ATC151126: Budgetary Review and Recommendation Report of the Portfolio Committee on Sport and Recreation, on the performance of the Department of Sport and Recreation, Boxing South Africa and the South African Institute for Drug-free Sport for the 2014-15 financial year, dated 20 October 2015

Sports, Arts and Culture

Budgetary Review and Recommendation Report of the Portfolio Committee on Sport and Recreation, on the performance of the Department of Sport and Recreation, Boxing South Africa and the South African Institute for Drug-free Sport for the 2014-15 financial year, dated 20 October 2015
 

The Portfolio Committee on Sport and Recreation, having considered the performance of the  Department of Sport and Recreation, its entities and submission to National Treasury for the medium-term expenditure framework period of the department, reports as follows:

 

  1. Introduction

 

1.1        The Role and Mandate of the portfolio committee is to:

  • Consider legislation referred to it
  • Exercise oversight over the Department of Sport and Recreation and statutory bodies reporting to the Minister of Sport and Recreation, namely Boxing South Africa and South African Institute for Drug-free Sport
  • Consider international agreements referred to it
  • Consider the Budget Vote of the Department of Sport and Recreation
  • Facilitate public participation in its processes
  • Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the National Assembly

 

In terms of the Constitution of the Republic of South Africa, 1996, portfolio committees have a mandate to consider bills, conduct oversight over the executive and facilitate public participation.

 

1.2 The role and mandate of the Department

The Department of Sport and Recreation is the primary government institution responsible for formulating and implementing policy on sport and recreation. It reports to and advises the Minister who, in conjunction with Cabinet, takes final responsibility for government policy. The department is headed by a director-general, who is responsible for ensuring that sport contributes towards maximising access to sport and recreation and encouraging world-class performance which strengthens social cohesion and nation-building.

 

 

 

  1. Purpose of the BRR Report

 

The Money Bills Procedure and Related Matters Amendment Act, Act 9 of 2009, sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department. In October of each year portfolio committees must compile Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery performance given available resources and evaluate the effective and efficient use and future allocation of resources, and may make recommendations on future use of resources. The BRRRs serve as source documents for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

 

  1. Overview of the key policy focus areas

 

2.1 Key Government policy documents

 

The BRR Report has been informed by the 2015 State of the Nation address (SONA 2015), in which it was indicated that the 1.5 per cent growth rate attained in the 2014-15 financial year, was a far cry from the national development plan's expected five per cent growth.  As a result, the committee, as part of its oversight function, needs to ensure that the department is able to use the resources effectively and efficiently for the purpose of ensuring that there no waste. The Medium-Term Strategic Framework (2014-2019) is a key policy document that has been taken into consideration. Sport and Recreation South Africa has aligned itself with the National Development Plan (NDP) and signatories towards the implementation of Outcome 14, which seeks to create empowered, fair and inclusive citizenship.

 

South African sport has been operating without any defined Sport System over many years, and the department has developed a National Sport and Recreation Plan (NSRP) since 2011. The NSRP is a roadmap of South African sport, the first of its kind since 1994. The department's 2015-20 Strategic Plan has been taken into consideration. The targets of the NSRP have also been included in the 2015-16 Annual Performance Plans that the department has presented during the year. The NSRP is now in its third year of implementation and still remains an unfunded mandate, in which the department had had to innovatively ensure that it achieves its objectives by a phased-in approach.

 

The department is playing a leading role in the development and implementation of United Nations (UN) policies related to sport for development and peace.

 

United Nations Educational, Scientific and Cultural Organisation (UNESCO): Governments have drafted, pursuant to the WADA Code (World Anti-Doping Code), an international convention under the auspices of UNESCO to allow formal recognition of World Anti-Doping Agency (WADA) and the Code. The International Anti-Doping Arrangement (IADA) has evolved into a unique and effective collaboration by signatories and their respective national anti-doping organisations (NADOs), committed to combating the practice of doping in sport.

 

2.2 Outcome-based Approach

 

The following are the strategic outcome-oriented goals of the department over the medium term:

  • Increase the access of South Africans citizens to Sport and Recreation
  • Provide mass participation opportunities
  • Advocate transformation in sport and recreation
  • Develop talented athletes by providing them with opportunities to excel
  • Support high performance athletes to achieve success in international sport.

 

  1. Overview of revised Strategic Plan and Annual Performance Plans
    1. SRSA

 

The SRSA 2015-16 Annual Performance Plan was presented at a time that the department had just received a clean audit for its performance during the 2013-14 financial year. The 2014-15 is informed by the first MTSF which has been linked with the National Development Plan, and which was adopted in August 2013. The MTSF serves as a 2014-19 government strategic plan and requires that all government departments and entities develop their policies to ensure that they address the strategic outcomes of the 2014-2019 MTSF. SRSA developed the National Sport and Recreation Plan (NSRP) as policy document to guide the sport development continuum of our country. As a result SRSA has had to align it to the 2014-19 MTSF. After adoption of the NSRP in May 2012 the department has had to restructure its programmes to align to the NSRP.  It has now been three years that the department has been implementing the first phase of the NSRP, and SRSA has aligned the 2015-20 Strategic Plan to the NSRP.

 

The phased implementation of the NSRP continues during the 2015-16 financial year. National Treasury has indicated that SRSA has estimated the cost of implementing the NSRP to be at R15.2 billion over the 2014-17 MTEF period. However, the current budget of SRSA for the 2015-18 MTEF period is at R3.2 billion, making it difficult for the NSRP to be fully implemented. At the same time SRSA has been exploring the possibility of introducing tax levies on ticket sales to sport events to fund the NSRP, and the National Treasury had advised the department to table this proposal to the Davis Tax Committee (DTC).

 

In the 2015-16 financial year the department was allocated R988 million, showing just a slight increase of R18 million (1.8%) from R970 million allocated in the 2014-15 financial year, indicating that the departmental budget can only fund a small portion of the approved NSRP. The major part of the budget, R628.4 million (64%), is allocated to the Active Nation programme and a large portion, R133.2 million (13.4%), is allocated for Sport Support programme. It is worth noting that the Infrastructure Support programme receives the smallest allocation, R9.7 million (0.98%), an indication that the scope of infrastructure development falls outside the mandate of the department in the current dispensation. However, the committee is encouraged by the response of the National Treasury with regard to considering the transfer of the sport infrastructure conditional grant allocation to the control of the department. This would allow for the proper coordination and control of the development of sport facilities through the department.

 

The 2015-16 SRSA Annual Performance Plan continues to recognise and prioritise the role of sport in achieving the broader outcomes of the MTSF. The MTSF sets out the actions that Government will take and the targets to be achieved. It is structured around 14 priority outcomes which cover the focus identified in the NDP and the Government’s electoral mandate. SRSA contributes to Outcome 14, aimed at promoting social cohesion through increased interaction across race and class. 

