The questions and issues discussed with the National and Provincial Departments of Health related to the five conditional grants administered by provincial health departments. The provinces all reported on their records of submissions of business plans, quarterly reports and monthly reports. All the provinces except Gauteng admitted to some degree of late submission and there were some problems with the quality of reporting and compliance. The Auditor – General's office (A-G)reported that there were late submissions from all provinces, to which Gauteng responded that they would provide proof of their compliance. The A-G also noted irregular payments and mismatched monthly, quarterly and annual amounts as points of concern.
The Committee's interrogated what the conditions were, why they were not met, and the reasons for the late submission. Many provinces cited capacity for monetary evaluation, the powers of the DG to investigate provincial inconsistencies and a general problem with the prescribed deadline for submissions as the major challenges.
In general the Committee was concerned with and unimpressed by the material non-compliance, which was not in line with the Public Finance Management Act. The provinces were called upon to give full written reports on all of the grants within two weeks and raised the possibility of penalties in the form of withholding the conditional grant transfers.
The South African Local Government Association (SALGA) was questioned on its audited financial statements, noting that the same problems had now arisen for sometimes three years in succession. The qualifications related to trade and payables, missing supporting documents, misstated opening balances and missing policies. SALGA was asked if there were measures in place to correct these problems or if there were problems due to lack of capacity. On trade Receivables and other income it was noted that the A-G had difficulties in obtaining information, lack of co-operation, no response to the management letter, the mismatch of opening balances and revenue being misstated. The Committee asked if the SALGA management had read the report and what their attitude was to accounting in general. In respect of the property, plant and equipment the asset register overhaul was questioned and SALGA was asked what the reasons were for the problems. Cash, employee benefits and leases were also questioned. SALGA was further asked to explain remuneration of staff, the organisational structure, the number of bank accounts, credit cards and various other expenses. There had been reports of irregular expenditure, and SALGA was asked about possible penalties owed to the Receiver of Revenue, the use of consultants, on which a written report was required, and the need to discipline those who flouted policy in the organisation.
Department of Health (DoH) provincial performance: Audited financial statements
Mr Thami Mseleku, Director General, DoH, Mr Gerrit Muller, Chief Financial Officers, DoH, represented the National Department of Health. Mr Mseleku said that he was pleased that this meeting had been called as it would assist with intergovernmental relations.
Representatives from the Provincial Departments of Health were then introduced. The Eastern Cape was represented by Mr Lawrence Boya (Superintendent General). Gauteng was represented by Mrs Sybil Ngcobo (Head of Department), Mr Fani Meso (Acting CFO), Dr O Mookeletsi ( DDG- ESPM), Dr M Maduna (Branch Coordinator – Service Branch), Ms B Deokaran ( Director: Financial Accounting) and Mr M Jwaai (Deputy Director: Conditional Grant Management).
Free State Province was represented by Dr Arrie Schoonwinkel (CFO).
North West Province was represented by Dr Lydia Sebego (Superintendent) accompanied by Mrs R Mohlabati (Acting CFO: North West DoH). Kwazulu-Natal was represented by Dr Yolisa Mbele (Acting HoD) and Mr A S Buthelezi (CFO). Limpopo was represented by Dr Jabu Dlamini (HoD). The Northern Cape was represented by Mr Thabo Sibeko (HoD). Mpumalanga province was represented by Dr Sibongile Zungu (Acting HoD), Mr J Nethononda (CFO) and Ms Milani Wolmarans (Planner). The Western Cape was represented by Prof Craig Househam (Head Health: Western Cape) and Ms Brenda Smuts (Directorate of HIV/AIDS and TB).
The Accountant General, Mr Freeman Nomvalo, was also present, and was accompanied by Dr M Blecher (Director Social services, National Treasury), P Narker, Mr N Marais. Ms Alice Miller, Mr J Okumo, Mr P Serote and Mr L Van Vuuren, who represented the Office of the Auditor-General (AG).
The Chairperson took issue with inadequate representation of the Free State and the explanation of the absence of the Head of the Department.
Prof Craig Househam asked to be excused at 9:30 to attend to a meeting of the Executive Council on the displaced foreigners in the Western Cape, called by the Premier.
The Chairperson took issue with this request. Prof Househam received instructions to stay till the end of proceedings.
