The Department of Home Affairs briefed the Committee on its Annual Report for 2007/08. At the outset the Director General recorded his disappointment at yet another Audit disclaimer, but sought to put this in context by noting that most of the senior staff had been appointed five months or less before financial year end, that considerable historical problems were carried over from the previous year and that even if there had been only one problem in a certain area, the Auditor General was nonetheless obliged to highlight this. Despite the adverse audit findings, there had been some good work in addressing issues raised in previous audits. The interventions were listed and explained, and it was also highlighted that this work had continued also past the period covered by the Annual Report. The Strategic Goals were summarised, with a highlight of achievements under each goal. A detailed explanation was given around the financial statements, which highlighted that the financial turnaround had begun in earnest in November 2007. Although an asset take exercise had commenced in February this was still work in progress and not in the form that it could be properly audited by the end of the year. The Immigration Account Financial Statements had been analysed and financial statements for the past five years on this account had been produced, although they were not yet audited. 92% of the budget had been spent. Six main areas had been identified as challenges, including the completeness of revenue, the Fixed Asset Register, the completeness of the lease register, lack of supporting documents for Government Garage transactions, supporting documentation for the Immigration Account, classification of expenses, and clearing of receipt and deposit accounts. Each of the problematic areas was explained, and the interventions that had been taken were summarised.
Members noted their concern at the statement that the qualified audits were likely to recur, and suggested that perhaps National Treasury should be asked to intervene. The various instances non-compliance with Public Finance Management Act, Treasury Regulations and Public Service Regulations were of concern, and seemed to point to the fact that assistance was needed. Further specific questions were asked around the Government Garage transactions, whether there had been any agreements with that body to try to sort out the problems, the apparent lack of monitoring, and the seeming contradictions between what was stated in the report of the Director General and of the Auditor General in the Annual Report. Questions were also asked around the staffing, the filling of vacancies, the disciplinary proceedings against the former Chief Financial Officer, and the large amounts spent on the Turnaround. They commented that there appeared to be lack of leadership. The Director General stressed that he had not been aware, at the time of making certain assurances last year, that he would be substantially hindered by processes required by Department of Public Service and Administration, nor that the disciplinary processes would become so protracted, through no fault of the Department. He pointed out that many of his proposals for fundamental restructuring were approved by DPSA, and, although he would abide by the decision of the Committee in regard to further interventions, he doubted sincerely whether National Treasury or any other body could have achieved more, given the constraints, in the time allocated. He believed that the turnaround could happen, but that it would require time and patience. The Committee resolved to recommend that the Minister request assistance from National Treasury and the Department of Public Service and Administration, especially to capacitate the Department properly, and the Minister would be asked to report back to this Committee, whilst the Department should attend a further meeting in November to address other issues. The Committee remained confident that the Director General, with assistance, would be able to achieve what he had sought to do.
The Department then briefed the Committee on the progress with the Smart ID Card, detailing the way in which it would work, the rollout of the pilot in 2009, the fact that the tender had closed on 29 June and that the final process of evaluation was due for completion by the end of the month. The tender processes were also described. The particular features and benefits of the Card were detailed, and it was noted that it could only be activated by the cardholder’s biometric. Turnaround time would be improved, there were steps to eliminate the likelihood of fraud and corruption along the processes, and the card would be able to run multiple applications should other departments later decide to insert their own chips. The Chairperson asked Members not to ask any questions at this stage, save that he questioned whether any other Department had been involved in the processes. The questions could be addressed during November.
Government Print Works then gave a brief presentation on their Annual Report, noting that the Strategic Plan had not yet been finally approved, so there were some issues that could not be addressed. The success of the Government Print Works (GPW) was crucial to the turnaround of the Department of Home Affairs. The history of the GPW was set out, and it was noted that although it had been established as a trading entity under the Department in 1976 there had been asset-stripping and it had prepared and presented a business case for its conversion to another entity, but that this had not been approved. This had severely hindered its ability to improve the processes, get increased funding, or take up opportunities for printing outside of South Africa. Despite this it had managed to achieve some levels of service delivery, as set out in the presentation.
Due to time constraints the financial situation could not be fully examined, save to note that there were still some challenges on debtors. There were six main reasons why the audit opinion had been qualified, exacerbated by the fact that there were no financially-qualified staff with the GPW. The various issues and the plans of action to address them were highlighted.
The Chairperson noted that questions and engagement would take place in November. However, a question was asked as to whether GPW was addressing the Judge White recommendations (which it explained did not apply since the GPW was not a party to the case), how far it had progressed with the new building, and the allocations for purchase of the new passport printing machine. The Committee commended the GPW on its achievements. It noted that this Committee was not in favour of the Corporatisation model proposed, as it felt that the State must retain control, but that also would be addressed in November.