 

  1. Boxing SA

Boxing SA has continued to face challenges which made it difficult to achieve most of its objectives in the 2013-14 financial year. These challenges ranged from the paralysis of the board after resignations of board members and the passing of one member. The suspension of the chief executive officer (CEO) also did not make things any easier. Whilst a chief financial officer (CFO) was appointed during the course of the year, there was a slight improvement in ratios for net profit, current assets and return on assets, largely due to increases in revenue generation and decreases in expenditure. However, the CFO has also been suspended and a new board was appointed in May 2014.

 

Major challenges for Boxing SA include the lack of broadcasting rights, which could generate regular income, lack of sponsorship as a result of lack of publicity, and inadequate funding, which limits implementation of some BSA programmes. These challenges have led to Boxing SA not being able to fill critical vacant posts and having to deal with regulation of licensees, without the necessary capacity to deal with the extended mandate. The organisational structure of Boxing SA is not suitable to support its mandate and drastic steps are required to ensure that the structure is aligned to its mandate. SRSA had intervened because of the leadership instability, and had been assisting Boxing SA with its internal audit functions, and in the absence of a full-time CEO the department had seconded an administrator to manage the entity. The entity is currently busy with the recruitment process for a new CEO.

 

  1. SAIDS

The introduction of the new World Anti-Doping Code (WADA Code), which was implemented in the beginning of 2015, has increased the activities and workload of SAIDS. This has necessitated that SAIDS assess the possibility of building a small addition to infrastructure that will support the new code requirements of processing doping intelligence information.

 

Implementing the code has changed the operations of the entity and necessitated a review of its organisational structure to accommodate the added responsibilities. Processes are currently under way to employ contract staff on a permanent basis. There has not been any update in the strategic plan about the implementation of the new structure.

 

In the 2013-14 financial year the department allocated an extra R3.6 million to SAIDS to increase its budget to R14 million, up from the R13.1 million it was provided in the 2012-13 financial year. In the 2015-16 financial year SAIDS has a budget of R30 million. This is based on the grant from SRSA and National Lottery. In the 2013-14 financial year SAIDS received an additional R18 million grant from the National Lottery to enable it host the WADA World Conference on Doping in Sport in Johannesburg in November 2013, and the International Conference on Sport Law and Anti-doping for decision-makers in South Africa and Africa.

 

 

 

 

 

SRSA Budget and Expenditure for 2013-2017

Programme

Audited Expenditure

Adjusted Expenditure

Revised Estimate

Medium Term Expenditure Estimate

R million

2013-14

2014-15

2015-16

2016-17

Administration

114.6

105.1

124.8

131.1

Active Nation

607.6

624.7

628.6

659.4

Winning Nation

231.4

83.1

92.2

95.1

Sport Support

115.8

148.8

133.2

138.6

Infrastructure Support

9.3

4.9

9.7

10.3

Total

1,073.8

966.8

988.5

1,034.4

 

Table 1: SRSA 2015-16 Budget allocation

 

The allocations show the reduction of departmental budget from R1.073 billion allocated in the 2013-14 year to R970.4 million in the 2014-15 financial year. During the 2014-15 financial year expenditure was at R966.8 m (99.6%) of the allocated budget. This reflects an underspending of just R3 million (0.3%) of the total allocation. However, the budget shows growth of 1.8% during the 2015-16 and it will increase by 4.6% to R1 034.4 billion in the 2016-17 financial year.

 

  1. Overview of key developments in the organisational and service delivery environments of SRSA for 2014-15 and 2015-16 MTEF cycle.

 

Strategic Goal 1: Citizens’ access to sport and recreation activities

SRSA was able to provide 54 154 people with access to sport and recreation between 2012/13 and 2014/15, this represents 20 468 participants that were reached in 2014/15 alone, a slight decline from the 61 694 participants reported to have been reached in the period between 2011/12 and 2013-14.  R627.4 million (64%) of the departmental budget was spent on the Active Nation programme, and this has been increased to R628.6 million in 2015-16, therefore it will be important to ensure that there is proper measurement of the outcomes and clear targets to ensure efficiency and effectiveness of the use of funds in order to create value for money.

 

Strategic Goal 2: Sport and recreation sector adequately transformed

The 2014 report of the Eminent Persons Group (EPG) on Transformation in Sport has highlighted that transformation is not only limited to the quota system, but should be applied multi-dimensionally to include: Progress to peak performance, changing demographic profiles, institutional governance, skills and capability development, employment equity and preferential procurement. The transformation baseline has been established to ensure that there are clear targets for measuring the rate at which federations are transforming.

 

Whilst funding of federations during the 2014-15 financial year did not take their transformation performance into consideration. It will be considered in the 2015-16 once they have signed the MoU. The department was able to assist 64 federations with funding; four more than the intended 60. The key observation is that 48 out of 60 federations had been assisted by the end of the third quarter.  It is important that the department conduct workshops with the federations so that they can be assisted well on time and can comply with the reporting and transformation requirements.

 

Expenditure in the Sport Support Service programme grew from R115.5 million in the 2012-13 financial year to R148.8 million in the 2014-15 financial year. The initial allocation was R145.1 million in 2014-15, where additional funding of R3.6 million was sought. These funds are earmarked for sport and recreation bodies that meet their transformation targets. The Eminent Persons' Group (EPG) will enter into an agreement with the national federations to ensure that they set clear transformation targets through which they will be measured and funded accordingly.

 

Strategic Goal 3: Athletes achieve international success

International success can be measured through the improvement in world rankings, and achievement of medals in international competitions. It is important for the department to indicate clearly set targets and assess the possibility of attaining these goals. The 2015-20 strategic plan offers no specific target. 

 

The 2014-15 annual report does not offer an indication of how this strategic objective was achieved. However, it offers an explanation of the efforts and programmes that were established to contribute to the objective, e.g. 54 learners have been placed on the Ministerial Bursary programme.

 

It will be important that, as we evaluate the 2015-16 financial year, we consider closely the indicators to give effect to this strategic objective. Different federations will be participating in different tournaments in the 2015-16 financial year: Swimming SA took part in the 2015 FINA World Championship in Russia, whilst Athletics SA was to send athletes to the CAA Africa Youth Championships in Mauritius in April 2015 and the 15th IAAF World Championship in Beijing in August 2015. The Netball World Cup was held in Sydney, Australia, in August 2015 and at the time of compiling this report, the Springboks were participating in the 2015 Rugby World Cup tournament in England. Other multi-coded events in the 2015-16 financial year included the 2015 All Africa Games in Congo in September.

 

Major events scheduled in the next financial year during the 2015-20 strategic term include the 2016 Rio Olympic Games, the 2018 FIFA Soccer World Cup, the 2018 Commonwealth Games in Gold Coast, Australia.