The Chairperson said that some points relating to the audit of the National Department of Health had been clarified but other matters needed resolution because they related to funds transferred to provinces. He said that there were issues that had arisen consistently over the past three financial years. This Committee could not, in terms of its oversight, ignore any amount when seeking accountability. He reminded the National Department of the need for the meeting with the provincial heads. He added that he was pleased to see with the delegation from Gauteng.
Mr E Trent (DA) said the purpose of the meeting was to find solutions on conditional grants as this was a persistent issue. He said that he had conducted research on all the provincial budgets from the previous financial years. He said that the Auditor General (A-G) had made comments on all provinces barring one. He commented on the Division of Revenue Bill, and said that it was clear on the conditions for funding to be granted. He said conditional grants could have significant impact if spent properly. He referred to avoidable expenditure of R283 million and said he believed there was a need to discuss this further. He asked if the conditions were too onerous to comply with and if there were proper structures for reporting between the national department and provincial departments.
The Chairperson asked what the actual problem was and why were conditions not being met by provinces. He asked for an outline of the challenges, and a suggestion for possible solutions.
Mr Mseleku responded that he agreed that there was a lack of capacity for monetary evaluation in the DoH. He said he wanted to start on the premise discussed in the last sitting. He said the DoH was taking the steps previously suggested. In regard to the conditions, he said the DoH had input on them, but they were not a product of negotiation. They were a product of the collective inputs on how the Division of Revenue Act (DoRA) was drafted. He said there were problems with the accounting conditions of budgets, equitable share, conditional grants and interaction with the national department. He said everything was not on the same scale of balance. There was a problem of disproportionality and this required more frequent reporting than the provinces were presently managing. This needed investigation.
Mr Mseleku added, in relation to quarterly performance reports, that there were issues with the reporting process. He noted that the submissions were late by about three to five days, and this was related to the technical nature of the process. He suggested that perhaps the Division of Revenue Act (DoRA) was unrealistic and said that if the due dates remained the same the outcomes would be the same. In relation to governance issues he said the relationship between national and provincial department was an equal relationship in terms of the Constitution. He said that problems should be located in that context. He said it was difficult to request internal audits to scrutinise inconsistencies in provincial reports as the Director General (DG) did not have this kind of authority. He also noted the issue of capacity.
Mr D Gumede (ANC) commented on capacity and said that this may be due to a lack of resources. He recalled a personal encounter with a South African hospital and wondered if this was not more a matter of an attitude problem.
Mr B Pule (UPSA) made the DG aware that the DDGs were underperforming, and asked what the DG had done about this since February last year. He enquired if the DG still had no reason to believe the reports were faulty.
The Chairperson asked about the National Treasury (NT) conditions. He asked how reasonable these conditions were and whether the problem lay with the conditions, or the people who were supposed to enforce them. In relation to capacity, he asked if more resources were necessary.
Dr Mark Blecher responded that the conditions were determined collectively between the DoH and the provinces and that the Treasury did not insert conditions that were not necessary. In the main, all conditions were essential for the grants. Compliance could be improved. If a problem were to arise and the conditions became unenforceable, the National Treasury would consider removing these conditions. He said their experience of capacity was that it was improving and that there was strengthening both of capacity and monitoring. He said about R10 million was given, conditionally, to the DoH to do this.
The Chairperson asked the A-G if the problems were of a technical nature and how substantive the non-compliance threat in provinces was.
Ms Alice Miller, Executive, Office of the A-G, went back to irregular payments of the past financial years where payments were made before business plans were approved. There was still concern about compliance and it was still viewed as material non-compliance. She said there were still severe problems with the information submitted for the evaluation of spending grants.
The Chairperson touched on the accountability of provinces. He asked what the attitude was toward accountabillity and how this influenced reporting. He acknowledged improvements but said that problems still existed. He asked why provinces submitted information late.
Ms L Mashiane (ANC) noted a contradiction in terms of transfers and monitoring of conditional grants. She pointed out that the report said the provinces were monitored by the DoH and reports were submitted to them. She asked how it could be that such reports were generated if the DoH did not have any power to force provinces to be accountable. She further said that reporting must be acceptable in terms of the Public Finance Management Act (PFMA) and this was the DoH's responsibility.
