Social Development2019BRRR
4. Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Social Development, on the performance of the Department of Social Development and its entities for the 2018/19 financial year, dated 16 October 2019
The Portfolio Committee on Social Development, having considered the performance and the submission to the National Treasury for the medium term period of the Department of Social Development, the South African Social Security Agency (hereafter SASSA or the Agency), and the National Development Agency (hereafter the NDA or Agency) reports as follows:
- Introduction
The Portfolio Committee on Social Development as an extension of the National Assembly of Parliament is tasked with a mandate to conduct oversight over the Department of Social Development and its entities the South African Social Security Agency (SASSA) and the National Development Agency (NDA).
The Committee’s mandate as prescribed by the Constitution of South Africa and the Rules of Parliament is to build an oversight process that ensures a quality process of scrutinising and overseeing the department’s action, that is driven by the ideal of realising a better quality of life for all people of South Africa. It is also required to facilitate public participation, monitoring and oversight over the legislative processes relating to social development and also to confer with relevant governmental and civil society organs on social development matters.
The Committee also enhances and develops the capacity of its members to exercise effective oversight over the Executive Authority in social development. It monitors whether the Department of Social Development fulfils its mandate according to priorities.
The Committee also has a mandate to perform the following:
- Considers legislation referred to it;
- Conducts oversight of any organ (s) of the state and constitutional institution(s) falling within its portfolio;
- Facilitates appointment of candidates to entities;
- Considers international agreements; and
- Considers budget of department and entities falling within its portfolio.
For the current medium term (2014 – 2019), the Committee’s oversight focuses on the department and its entities performance with regard to the implementation of the priorities set in the National Development Plan and in the Medium Term Strategic Framework. The Committee also conducts oversight over the department’s performance in implementing the priorities of the State of the Nation Address (SONA).
National Development Plan (NDP)
These are the priorities of the NDP that the Committee focuses on:
- establishment of a social floor which outlines an acceptable or decent standard of living,
- bringing the informal sector into the mandatory contributory scheme,
- expanding social welfare system,
- reviewing funding to not-for-profit organisations,
- training more welfare professionals and community workers,
- expanding public employment programmes,
- promoting opportunities for youth employment.
- use of social audits to enhance accountability in the welfare system, and
- the integration of all databases of people who receive different forms of social security services.
The Medium Term Strategic Framework (MTSF)
These are the priorities of the MTSF that the Committee focuses on:
- provision of quality and universal early childhood development (ECD) accessible to all young children and their caregivers,
- universal access to social assistance benefits, at least to 95% of eligible people;
- strengthening of community development emphasizing the roles of community-based planning and
- profiling of communities, in the process identifying vulnerable households.
2018 State of the Nation Address
The 2018 SONA outlined the following policy objectives in the area of Social Development:
- The Reducing income poverty by providing social assistance to eligible individuals;
- Improving service delivery;
- Improving internal efficiency; and
- Institutionalising social grants payment system within SASSA.
1.2 Purpose of the BRRR
As part of exercising its oversight work, the Committee considered the 2017/2018 annual reports of the department and its entities. This BRRR reports on the financial and non-financial performance of the department and its entities.
In terms of Section 5 of the Money Bills Amendment Procedures and Related Matters Act, No. of 2009, the National Assembly (NA) through its committees must annually assess the performance of each national department. Portfolio Committees must thus annually submit Budget Reviews and Recommendation Reports (BRRRs) for tabling in the NA in order for Parliament to compile a report for the Medium Term Budget Policy Statement.
The Money Bills Amendment Procedure and Related Matters Act therefore make it obligatory for Parliament to assess the department’s budgetary needs and shortfalls vis-à-vis the department’s operational efficiency and performance.
Most importantly, the budget review process enables the Committee to amend the budget allocation of the department through the recommendations it makes. Its recommendations are considered during the consideration of the Medium Term Budget Policy Statement (MTBPS).
The budget review process also enables the Committee to make recommendations to the Minister of Social Development on issues pertaining to service delivery. This therefore means that the analysis contained in the BRRR is both backward and forward looking.
2. Methodology
The BRRR culminated from a very intense and thorough analysis and interaction with the Department and its entities. These included a briefing from the Department of Social Development on its quarterly reports, briefings on the annual reports of the department and its entities and a briefing from the Office of the Auditor-General on the audit outcomes of the department’s financial and non-financial performance in the year under review (2018/2019).
3. Mandate of the Department of Social Development
The department derives its mandate from several pieces of legislation and policies, including the White Paper for Social Welfare (1997) and the Population Policy (1998). The constitutional mandate of the department is to provide sector-wide national leadership in social development by developing and implementing programmes for the eradication of poverty and social protection and development amongst the poorest of the poor and most vulnerable and marginalized.
The department’s mission is “to ensure the provision of comprehensive social protection services against vulnerability and poverty within the constitutional and legislative framework, and to create an enabling environment for sustainable development’’. The Department further aims to deliver integrated, sustainable and quality services, in partnership with all those committed to building a caring society.
The vision of the department is to create a caring and integrated system of social development services that facilitates human development and improves the quality of life.
4.Strategic overview of 2018/19
4.1 Strategic Priorities of Government
National Development Plan
The vision of the NDP is that by 2030 South Africa would have a comprehensive system of social protection that includes social security grants, mandatory retirement service, risk benefits such as unemployment, death and disability benefits, as well as voluntary retirement savings. It proposes, amongst others, defining a social floor, which outlines an acceptable or decent standard of living, bringing the informal sector into the mandatory contributory scheme, expanding public employment programmes, and promoting opportunities for youth employment.
Further, it focuses on expanding social welfare services, reviewing funding to not-for-profit organisations (NPOs), and training more welfare professionals and community workers. The NDP also proposes the use of social audits to enhance accountability in the welfare system, and the integration of all databases of people who receive different forms of social security services.
The 2018 State of the National Address (SONA) outlined key policy objectives in the area of Social Development; namely to:
- Continue expanding Early Childhood Development (ECD) programme;
- Create youth employment opportunities;
- Support the emerging rural and township SMMEs and cooperatives;
- Support and improve interface between the state and non-governmental organisations (NGOs);
- Expand economic opportunities for people with disabilities; and
- Enforce Batho Pele principles.
Medium Term Strategic Framework (MTSF) 2014-2019
The MTSF builds on the significant achievements of the first two decades of democracy. The MTSF (2014-2019) provides key targets pertaining to the Department and state that:
- By 2024, an essential age- and developmentally stage-appropriate package of quality early childhood development (ECD) services is available and accessible to all young children and their caregivers.
- Universal access (at least 95% of eligible people) to social assistance benefits by 2019; notably the child support grant, disability grant and old age pension.
- Work on community development will be strengthened, emphasising the roles of community-based planning and community profiling, in the process identifying vulnerable households. Support will be provided to establish community-based structures, including cooperatives.
Department of Social Development Strategic Plan (2015-2020)
The Department’s Strategic Plan (2015-2020) aims to (a) strengthen community development interventions and child protection services, (b) improve the quality of (i) ECD services, (ii) social crime prevention and victim empowerment in order to reduce the incidence of crime and substance abuse, (c) facilitate the provision of support services to target groups, and (d) strengthen social welfare service delivery through legislative and policy reforms by 2019.
The Department focused on the following key priorities over the 2016/17 -2018/19 Medium Term Expenditure Framework (MTEF):
- Increasing access to social assistance;
- Investing in and increasing access to effective early childhood development services;
- Reforming and standardising the social welfare system;
- Expanding social development services;
- Improving household access to food and nutrition; and
- Strengthening community participation in service delivery.
5. Quarterly performance of the department 2018/19
As per the provisions of the Money Bills Amendment Procedures and Related Matters Act, No. of 2009, the National Assembly committees are required to scrutinise quarterly reports of the department. The section below highlights the key findings of the Committee over the quarterly performance of the department.