 

The goal statement for this strategic outcome clearly specifies that success is qualified as an improvement in South Africa’s performance at selected multi-code events or improvement in rankings in certain sporting codes. Whilst these indicators may not necessarily be the ideal measurement of success, they are tools to assist in reaching a judgment. Participation and performance at previous events should be used as a baseline to measure performance in upcoming events.

 

The department was able to spend R43.9 million towards the scientific support sub-programme. The total expenditure in the Winning Nation programme was R83.1 million, which is R5 million more than the appropriated funds, because additional funds were required for the Major Events sub-programme and the recognition system.

 

The Ministerial Bursary programme managed to assist up to 28 athletes during the 2013-14 financial year, however at the end of 2014-15 financial year 54 athletes have been assisted. The old programme of residential support was discontinued in December 2013. During the 2012-13 financial year 90 athletes from the old programme were supported and in the 2014-15 financial year only 58 athletes remained in the athletes support programme. The department aims to assist 60 athletes in the 2015-16 financial year with the budget allocation of R27.8 million.

 

Strategic Goal 4: Enabling mechanisms to support the delivery of sport and recreation

SRSA has allocated an amount of R5.1 million to roll out the multi-purpose sport facility programme in the 2015-16 financial years, and this will increase to R5.8 million in 2017-18 financial year. 25 facilities were built in the 2014-15 financial year.

 

Other notable achievements on this strategic goal is 4.5% of the conditional grant allocated to Sport Academies, which ensured that 3746 athletes were supported, and 96 individuals trained, in the academy system.

 

The decision to allocate 20% of the Mass Participation and Sport Development conditional grant to the provinces for Club Development is important as clubs serve as the basis for active participation in sport. During its oversight visits, the portfolio committee saw that the model for club development programme in Mopani region in Limpopo and in eThekwini in KwaZulu-Natal, where SRSA is piloting the programme, was yielding positive results in ensuring that communities take ownership and are able to set up community leagues. The 2014-15 annual report has indicated that the department has extended the pilot study period in order to collect more evidence about the model.

 

Strategic Goal 5: Sport and Recreation used as a strategic tool to support Government and global priorities

 

The committee acknowledges the important role that the department plays in implementing its programmes in line with the 2014-19 MTSF, as they relate to the building of social capital and fostering social cohesion. It is therefore important that, whilst the programmes are giving an expression of how the goals will be achieved, they may also assist with compliance to the principle of governance set out in the Public Finance Management Act (PFMA), Act 1 of 1999, and the audit principle of looking at predetermined outcomes. This important outcome to the department and the country will need to be included in the 2015-20 Strategic Plan in order to ensure that it adheres to the established systems of governance and accountability.

 

The Sport for Social Change programme aims to catalyse change in the environment, HIV and AIDS and offers programmes for sport against crime. In order to achieve this the department needs to monitor any change or progress that take place over time. This programme is strategically linked to the other programmes of the department and is also dependent on the strength of interdepartmental relations to measure its progress. It is important to have a clear monitoring and evaluation tool to measure the impact of sport in bringing about a meaningful change in society.

 

SRSA has committed to making its contribution to matters of global importance within the United Nations Educational, Scientific and Cultural Organisation (UNESCO), UN Sport for Peace and Development International Working Group (SDP IWG), International Anti-Doping Arrangement (IADA) and WADA. South Africa holds the chairmanship of the board of SDP IWG and was requested to develop a framework on the role of sport to address gender-based violence. In the 2014-15 financial year the department had promised to cut down on cost of international travel by reducing the number of delegates. 

 

The strategic goal needs to be developed in such a way that it adheres to SMART principles.

 

Strategic Goal 6: Efficient and effective organisation

The outcome as it appears in the 2015-16 APP (Annual Performance Plan) is also not reflected in the 2015-20 Strategic Plan. Since it is an important outcome of the department, it will have to be reflected in the strategic plan and therefore be given an effect in the APP. SRSA should attempt to improve its performance in the quality of management practices, as assessed through the MPAT score of 2.6 in the 2014-15 financial year, and the department has promised to put measures in place to improve.

 

The clean audit of the department in the 2014-15 financial year should be commended and efforts should be made to address the matters that were raised by the AG in order to maintain the good performance. During the 2014-15 financial year SRSA achieved a performance score of 91%, which was an improvement from the 76% that was achieved in 2013-14 financial year. During the 2015-16 it was important for SRSA to ensure alignment of its 2015-16 APP strategic outcomes to the 2015-20 strategic plan outcomes.

 

The department has indicated that it would need more funding to implement the newly established organisational structure on an incremental budget. R124.8 million has been allocated for departmental administration in the 2015-16 financial year and the amount will increase to R138.1 million in the 2017-18 financial year.

 

Boxing SA

During the 2014-15 financial year Boxing SA continued to experience governance challenges. However the Minister managed to appoint new board members in May 2014, the board was able to hold stakeholder management meetings in seven provinces, develop new structures and identify plans to source additional funds. The notable achievement was the restoration of broadcasting of boxing on SABC. The entity has been able to establish a Disciplinary Committee, Arbitration Committee and Appeals Committee. They were also able to establish the Functional and Ratings Committee. A total of 71 tournaments were held - a drop from the 84 staged in 2013-14 financial year, 110 new boxers passed the sparring and 901 licensees were registered during the 2014-15 financial year.

 

The 2014-15 Auditor General report has provided a qualified audit opinion on the financial statements of Boxing SA. This information is corroborated by the audit committee’s report that had asserted that during the period under review, the system of internal control was not adequate and effective in relation to financial reporting, reporting of predetermined objectives and compliance. A number of governance deficiencies make it difficult for Boxing SA to achieve its objectives. These include lack of internal controls, lack of compliance to the laws and regulations for financial and performance management, lack of leadership to conduct oversight with regard to compliance. These deficiencies are compounded by the number of lawsuits faced by the entity.

 

  1.  

The adoption of the WADA code has necessitated a change in the operations of SAIDS. It is evident that the new code will require additional resources in order to be effective and for SAIDS to remain compliant with the code. Since the heightened attention to curbing the use of performance enhancing substances by learners, SAIDS has had to ensure that they conduct testing in schools and provide educational workshops regarding the use of these substances. A change in legislation is currently under review to ensure that these elements are incorporated to provide a much clearer and effective direction to the operations of the agency.