Mr Trent said the format was set out very clearly and there were measurable outputs in relation to conditions and the allocation criteria, and that explanations and the responsibilities of the DoH were also set up very clearly. He said that this was the way conditional grants worked, that Parliament voted on these grants, and SCOPA must ensure that they were accounted for. He said he did not think this was a matter of equality. This was not about taking the grants away, rather it was about SCOPA being responsible for voted funds.
Mr M Stephens (DA) said that he detected a misunderstanding. It seemed that the DG was saying he had no option but to take reports at face value, and that his monitoring was restricted to submitted reports. If this was the case, the problem lay with the power the DoH had to go behind the face of a report to investigate it. He said a further problem lay with provinces who had not reported for a number of conditional grants. He said, in those cases, surely no money could be paid. He asked what happened in those cases.
The Chairperson expressed the opinion that the DG was looking to SCOPA to interrogate the provinces. He thought the view of the DG was that there were no problems.
Ms Mashiane requested that the provinces should report on the individual grants listed in a comprehensive way.
The Chairperson thought their approach should be more generic as to why there were late submissions of business plans, quarterly and monthly reports. He also thought the inconsistencies in information should be addressed. He wanted to know why the provinces were not reporting properly and what were the qualitative problems.
Ms Sybil Ngcobo (Gauteng HoD) reported that there was a continuous improvement in monitoring and reporting capacity. She referred to work being done in the districts where objectives were being implemented, and the recently procured Health Information System to aid capturing and collation of information. She said the CFO had established a unit to monitor the districts and had seen a marked improvement in compliance.
The Chairperson referred to the shortcoming reported and wanted provinces to address the late reports.
Ms Ngcobo reported that there were no problems with business plans. She said they were willing to confirm and that they did not submit late. Gauteng has no inconsistencies.
The DG said he agreed with this assessment by and large, but there was room for improvement on the quality side.
Dr Sebogo (North West) reported that there were no late business plans. She referred to instances in the 2006/7 financial year where reports were at most three days late. Otherwise they had been submitted on time. She said this province was consistent with the conditions of DoRA. She noted an instance where the Health Professional Training and Development Grant (HPTD) was used for nurses. It was meant for medical students and specialists, and once the error was pointed out, this department had since complied.
Dr Mbele (Kwazulu – Natal) reported that generally the province had no problems with the business plans. The quarterly reports had been late but there had been improvements recently. The problem highlighted was the vastness of the province, capacity and the manual system. There were no problems with quality.
Mr Sibeko (Northern Cape) said that there had been challenges in the 2006/7 financial year. He said that he had only recently joined the department, which placed him at a disadvantage. On the issue of reporting late, he thought the date was a bit tight and this affected the quality of the report. He said the data was not up to quality at the time. He suggested that dates be altered to improve the quality. With regard to business plans, the problem was putting plans on paper.
The Chairperson responded that this spoke to planning and that excuse was not acceptable.
Dr Zungu (Mpumalanga) said there had been consistent delays and omissions. She said the only area of improvement was in the Comprehensive HIV and AIDS Plan. She cited high staff turnover, information Systems management and general capacity problems as reasons. Interventions were currently being implemented as well as reviews on capacity and remuneration.
Mr V Smith (ANC) noted that provinces were saying lack of capacity reduced their ability to perform. He said the accounting officer should have ensured that capacity was in place in order to comply. He said there was a possibility that the A-G would accuse the DoH of not using the funding correctly. He noted that the provinces did not show the necessary urgency. He said it was within Parliament's rights not to approve transfers if this was the case. He was not getting the sense that a programme was in place, and said that unless it could be satisfied of this, Parliament would have to stop transfers.
Dr Househam (Western Cape) responded that not all grants were easy to report on. He mentioned the HIV and forensic pathology grants as challenges. He added that the other three grants were fine. He said the delays in Western Cape were similar to those of the other provinces but did not run across all reports. He acknowledged that there were inconsistencies and inaccuracies and said that the key issue was the pressure of time. He said that much of the information was provisional and could not be verified until the annual report and this was the reason for the inconsistencies.
Mr Boya (Eastern Cape) said that the HIV business plan for the current financial year was late because of corrections on the initial submission. In the last year all monthly reports were late by one or two days. He admitted that they should not be late. The reasons for this related to the manner of submissions and dates falling on Fridays. Steps were being taken to correct the problem of reports not being received. There were challenges concerning quality, stemming from incomplete data from implementing institutions. He said there was a need to deal with the submission of incorrect data that could also not be understood.