Department of Home Affairs (DHA) Annual Report 2007/08
The Chairperson noted that on the previous day Members had received a briefing from the Auditor General on the disclaimed audit report for 2007/08. This briefing was intended to address some of those issues, as well as to hear the Annual Report briefing from the Department of Home Affairs (DHA). However, the Minister of Home Affairs had apologised that she was unable, for personal reasons, to attend the meeting, and so the delegation would be led by the Director General, which would result in certain of the issues needing to stand over until the following week, including displacement of persons and temporary shelters.
Mr Mavuso Msimang, Director General, Department of Home Affairs, noted that he was saddened by the fact that the Department had received yet another disclaimed audit report. It was necessary to understand the context. He had joined the Department ten and a half months into the 2006/7 financial year. There was considerable baggage carried over from the previous year. Matters in government did not move as fast as he would have liked, and certain bureaucratic procedures needed to be followed. He noted that the disciplinary process against the former Chief Financial Officer was still pending. The currently Acting Chief Financial Officer had started in his post five months before the end of the 2007/08 financial year, the Deputy Director General for Immigration had joined only in February 2008, the technology expert in November 2007 and the person taking charge of the Civics Branch had been appointed only in October 2007. These were key personnel, who had therefore not been in their positions for much time.
The Department had, despite the Auditor General (AG) finding, done some good work in addressing issues raised in previous audits. Before anything could be done to address existing issues, an eight-week period had to be set aside to analyse the status quo and design solutions, including examining the report prepared by the Support Intervention Team (the Team), reports from the past, deal with disciplinary issues, and replace those who had been suspended. There were also consultations with National Treasury (NT) around the budgets, as what existed at the time did not conform to what was being discovered. Contract management improvements had resulted in substantial cash savings. There had been allocation of significant resources and time to address asset, revenue and risk management. Nonetheless, the benefits of these initiatives could not be captured in the 2007/08 financial year.
In the longer term, there was a need to invest substantially in the human resources, systems and infrastructure to achieve desired standards. He anticipated therefore that the qualified audit reports might continue into the next year, unless the DHA could receive assistance in respect of the foreign component of revenue management and the immigration account, whose cycle was longer than the financial year. The suspense accounts must also be discussed and agreed.
The Annual Report reported against both the three-year Strategic Plan and the Annual Performance Plan (which had been amended to take account of new projects and deliverables). It also related to the audited financial statements of the DHA and Government Print Works (GPW).
Mr Msimang noted that the primary strategic goal was to transform the Department into a modern, efficient, cost effective service organisation that responded to the needs of South Africans and visitors. The Minister had mobilised a Support Intervention team that had produced a report in March 2007 and the Turnaround had been launched in June 2007. The first phase, which was service and customer focused, had ended in December 2007. A number of "quick win" areas were identified, on which immediate action was taken, and significant success had been achieved, such as improving the Identity Document (ID) process. Phase 2 was concerned with broad based implementation of change, and the final phase, during 2010 and 2011, would achieve the final transformation. Four main areas were targeted, being service delivery and facilities, people and organisational structure, corruption, security and risk, and Information Technology (IT).
The Strategic Plan for 2007/2008 had been tabled prior to commencement of the turnaround. The revised Annual Performance Plan sought to include the Turnaround projects, and this portrayed a true reflection of what the DHA had achieved.
Mr Msimang then turned to the performance, which he summarised under the strategic objective headings. The first objective was to provide secure, efficient and accessible civic and related services and products to citizens and legitimate residents. The turnaround time for IDs had been improved from 120 days to 42 days. An electronic tracking system –“Track and Trace” - was rolled out. Productivity had been improved by 300%, and the backlog of over 236 000 records in fingerprint verification was eliminated. A new contact centre had led to improvement in handling of customer calls. Processes for ID had been improved in a number of ways (see attached presentation) and 22 million records had been sorted and indexed.
The second major objective related to managing migration effectively, both for skilled workers and visitors. The user requirements for the 2010 FIFA World Cup had been completed, a Large Account Unit had serviced 1 800 permits, and 1 133 quota work permits were issued to foreigners with scarce and critical skills.
The third objective was to determine the status of asylum seekers and manage refugee affairs. The Refugee Affairs capacity had been strengthened, a new biometric system had been developed and piloted, the infrastructure and equipment and systems had been improved at Marabastad, and the Counter-Xenophobia Unit had been set up and was carrying out awareness campaigns. He pointed out that the tasks of dealing with xenophobia fell largely on citizens, and on those local institutions where the immigrants had settled.