 

  1. Overview and assessment of financiaL AND SERVICE DELIVERY performance

 

  1. Overview of Vote allocation and spending (2012-13 - 2016-17)

 

Programme

Audited Average Expenditure

Adjusted Appropriation

Expenditure Total Average (%)

Medium Term Expenditure Estimate

R million

 

2010-11 to 2012-13

2013-14

2010-11 to 2013-14

2014-15

Administration

90.8

100.3

124.9

9.5%

131.3

Active Nation

500.8

539.5

592.3

51.8%

615.2

Winning Nation

45.5

292.5

228.8

16.1%

91.3

Sport Support

48.2

117.5

118.2

8.7%

122.2

Infrastructure Support

7.2

4.3

9.3

0.5%

10.4

2010 FIFA World Cup Unit

559.6

_

_

_

_

Total

1,252.0

1,054.1

1,073.5

91%

970.4

 

 

Expenditure over the 2014-15 financial year was at R966.8 million (99.6%) which is slightly less than the 99.9% achieved in the 2013-14 financial year. The allocation for 2014-15 was at R970.4m, due to the special allocation of R120m for hosting the CHAN in 2014. Active Nation programme was the largest expense of R624.7m (66.4%), followed by the Sport Support programme with R148.8m (15.3%). During the 2013-14 financial year Winning Nation had the second largest spending to the amount of R231.3m. The sharp decline in budget allocation was a result of the alignment of departmental programmes.

 

The economic classification indicate that the largest expense of the department remains transfers and subsidies to provinces and municipalities. During the 2014-15 the department managed to transfer R699m (72.3%) of its budget to provinces and entities, down from the R814.2m that was transferred in 2013-14. The difference was caused by additional funds that had to be transferred to municipalities that were hosting CHAN 2014. This effectively meant that there was only R269.4m left for current payments.

 

During the 2014-15 financial year, the overall expenditure on current payments was R265.5m (98.5%), the initial allocation was R269.4m in 2014-15 up from R258.4m that had been allocated in 2013-14, where just R257.5m (99.6%) was spent. Goods and services were the main cost drivers where R185.2m, representing 69.7% of the total costs of current payments and compensation of employees consuming just R84.2m (31.7%) of the total costs on current payments. There were virements of R4m out of compensation of employees, whilst this is within the treasury regulations, it indicates the seriousness of vacant posts. In the current financial year the department had started a recruitment drive fill the key vacant posts.

 

The department was able to reduce its expenses on contractors, down from R46.7m in 2013-14 to R26.4m in 2014-15. This is an indication that the department is able to produce most of its functions internally and create value for money. This decline saw funds being transferred from this line item to venue and facilities, whose budget was initially put at R34.3m in 2014-15 however the department spent R56.9m on venue and facilities last year slightly higher than R56.3m that was spent in 2013-14. Another saving came from travel and subsistence, where the department spent R29.9m down from R30.8m spent in 2013-14.

 

 

 

 

 

 

 

 

  1. Public Entities

 

 

Programme

Audited Average Expenditure

Audited expenditure

Medium Term Expenditure Estimate

R million

2012-13 to 2013-14

Rm

2014-15

Rm

2015-16

Rm

2016-17

Rm

Boxing SA

6 897

6 552

10 017

10 500

11 000

South African Institute for Drug Free Sport

15 876

33 637

24 377

19 800

21 900

Total

22 773

20 576

34 394

30 300

33 900

Table: Expenditure trends of the public entities

 

 

During the 2014-15 financial year, Boxing SA had serious challenges relating to lack of good governance, resignation of board members and passing away of another member resulting in a lack of quorum for the board, suspension of the CEO and lack of internal controls. As a result the Auditor General gave them a qualified audit opinion. The results was based on the lack of adequate systems and process to collect, record and reconcile tournaments revenue and receivables, payment of supplier invoices in the financial records.

 

Boxing SA received R10.3m during the 2014-15 financial year compared to R10.m they received last year. Whilst they were able to increase their income, their expenses also increased during the same period, where they spent R10.2m, most of which went to employee costs, R6.2m (60%). The supplier’s costs also increased up from R3.3m in 2013-14 to R3.9m in 2014-15.

 

Expenditure of the South African Institute for Drug-free Sport (SAIDS) decreased from R33.6m in 2013-14 to R24.3m in 2014-15 this was because of the WADA conference that was held last in 2013-14. However expenditure increased in the Education programme, up from R1.7m spent in 2013-14 to R3.2m in 2014-15, this was due to increased focused on doping education as result of adopting the new WADA code. Expenditure on Doping control also increased from R9.2m in 2013-14 financial year to R11.6m in 2014-15.

 

Whilst the Auditor General provided an unqualified audit opinion for SAIDS, there continue to be matters of emphasis relating to adherence to legislation, especially the PFMA where it concerns Supply Chain Management.

  1. Financial Performance 2014-15

 

  1. Administration

 

The overall essence of this program was to provide overall and centralised support services. This means that administering, guiding and managing Sport and Recreation is the core business of this programme. The total expenditure on this programme was R105.1m (98.6%) of the total allocation of R106.5m in 2014-15, this was an increased percentage spending compared to the 2013-14 financial year, where there was an expense of R114.5m (91.7%) from R124.8m that had been allocated in that financial year. There was a major reduction on spending for Office accommodation during the 2014-15 financial year, where the department was able to spend R9.8m (92.4%) of the R10.6m budget, compared to R17.1m in the 2013-14 financial year.

 

The largest spend is current payments, with compensations of employees taking up R59.6m (58%) of the total spend of the programme in 2014-15. The improved spending on this item compared to R56.2m (49.6%) in the 2013-14 financial year can be attributed to the filling of a few posts that were vacant. Goods and services incurred an expenditure of R42.8m (40.5%) of the total costs of the Administration programme compared to R57m (49.7%) in the 2013-14 financial year. This decline in expenditure can be attributed to reduced spending on advertising, from R2.5m spent in 2013-14 to R1.2m in the 2014-15 financial year as well as travel and subsistence, down from R15.8m in the 2013-14 financial year to R10.5m in the 2014-15 financial year. This is in line with the National Treasury request that all departments ensure that they cut costs and use the available resources more sparingly and effectively. 

 

There was, however, a significant increase of expenditure on transfers and subsidies, on Household, which amounted to R311 000, when only R76 000 had been allocated for expenditure such during 2014-15. The same had taken place during the 2013-14 financial year, when the department exceeded their expense to the amount of R323 000 compared to R72 000 allocated. There is a need for the department to ensure proper budgeting in order to ensure that all line items are properly allocated as per approved plans.

 

 

 

 

 

 

  1. Active Nation

 

The purpose of the Active Nation programme is to support the provision of mass participation opportunities in sport and recreation. One of the objectives of this program is to improve the wellbeing of the nation by stimulating lifelong participation in active recreation through facilitating the delivery of at least 3 programmes. The spending focus over the medium term on this program should be on promoting mass participation in sport and recreation through the mass participation and sport development conditional grant, which supports school sport, club development, sporting hubs, sport academies and sport councils, and accounts for dominance of expenditure on transfers to provinces in the programme.