5.1 Programme performance – quarterly achievement of targets & expenditure
Table 1: Achievement of targets per quarter
Quarters |
Set targets |
Achieved targets |
Partially achieved targets |
Not achieved targets |
Allocated budget |
Budget expenditure |
Quarter 1 |
55 |
39 (69%)* |
6 (11%) |
10 (20%) |
R391.7 million |
R42.2 million (22.4%) |
Quarter 2 |
56 |
26 (65%) |
7 (13%) |
12 (22% |
R162. 9 billion |
R42. 7 billion (24.7%) |
Quarter 3 |
56 |
35 (63%) |
10 (18%) |
19 (22%) |
R1. 3 million |
R43.7 million (25.2%) |
Quarter 4 |
55 |
42 (75%) |
5 (9%) |
8 (16%) |
R392.3 million |
R43.9 million (25.4%) |
Total |
222 |
142 (63%) |
28 (13%) |
49 (22%) |
R172.8 billion |
R172.6 billion (98%) |
- The department reported 79% achievement in reporting of subsequent quarters
The department set to achieve 222 annual targets for the year under review. For quarters 1 and 4 it set to achieve 55 targets and 56 targets for quarters 2 and 3 respectively. The achievement of targets in quarters 1 and 4 demonstrated a high performance of 69% and 75% respectively. For quarters 2 and 3, the achievement of targets dropped to 65% and 63% respectively. Quarter 2 had a lowest performance at only 26%. It must however be noted that the department reported on different percentages for Quarter 1 in its programme performance trend when reporting for Quarters 2 – 4. It reported that the department managed to achieved 79% of planned targets, partially achieved 10.5% (instead of 11%) and not achieved 10.5% (instead of 20%). It makes it difficult to have an accurate assessment of the department’s performance during Quarter 1. It indicates a huge discrepancy in the reporting.
5.3 Committee recommendations on quarterly reports
5.3.1 The Minister of Social Development must ensure that:
- The department fast-tracks the process to finalise the White Paper on Social Welfare as most of its programmes are linked to this paper.
- The department’s set targets on its quarterly report should reflects timeframes to achieve certain targets.
- The department develops a cost saving business plan to use it as a tool to save costs on certain programmes. It cautioned that a lot of money was spent on accommodation and
S&T for officials.The department must look at making use fieldworkers to carry out certain projects.
- The department expands its target to present the National Plan of Action for Children in the National Children’s Rights Interpectoral Coordinating Committee to other five remaining provinces, namely, Gauteng, Limpopo, North West, Western Cape and Free State.
- The South African Social Security Agency (SASSA) and the National Development Agency (NDA) should also report on their quarterly performance as from the 2019/2020 financial year.
6. Annual performance of the department 2018/19
6.1 Programme performance
The department’s Annual Report is analysed in conjunction with its 2015–2020 Strategic Plan, which provides valuable information on its annual plans and achievements. The report also provides information on the operational successes of the department in relation to its programmes and sub-programmes.
The department indicated in its annual report that it reconsidered some of its 2018/19 APP targets, and an errata APP was developed to reflect the revised commitment. As a results of this revised commitment, Programme has 2 extra targets while Programme 3 has 2 targets not reported on. The following percentages are therefore based on the initial APP 2018/19 targets that were presented before the Portfolio of Social Development Committee last year on the 25th April 2018.
6.1.1 Programme 1: Administration
Objective: To provide leadership, management and support services to the Department and the social development sector.
Table 2: Programme 1: Administration
Total targets set Annual Performance Plan (APP) |
6 |
Total targets reflecting in the Annual Report |
7 |
Targets achieved in Annual Report |
3 |
Targets not achieved |
3 |
Targets not reported on/additional |
1 additional target from APP |
Performance success rate |
42.9% (as per Annual Report targets) |
Total budget spent |
R361.367 million (92.2%) |
The department’s targets under the Administration programme increased from 6 to 7 as part of the revision of its 2018/19 APP. The department met 3 out of 7 targets set – resulting in a 42.9% success rate.
The department failed to finalise its organizational structure and that impacted negatively on two targets related to achieving a governance and oversight framework for departmental entities. None of these two targets were achieved.
The department also failed to achieve its target to establish a National Integrated Social Information System (NISIS) governance framework and to enhance the existing data sources. This was attributed to the lack of cooperation from identified Social Protection Cluster departments. The department committed to ameliorate the situation by formalising the NISPIS governing at political level and at steering committee level. It will also request National Treasury to ring fence a budget for this purpose.
For the year under review, this Programme spent a total of 92.2% as opposed to 99.4% in 2017/2018 financial year.
6.1.2 Programme 2: Social Assistance
Objective: To provide social assistance to eligible beneficiaries in terms of the Social Assistance Act 13 of 2004, and its regulations.
Table 3: Programme 2: Social Assistance
Total targets set Annual Performance Plan (APP) |
8 |
Total targets reflecting in the Annual Report |
8 |
Targets achieved in Annual Report |
6 |
Targets not achieved |
2 |
Performance success rate |
75% |
Total budget spent |
R162.709 billion (99.9%) |
This Programme achieved a performance rate of 75%, compared to a 100% achievement in the previous financial year. It was reported that reasons for non-achievement were beyond the department’s sphere of control. For an example, the War Veterans Grant depends on the person’s life span, while the Social Relief of Distress (SRD) depends on qualifying criteria, which are needs driven.
The department set a target to reach 252 833 beneficiaries of SRD for 2018/19 and it reached 443 687 beneficiaries. This is despite the fact that actual achievement in 2017/2018 amounted to more than double (573 196) the targeted number of 500 000. This raises a question of how realistic are the department’s projections and setting of targets
This Programme spent 99.9% of its allocated budget compared to 98.41% in the previous financial year. The under-expenditure mainly related to slow spending on SRD and the War Veterans Grant due to lower than anticipated projected beneficiaries.
Some considerations on Social Grants
- The South African Social Security Agency (SASSA) is responsible for the administration of social assistance grants. In the year under review, social grants increased from 17.5 million in the previous financial year to more than 17.8 million. Out of the 17.8 million beneficiaries receiving social grants, 12.4 million are children benefiting from the Child Support Grant and 3.5 million are older persons.
- Critics have indicated that grants are not indexed against inflation. The benefit amounts were adjusted during the Medium-Term Budget Policy Statement (MTBPS) to counter inflation, with an average increase of 6% for most grants, which was above inflation.
- The Financial and Fiscal Commission (FFC) indicated that research shows little evidence that an alternative use of resources invested in social grants will lower the poverty head count, poverty gap and poverty severity. However, some studies indicate that social grants have a positive impact and the CSG in particular, on alleviating poverty and promoting child well-being.
- South Africa has a high unemployment rate, social grants, together with access to quality education, health and social services and other measures, support families to care for their children, and are an essential component of broader social protection strategies to enable all children to realise their full potential. It is imperative to note that the NDP calls for inclusive economic growth and employment creation as key strategies for tackling the structural causes of poverty and inequality in the country. Social grants are more likely to reduce economic inequality. Studies on the impact of the social grant show that it plays a role in lowering the cost of health services and agriculture and food products.
Moreover, the High Level Panel on the Assessment of Key Legislation and the Acceleration of Fundamental Change (HLP) has found that, there is a lack of coordination between the social grant system, community workers and community works programme. In its report to the Committee on its responses to the HLP findings and recommendations, the department reported that it was working with other government departments with the aim to find strategies and models on how can government services can be linked at both policy level and systems level.
6.1.3 Programme 3: Social Security Policy and Administration
Objective: To provide for social security policy development, administrative justice of social grants, and the reduction of incorrect benefits payments.