Dr Dlamini (Limpopo) said that they were on time with their business plans with one exception, due to a need for corrections. There had been instances where the quarterly reports hade been late due to lack of capacity of institutions. He noted a problem with the date. He said there had been improvements and that they had met targets and been on time. He added that quality was a problem
Dr Schoonwinkel (Free State) said that business plans were submitted on time. He said that the A-G was reporting on dates of approval and problems with disagreements on content. In regard to the quarterly reports, they generally did comply with the target of the 15th of the month. There were technical problems and problems with deadlines falling on weekends. In respect of the quality he concurred with the Western Cape and reiterated that the 15th of the month was sometimes a problem.
The Chairperson asked the NT about conditions and also referred to the numerous complaints about the date.
Ms Miller (A-G' s office) responded that they had concentrated on 3 grants: the Health Professionals Training and Development Grant, Hospital Revitalisation Grant and the comprehensive HIV and AIDS plan.
She reported that none of the provinces had made their deadline. Gauteng did have inconsistencies. Kwazulu-Natal' s HIV quarterly reports had not been submitted for the whole year and there were inconsistencies. The same applied to Limpopo. The Eastern Cape also did not submit their quarterly reports for the HIV grant and monthly reports on the Hospital Revitalisation. She said the expenditure fluctuated and the quarterly reports and monthly report did not add up the way they should. Generally she pointed out the trend that figures not matching up posed a material challenge to the A-G. She said the recording of expenditure at root level was a problem as well as expenditure monitoring in provinces.
Mr Mseleku referred to the problem of verifiable information. He said the areas where the National Department had authority were clear and there were differences in the levels of authority. The DG was not able to interrogate the books and he accepted that there was a problem with DoH monitoring. He referred to the expectations that the DG should investigate expenditure, but responded that the DG's office did not have the capacity to do what the A-G could do. He said there was the generic problem of the business plans and what constituted materiality. He noted that there had been a general improvement, but there were still instances of provinces being late. It was important to understand the contradiction between the problems of capacity and directing efforts to address this. If the province submitted a compliance certificate this was a written assurance that they had the capacity to comply. From the PFMA perspective, there was compliance from the DG's side. He asked if he should send a team to investigate capacity when he had received such a certificate from a province in order for them to obtain transfers.
The Chairperson asked, if a province submitted a compliance certificate, then failed to comply, whether previous experience would not be taken into account to inform on future transfers.
The DG asked if he had the right to withhold participation in a grant.
The Chairperson countered by asking if the compliance certificate meant nothing.
Mr Freeman Nomvalo, Accountant General, said that compliance certificates had to mean something. In order to make payments or transfers, conditions must be put in place that were appropriate and relevant and that he did not think transfers should be made if conditions were not met. He added that it was not always possible to identify problems and stop transfers, and that there must be a mechanism in place to verify compliances to inform decisions going forward.
Mr Smith said he was of the opinion that the PFMA was the supreme law. If provinces consistently did not perform on a grant, the transfer must be withheld. Not to do so would be negligent and would be inconsistent with the PFMA. He said there had to come a time to implement the PFMA and implement punishment. He proposed that provinces could not be allowed to continue their non-compliance.
Mr Trent referred to the Hospital Revitalisation Grant. He spoke to the mismanagement of grants and said that it was the responsibility of the accounting officer to check on this. He added that Parliament must exercise oversight over voted money. They were still responsible for that money. He also raised concerns about avoidable expenditure amounting to R283 million.
Ms Mashiane commented that she had received the reports in a mixed manner. She suggested that each province be given 60 days to give reports on the five grants indicated, and that these should then be checked against the report of the A-G to see if information was correct.
The Chairperson agreed, but reduced the time for these reports to two weeks. On the business plans, quarterly reports and monthly reports, he wanted to know what the challenges were. He noted the provinces were not accounting in a manner that satisfied SCOPA and the DG. He asked how Parliament could continue to give money when accountability was not up to scratch. He asked about the contradictions between provinces and the A-G and stressed that the picture of provinces in terms of administration of resources and conditional grants was not good.
Mr Mseleku thanked the Committee for the opportunity and added that this discussion would assist in the sectoral discussions being held. He said there must be a platform to talk, in order to discuss possible amendments to laws.