 

Expenditure on this programme was dominated by the transfers to the provinces, where R525.6m (84.1%) of the R624.7m was spent on this programme in 2014-15. During the 2013-14 financial year the department had overspent their R592.3m budget by 2%; spending R606.7m (102%) on the Active Nation Programme.  Community Sport received a large virements portion of R17.5m, and there were virements amounting to R12.1m out of the school sport programme in 2014-15. Despite these movements of funds, expenditure for Community Sport had declined from R97.6m in 2013-14 to R79.9m in 2014-15, whereas School Sport sub-programme expenses had increased from R8.8m in 2013-14 to R16.3m in 2014-15. In both these sub-programmes the department had exceeded its targets for the year 2014-15, signalling that there is a need to plan accordingly and not ''underplan''.

 

  1. Winning Nation

 

Operational expenditure for Winning Nation was around R 42 million, the majority of which was spend on goods and services (mainly for venues, facilities and supplies). Spending on the program cannot be compared to the previous financial year due to the structural change in 2013-14. The slow spending in this program in relation to planned spending is due to delayed submission of invoices from the high performance institutions for the residential programme.

 

The purpose of the programme is to support the development of elite athletes. One of the crucial objectives of this program is to contribute to nation building by financially supporting, monitoring and evaluating the services delivered by the South African Sports Confederation Olympic Committee (SASCOC) in preparing and delivering South African teams for participation in selected international multi-sport code events on an ongoing basis. The spending focus over the medium term was on providing scientific support to athletes as reflected in the scientific support subprogramme. The recognition systems subprogramme was introduced in 2011-12. Expenditure in this subprogramme has fluctuated from inception, mainly due to financial incentives paid to athletes for their achievement at international events in 2011-12 and 2013-14.  These payments were made through transfers to the South African Sport Confederation and Olympic Committee and are reflected under transfers to non-profit institutions. As part of the Cabinet-approved budget reductions, expenditure of the recognition systems subprogramme will be reduced by R 3.4 million over the medium term. The impact of this reduction on service delivery will be minimised as private sector donors are brought in to augment funding for the recognition of performances.

 

The number of personnel in this programme is expected to increase from 17 in 2013-14 to 23 in 2016-17. The Department delayed filling these posts to ensure that the new organisational structure would be aligned with this plan.

 

Expenditure into the programme had reduced sharply from R231.3m in 2013-14 (101.1%) to R83.1m (98.4%) in 2014-15 due to the introduction of the new organisational structure and the structural alignment of programmes, as well as the once-off funding allocated for CHAN 2014 during the 2013-14 financial year.

 

  1. Sport Support

 

The purpose of the Sport Support programme is to develop and maintain an integrated support system to enhance the delivery of sport and recreation. The objective of this program was to contribute tow uniting the country by supporting 60 national sports federations and other non-governmental organisations that offer sport and recreation opportunities to all South Africans in 2014-15.

 

Operational expenditure by the end of quarter three was R 34 million, the bulk of which was spent on goods and services. The higher-than-projected spending in this programme is due to the payment of outstanding annual subscription fees owed to the African Union Sport Council and its regional organisation.

 

In Sport Support in 2010-11 there was a far lower budget of R48.2 million, and then suddenly R117.5 million in 2012-13 and R118.2 million respectively; and then an average expenditure of 8.7 per cent, which must also be explained for those years. Paradoxically the average under spending here has been at the rate of 8.7 per cent. The international liaison subprogramme was projected to have a negative average annual growth over the medium term due to the implementation of efficiency measures in international travel, which include smaller delegations to international events. The number of posts in this programme was expected to increase from 6 posts in 2013-14 to 9 funded posts in 2016-17, which accounts for the growth in expenditure on compensation of employees over the MTEF period as the department fills vacant posts to provide the capacity required to support the implementation of the newly endorsed National Sport and Recreation Plan.

 

  1. Infrastructure Support

 

The purpose of the Infrastructure Support programme is to regulate and manage the provision of sport and recreation facilities. The objective of this programme is to improve levels of participation in sport and recreation by facilitating the provision of adequate and well-maintained facilities. In this instance the department was not able to achieve its target of completing the facility audit, which had been communicated to the portfolio committee by the end of the third quarter. However, they were able to exceed their target on technical assistance on provision of sport and recreation facilities.

 

The department is not responsible for the building or development of sport facilities, however, through the different initiatives they have managed to mobilise stakeholders to help with the building of sport facilities in rural communities. In the 2014-15 financial year the department had allocated R5.7m to Infrastructure Support programme compared to R9.2m allocated in 2013-14 financial year, and managed to spend R4.9m (85.6%) during 2014-15 when only R4.5m (48.9%) of the total allocations to the programme was spent in the 2013-14 financial year. It is important that the department ensures that all provinces complete the facility audit process and that a national database of sports facilities is developed to enable implementation of the national facilities plan.

 

  1. Public Entities

 

  1. Boxing SA (BSA)

 

Boxing SA's financial position has regressed from the 2013-14 financial year, where they had received an unqualified audit outcome from the Auditor General. This year they received a qualified audit opinion with matters of emphasis. The AG had observed that BSA was unable to submit a reliable report of financial statements. The first main underlying cause for unchanged and regressed outcomes for drivers of key controls was slow response by management in addressing the root causes of poor audit outcomes, with the recommendation that management must develop action plans that address the audit findings, and action plans must be monitored by those charged with governance. The second underlying cause was that key officials lack appropriate competencies, with the recommendation that management must ensure that appointed employees have proper qualifications and experience, and that competency assessments and training must be done on a continuous basis to assess and improve skills of key officials. The third was instability or vacancies in key positions, with the recommendation that management must finalise the investigations of the suspended officials and appoint competent staff.

 

Irregular expenditure at BSA related to supply chain management compliance. In the case of BSA it mainly related to quotations not always obtained for amounts between R2000 and R200 000 and not getting tax clearance certificates for service providers, which rendered the procurement irregular expenditure.

 

BSA had irregular expenditure of R1 920 772 (89% identified by the auditors) of which the root cause was a lack of monitoring controls for compliance with procurement processes.

 

  1. SAIDS

The entity managed to receive an unqualified audit outcome from the Auditor General during the 2014-15 financial year, with matters of emphasis. The AG identified material misstatements in the areas of assets, employee costs and commitments, caused by lack of adequate review due to lack of skills.

 

During the 2014-15 financial year the entity spent R24.3m (95%) of the R25.6m income that was generated in the same year, which was a major improvement in savings for the institution, moving from a deficit of R182 000 in the 2013-14 financial year to a surplus of R1.2m at the end of 2014-15 financial year. This was achieved despite the loss of income in exchange revenue, from R3.1m that was collected in 2013-14 to R2.4m achieved at the end of 2014-15.

 

There was a general increase of cost in the following programmes: Administration, Education and Doping control, largely owing to the introduction of the WADA code. The entity was able to reduce the costs of results management, international projects and corporate services.