Table 4: Programme 3: Social Security Policy and Administration
Total targets set Annual Performance Plan (APP) |
5 |
Total targets reflecting on the Annual Report |
3 |
Targets achieved in Annual Report |
3 |
Targets not reported on in Annual Report |
2 |
Performance success rate |
100% (as per Annual Report targets) |
Total budget spent |
R7.840 million (99.5%) |
Key issues
- As stated previously, the department indicated that it reconsidered some of its targets and an errata APP was developed to reflect the revised commitment.
- Out of 5 targets set in the 2018/19 APP, a total of 2 targets were not reported on in the Annual Report. The following two targets that were not reported:
- Submit policy on mandatory cover for retirement, disability and survivor benefits to Cabinet approval.
- Submit policy on voluntary inclusion of informal sector workers in social security to Cabinet for approval.
- While the overall programme achieved a 99.5% expenditure rate, the highest under-expenditure was recorded in the Social Security Policy Development sub-programme, which spent 63.7% of its final appropriation.
6.1.4 Programme 4: Welfare Services Policy Development and Implementation
Objective: To create an enabling environment for the delivery of equitable developmental welfare services through the formulation of policies, norms and standards and best practices and the provision of support to the implementation agencies.
Table 5: Programme 4: Welfare Services Policy Development and Implementation
Total targets set Annual Performance Plan (APP) |
23 |
Total targets reflecting on the Annual Report |
23 |
Targets achieved |
14 |
Targets not achieved |
9 |
Performance success rate |
60.9% |
Total budget spent |
R1.277 billion (98.2%) |
The department reported on all 23 targets set under this programme. Out of the total of 23 targets, 14 were achieved, resulting in 60.9% success rate. Out of the nine (9) targets not achieved, 6 were linked to actual performance requiring either submission to, or approval by Cabinet. These include:
- The Programme of Action (POA) for Addressing Gender Based Violence due to Cabinet submission order to link it with Femicide Presidential National Submit outcomes.
- The National Drug Master Plan was not submitted to Cabinet because the new Minister recommended for further consultation.
- The National Plan of Action for Children was held back from Cabinet approval to align it with the 6th Administration of government.
- The Child Care and Protection Policy was not submitted to Cabinet but to the relevant Cabinet committee, which returned it with recommendations.
- The White Paper on Social Development was not submitted to Cabinet. It will be subject for further stakeholder engagement as directed by MINMEC.
- The National Strategic Framework on Disability Rights awareness campaigns was not submitted to Cabinet for approval. This was attributed to a moratorium on the filling of posts.
- A final report on the costing of the Victim Empowerment Support Service Bill was not achieved due to the fact that technical experts only commenced their services during the third quarter of the financial year.
Achievements
- In terms of Early Childhood Development, the department has set itself a target of monitoring the implementation of the National Integrated Implementation Plan on ECD policy. The department achieved this target and quarterly progress reports were produced.
- The Children’s Act implementation was monitored as envisaged and the department produced a report on the findings.
Under this Programme, the department spent 98.2% of its allocated budget compared to 95.8% in the previous financial year.
6.1.5 Programme 5: Social Policy and Integrated Service Delivery
Objective: To support community development and promote evidence-based policy making in the Department and the Social Development Sector.
Table 6: Programme 5: Social Policy and Integrated Service Delivery
Total targets set on Annual Performance Plan (APP) |
18 |
Total targets reflecting on the Annual Report |
15 |
Targets not stated in APP |
3 |
Targets achieved in Annual Report |
13 |
Targets not achieved |
2 |
Success rate |
86.7% (as per Annual Report targets) |
Total budget spent |
R390.312 million (99.5%) |
Under this Programme, the department set to achieve 18 targets in the APP but this was revised to 15 targets in the Annual Report. It managed to achieve 15 targets, marking 86.7% success rate. It exceeded its target to reach 415 000 vulnerable individuals with food parcels through its Community Nutrition and Development Centres (CNDCs). It reached 1 160 433 million individuals. The variation was due to high demand for food by vulnerable people. The department should thus consider to what extent its targets are realistic to the actual demand.
The department managed to link only 678 cooperatives against a target of 1 000, to its economic opportunities. This was attributed to the implementation of the National Treasury Reclassification Circular 21 which reviewed the funding model. It requires that cooperatives to be funded under Goods and Services. The department reported that cooperatives were significantly affected as they are not acquainted with SCM processes.
The department did not achieve its target of submitting the NPO Amendment Bill to Cabinet due to the delays in phase two of the Socio-Economic Impact Assessment System (SEIAS). This target was carried over to 2019/20 financial year.
6.2 Conditional grants: anti-substance abuse
The department funded four provincial departments, namely; Eastern Cape, Free State, Northern Cape and North West. The Free State Provincial Department received a total amount of R31 945 million and only spent R272 000, the reason for this under expenditure is that the treatment centre only became fully operational in February 2019. The appointment of the first staff members took place in September 2018.
7. Report of the Auditor-General (AG)
The department received a qualified audit opinion due to the following findings:
- Annual financial statements: the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1)(b) of the PFMA. Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected, which resulted in the financial statements receiving a qualified opinion.
- Expenditure management: some payments were not made within 30 days or an agreed period after receipt of an invoice, as required by treasury regulation 8.2.3.
- Procurement and contract management: some of the contracts and quotations were awarded to bidders based on preference points that were not allocated and/or calculated in accordance with the requirements of the Preferential Procurement Policy Framework Act and its regulations related to the awarding of BBBEE points.
- The expenditure relating to social assistance grants was not supported by accurate, sufficient and appropriate evidence.
- Management did not review and monitor compliance with applicable legislation in terms of preferential procurement as the policies and procedures were not updated with the new requirements.
- Noted that Hawks is currently performing investigations on social assistance grants fraud. The investigations are ongoing.
7.1. Summary and analysis of annual financial statements
Virements
At the close of the 2018/19 financial year, the department made no virements.
Unauthorised, fruitless and wasteful expenditure
- During this financial year, 2018/19, the department identified irregular expenditure to the value of R7 611 million compared to R904 million in 2017/18. The reason for this was (the same as the last financial year) non-compliance to the Public Financial Management Act, 1999 (Act No. 1 of 1999) and National Treasury Practice Notes: SCM processes were not followed. The department indicated that there was an unforeseen and unavoidable need for additional goods or services during departmental activities.
- Fruitless and wasteful expenditure amounted to R713 million (compared to R528 the previous year). Increase in the current year relates to hotel no-shows, camera and damage to hired cars.
Steps taken to address and prevent recurrence
- Engage with affected officials;
- Reviewed financial policies and delegations in line with the National Treasury Practice Notes and Circulars;
- Issued circulars to sensitise officials in the Department on the implications of financial misconduct;
- Reviewed and strengthened controls where they were found to be weak;
- Facilitated, coordinated and provided guidance and advisory services in terms of audit queries through the implementation and monitoring of audit action plans. Tested the environment to ensure compliance and implementation of actions;
- Instituted disciplinary action against officials found liable for irregular, fruitless and wasteful expenditure; and
- Recovered expenditure from officials who were found liable for financial misconduct.
8. Committee observations on the 2018/19 annual report of the department
Having considered the briefing by the department, the Committee made the following observations:
Service delivery
- The report of the department did not have enough focus on interventions against gender based violence (GBV) in its APP and annual report. GBV is a serious matter facing the country. The department for instance, has an important role to play in the Thuthuzela Care Centres in terms of provision of psychosocial services to the victims of gender based violence. A Member of the Committee made reference of Thuthuzela Care Centre in Khayelitsha hospital as an example. The centre only has one (1) social worker, who reported that there was no adequate protection for her especially when perpetrators follow the victims to the centre. There was also lack of clarity on what services she is expected to render.
In addition, the Committee cautioned the department to not only focus its implementation of programmes against gender based violence on poor areas but on affluent areas as well. GBV affects all levels of society.