South African Local Government Association (SALGA): Interrogation of Annual Report
The Chairperson, made some general comments to the SALGA delegation. He said that what SALGA did was of significance to everyone. He referred to the promise that there would be changes, which was made at the last sitting. He said the current report did not bear out any change and this was the reason for this interaction. He said the critical aspects could not be overemphasised and that challenges always faced local government. The most recent report from the A-G highlighted more issues than before and it seemed that instead of improving, the situation had deteriorated. He referred specifically to other income and related parties being in a consistently unacceptable state.
Cllr Amos Masondo, Chairperson, SALGA, wanted to clarify that the delegates could not attend the meeting to the City of Tshwane's budget presentation. He said that it was the view of SALGA that they were making progress and that they welcomed engagement on these matters. He raised the problem that SCOPA had been unable to produce its schedule for SALGA to adapt its schedule and added that arrangements must be made for this.
The Chairperson responded that SCOPA sent invitations out as timeously as possible. He said they were always flexible to receiving requests for adjustments to the dates, at their discretion, and that clashes in dates were not insurmountable. He said that SCOPA appreciated SALGA's progress but engagement was important.
Mr T Bonhomme (ANC) interrogated the trade payables and operating expenses. He noted that the fair value adjustment could not be audited due to a late submission and asked what had led to this.
Cllr Masondo asked if Mr Bonhomme could elaborate.
The Chairperson said that the question was fair and wanted to know what had lead to the lack of supporting documents for those amounts.
Ms Josephine Meyer, CFO, SALGA responded that they did not have sufficient time to audit adjustments as supporting documents were submitted late.
Mr Bonhomme asked if there were measures in place and whether it was poor supervision or a lack of capacity that led to this.
Mr Xolile George, CEO, SALGA, responded that capacity had been a problem. He said that it was a different operating environment, given the nature of the organisation, hence the late submission. He said measures were in place to capacitate the organisation in this regard.
Mr Bonhomme referred to the debit and credit journals not being provided. He asked how SALGA could generate statements without such important documents.
Mr Nceba Mqoqi, Head: Financial Planning and Reporting Systems, SALGA, said that the report did not convey the context. The matter was brought forward from the 2006/7 financial year. The opening balances issue had been provided to the A-G to look at. There had been capacity constraints. The opinion was based on the preliminary trial balances which were provisional. The A-G had not had adequate time to review it. He assured members that the corrective measures would ensure that journals that recorded movement were already in the hands of the A-G, who was auditing the opening balances issue.
Mr Bonhomme asked if the situation would be remedied. He then said that the A-G had noted that supporting documents were not submitted and expenses were not justified, and not in line with the PFMA which required full records. He asked why this was not done.
Cllr Masondo replied that SALGA was there to take full responsibility and to bring clarity.
The Chairperson said that SALGA's position was not unique. Other entities usually responded to such details. He said the expectation was not that all officials should be present but that the members of the board should be able to respond to questions.
Mr Bonhomme said that his questions were not being answered and that he suspected an official cover-up. He said he did not think he could continue asking questions. He then asked several questions concerning trade and payables, particularly referring to missing policies.
Cllr Masondo responded that all reports and policies were left with SCOPA in the past week and he wondered how questions on missing policies could have arisen.
The Chairperson said that the questions must be responded to specifically.
Cllr George responded that SALGA had a weak internal control environment. He said that the end of year audit was a challenge in terms of generating and receiving support documents. The accounting authority had put administration into terms and the problems must be corrected. He said SALGA’s staff had taken financial and control measures to improve compliance.
Mr Smith said that it was SCOPA's mandate to interrogate the A-G's report. He said the A-G's report indicated certain problems. He asked for clarification on these matters.
Mr Bonhomme said that he had lost confidence in SALGA's competence and asked if SCOPA could have guarantees that matters would be resolved at the next meeting.
Cllr Obed Mlaba, Deputy Chairperson, SALGA, commented that the audit report had been done when SALGA was amalgamating independent provincial entities with their own accounting systems. He said it had been difficult to come up with one system and that they had almost been able to bring everyone together and create capacity to do day-to-day management. He added that it was difficult in the political environment, but implementation would be better in the future.
The Chairperson responded that the question of integration had been raised and he thought it would have been sorted out by now.
Mr Bonhomme said that he was satisfied with the assurances and would await future reports.