The fourth objective related to fostering of domestic, regional and international cooperation. Visa waiver agreements had been concluded, training had been provided to immigration officials from Rwanda and Democratic Republic of Congo, the Facilitation of Movement Agreement had been signed with Lesotho, repatriation of records held in South Africa to Namibia had been concluded and a One Stop Border Post agreement had been signed with Mozambique.
The fifth objective related to implementation of a new organisational model, characterised by caring officials serving with professionalism. The new operational model was being implemented, a nationwide survey had been conducted with clients, a high level plan to transform the Department was developed and agreed, a new governance structure was recommended and implementation had begun, and a draft policy and legislative conceptual framework was developed.
The sixth objective related to putting into place efficient support services that would prevent corruption. He noted that all six previous audit reports were categorised and key risks and issues had been prioritised. A strategy had been developed to deal with risks at the Document Archives. An asset register was compiled, tender and contract management processes were finalised, and cost savings had been realised, especially in regard to the Lindela Deportation Centre and contract revisions. Information services, which had previously lagged behind, had been upgraded and updated and a refugee and deportation system was developed. The Home Affairs National Identification System (HANIS) had been upgraded. Corporate Services had investigated its performance agreements and had achieved 70% functionality on the PERSAL personnel system, and a statement of shared intent had been issued with the union leadership.
Mr Msimang noted that there was now an approved Audit Charter, and an Internal Audit procedure manual had been adopted. Enterprise-wide risk management strategies were facilitated and preliminary risk assessments were conducted, with ten risks being prioritised for management. In respect of counter-corruption, high risk offices were identified, prevention workshops had been conducted, pre-employment screening of 490 prospective employees were conducted and security evaluation on 84 offices had been carried out
Mr Sagaran Naidoo, Acting Chief Financial Officer, DHA, then moved to the financial overview. He noted that the financial turnaround had begun in earnest in November 2007. There were weekly operational meetings with the auditors and turnaround team, and monthly executive meetings with the Auditor General. The Information Systems budget was re-prioritised. An Asset-take exercise commenced in February, but this was still in progress at the time of the audit, so the Asset Register was by that stage not finalised for audit. The Department had completed the backlog of Senior Management Service members’ performance reviews. It had negotiated R68 million savings on the Lindela contract. In the five months prior to the end of the financial year, DHA had addressed the reporting of fraud and error, the completeness of accruals, the commitments, and the clearing of suspense accounts, as far as possible. There was no further fruitless and wasteful expenditure, and the issue of the Fixed Asset register had been addressed in the sense that one was commenced, although the work was still in progress at the time of audit. The Immigration Account Financial Statements had been sorted out by ten years of data having been analysed, and financial statements for the past five years on this account had been produced. The AG had not yet concluded the audit on these.
Mr Naidoo set out, on page 28 of his presentation, the summary of expenditure. 92% of the budget had been spent. The major under-spending had occurred in the area of payment of capital assets, where new buildings had not materialised, as well as re-classification of expenditure to maintenance. New vehicles purchased before year end could not be delivered and paid for in that year, which also resulted in under-expenditure in the financial year, and further under-spending applied in respect of compensation, as certain vacancies could not be filled pending the finalisation of the organisational structure.
Mr Naidoo noted that there were six main areas that remained as challenges, as appeared from the Audit Report. These included the completeness of revenue, the ability to audit the Fixed Asset Register, the completeness of the lease register (which had accounted only for property, and not for movables), and the supporting documentation for Government Garage transactions, where 44 pieces of supporting documents could not be provided, of which the majority were petrol slips. Supporting documentation for the Immigration Account was generated by the Department of Foreign Affairs, via the missions, and that resulted in a time lag, and there were problems with the classification of those expenses, some of which had been posted to incorrect journal accounts. The clearing of the receipt and deposit accounts had been of concern. 32 of the 38 suspense accounts had been cleared. The remaining six related to Cash Received, but there had been progress, and weekly trial balance meetings had been instituted to check and confirm the status of all control accounts.
Mr Naidoo said that there were some fundamental flaws in the manner of collecting the revenue, especially in the foreign missions. At the moment manual spreadsheets were being kept. The processes had now been separated; the local revenue was being addressed by Standard Operating Procedures, with integrated systems and interface with the Basic Accounting System (BAS) and directly with the banks. It was hoped to include this procedure in 56 of the top revenue offices in the 2008/09 financial year. For foreign revenue, an agreement must be reached with the Department of Foreign Affairs, but he noted that since DHA did not have a presence in all the Missions its supervision was limited. The receipting solution was to be put in place at all foreign missions. It might be necessary to have National Treasury intervention. The most likely difference in the foreign allowance account was R14 million, and the general ledgers were being scrutinised to correct mis-postings.