- The report of the department was found wanting with regard to the SMART principle (the relevant tangibles as they relate to the situation of needs of the people). The programmes of the department focus only on intervention not on the intended change in the lives of the people as far as addressing their vulnerabilities.
Governance
- There was a disjuncture between the report of the AG report, the department’s report and the opening remarks of the Minister. Minister’s remarks resonated with the AG’s findings. The presentation from the department seemed to paint only a good picture.
9. Annual assessment of performance of South African Social Security Agency (SASSA or Agency)
The mandate for South African Social Security Agency (SASSA) is to ensure the provision of comprehensive social security services against vulnerability and poverty within the constitutional and legislative framework.
SASSA sets its performance plans in line with Government Outcome 13 of the Medium Term Strategic Framework (MTSF). (special focus on items highlighted):
- Improved quality of basic education.
- A long and healthy life for all South Africans.
- All people in South Africa are and feel safe.
- Decent employment through inclusive economic growth.
- A skilled and capable workforce to support an inclusive growth path.
- An efficient, competitive and responsive economic infrastructure network.
- Vibrant, equitable and sustainable rural communities and food security for all.
- Sustainable human settlements and improved quality of household life.
- A responsive, accountable, effective and efficient local government system.
- Environmental assets and natural resources that is well protected and continually enhanced.
- Create a better South Africa and contribute to a better and safer Africa and World.
- An efficient, effective and development oriented public service and empowered, fair and inclusive citizenship.
The priorities of SASSA for 2014-2019 Medium Term Strategic Framework (MTSF) are as follows:
- Reducing income poverty by providing social assistance to eligible individuals;
- Improving service delivery;
- Improving internal efficiency; and
- Institutionalising social grants payment system within SASSA.
The State of the Nation Address (SONA) also identifies annual priorities which government departments and their entities should base their annual plans on. There were three (3) priorities that related to the work of SASSA, namely:
- creation of youth employment opportunities,
- support of emerging rural and township Small Medium & Micro Enterprises (SMMEs) and cooperatives, and
- enforcement of Batho Pele principles.
9.1 Overall performance and financial expenditure
Table 7: Budget expenditure per programme
R’000 |
Programme 1: Administration
R’000 |
Programme 2: Benefits Admin Support R’000 |
Total
R’000 |
2018/19 Budget Allocation |
3 046 346 |
4 716 532 |
7 762 878 |
2018/19 Actual Spent |
2 878 215 |
3 583 836 |
6 462 052 (83%) |
Variance |
-168 131 |
-1 132 696 |
-1 300 827 |
The overall budget of SASSA for the period under review was R7. 7 billion. The actual expenditure for the year under review was R6. 4 billion, which was an under expenditure of R1. 3 million. In the previous year SASSA had an over expenditure of R10. 9 million out of the actual budget was R7. 2 billion.
Table 8: Achievement of targets
Planned Targets |
Achieved Targets |
Targets not Achieved |
Targets not Reported on |
Revised Targets |
40 |
29 |
11 |
2 |
2 |
Percentage |
72.5% |
27.5% |
5% |
5% |
In total, for the year under review, SASSA had set to achieve 40 targets but managed to achieve 29 targets, meaning 11 targets were not achieved. However, two (2) targets were reported on in the Annual Report but were listed in the Annual Performance Plan (APP). These are targets to conduct 18 Mikondzo service delivery interventions and implement Integrated Communication and Marketing Strategy. In the APP, SASSA had set a target to reduce cash pay points by 8%. It had also set to reduce beneficiaries paid through cash channel by 8%. Both of these targets were increased to 20%. It was reported that these targets were increased due to a decision to use South African Post Office for all payments including cash distribution.
The performance of the Agency based on the achievement of targets demonstrates an improvement compared to 2017/2018 financial year. In that year, it managed to achieve 64% (27) of its 42 planned targets, meaning 15 targets were not achieved. In 2018/19, it achieved 72.5% of its planned targets.
9.2 Performance information by programme
The Agency functions through two main programmes, namely, Programme 1: Administration and Programme 2: Benefits Administration and Support. Analysis of the Agency’s performance will be aligned to the achievement of the priorities of the MTEF mentioned earlier as well as the 2018 State of the Nation Address priorities. These are also aligned to the National Development Plan priorities.
9.2.1 Programme 1: Administration
The purpose of this programme is to provide leadership, management and support services to SASSA.
Under this programme, SASSA had planned to achieve 21 targets and it managed to achieve 16 targets. Linking the achievements of targets to government priorities (including SONA) listed above, SASSA performed as follows:
- Improving service delivery:
It achieved the target to review its Human Resource Plan as planned. With the current transition period from outsourced payment of social grants to an in-house payment system it is important for the Agency to ensure that its human resource capacity is able to take over and perform functions previously done by Cash Paymaster Services (CPS). This function is in the interim done by South African Post Office (SAPO), commercial banks and merchants.
Linked to the above target, was the target to fill 95% of funded posts. Even though this target is reported as not achieved, the Agency managed to fill 92% of these posts, which marks a deviation of only 3%.
SASSA also achieved its target to finalize its Ten Year Infrastructure Plan. One of the big challenges faced by SASSA has been lack of appropriate infrastructure at its pay points, service offices and office spaces. Some regional offices share office space with the Department of Social Development. Some service offices have been operating in park homes, which compromised confidentiality of beneficiaries’ sensitive information. These challenges also affected service delivery as these spaces are not ideal to serve a large number of people.
- Improving internal efficiency:
To improve efficiency, SASSA achieved its target to conclude the co-sourcing of beneficiary records project which was started in 2016/17 financial year. For the MTSF, SASSA had set itself a target of automating its business processes and systems to improve efficiency. This also included scanning hardcopy files of beneficiaries. It achieved its target of implementing the Enterprise Business Intelligence, which enables it to collect data from internal and external source systems to create monthly reports. It also achieved the target to upgrade network connectivity infrastructure at its offices. A total of 116 offices were targeted for upgrade but the Agency managed to upgrade connectivity at 252 offices. This target was not achieved in 2017/2018 due to a prolonged industrial action at Telkom, which delayed the implementation of this project. Only Head Office, Regional Offices and Registries were upgraded.
SASSA however, did not achieve the target to implement the Biometric Identity Access Management System for SOCPEN users and beneficiaries due to an internal industrial action. This target was also not achieved in 2017/18 financial year. The reason given for the non-achievement was that this project was included in the overall New Insourcing Payment Model as part of SASSA’s Transition Programme. This critical project has now been delayed for two (2) years. The project is critical in preventing fraudulent activities in the social payment system, with the recent fraudulent activities involving SASSA officials tampering with beneficiaries’ data and divert payments to unknown beneficiaries.
The non-achievement of this target also delayed preparations towards the institutionalisation of the social grants payment system as was announced as a priority in the 2018 SONA. Network connectivity of offices, infrastructure upgrades, taking over of the biometric function from CPS, human resource capacity, data management, these are critical functions towards institutionalisation of the social grant payment system.
Nevertheless, SASSA achieved its target to develop a Data Governance Framework, which is aimed at safeguarding the personal information of beneficiaries.
9.2.2 Programme 2: Benefits Administration and Administration and Support
The purpose of this programme is provide a grant administration service and ensures that operations within SASSA are integrated. It also ensures implementation of the full value chain of grants administration.