 

 

 

 

 

  1. MTEF 2015-16 Allocations

 

Due to the constrained economic outlook, the scope for providing additional funding has been limited by the National Treasury, and departments, public entities and constitutional institutions were asked to reprioritise funds within their existing baselines to fund emerging priorities. Should the fiscal outlook improve, recommendations for additional funding may be considered in future budget processes. Difficult choices have to be made between spending priorities and sequence of programme implementation. As a result of these budgetary constraints, departments are required to efficiently manage the costs pressures related to changes in the inflation rate, exchange rate or any other factors affecting input prices.

 

SRSA can only implement the NSRP partially or in phases until such time that there is enough funding for full implementation. The 2015-20 Strategic Plan focuses heavily on the important role of the department towards nation-building and fostering social cohesion. Strong emphasis is placed on the alignment of the 2015-20 strategic plan to sub-outcome 3 of Outcome 14 of the 2014-19 MTSF. These objectives are to be pursued in the medium term as SRSA has aligned its Strategic plan and APP to the 2014-19 MTSF.

 

The department has been allocated R3 billion in the medium term and of that, R2 billion will be allocated to the Active Nation Programme and R417.3 million to the Sport Support programme. The allocation will fund only a small portion of the implementation of the NSRP. The key deliverables for this expenditure will be ensuring that participation sport events increase from 9 150 in the 2015-16 financial year to 15 000 in the 2017-18 financial year, and that efforts to transform sport are also allocated R107.6 million in the 2015-16 financial year as part of ensuring commitment towards changing the landscape of South African sport to reflect the demographics of the country.

 

 

 

 

 

 

 

 

 

 

 

  1. 2015-16 SRSA BUDGET ANALYSIS PER PROGRAMME

Programme

Audited Expenditure

Adjusted Expenditure

Revised Estimate

Medium Term Expenditure Estimate

R million

2012-13

2013-14

2014-15

2015-16

Administration

100.3

114.6

131.3

124.8

Active Nation

539.5

607.6

615.2

628.6

Winning Nation

292.5

231.4

88.8

92.2

Sport Support

117.5

115.8

125.6

133.2

Infrastructure Support

4.3

9.3

9.4

9.7

Total

1,054.1

1,073.8

970.4

988.5

National Treasury (2015)

 

The department has a total budget of R988.5 million to spend for the 2015-16 financial year. The budget is allocated to five different programmes of the department to ensure that it gives the practical implementation to the plans of the department. Active Nation programme has been allocated R628.6 million (64%) and this is the major programme of the department, which includes school sports and community sport. It is followed by the Sport Support programme with an allocation of R133.2 million (13.4%), the majority of which will be transfers to national federations, then the allocation of R124.8 million (12.6%) for the administration of the department.

 

The main expenses of the department, R720.7 million (72.9%) is incurred on transfers and subsidies to the provinces, departmental entities and federations so that they can implement programmes. Another major share of the departmental expense is on current payments, R265.7 million (26.8%), currently being goods and services and the compensation of employees.

 

  1. Programme 1: Administration

 

The allocation of R124.8 million in this programme for the 2015-16 financial year is an increase from the R116.7 million that was appropriated in the 2014-15 financial year. Corporate services receives a big portion of the budget R40 million (32%), however, this has decreased from the 2014-15 budget of R44 million. There is a major increase of 29.7% for office accommodation, from R11.7 million in the 2014-15 financial year to R20.1 million in the 2015-16 financial year. The department is still using the offices which they had indicated were not suitable because there was inadequate parking space, there was a security risk to staff and the offices were not properly located. There is a need to speedily resolve the negotiations with the Department of Public Works to find alternative accommodation.

 

SRSA has to ensure that it is able to respond to the concerns raised by the Auditor General of filling the vacant posts and completing the policies and procedures that are necessary for maintenance of good governance. All vacant posts should be filled and the lengthy recruitment process be addressed as a matter of urgency. IT governance is long overdue and should be completed. Whilst the department has extended its audit services to Boxing SA, it should be noted that this is an addition to the functions and should not compromise the operations of the department. 

 

  1. Programme 2: Active Nation

 

In the 2015-16 financial year the programme’s budget increased marginally to R628.6 million, compared to R620.1 million allocated in the 2014-15 financial year. Provincial support and coordination is allocated about R537.3 (85.4%) in the 2015-16 financial year, up from R525.6 in the 2014-15 financial year. It is important that provinces are monitored to adhere to Treasury provisions and avoid possible audit queries. SRSA should ensure that all provinces adhere to the stipulated regulations. Attention should be given to avoid over-expenditure by provinces.

 

The programme has five sub-programmes: Active Nation, Active Recreation, Community Sport, School Sport and Provincial Support and Coordination. All major events of the department are in this programme. The department has indicated that the current organisational structure does not meet the expanding responsibilities placed on the programme following the approval of the NSRP. As a result staff will be migrated to match and place them to positions that will best support the expanded obligations.

 

One notable change in the budget under this programme is the decrease of the expenditure for goods and services, from R52.8 million in the 2014-15 financial year to R38.2 million in the 2015-16 financial year, whilst the compensation of employees has increased sharply from R6.6 million to R16.4 million. Lovelife will continue to receive a funding allocation of R36.6 million in the 2015-16 financial year, up from R35.5 million in 2014-15.

 

 

 

 

  1. Programme 3: Winning Nation

 

The purpose of this programme is to support the development of elite athletes. One of the crucial objectives of this programme is to contribute to nation building by financially supporting South African Sports Confederation and Olympic Committee (SASCOC) in preparing and delivering South African teams for participation in selected international multi-sport code events on an ongoing basis.

 

In the 2015-16 financial year the programme has been allocated R92.2 million, up from R78.1 million allocated in 2014-15. The increase resulted from the increase of the budget of the Scientific Support sub-programme from R44 million in the 2014-15 financial year to R61.4 million in the 2015-16 financial year due to the extended mandate of SAIDS to comply with the new WADA Code. SRSA has set itself about seven targets to achieve in the current financial year.

 

  1. Programme 4: Sport Support

The objective of this programme is to contribute towards uniting the country by supporting 60 national sports federations and other nongovernmental organisations that offer sport and recreation opportunities to all South Africans. To achieve this objective, the department has set seven targets to be achieved in the 2015-16 financial year. There are three sub-programmes that supports the Sport Support programme:  These are Sport Support, International Relations and Sport and Recreation Service Providers.

 

The programme has an allocation of R133.2 million for the 2015-16 financial year, down from R145.1 million that was allocated in the 2014-15 financial year. Sport and recreation service providers sub-programme receives the lion's share of the budget, with R126.1 million (94.6%) going towards the funding of federations. Boxing SA has received an increase of budget from R7.9 million allocated in the 2014-15 financial year to R10.5 million in the 2015-16 financial year. This allocation would require a strict process of monitoring, especially with regard to compliance and adherence to predetermined objectives. SRSA will have to ensure that there are punitive measures in place and that the federations sign the agreement to comply.