Mr Naidoo summarised the Department's reaction to and interventions in respect of the points raised by the Auditor General. The R392 million worth of assets that could not be verified had been analysed and corrected, as set out in detail on page 34 of the presentation. In respect of assets and their accounting for them, the DHA was still to do some work. It had historical problems with matching of invoices to IT assets, but it would still deal with this, would update the Asset Management Policy, would maintain the asset register and train staff in all procedures. All assets without any economic use and value would be disposed of. In respect of the leases, he noted again that the historical lease register had not reflected all leased property, and this was being updated, and should be completed by December 2008.
Government Garage transactions remained a challenge within the Department, and he reiterated that most of the problems with supporting documentation were related to petrol slips. The DHA and the Auditor General were discussing how to resolve the issues. Additional transportation officials had been appointed throughout the Provinces, to have stronger monitoring controls.
Kgosi K Morwamoche (ANC) stated that he would have liked to have received these documents on the previous day, in line with procedure.
Mr Morwamoche noted that there was likely to be a continuance of the qualified audits. He suggested that perhaps the National Treasury should be asked to intervene. There had been non compliance with the Public Finance Management Act (PFMA), the Treasury Regulations, and Public Service Regulations, as well as non compliance with procedures. Furthermore, the Auditor General had reported that the Department had not produced documents and invoices on request. This non compliance had meant that there were not effective systems of internal control. On a matter of governance, the AG had also raised concerns with regard to the operation of the Audit Committee, which was not following the terms of reference, or the approved internal audit plan. The AG had also noted that the prior year's recommendations had not been substantially implemented. There was, further, roll over of more than 5%. The lease agreements were not in accordance with Treasury Regulations. Changes had been made to plans without the approval of Parliament. He therefore felt that there seemed to be a need to assist the Director General, who himself had said that without such assistance from the relevant departments there could be further problems.
Mr Msimang said that the context of the AG’s comments was that this was "work in progress". He reiterated that all those staff who were able to effect changes had only started their work five months or less prior to the end of the financial year. This had been a serious constraint. Although attempts had been made to address issues prior to that, it was the very same officials who might have caused the problems who were then attempting to rectify them, and it had not been easy to sort out the staffing issues, since the Labour Relations Act had required the Department to move carefully in this regard.
Dr S Huang (ANC) questioned issues on page 37, particularly the lack of supporting documentation in respect of Government Garage, and asked how much this represented, since the audit report of a figure of R76 million did not seem to tally with the number of invoices involved.
Mr W Skhosana (ANC) agreed that this was a concern. He said that Government Garage had been a recurring problem, and it seemed that the inability to sort this out was indicative of an inability by the Department to manage its financial affairs.
Mr Naidoo responded that the figure of R76 million was the total of what had been paid to Government Garage. The maximum of any one payment of any one invoice was minimal, and the 44 pieces of paper had in fact totalled about R3 to 4 thousand. However, he explained that the audit was done on the basis of a sample, and the audit convention was that if the sample failed, then the whole balance was deemed to have failed; hence the reflection of the whole R76 million.
Ms M Maunye (ANC) asked if there would be any agreements made between the DHA and Government Garage, as there seemed to be constant problems.
Mr Naidoo said that he had instituted a system in which all electronic documents related to payments interfaced into BAS and produced an electronic line item per invoice. However, Government Garage was not providing the supporting documentation used to raise and capture the information. The process was being re-engineered. The problem was that the good processes had thus far not been linked to good people on the ground, and until those posts were filled, the paperwork must be re-engineered. There was a tacit agreement for the future, and he was also trying to reach agreement with the AG whether it was absolutely necessary to keep petrol slips, which were small, easily-misplaced, and faded over time. It seemed that reports via the WesBank Fleet Account might be useful and if this was formalised it might put the DHA in a better position to be audited.
He noted that similar discrepancies arose with some of the other figures; for instance, the sampling figure of the foreign missions.
The Chairperson noted that what was of concern was the indication that the DHA was not monitoring the situation. He suggested that surely the information should be scanned, as this was a simple procedure. This was public money, and controls must be in place.
Dr S Huang (ANC) enquired why only one courier was being used.
Mr Msimang explained that in the past a number of couriers were used, but the decision was then taken that it would be operationally more efficiently to have one firm, which had a large country-wide footprint, to attend to all. It had the capacity, was affiliated with the Post Office, and was monitored by a service level agreement.
Dr Huang said that the Department had noted, on page 44, that some assets had been verified, but the figures that had been given did not seem to tally with the AG’s figures, and he called for an explanation.
Mr Naidoo explained that the Audit Report was drawn as at the end of the financial year, and provided only the information up to that date, whereas the report of the Director General was drafted in August, so that reflected updated information subsequent to the end of the financial year. The R125 million had been resolved.
