May 2008.  The venue will be confirmed.

Mr Trent requested confirmation of the minimum attendance and requirements for the briefing.

The Chairperson replied that the requirements were made clear during the discussion.  Councilors Masondo, Mlaba, Jenkins and Mothupi were expected to attend.

The meeting was adjourned.