 

SRSA has set to assist 60 national federations with financial and non-financial support, however it expects to only have 20 federations pledging support for the Code of Conduct. The introduction of the Code of Conduct was to ensure that federations would improve their governance and only those that comply will receive financial support. As a result all federations are expected to honour the Code of Conduct and SRSA has an obligation to ensure compliance.

 

  1. Infrastructure Support

For the 2015-16 financial year the Infrastructure Support programme is allocated R9.7 million, up from R9.4 million that was appropriated in the 2014-15 financial year. The budget was adjusted to R10.4 million during the 2014-15 medium term budget. The programme has three sub-programmes and is aimed at improving levels of participation in sport and recreation by facilitating the provision of adequate and well-maintained facilities. The department lobbies for the development of sport and recreation facilities within municipalities.

 

One of the major activities that the department has been engaging in is the discussion to have the 15% that has been ring-fenced from the Municipal Infrastructure Grant (MIG) transferred to the department. Whilst SRSA has indicated that the grant would not be administered by the department in the 2015-16 financial year, there is a need to properly plan to ensure proper administration of the grant.

 

  1. ENTITIES BUDGET ANALYSIS

 

Table 2: Budget of entities of department.

Programme

Audited Expenditure

Medium Term Expenditure Estimate

R million

 

2013-14

m

2014-15

m

2015-16

m

2016-17

m

2017-18

m

Boxing SA

R6.5

R7.9

R10.4

R11.0

R11.5

SAIDS

R14.0

R18.5

R19.8

R21.9

R23.0

 

  1. Boxing SA

 

The budget allocated to Boxing SA for the 2015-16 financial year is R10.4 million, an increase from R7.9 million that was allocated in the 2014-15 financial year. The increase is due to a substantial increase allocated for goods and services, from R3.7 million in the 2014-15 financial year to R6 million in 2015-16. This increase is intended to allow Boxing SA to implement some of its annual operational plans. The entity has been allocated R21.6 million in the medium term period for compensation of employees. During the 2015-16 financial year, compensation of employees will constitute 65% (R6.5 million) of the total expenditure of the entity. 

 

The functions of Boxing SA are clearly explained in the 2015-16 APP and are divided as core and strategic functions. To carry out these functions, Boxing SA, having considered its resources capacity, ought to carry them through programming and proper prioritising. At the moment the structure does not give an indication of how, for instance, marketing functions are carried. Regulating functions are very important in the business of Boxing, since there are broadcasting, bouts and licensees contracts to manage, which require an organisation that has a structure well-suited to managing such tasks and avoiding possible litigation that may arise in case of any dispute.

 

  1. South African Institute for Drug-free Sport (SAIDS)

 

In 2013-14 the Auditor-General provided an unqualified audit opinion with regard to the financial statements of the South African Institute for Drug-free Sport. This shows a consistency of good financial performance by the entity. SAIDS budget allocation increased slightly from R13.2 million allocated in the 2012-13 financial year to R14.7 million in the 2013-14 financial year. The allocation has been increased to R14.8 million in 2014-15 financial year period. The National Lottery allocated SAIDS R18 million in the 2013-14 financial year. Additional funding of R3.6 million was secured for SAIDS in the 2014-15 financial year, R4.2 million in the 2015-16 financial year and R5.5 million in the 2016-17 financial year to ensure that SAIDS is able to comply with the World Anti-Doping Code (WADA Code).

 

The budget allocated for SAIDS in the 2015-16 financial year is R19.8 million with an additional R10 million from the National Lottery. This amount has been allocated such that 41% (R12.3 million) will be utilised for doping control, and administration will consume 32% (R9.7 million) of the total allocation. SAIDS has had to ensure that staff that had been employed on contract are employed on a full time basis, which resulted in increased total expenditure.

 

Education is an important role of SAIDS and during the 2014-15 financial year 16 education officers were appointed in 7 provinces, excluding provinces such as Mpumalanga and North West. This expansion of staff will have an impact on the entity’s outreach programmes and there is a need for SAIDS to review its current model on education and outreach, so that it can be effective and efficient.

 

SAIDS intends to conduct 3000 tests and implement 7 anti-doping outreach projects in the 2015-16 financial year. During this period they will also deliver 8 anti-doping workshops/seminars to provincial sports federations/sports academies. These actions are meant to ensure greater awareness across the sector about the need to have doping-free sport and to educate athletes about fair competition.

 

  1. Concluding comments on financial and service delivery performance

 

The financial performance of SRSA continues to inspire confidence in how the department is able to channel its resources effectively and efficiently to achieve its goals. Whilst the department receives little funding compared to all the other national departments, it continues to ensure that sport programmes are implemented in order to ensure that there is social cohesion and nation building. The two entities overseen by the department, Boxing SA and SAIDS, have also been performing, albeit not consistently, especially Boxing SA. Boxing SA continues to experience challenges regarding governance and compliance to legislation.

 

The economic climate remains the greatest concern for funding of sport and recreation in the country. The department continues to deliver programmes through funding they receive from the National Treasury, which is largely transferred to provinces and federations. Without any major sponsorship in sport, full implementation of the National Sport and Recreation Plan will continue to be implemented in phases.

 

Compliance of federations with the established regulations for securing funding remains a challenge. Whilst some federations are able to submit their business plans and annual reports to the department on time, the majority continue to experience a challenge in this regard, leading to funds being transferred late in the year. By the end of the third quarter only 48 federations had complied, in sharp contrast with the two federations that had complied by the end of second quarter. Many federations are still largely run by volunteers who work on a part-time basis in sport. The key factor remains adherence to good governance principles of accounting and ensuring that development programmes of sport are driven and reach the rural areas.

 

Building of sport and recreation facilities remains a key driver of ensuring that communities in rural areas are able to access sport and recreation opportunities. The discussions of SRSA and National Treasury including COGTA on the Municipal Infrastructure Grant (MIG) allocations to municipalities should be concluded as soon as possible so that there can be no further delays in rolling out sport infrastructure development in communities. The portfolio committee had noticed during its oversight in various provinces that municipalities are not effectively using the P-Component of the MIG, to build sport facilities, thus delaying the necessary transformation of sport. On average provinces spent just 4% of the MIG to build sport facilities, and this situation needs to change if the NSRP objectives are to be achieved, where building of sport infrastructure is identified as an enabler to participate in sport.