Ms M Matsemela (ANC) commented that the report today had highlighted that some of the turnaround objectives had been achieved. She too asked whether the Auditor General had ignored certain facts, as there appeared to be some conflicts between the AG’s Report and that of the Director General.
Mr Naidoo explained the audit procedures. He noted that the instances of non compliance reported upon covered the whole period, from April 2007 to March 2008. Most departments, for instance, could not do reconcilations daily. They would therefore request an exemption from doing so from NT. However, if that exemption was only given part-way through the financial year, after there had been a failure to do the daily reconciliations, then this would still be reflected in the report as being technical non-compliance with the NT Regulations. He said again that the Auditor General was obliged to report any failures to meet strict accounting standards, but that the AG’s report would not include any context. The context was explained in the Accounting Officer’s report. In fact there was no conflict between the two reports.
Mr Msimang added that the progress on the turnaround strategy was highlighted on page 142 of the Annual Report. The significant progress that had occurred between April 2008 and March 2009 would be included in the next audit report. He reminded the Committee that an audit was essentially a "snapshot" of what was taking place at a given time. The Auditor General would not comment on the positives, but had to look at the period as a whole and give a summary only of the problems that had arisen throughout the year. He noted that in fact it was his own report that would highlight the progress made.
Ms Matsemela noted that the Chief Financial Officer had not yet been employed on a permanent basis. She said that the number of acting appointments and vacancies posed a serious challenge. She asked how long he had been in an Acting Position. She was asking these questions because there appeared to be a lack of stewardship and leadership.
Mr Msimang noted that Mr Naidoo had been appointed as Acting CFO in October 2008. He was still Acting, as the disciplinary process in respect of the previous CFO was still ongoing.
The Chairperson noted, in this regard, that previously the Committee was assured that the case would be finalised within three months, but it had now been dragging on for considerably longer. Although he did not want to go into the specifics at this meeting, he noted his concern.
Mr Msimang conceded that he had seriously underestimated the time that would be taken on this case, and the delays had been occasioned by legal haggling back and forth. The suspended official was still being paid, but Mr Msimang was unable to issue directives on how the case must be dealt with.
In respect of the vacancies generally, Mr Msimang noted that bureaucratic processes must be followed. The objectives were achieved, but more time than anticipated had passed. When a post changed in a Senior Management Service group, Department of Public Service and Administration (DPSA) requirements must be met and there must be consent to the change. He asked that the Committee judge the DHA on the basis of what it could realistically achieve, in view of these constraints, within the time frame.
Mr W Skhosana (ANC) noted that qualified or disclaimed reports were constantly received, yet this Committee was told that there was "work in progress". He asked if there were insufficient staff, or if management of the Department had been taking advantage of the historic problems. He asked why the department had not implemented a basic monthly or quarterly on-line report.
Mr Skhosana noted that work was to be undertaken in various provinces, and he asked if the Department had managed to establish a monitoring mechanism against fraud and corruption in all the provinces, as this had been a stated objective.
Mr Skhosana also asked for comment whether the management of the finances should perhaps be handed over to National Treasury.
The Chairperson said that the Committee had taken note of the achievements to date. He noted that the turnaround had been running for about 16 months. The Team had been brought in precisely because of similar problems some years ago. The Minister had also previously deployed National Treasury and DPSA staff, who had identified some of the issues. In the current financial year R250 million had been allocated to the Team and the total thus far spent on the Turnaround was almost R1 billion. His greatest concern was that the issues that the Auditor General had raised were simply recurring. The non-compliance with legislation was disturbing. The Accounting Officer had failed to abide by requirements of the PFMA and had also failed to implement controls, and therefore to account properly.
The Chairperson added that there were a number of matters raised in the presentation that were not covered in the Annual Report. Despite the allocations, and the support, there had not been a real turnaround, as the Department had again reverted to the position where it received a disclaimer. He would like to reach an understanding as to how to move away from these consistent problems. He noted that the Auditor General had also indicated that he thought the Department perhaps needed more assistance, but this begged the question of what the Turnaround Team was doing, especially in their addressing of internal controls. He pointed out that South African Revenue Services (SARS) had achieved some substantial successes in their turnaround, and this should not be impossible to achieve.
Mr Msimang agreed that he had assured the Committee last year that he had hoped there would not be another disclaimer. When he made that statement, he had reckoned without the bureaucratic processes that had later confronted him, including the protracted consultation with DPSA. When the top three layers of any Department were changed, it was necessary to consult with DPSA, and it took no less than two months to do so. Until that process had been completed, the vacancies could not be filled. Until the vacancies were filled, the work could not be done. Many of the things he had anticipated doing were therefore hindered by processes. This Department was a Department, and not an entity, such as SARS, and he had not been permitted to go to the open market and try to source the best possible staff, nor to use the SARS formula. None of the fundamental restructuring that he had wanted to implement, including paying certain sums to line management, could be done. There were real limitations and problems, and, with respect, he doubted that National Treasury or any other entity could have achieved more.