Cllr S Molokoane- Machika, SALGA, replied that the process was 75% implemented and they had submitted the report to the A-G on time.
Cllr Hazel Jenkins, Deputy Chairperson, SALGA, replied that SALGA had sourced the services of a documentation company for the retrieval of information needed by the A-G. All transactions would now be done through the national office.
Mr P Serote, Deputy AG, said that the consolidation of the ten trial balances into one was a challenge, in terms of returning to the originating transactions. SALGA should report on this.
Mr Trent interrogated Trade, Receivables and Other Income. He referred to the qualification for three years. He was concerned that there was significant difficulty in obtaining information for audit purposes. There were no comments from management on the management letters. He was aware of their problems, but asked why but why there was no co-operation. It did not sound good.
Cllr Masondo replied that this was a matter on which the managers of SALGA would have to take strong action and they would investigate refusals to comply with the A-G’s requests.
The Chairperson said there had been instances where people had not been co-operative with the A-G, after the audit.
Mr George replied that he was not aware of this and had thought that there was constant interaction.
Mr Serote responded that there had been some action taken subsequently, which had been of assistance, and that there were subsequent engagements.
Mr Van Vuuren, Office of the Auditor General, added that the change in the financial year took away three months to fix problems. They had to start earlier this year and although SALGA wanted to start later, the A-G could not accede to this. He said there was no problem with co-operation from their point of view.
Mr Trent asked if Cllr Masondo had read the audit report and said he found it strange that it was not followed up.
Cllr Masondo replied that he was surprised at Mr Trent's tone.
Mr Trent said he was glad to hear there was co-operation and added that the purpose of the hearings was to assist and not to chastise. He wanted specifics about the disclaimer opinion in the A-G's report and the mismatch between opening and closing balances. He asked if SALGA had a positive attitude toward the functioning of their accounting department.
Cllr Masondo responded that they were not perfect but he had confidence in the team and that it would deliver.
Mr George said that he was confident of the reversal of the situation of imbalance and the fair value adjustments. He said he was confident that SALGA would submit on time as they attempted to correct issues.
Mr Trent emphasised that opening balances were materially misstated.
Ms Meyer responded that this was due to the preliminary figure versus the final opening balances. She said this would be resolved but that it went right through, affecting all balances. This would be corrected in the 2007/8 financial year report.
Mr Trent referred to problems with membership levies, leading to revenue being materially misstated.
Ms Meyer said the income was based on a formula. It was mistakenly invoiced. This was an error and would be done correctly in the future.
Mr Trent referred to the validity and accuracy of the journals, noting that the supporting documents were not available. He asked if journal entries had been corrected and what was done to make sure documents would be available in future.
Ms Meyer reiterated that the information was available to the A-G.
Mr Van Vuuren replied that journals were posted at a very high level, making them difficult to understand. Mapping had now been done to fix this problem.
Mr Pule interrogated Property, Plant and Equipment. He asked how far SALGA had got with compliance and if asset inconsistencies had been corrected.
Ms Meyer replied that they had been corrected.
Mr Pule queried the fact that documents had not been provided,
Ms Meyer responded that this went back to document management and this had already been spoken to by Cllr Jenkins.
Mr Pule asked about the fixed asset register. He referred to the fact that certain items recorded could not be found and that certain items in their possession were not recorded. He referred specifically to an unexplained difference of R2,5 million.
Ms Meyer replied that in the 2007/8 financial year, SALGA had an overhaul of the asset register. Here two systems were maintained on different software (Pastel and Excel). The inconsistencies had been fixed now that the systems were aligned, and had now been correctly been accounted for.
Mr Serote responded that quite a few of these matters would not be able to be confirmed. The A-G had not yet received these documents. They should be receiving them soon and would then be able to respond.
Mr Pule asked if this was an assurance that the asset issues have been attended to.
Ms Meyer responded that they had all received attention but they were still battling with certain issues, which would be discussed with the A-G.
Mr Pule asked about the lack of skills and capacity. He noted that the A-G had not spoken about this. He said that management was inadequate and there was a lack of a supportive attitude to accounting. He asked if control measures were not in place.
Cllr Masondo responded that SALGA subscribed to the idea that staff must comply with laws and regulations. In relation to the questions on attitude, he said he would like to get more information, in order that SALGA could be supportive all of the time. He said that was a judgement and that SALGA too would like to know what the problem was.