For the year under review SASSA had set to achieve 19 targets under this programme. It managed to achieve 14 targets. Linking the achievements of targets to government priorities (including SONA) listed above, SASSA performed as follows:
- Reducing income poverty by providing social assistance to eligible individuals:
SASSA contributes towards poverty alleviation through the payment of social grants, including Social Relief of Distress (SRD). For the year under review SASSA over achieved its target of increasing grants in payment from 17 509 995 in 2017/18 to 17 811 745. It awarded SRD to 443 687 applications instead of a target of 252 833. In terms of alleviating child poverty, SASSA over achieved its target of processing 560 000 applications for social grants for children aged 0 – 1 by processing 702 306 applications. This age cohort has been prioritised because a 2016 study commissioned by the Department of Social Development, SASSA and UNICEF found that there was a slow uptake (or exclusion) on Child Support Grant of children aged 0 -1. At the time of reporting there were about 2.5 million children in this age cohort who were excluded due to various reasons including lack of understanding of the means test and lack of documentation. Ever since the publication of the study, SASSA had made concerted effort to reach these children.
SASSA also achieved its target of processing 130 976 Foster Care Grant reviews by processing 131 341 reviews. This was however a decline compared to processing 181 305 reviews in 2017/2018 financial year. This was attributed to systematic management foster care system which result in the lapsing of children who are no longer eligible for the FCG.
- Creation of youth employment opportunities – through SRD
As far back as 2010/11 – 2012/13 strategic plan, SASSA identified as a priority to recruit relevant skills from the social grants beneficiaries list in order to fulfill its priority of linking social assistance beneficiaries to sustainable livelihood. SASSA is implementing this priority by developing economic opportunities and small business through SRD programme. For the year under review, SASSA awarded R110 million (26.8%) instead of planned R410 million of total SRD rand value through cooperatives.
During the past five years, SASSA has ensured that a portion of its SRD awards is through co-operatives (in particular school uniforms and vegetables for food parcels). The co-operatives used were identified and trained by the NDA. It is however, not clear whether who benefits from this initiatives, whether the cooperatives are run by youth or women?
- Support of emerging rural and township Small Medium & Micro Enterprises (SMMEs) and cooperatives
SASSA contributes to this priority through linking of cooperatives to the SRD programme. In the Annual Report Foreword Minister Zulu reports that the department, SASSA and the NDA will work together as a portfolio to enhance service delivery with the aim to empower communities to become active citizens. This will involve partnering with other government departments and state entities. Government’s procurement and investment will be used in the social assistance programme by linking cooperatives to the SRD programme.
In implementing this priority, SASSA set a target to award 30% (R123 million) of total SRD rand value through cooperatives. SASSA however managed to award 26.8% (R11 0 163 341) of total rand value. This was due to some applications processed late in the fourth quarter and so expenditure will be reported in the first quarter of 2019/2020 financial year.
SASSA did not achieve the target to appoint 45 2nd tier merchants and Cooperative Financial Institutions as alternative pay points. This model was discontinued because SAPO took on the responsibility to pay grants at pay points.
10. Findings of the Auditor General (AG)
SASSA obtained unqualified audit opinion with findings on compliance from the AG, for the 2018/19 financial year. This was an improvement from a qualified audit opinion in 2017/18 financial year.
10.1 Summary and analysis of annual financial statements
Irregular expenditure
SASSA incurred an irregular expenditure of R67 million due to payments made on unapproved lease contract extensions and deviations of contract. The AG found that no appropriate steps were taken to prevent irregular expenditure.
Fruitless and wasteful expenditure
The AG also found that steps were no taken to prevent fruitless and wasteful expenditure of R77.8 million which occurred due to payment on services that were not utilized or rendered.
Internal controls
The AG found that leadership did not implement effective controls to ensure accurate financial reporting. It also did not exercise adequate oversight responsibility over compliance with legislation. These resulted in in material adjustments made to the financial statements as well as instances of irregular expenditure and fruitless and wasteful expenditure not being prevented.
11. Overview and assessment of performance of the National Development Agency (the NDA or Agency)
The NDA is a public entity established by the National Development Agency Act, (No. 108 of 1998) as amended, and reports to Parliament through the Minister of Social Development. It is listed under Schedule 3A of the Public Finance Management Act (No. 1 of 1999).
The NDA’s primary mandate is to contribute towards the eradication of poverty and its causes by granting funds to civil society organisations (CSOs) to among others:
- Implement development projects in poor communities, and
- Strengthen the institutional capacity of CSOs that provide services to poor communities.
The NDA’s secondary mandate is to:
- Promote consultation, dialogue and sharing of development experience between CSOs and relevant organs of state,
- Debate development policy, and
- Undertake research and publication aimed at providing the basis for development policy.
11.1 National Development Agency policy priorities
The NDA Board identified four (4) strategic objectives of the NDA for MTSF. They are as follows:
- To develop and strengthen internal systems, processes and human capability to deliver efficiently and effectively on the NDA mandate.
- To conduct CSO engagements, assessments, and needs analysis in the identified prioritised wards.
- To increase accessibility to capacity strengthening interventions to CSOs with the aim of improving the quality of services.
- To conduct, collate and disseminate research and evaluations that inform the national development agenda.
11.2 Overall performance and financial expenditure
During the year under review (2018/19), the NDA’s actual expenditure was R226.6 million compared to R230.1 million in the previous year (2017/18). The entity underspent R20.8 million from its budget of R247.47 million. Overall expenditure for the 2018/19 financial year amounted to 91.6%.
The NDA raised a revenue of R216 million for 2018/19, which included a transfer of R202 million. Expenses for the year totalled R226.6 million, resulting in a deficit of R5.123 million. Administrative expenses for 2018/19 included R54 990 for increase in allowance for losses relating to outstanding debtors, which were approved for being written off.
The NDA had a total number of 17 targets as per APP 2018/19. As per the annual report, only 10 targets were achieved whilst 7 targets were not fully achieved. Some targets were exceeded. The NDA can be commended for its achievements especially where targets were exceeded; however, it must be borne in mind that this may be an indication of poor planning and or low targets set.
In terms of marketing and communication, the Agency managed to reach over 80 000 digital media users through its social media platforms. These platforms were used to distribute NDA information and to share useful information that could be of benefit to social media visitors who had an interest in NDA operations.
- Performance information by programme
The NDA executes its mandate through 3 programmes. These are:
- Programme 1 - Governance and Administration;
- Programme 2 - CSO Development; and
- Programme 3 - Research.
11.3.1 Programme 1: Governance and Administration
The focus of this programme is on promoting and maintaining organisational excellence and sustainability through effective and efficient administration that includes performance management, employee well-being, as well as cost containment and brand recognition.
Table 12: Programme 1 - Performance on planned targets
|
2018/19 |
Total targets set (APP) |
4 |
Targets reported in AR |
4 |
Targets achieved |
1 |
Targets not achieved |
3 |
Performance success rate |
25 % |
Total budget spent |
R101.7 million |
Expenditure rate |
91.9% |
Table above depicts that NDA had set itself a total of 4 targets in the 2018/19 APP and it reported on the same number in its annual report reflects. The entity in the past has not reported on some targets in annual reports. NDA achieved one (1) target as reported in the AR. A total of R101.7 million, or 91.9% was spent during 2018/19 financial year under this programme.
Challenges
- The Integrated Human Resource Strategy and Development was developed, but not approved as envisaged in the APP. The reasons given for this was the absence of the approving authority although it had gone through all the management processes.
- In terms of Integrated ICT System, the civil society organisation (CSO) Database was not developed as planned.
- The programme did not comply with all legislation (100%) as it has envisaged; it only achieved 86%.
11.3.2Programme 2: Civil Society Organisation (CSOs) Development
This Programme provides a comprehensive package aimed at developing CSOs to their full potential so as to ensure that CSOs, especially those operating in poor communities, have capabilities to provide quality services to the communities they are serving.
Programme 2 is implemented through four sub-programmes, namely: CSO mobilisation and formalisation; institutional capacity building; resource mobilisation and grant funding; and linkages for sustainability.