The Chairperson said that, looking at current capacity, it would seem that it would take some time for the DHA to arrive at a better position. He commented that it might be necessary for the DG to run a department staffed by consultants, as it seemed the correct capacity did not exist in the Department or indeed in the public service, but questioned whether the State had the resources to do so. He understood that as much as the Director General wanted to implement certain measures, he was being told that the Department must operate within the public service rules. He therefore thought that there was a real need to engage around the point that DPSA and NT must become involved as support departments. The DHA clearly needed to build capacity.
The Chairperson noted that everything in the country was dependent on DHA. He commented that 5 million out of 47 million people in the country were undocumented, and this did not augur well for the security of the country. This system could not be allowed to collapse. It was unfortunate that the Executive was not present, as the Committee was limited in how far it could go with this engagement. Parliament, however, had a responsibility to give the Director General the necessary support.
Mr Msimang noted that he wished to comment on the undocumented people. Asylum seekers were being processed much faster than in the past. If there were indeed 5 million illegal immigrants, then he could assure the Committee that at least three quarters of them would be attempting to avoid DHA, and would be unlikely to reveal their presence nor actively seek documents. DHA did not police the borders and could not prevent them from coming in.
Mr Msimang noted that he appreciated the comments and concerns. He noted that he too was in a difficult position. One option open to him, when he discovered that his original plan could not be implemented, would have been to leave, but he had made a commitment to a public sector organisation, and his withdrawal would not assist. Building an organisation could not be achieved overnight, particularly when there were also historic difficulties that had accumulated over several years. He said that a person visiting some of the DHA offices and seeing attitudes could see the difficulties. However, he was not too pessimistic. He reiterated that many of the changes could only commence late in the financial year. The Team had indeed been in existence for some sixteen months, but their mandate was to identify and point out the ills of the Department, but not to do anything further about them. That had been left to himself. He said that if there were better options, he would be happy to consider them.
In respect of the comments about consultants, Mr Msimang noted that although they had been expensive to hire, they had done a good job in the process engineering and their knowledge had been passed on to the Department. The consultants had been used optimally in the Department, and a structure was developed to have DHA ownership right from the start, with the Departmental staff themselves being required to report properly, so that the "hand-holding" was not being perpetuated. In order to bridge the knowledge and skills gap, the management leadership support was hired in over a fixed period, not exceeding six months, to pass on knowledge and skills to senior staff.
In regard to questions raised about appointments, Mr Msimang noted that the Acting appointments, once confirmed into final appointments, would be a positive step. The Department could either have appointed more consultants on three year contracts, or develop from within. Although the latter option took time, he was greatly encouraged with the staff, as they had worked with the consultants and also knew the organisation, and were prepared to change things that had not worked well in the past. He reiterated that he would be prepared also to explore other options, provided that they might achieve better results. However, he again also reiterated that nobody would have been able, or could currently be able to achieve turnaround in a shorter period of time. He would support what the Committee suggested, in terms of assistance by DPSA and NT, but cautioned that instant results would never be achieved. There was far too much that had gone wrong over a long period of time. He asked that the Committee give the DHA a fair chance, and bear in mind that the public service requirements simply had not permitted faster moves.
Kgosi Morwamoche reminded Members that nobody at the DHA had been charged for previous breaches of the PFMA. He thought that this was part of the problem. He reiterated that he felt an intervention was needed.
Ms Matsemela hoped that there was an Internal Audit mechanism, and asked whether this was functional. She was concerned that sometimes DHA had not been able or had been unwilling to produce documents.
Mr Msimang confirmed that in the past the internal audit had been problematic.
Ms F Mathibela (ANC) noted that on the previous day the AG had noted that there were documents that could not be found to verify the Fixed Asset register.
Mr Naidoo responded that the DHA had gone around the country, bar-coding and doing an asset count. It had also extracted all the invoices relating to assets over multiple years, and tried to match invoices to assets. When the Department moved from Civitas Building, some of the documentation had gone missing, including invoices. However, he noted that the Accountant General had issued a practice note in 2003 to the effect that where no other documentation was available, a department could adopt a “fair value” process in order to comply with Asset Register requirements. Unfortunately, there was also an NT Regulation to the effect that all documents had to be kept for five years, and technically therefore DHA was in breach of that Regulation. The amounts referred to assets bought over the last five years; but for the last two years the documents were available.
Ms Mathibela referred to the direct transfers from the cash receipting machines to the bank, and asked if this system allowed for the funds to be identified and also for where they must be posted in the books of account.