The Chairperson said that Mr Pule was merely referring to the report.
Ms Mashiane expressed concern and asked if the leadership had read the report of the A-G. She said that Cllr Masondo was busy with a PR exercise and wondered if the leadership of SALGA had not themselves called for answers.
Mr Serote responded that it was an issue of saying that the A-G had signed off on the report on control activities and monitoring and that conclusions about attitude could be drawn.
Mr George replied that this was due to the absence of a performance management system, which SALGA had now taken measures to institutionalise. He said he would have loved to demonstrate the extent of the measures and that he was confident that these problems would not be reported again. SALGA had also internalised risk management and audit capacity.
Mr Pule wanted assurances that SCOPA would not have to address the same issues at the next meeting and that the necessary control capacity would be in place.
Mr George responded that they would not be in place.
Mr P Gerber (ANC) referred generally to the audit report and asked why it had not been signed. He noted this as a repeat problem from the previous year.
Cllr Masondo replied that this was as a result of the rush to produce the document.
Mr Gerber referred to staffing and quoted the figures on personnel recruitments and terminations. He then referred to the personnel costs being up by 8% due to inflation. He also asked which was the correct figure for the vacant posts to be filled.
Ms Meyer responded that the correct figure was 55 posts to be filled.
Mr Gerber referred to the operating expenses for 2006/7. He asked if the R71 million was for the 308 posts budgeted for or for the 259 posts actually filled.
Ms Meyer said this included the leave provision and leave payments for staff who had left.
Mr Gerber queried internal promotions and changes to the organogram. He said if the changes were worked out, it added up to a 31% difference. He asked who was receiving increases of this size
Ms Meyer responded that there was an 8% increase across the board. The rest of the increase figure was accounted for by promotions, new directorates, and cost centres, trade and payables. She noted that the bonuses were not performance based but a form of annual savings where employees’ salaries were divided into 13 instead of twelve to generate a year end bonus.
Mr Gerber queried the 10 CEOs on the organogram and asked if SALGA could be functioning this way.
Mr George responded that SALGA was undertaking an institutional review and this was an offshoot of contractual issues.
Mr Gerber noted that assets were disposed of. He asked what was sold, what was the process and what profit was generated.
Ms Meyer responded that a valuation had shown it was prudent to dispose of assets.
Mr Gerber asked about income arising from commissions.
Ms Meyer replied that SALGA had contracted an in-house travel agency. The income was due to SALGA getting a percentage of commissions back.
Mr Gerber queried the reported asset loss.
Ms Meyer said this was a result of the attempt to reconcile the asset register. There were differences that SALGA had to put through.
Mr Gerber queried an amount of R22 000 for flowers.
Ms Meyer replied that this was for conferences held last year.
Mr Gerber enquired about the situation with SALGA's bank accounts, reporting that there seemed to be too many. He asked if this was still the situation.
Mr George responded that SALGA used to have ten bank accounts but now only had one.
Mr Gerber asked how many credit cards were held by SALGA, who kept them, what were the rules attached to them, and was there better control of this.
Ms Meyer replied that SALGA had two credit cards held by the national office and that they had regulations and tighter controls.
Mr Smith interrogated irregular expenditure. He restated that the PFMA said that this must be disclosed. He then wanted to know why it had not been disclosed. On the total and interest and penalties, he wanted to know why there were differences.
Ms Meyer replied that there was merely an error as to the disclosure.
The Chairperson asked if it was really that simple.
Mr Smith said that this was an important problem of disclosure. He asked if SALGA owed the Receiver of Revenue anything in terms of penalties
Ms Meyer responded that they did not.
Mr Smith wanted what the procedure was around appointing consultants and what, exactly their jobs were
The question could not be answered by any SALGA representative.
Mr Smith requested a written answer within two weeks.
Mr George assured the Committee that this would be followed up.
Mr Smith asked a general question relating to the steps that should be taken against those who flouted policy. He advised SALGA that people must be disciplined even when they had resigned and that this was unacceptable.
Mr Smith questioned associated irregular expenditure.
Ms Meyer said this was for the procurement of a venue for a conference.
Mr Trent then made general comments on the problems observed by the Committee and made a call for interaction on these and for the issues to be resolved.
The meeting was adjourned.
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