Table 13: Programme 2 - Performance on planned targets
|
2018/19 |
Total targets set (APP) |
9 |
Targets reported in AR |
9 |
Targets achieved |
4 |
Targets not achieved |
5 |
Performance success rate |
44.4% |
Total budget spent |
R116.8 million |
Expenditure rate |
92.4% |
Programme 2 achieved 4 targets (44.4%) and 5 (55.6%) targets were not fully achieved. Of targets achieved, most were exceeded. The expenditure for this programme was 92.4% of its revised budget of R126.4 million.
Achievements
- The NDA exceeded its target of 4000 by training 4455 CSOs to comply with registration legislations per year. This was due to wide access by CSOs of the NDA services.
- It over achieved its target of raising R50 million by raising R147 million during this current financial year.
Challenges
- The target of ensuring that CSOs (7% in disability) receive grant funding per year was not achieved due to delays in concluding assessment and review of proposals submitted for grant funding in this financial year.
- Delays in the finalisation of referrals per year made NDA not to achieve the target of referring CSOs to sustainable resources opportunities.
11.3.3Programme 3: Civil Society Organisation Capacity-building
This Programme focuses on action research and impact evaluative studies that is used to inform Programme planning, implementation and management of NDA CSOs development programmes. In addition, the Programme promotes and informs national development policy debates and engagements with the CSO sector and state organs on issues relating to development and poverty alleviation in general.
It also produces publications and standards for effective best practice in the CSOs sector to promote sharing of lessons and good practice in the social development sector.
Table 14: Programme 3- Performance on planned targets
|
2018/19 |
Total targets set (APP) |
4 |
Targets reported in AR |
4 |
Targets achieved |
4 |
Performance success rate |
100 % |
Total budget spent |
R8.096 million |
Expenditure rate |
78.4% |
Programme 3 achieved 100% of its planned targets, of which 3 exceeded the targets set. Expenditure under this programme was R8,096 million, but expenditure was 78.4%. There appears to be some disjuncture between expenditure and performance; the NDA under Programme 3 met all target; yet underspent by 21.6% of its financial resources budgeted.
Achievements
- The target of producing 23 research reports, and policy briefs per year was achieved.
- The target of providing empirical information from research and evaluation studies was achieved. The target was achieved through the formation of Umzamo Wethu cooperative, which has shown sustainability of the cooperative business. The study was done to inform national development policy formulation, debates and engagements between the CSO, public and private sectors.
11.4Human resources
As at 31 March 2018, the NDA employed 196 employees within its total workforce. The table below summarises the audited expenditure and provides an indication of personnel cost per programme and salary band.
Table 15: Personnel cost by programme
Programme |
Total expenditure for the entity (million) |
|
Personnel expenditure
(million) |
Personnel expenditure as % of programme expenditure |
Number of employees |
Average personnel cost per employee (R’000) |
Programme 1 |
101.704 |
|
47.187 |
46.4 |
61 |
773 |
Programme 2 |
116.817 |
|
73.969 |
63.3% |
128 |
578 |
Programme 3 |
8.096 |
|
6.377 |
78.8% |
7 |
911 |
Total |
226.617 |
|
127.533 |
56.3% |
196 |
651 |
In terms of personnel cost by programme, the highest expediture is recorded in programme 2 to the value of R74 million, which is 63.3% of the allocated budget. This is followed by programme 1 which spent R47.2 million on personnel, which is 46.4% of its allocated budget. Programme 3 expenditure constituted 78.8% of its budget on personnel. Personnel constitutes a significant proprtion of the NDA’s expenditure; i.e. 56.3%.
For the period under review, the NDA had a vacancy rate of 10% as opposed to 19% in the previous year 2017/18. The vacancies are recorded as follow: in Programme 1(5 vacancies) , Programe 2 (20 vacancies) and Programme 3 (1 vacancy).
When these vacancies are broken down, it is represented as: top management (1); senior management (1); professional qualified (12); skilled (5); and unskilled (7).
- Report of the Auditor-General
The NDA received an unqualified audit opinion with findings for the 2018/19 financial year. This means that the AG could obtain audit evidence that is sufficient and appropriate to be able to present an Audit Opinion. Below, were matters emphasised:
- Correction of prior errors: corresponding errors for 2017/18 were restated as a result of an error in financial statements of 2018/19.
- Contingent liabilities: The NDA is facing various litigation cases, which it is opposing. The ultimate outcome of these ongoing cases could not be determined, and no provision for any liability (in future) was thus made in the financial statements.
Performance information
The material findings in respect of the usefulness and reliability of the selected programme are as follows:
Various indicators
The source information and method of calculation of the achievement of the planned indicators were not clearly defined for the indicators listed below. Due to these significant inconsistencies, the AG was unable to obtain sufficient appropriate audit evidence for the variance between the planned target and the reported achievement in the annual report.
Furthermore, the supporting evidence did not agree to the reported achievements in the annual performance report. Consequently, the AG was unable to determine whether any adjustments were required to the reasons for the variances and whether any adjustments were required to the reported achievements in the annual performance report.
Indicator: Number of CSOs (7% in disability) that receive grant funding per year.
The indicator was initially approved in the annual performance plan as 250. However, the indicator was changed without approval and reported in the annual performance report as 250 (18).
The source information and method of calculation for the indicator were not clearly defined and the type of disability was not specified. Due to these significant inconsistencies, the AG was unable to obtain sufficient appropriate audit evidence to support the reported achievement of 124 (7% in disability 7) CSOs that received grant funding per year. This was due to inadequate technical indicator descriptions that predetermined how the achievement would be measured, monitored and reported. The AGSA was unable to confirm the reported achievement of the indicator by alternative means and consequently was unable to determine whether any adjustments were required to the achievement of 124 as reported in the annual performance report
Compliance with Legislation
The AG found the material findings on compliance with specific matters in key legislation as follows:
Annual financial statements
- Financial statements were not submitted for auditing within two months after the end of financial year, as required by section 55(1)(c)(i) of the PFMA.
- The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 55(1)(a) and (b) of the PFMA. Material misstatements of the cash flow statement, accounting policies and disclosure notes identified by the auditors in the submitted financial statements were corrected and the supporting records were provided, resulting in the financial statements receiving an unqualified audit opinion.
Expenditure management
Effective and appropriate steps were not implemented to prevent irregular expenditure amounting to R18 million – mostly caused by non-compliance with SCM processes.
Consequence management
Proper and complete records were not kept as evidence to support investigations into irregular, fruitless and wasteful expenditure. The AGSA was unable to obtain sufficient evidence of disciplinary steps taken against the relevant officials.
Internal control deficiencies
Internal deficiencies are listed due to resulting in finding in annual performance report and compliance with legislation, as identified by the AGSA:
- Effective controls were not implemented to ensure accurate financial and performance reporting, and leadership did not exercise adequate oversight responsibility over compliance with applicable legislation.
- Management did not implement proper record keeping in timely manner.
- Management did not prepare regular, accurate and complete financial and performance reports – which were supported and evidence by reliable information.
12. Committee observations on AG report on the Social Development portfolio
Expenditure
- The Committee noted with concern the observation of the AG that SASSA conducted investigations on irregular expenditure but these investigations were not concluded. Although SASSA appeared to be conducting investigations but it accounts for the largest portion of irregular expenditure, which is R1.8 billion. This tends to be similar to where there is no investigation.
- The Committee was further concerned over the AG finding that the Social Development portfolio regressed in improving key controls and addressing risk areas. This was the root cause of non-compliance with applicable legislation, policies and directives. This led to the occurrence of irregular, fruitless and wasteful expenditure. Senior management at DSD and at its entities (from political/executive to administrative level) failed to respond with the required urgency to AG’s messages to address risks and improve internal controls. The AG also found that there was a regression in senior management at DSD, SASSA and NDA providing assurance.