Mr Naidoo said that the receipting system identified 65 possible transactions. It would do the cross-casting from reference numbers and enabling documents. This system had been implemented since October 2007, but prior to that there was a manual system with a till slip. DHA planned to roll out this system over the next eighteen months and would be in a better position then to track front office services to back office services.
Ms M Maunye (ANC) asked if the Aliens Account still existed.
Mr Naidoo confirmed that this was now called the Immigration Account, and it had been reconciled, and financial statements had been produced for the last five years, although they were not audited.
Ms Maunye then asked if there was an official banking policy, and, if not, when this would be implemented, in order to comply with the PFMA.
Mr Naidoo said that this was set by National Treasury, and DHA did follow it, although it had not yet been tailored it into a policy for the department. It was merely a matter of adopting and localising it. A policy to write off debt had now been approved by Exco and management. In general, he commented that all compliance issues were to be firmed up.
Mr Skhosana noted that the DHA had committed itself to the vetting of a total of 192 employees. He noted that only 83 had been achieved, and asked why this number was so low.
Mr Msimang noted that in respect of vetting the DHA was highly dependent on National Intelligence Agency (NIA) and that was the reason for the low numbers.
The Chairperson noted that it had only been possible at this meeting to spend a few hours with the Department, but he would like the DHA also to look at the written queries, which addressed issues similar to those raised previously with the Minister, and give responses. These would include the issues of immigration and Civic Services, which could not be dealt with today because of time constraints. A further briefing would be arranged for November.
He reiterated that the DHA clearly needed assistance with capacity, and with employing people to fill the vacancies, especially several senior positions, which must be filled in order for the Director General to achieve what he wished. The Committee thus took a formal resolution, which it would place before the House, and which would thereafter be forwarded to the Minister, that the Minister must seek assistance from DPSA and National Treasury to address the problems, particularly the lack of controls around public funds. The Minister would need to report back to the Committee within one month. This Committee remained confident that the Director General, with assistance, would be able to achieve what he had sought to do, and achieve improvements in the audit report. The Annual Report discussions should be seen as ongoing.
Smart ID Card Update Briefing
Mr Vusi Mkhize, Acting Deputy Director General: Civic Services, DHA, noted that there had been an Inter-Ministerial Committee to approve how to move forward with the Smart ID Card. The process would be done through fingerprinting, and about 30 million prints had been captured and automated, with the backlog having been completed. A pilot rollout was planned for the first quarter of 2009. The objectives of the Pilot would be to test the functionality of the selected solution.
The tender was initiated on 16 May, and 90 suppliers had attended the briefing conference. The tender had closed on 29 June, after eight supplier bids were received. The tender evaluation process was being done presently at State Information Technology Agency (SITA) and should be completed by the end of October. The Tender Evaluation Committee had to ensure a segregation of functions, across the Black Economic Empowerment, Technical Evaluation and Pricing Evaluation Committees. He tabled the evaluation Committee members, who they represented, and their role. The Auditor General would audit the process. The card design was currently being finalised, and Cabinet would approve it.
The ID card would be difficult to reproduce, would be tamper-resistant and durable. There would be access to biometrical information for authentication. It would be compliant with the Electronic Communications and Transactions Act. Offline verification would also be possible. It could only be activated by the cardholder biometric, which would reduce theft in transit and corruption during the creation of the card.
The benefits of the Smart Card would include a reduction in labour intensive processes, which would improve turnaround time. There would be immediate transaction, minimisation of errors and faster processing, improving access to benefits for needy groups. The card could also be able to run multiple applications. It would provide easy access to other Government services, and self-service internet for convenience. The introduction of this Card would significantly reduce the costs associated with identity theft, and would reduce the ability of syndicates to siphon money, to get fraudulent access to government services, and reduce identity theft and fraud.
The Chairperson indicated that no questions should be asked at this stage, as it would be dealt with during the next meeting. However, on a point of clarity, he asked if there was involvement with, or what the roles of any other department would be. He noted that in the Annual Report of 2001/2002, it was noted that the DHA had engaged with other departments on the feasibility of the Smart Card, particularly the Department of Social Development. The Department of Transport had decided to follow its own route with driving licences.
Mr Msimang agreed that it would be desirable to have a single card. The Executive had taken the position that DHA must take the lead. Other departments were aware of this. However, the concern was that this might never happen if DHA had to wait for the approval of all others. The card, however, was "scaleable", and other Departments would be able to insert their own chip into the Smart Card with their own information if necessary.
Government Print Works (GPW) Annual Report
The Chairperson noted that the Strategic Plan of Government Print Works (GPW) had not yet been approved, as there were still some outstanding issues. However, these would not necessarily be addressed at this meeting. He noted that there was only time for a very brief report on the Annual Report.
Mr Tom Moyane, Chief Executive Officer, Government Print Works said that the success of GPW was key to the turnaround of DHA and the sanctity of the State as it was the mandated security printer.
The GPW was established in 1888, but asset stripping had resulted over many years. Finally, it was established as a trading entity under DHA in 1976, but was unable to secure adequate revenues to capitalise and invest in modern facilities and equipment required of a state-of-the-art printer. A business case was prepared and presented to NT and DPSA in May 2007 for conversion to corporatisation, as mentioned in a previous presentation to this Committee, but this had never been finalised. GPW believed that corporatisation was key to the delivery of security printing, as all the time the organisation had been hampered by its circumstances.
The AG had raised various qualifications in the financial statements, but these were not fully addressed to date. Challenges included the fact that the DHA charged the public for the printing of documents but revenue from this flowed to the national fiscus, and not GPW. Profits could not be retained for future investment and this had resulted in asset stripping. Opportunities for printing outside of RSA could not be maximised, due to capacity and other constraints. GPW had ventured into other printing areas to remain viable, but these were non core. It required additional government funding. Its facilities were not conducive to a manufacturing environment. The DHA understood these issues and was committed to implementing a turnaround strategy that did meet stakeholder aspirations.
Despite these problems, Mr Moyane noted that service delivery had continued. In the printing sector there had been substantive development, with growth of 33%.There had been 17% extra contract printing, but this was limited by internal constraints. There had been 25% growth in publications. Warehousing was not cost effective and had dropped. There had been underperformance on personnel, because many posts had not been filled, since staff promotion and development was not adequate to attract staff. Purchases of equipment had not taken place, and much of the equipment was being hired at the moment. However, the transformation was moving, and it was to be stressed that the organisation must transform internally to achieve what it wanted.
Mr Moyane said that he would not, because of the time constraints, deal with the balance sheet, save to say that the debtors still remained a challenge and there had been dedicated resources to focus on this.
Mr Rassie Barnard, Acting Chief Financial Officer, GPW referred to pages 12 to 14 of the presentation. He summarised that there were six main categories of qualifications in the audit report. However, he noted that the GPW did not have a single person in its financial department with a degree in finance. The matters were complex, and proper costing of products was posing a real challenge. Pages 15 to 22 of the presentation contained the detail of the various issues and possible solutions, and an action plan had been drawn to address the audit comments, with the relevant time frames and lines of responsibility set out.
Mr Moyane emphasised that GPW had a strategic objective based on technological upgrading, and production process automatisation. He noted that there had been some developments. The new facility now housed the passport printing machine, for which he thanked the DHA. Meetings and discussions had been held with international stakeholders, around the format and production of the new passports, and he was confident that these new passports would be superb and amongst the best internationally, with full credibility. In order for GPW to remain viable and meet its requirements it must have a strong marketing principle that in turn must be based on strong documentation. Finally, he noted that a remaining objective was corporatisation. GPW was still waiting for approval of the business plan by the Minister of Finance and Parliament. A thorough consultative process had been held, with DHA, Government Communication and Information Systems, NIA and organised Labour. Despite the problems there had been significant inroads to support the turnaround strategy within Home Affairs.
The Chairperson noted that all questions and engagements on this could take place in November.
Kgosi Morwamoche asked, for clarity, about the comment of the Auditor General on the non compliance with legislation, including the implications of the Judge White Commission.
Mr Moyane said that this was being dealt with by the DHA, as GPW was not a party to the relocation issues.
Ms Maunye questioned how far the GPW was with its new building.
Mr Moyane showed some pictures of the progress. The GPW would move to the new premises within the next few months.
The Chairperson noted that last year it was mentioned that R800 million would be allocated to the new passport machine, yet he saw only the allocation of R110 million reflected. He asked for clarity.
Mr Moyane said that R110 million was allocated by National Treasury and that had been received for the passport machine. In the current year, R135 million from the DHA had been received.
The Chairperson said that at the next meeting the Committee would interrogate the Auditor General’s findings, but he also wished to record his congratulations on the achievements. He reminded the GPW that the Portfolio Committee had already noted that it was not in favour of corporatisation, believing that any model to be instituted must include State control, as State printing could not be done independently of the State.
The Chairperson noted that there had been calls for support on the costs of obtaining photographs and ID documents, so that younger citizens, and the poorest of the poor, would be able to vote in the next election. This too would be discussed in November.
The meeting was adjourned.
- Government Print Works presentation on Annual Report 2007/08 [Part 3]
- Government Print Works presentation on Annual Report 2007/08 [Part 2]
- Government Print Works presentation on Annual Report 2007/08 [Part 1]
- Department of Home Affairs presentation on progress of Smart ID Card
- Department of Home Affairs Annual Report 2007/08 presentation
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