The Committee is of the opinion that the above findings point to total disregard by management of audit reports. The findings constitute as huge indictment against the management. The findings of the AG are a serious matter as they are the basic requirements that management needs to make sure they are in place.
- The Committee was equally concerned about the AG’s finding that instability and prolonged vacancies in key positions at DSD and SASSA can cause a competency gap and affect the rate of improvement in audit outcomes. It cautions that even though government departments and entities need to be mindful about the fiscal position of the country this should not affect filling in of critical vacancies.
- The Committee was also seriously concerned that the AG found that in the NDA officials who deliberately or negligently ignored their duties and contravened legislation were not held accountable for their actions. Officials may see such behaviour as acceptable and tolerated. The Committee emphasised that there is no self-respecting institution that can carry on like this.
- The AG also found that that audit committees at DSD, SASSA and NDA provided 100% assurance. However, at senior management level there was 100% non-assurance. Executive authority provided some assurance. The Committee felt that this meant senior managers are not influenced by the reports of the internal audit committees. This translated to similar findings of the AG.
13. Summary of previous (2017/2018) key financial and performance recommendations of committee and progress made
The Portfolio Committee on Social Development, having considered the performance and the submission to the National Treasury for the medium term period of the Department of Social Development, the South African Social Security Agency (hereafter SASSA or the Agency), and the National Development Agency (hereafter the NDA or Agency) reports as follows:
13.1 Department of Social Development
- Service delivery
Recommendation
The Minister must ensure that the Department revise its projections on the number of Foster Care and Old Age Grants beneficiaries. It must make sure that the budget allocation for these grants is accurately aligned to these projections so as to prevent under expenditure in Programme 3: Social Assistance. The Department should report to Parliament on how it revised these projections on its progress report on the implementation of this report.
Progress:
The projections on the number of social grants beneficiaries are done in conjunction with National Treasury. The methodology used allows a 5% margin of error.
Recommendation
The Minister must ensure that the Department prioritises the completion of the construction of the Substance Abuse Centre in the Free State. The construction should be completed before the end of the current financial year (2018/2019).
Progress:
The department is closely monitoring the construction of the Substance Abuse Centre in the Free State. The Province has recently appointed a new contractor due to poor workmanship of the initial contractor.
Recommendation
The Minister must monitor progress and ensure that the Department, as a temporary measure, explores alternative ways to render the needed substance abuse services to the communities. The Department must make sure that this centre is operational. The Department should partner with Community Based Organisations (CBOs) who render these services. This will ensure that the Department does not underspend on operational costs payments.
Progress:
No community based organization was appointed as yet, however the National department continues to support the province to be able to provide the much needed service while completing the centre. There are various organizations available in the province that can play the role of providing the treatment services, this requires the province to identify and appoint one of them to provide the treatment services required .The province has just operationalized substance abuse half way house in Clarence as part of its efforts to fight substance abuse
Recommendation
The Minister must ensure that the Department strengthens its oversight over SASSA. Focus should be on ensuring that SASSA complies with Supply Chain Management legislation in its administration of the Social Relief of Distress. This will avoid the Department incurring irregular expenditure under this programme. Steps taken by the Department to strengthen its oversight should be reported in the progress report to Parliament on the implementation of the recommendations contained in this report.
Progress:
The department has developed the Entity Oversight Framework. Entity oversight has been prioritised in the Annual Performance Plan for 2019/20. The Framework will allow the Department to improve its oversight responsibilities over its entities. Plans are under way to elevate the quarterly Social Assistance Service Delivery Assurance Committee(SASDAC) to perform the oversight function over SASSA, pending the processing of the Social Assistance Amendment Bill to establish the Inspectorate for Social Assistance as a government component, and the. Finalisation of the review of the SASSA Act to address the governance weaknesses in that legislation. Furthermore the Department will conduct a forensic audit of the expenditure on Social Relief of Distress to identify and address the specific weaknesses in its implementation.
Recommendation
The Minister must make sure that the Department only procures goods from suppliers who meet prescribed minimum threshold for local production and content.
Progress:
The procurement of goods from suppliers who meet prescribed minimum threshold for local production and content was also raised by the Auditor General of South Africa (AGSA) in their report issued in July 2018. The Department has since ensured that it procures goods from suppliers who meet prescribed minimum threshold for local production and content.
Recommendation
The Minister must ensure that the Department improves under-spending in critical programmes such as Programme 2: Social Assistance. Particular focus should be on spending on Foster Care Grant.
Progress:
The projections on the number of social grants beneficiaries are done in conjunction with National Treasury. The methodology used allows a 5% margin of error.
Recommendation
The Minister must make sure that the Department discontinue the practice of making virements from core programmes to fund non-core activities, such as Subsistence and Travel (S&T) and outreach programmes under Programme 1, sub-programme Ministry.
Progress:
Recommendations were implemented and as a result no virements were done in 2018/2019 year end.
Recommendation
The Minister must ensure that transfers to the provincial departments for the absorption of social workers is utilised accordingly so as to ensure that the backlog is eliminated. The national department should improve its monitoring and evaluation and reporting by the provincial departments on this matter.
Progress:
This has been escalated into a conditional grant and its implementation is closely monitored on quarterly basis. All 566 social workers were appointed using the conditional grant. The national treasury agreed to earmark the funds once they are transferred to equitable share next financial year so that it continues to be used for the purpose it is intended for, that is paying salaries of the absorbed social workers
- Governance
Recommendation
The Minister must make sure that the Department improves its oversight responsibility over its entities. Oversight should focus on ensuring that SASSA and the NDA address the AG’s audit findings over the regression in the status of internal controls. Steps taken to improve oversight should be reported to Parliament as part of the progress report on the implementation of the recommendations of this report.
Progress:
The department has developed the Entity Oversight Framework. Entity oversight has been prioritised in the Annual Performance Plan for 2019/20. The Framework will allow the Department to improve its oversight responsibilities over its entities. Plans are under way to
elevate the quarterly Social Assistance Service Delivery Assurance Committee(SASDAC) to perform the oversight function over SASSA, pending the processing of the Social Assistance Amendment Bill to establish the Inspectorate for Social Assistance as a government component, and the. Finalisation of the review of the SASSA Act to address the governance weaknesses in that legislation. Furthermore the Department will conduct a forensic audit of the expenditure on Social Relief of Distress to identify and address the specific weaknesses in its implementation.
Recommendation
The Minister must ensure that the Department during the 2018/2019 financial year develops and implements consequence management policies to hold those responsible for non-compliance with PFMA and SCM regulations, as found by the AG.
Progress:
The Department has in place mechanisms to deal with irregular, unauthorized, fruitless and wasteful expenditure. The Loss Control Committee has been established to deal with all reported cases of financial misconduct. Consequence management is applied where officials are found guilty if financial misconduct.
13.2 South African Social Security Agency (SASSA)
- Governance
Recommendation
The Minister must ensure that SASSA puts in place mechanisms to improve the status of its internal controls for risk management and leadership controls.
Progress:
- In 2018/19, SASSA developed measures to improve its internal controls and reduce irregular expenditure. The measures included amongst others implementation of prevention mechanisms, consequence management, pre-audit of new contracts. As a result of the intervention, we have seen reduction in the current irregular expenditure (2018/19) which stands at R66 million compared to the previous financial year (2017/18) where the irregular expenditure stood at R224 million. In addition, the number of financial misconduct cases finalised were increased.
- During 2019/20 financial year, SASSA will start with the organisational review including review of the service delivery model in order to address the organisational inefficiencies and the capacitation model
Recommendation
The Minister must ensure that the Agency strives to meet the requirement to employ at least 2% requirement of people with disabilities within its establishment.
Progress:
- In the beginning of the 2018/19 financial year, a decision to place a moratorium on the filling of positions for both Head Office and Regions was made. The purpose was to improve efficient utilization of existing staff as well as conduct an Organisational review. The moratorium was later (February 2019) partially uplifted to appoint staff at selected service delivery posts such as SCM and Grant Administrators at local office level. The moratorium had an effect on the SASSA objective to have at least 95% of the funded posts filled closing the year with only 92% of the funded posts filled. The moratorium had a knock on effect on the realization of the employment equity quotas.
- By the end of March 2019, the disability quota stood at 1.9% of the filled funded posts, which is 153 persons with disabilities in employment against a total of 8 269.
- Expenditure
Recommendation
The Minister must ensure that SASSA puts in place mechanisms that will hold officials accountable for hotel ‘no shows’ which resulted in fruitless and wasteful expenditure of R419 000. Focus should be on ensuring that this kind of expenditure is totally avoided.
Progress:
- SASSA incurred R67 579 fruitless and wasteful expenditure relating to Hotel no-shows for the year 2017/18. This expenditure is comprised of 41 cases. All Hotel on-show cases of fruitless and wasteful expenditure were investigated and finalized except two that are still being investigated. The outcome has been detailed below:
Progress on Fruitless and Wasteful expenditure: Hotel on-shows: 2017/18 |
||
Case Status |
number of cases |
Amount |
Write-off |
23 |
25 409,50 |
Recovery |
12 |
19 718,93 |
Credit Note |
1 |
1 575,00 |
Not fruitless (concluded after investigation) |
2 |
13 000,00 |
Appeal |
1 |
1 460,50 |
Still under investigation |
2 |
6 415,50 |
TOTAL |
41 |
67 579,43 |
- The Agency is taking the financial misconducts very seriously and has focused its efforts to implement consequence management accordingly. The Acting Chief Executive Officer (ACEO) and Chief Financial Officer (CFO) between 19 October 2018 and 02 November 2018 conducted Regional visits to all the 9 regions and Head Office engaging senior managers on their responsibilities to ensure the cases of irregular expenditure, fruitless and wasteful expenditure as well as losses and damages should be ceased and those employees who commit these acts are being disciplined.
Recommendation
The Minister must also make sure that SASSA’s Supply Chain Management checklist is effectively implemented. It must achieve its desired intention to completely end irregular expenditure due non-compliance to Supply Chain Management policies. Steps taken to ensure that this checklist achieves its purpose should be reported to Parliament as part of progress report over the implementation of the BRRR recommendations.
Progress:
- The reviewed SCM compliance checklist was implemented from the 01st April 2018, the review of the checklist is done on a regular basis to address any updates and instruction notes by National Treasury in SCM environment.
- Oversight function by Head Office has been strengthened as follows:-
- Quarterly visits that involves reviews of transactions to ensure that the checklist is implemented and implemented correctly.
- The developed and approved Supply Chain Management (SCM) checklists were used to review existing running contracts for compliance to Supply Chain Management prescripts and procedures.
- The checklist is also used to pre-audit all new contracts within the Agency.
- Contracts and payment batches are reviewed to detect any irregular expenditure for correct disclosure.
- Monthly reporting of Irregular expenditure (IE) by the Regions is a mandatory process.
Recommendation
The Minister must ensure that the Agency develops mechanisms to improve the collection of debtors as this has the potential to cause problems in the future.
Progress:
- The Agency is in a process to conclude appointment of a service provider that will provide a data-based business intelligence that will provide relevant and current information on both businesses, and consumers across economies. This will assist the Finance branch responsible for the collection of debtors to do data cleansing and remove wrong and outdated addresses from both BAS and ORACLE systems; and also access the economic status of both the staff and social assistance debtors. The Terms of reference has been approved by Bid Adjudication Committee and it is expected that the SCM process will be finalized by 30 April 2019.
- The Agency has done a research on the drivers that influence the increase of the debt book, some of these will require amendment of legislation and policy while certain intervention are being implemented without any delay. This is meant to reduce the growth of wrong payment by the grant administration processes which lead to increase of the debt book. The emphasis is on prevention strategies against debt book growth while intensifying recovery initiatives and processes.
- The Agency is engaged with the process of organizational development, in particular with the establishment of the Debt structure to ensure that approved debt policies and procedures are complied with fully; these are meant to assist in debt collection. The Organizational Development unit is currently busy with the necessary processes to finalise a due debt management structure.
- The Finance Branch and Legal department held a workshop to improve and streamline debt management processes. This workshop held in November 2018 agreed to engage the office of the State Attorney to prioritise collection of debts in particular on those employees that have left the organisation.
13.3 National Development Agency(NDA)
Governance
Recommendation
The Minister must ensure that the NDA strengthens the implementation of leadership control as was highlighted as an area of concern by the Auditor General.
Progress:
The Minister has appointed the Board and the CEO of the Agency. The CEO and the Board have appointed Executives in vacant positions.
Recommendation
The Minister must ensure that the NDA puts mechanisms in place to address the regression in the internal controls relating to financial and performance management in record keeping, as well as performance reporting and compliance with regulations. These mechanisms should be reported to Parliament as part of the progress report on the implementation of the recommendations of this report.
Progress:
The Agency has strengthened the functions of internal audit and appointed a Manager for Risk Management to improve internal controls of the Agency. The Agency has furthermore implemented an improved organisational performance management system for record keeping and accurate reporting.
Recommendation
The Minister must ensure that the NDA improves on its oversight responsibility over the preparation of financial statements, implementation of Human Resource Management, actions plans and policies and procedures.
Progress:
The Agency has reviewed some of its financial management and human resources policies and procedures to ensure and enhance the oversight functions of the Minister over the Agency.
Recommendation
The Minister must ensure that the NDA take steps to prevent irregular expenditure by ensuring that officials follow all the bidding processes. The NDA should develop policies and regulations.
Progress:
The Agency has reviewed its SCM policies to align to National Treasury regulations and SCM framework to prevent unnecessary irregular expenditure due to noncompliance. SCM officials have been trained on SCM to improve their understanding of regulations and compliance requirements.
14. Committee recommendations for 2018/19 BRR Report
Having deliberated and made observations on the department and its entities’ annual reports, the Committee recommends the following:
Department of Social Development, SASSA and the NDA
Reporting on committee recommendations
- The Minister must make sure that the department and its entities develop an action plan of implementing the recommendations of the committee. The action plan should be presented to the committee in its next meeting. The implementation of the plan should also form part of the quarterly reports of the department and its entities.
Performance reporting
- The Minister must ensure that the department reports to the Committee on its mandate and its role in the fight against gender based violence.
- The Minister must ensure that the department commissions an investigation into the state of psychosocial services at Thuthuzela Care Centres.
- The Minister must also ensure that the department employs people with disabilities to at least exceed the 2% target of government. This is important because the department is entrusted with the constitutional mandate of protecting the rights of vulnerable people.
- The Minister must ensure that the Social Development portfolio in its re-imagination of social transformation aligns its targets to its mandate.
- The Minister must make sure that the Social Development portfolio moves towards evidence based outcomes approach to deliver on its mandate. The portfolio must strengthen monitoring and evaluation. It must work with the Department of Planning, Monitoring and Evaluation. Some of this responsibility must be placed in the Office of the Minister.
Expenditure
- The Minister must ensure that the department, SASSA and the NDA develop an action plan to address control deficiencies and other recommendations of the AG. This plan should be tabled and presented to the Committee during its next meeting. It should be submitted to the Committee in advance so that Committee Members can go through it before the meeting. The implementation of the action plan should form part of the quarterly reports to the committee.
- The Minister should also ensure that the department, SASSA and the NDA finalise investigations on irregular, fruitless and wasteful expenditure. The report on the outcomes should be submitted to the Committee.
- The Minister should also ensure that the financial expenditure reports are aligned with the non-financial performance or mandate of the department and its entities. They should indicate how the funds were allocated and spent towards the achievement of performance targets.
Report to be considered