 

School Sport remains the priority programme of the department, which is evident from the fact that 64% of the departmental budget is spent on this programme. Only 50% of South African schools are registered on the programme and the National Schools Sport Championships continue to attract more than 10 000 participants. The department has been experiencing challenges in implementing the MoU that was signed with Department of Basic Education (DBE) in 2011. There are two main challenges relating to implementing the MoU. One relates to funding of programmes: There has been little funding from DBE in this regard, making it difficult to ensure that all learners and schools are able to participate fully in the programme. The other challenge relating to the programme is the ability of DBE to organise intra-school leagues, and ensuring that these activities take place. The portfolio committee will continue to encourage the discussion and will seek to engage the political heads of both departments in this regard.

 

  1. Finance and Service delivery performance assessment

 

It should be noted that during the 2014-15 financial year the department was able to spend R966.8m (99.6%) which is slightly less than 99.9% achieved in the 2013-14 financial year. The majority of these funds were transferred to provinces and the entities. During the 2014-15 the department managed to transfer R699m (72.3%) of its budget to provinces and entities, down from R814.2m transferred in 2013-14. As a result the department is wholly dependent on the provinces and entities for its delivery and performance. The monitoring tools need to be enhanced to ensure that there is no delay and misrepresentation of reporting lines and items.

 

The performance continued to show improvement in SRSA with the achievement of 91% of its targets.   National federations continue to receive financial aid, 64 of them received financial aid, whilst the department has indicated 16 of the national priority federations would be signing their transformation scorecard with the EPG in order to effect transformation. The department has managed to fill of 33 of the 71 vacancies that existed in 2014-15. There was R3.5 million in underspent funds (Compensation of Employees, R1.8 million and Goods and Services, R1.7 million) and funds not transferred (R29 000).

 

Boxing SA could not submit performance information for the audit. However, the AG had found that BSA had irregular expenditure of R1 920 772 (89% identified by the auditors) of which the root cause was a lack of monitoring controls for compliance with procurement processes.

 

  1. COMMITTEE'S Observations and response

 

  1. Technical issues

 

SRSA has indicated that they not be able to finalise all the legislation that they had anticipated to complete, and that only the National Sport and Recreation Amendment bill and the South African Drug-free Amendment bill would be prioritised.

 

Implementation of the MoU between SRSA and DBE continues to show some challenges that need to be attended to urgently in order to improve the situation of learners’ participation in school sport. The portfolio committee has been calling joint meetings to ensure some intervention in the programme. A much higher level of intervention and leadership at political level is necessary so to ensure success of the school sport programme.

 

A range of stakeholders who are involved in the rolling out of sport facilities need to ensure proper coordination and support for such endeavours. The standard needs to be uniform and there is need for proper control in this regard. The Sport for Social Change, Sport Trust and National Lottery are the main role players in provision of funding for sport facilities, this includes SRSA who also fund some of these projects. Municipalities’ inability to spend the 15% P-Component of the MIG has to be taken seriously and discussions with COGTA and National Treasury should be prioritised.

 

  1. Service delivery performance

 

SRSA has not achieved a clean audit for the second year in row, but has improved on its performance. They have been able to achieve a 91% delivery of targets, up from the 76% in the last financial year. Only two of their targets were not achieved. The target for facility audit was not achieved, and only two provinces had completed the audit. The programme has been changed to a facility count after all provinces had indicated the challenges they experienced with the audit, and because of the costs involved in doing a complete audit. The other target not met was achieving an MPAT (Management Performance Assessment Tool) score of 4. MPAT is an assessment mechanism that the Department of Performance Monitoring and Evaluation (DPME) uses to assess departments' service delivery performance against the priorities of the NDP.

 

National School Sport Championship, Sports Awards, National Indigenous Games, Big Walk, Nelson Mandela Sport and Cultural Day events continue to be the main events of the department. The department has indicated that there are currently three sponsors who are supporting the National School Sport championships, which is commendable. These major events will have to be self-sustainable in the near future so that the department can further redirect its funds towards other development programmes.

 

Funding of federations appears to entrench the status quo, where the most lucrative federations get more funding and smaller federations getting less funding. SRSA needs to explore the model that will ensure that big federations that are able to generate own funds gets a small allocations and smaller one are adequately assisted.

 

For SRSA to continue performing well and maintaining a clean audit a number of service delivery aspects will have to also continue improving. These include the lack of delivery in rural areas. The portfolio committee had observed during its oversight visits that rural communities in many provinces continue to be under serviced both in terms of sport infrastructure and equipment and sport development programmes. The annual report had only identified only 2 coloured females under skills development during the 2014-15 financial year. The department was able to ensure that the performance agreements at SMS level are signed and the committee emphasised that the same should be extended to junior staff.

 

For sport to be truly transformed to be carried into club level there is a need for provincial rugby unions to ensure clubs remain operational. SRSA, through the EPG, will have to ensure that all sporting codes sign the transformation scorecard as a sign of their commitment to the transformation agenda.

 

The portfolio committee has been concerned about the slow pace of performance regarding the implementation of the MoU for school sport between SRSA and DBE. Despite the joint meetings, the committee has been pursuing that the two departments to work together. A much more aggressive approach is needed to ensure that the intra-school programme is properly resourced and implemented by the Department of Basic Education.

 

 

 

  1. Financial performance including funding proposals

 

SRSA received an unqualified audit report with no findings (green), SAIDS received an unqualified audit report with findings (yellow) and BSA received a qualified audit report with findings (purple).  Regarding BSA the AGSA found 23 areas for which action plans should be developed.

 

Under Predetermined objectives for BSA the auditors were unable to obtain the information and explanations considered necessary to verify reliability of the reported performance information on objective Marketing, Branding, Communication and Event Coordination. The root cause was identified to be lack of understanding of the FMPPI and the suspension of the CEO which led to a lack of leadership in the entity, which impacted on accountability to ensure that supporting evidence is filled and submitted for audit.

 

Material errors/omissions in submitted annual financial statements:  For BSA material misstatements were identified in the areas of provisions, trade receivables, pre-paid expenditure, accruals, revenue, expenses, irregular expenditure, fruitless and wasteful expenditure, related parties and contingent liabilities. Root causes were the suspension of the CEO and CFO which resulted in a lack of review on the financial statements.

 

For SAIDS material misstatements were identified in the areas of assets, employee costs and commitments, caused by lack of adequate review due to lack of skills. It was recommended that officials be trained on technical matters, change in the environment and that a skills review of officials in the entity should be performed.

 

Human resource management and consequence management: There were no significant findings for the department and SAIDS. BSA had no approved HR plan, because there was no CEO and CFO to have the HR plan developed.

 

Information technology (control environment): BSA does not have adequately designed formal controls over information technology systems to ensure the reliability of the systems and the availability, accuracy and protection of information.

 

Irregular expenditure

Irregular expenditure at BSA related to supply chain management compliance. In the case of BSA it mainly related to quotations not always obtained for amounts between R2000 and R200 000 and not getting tax clearance certificates for service providers, which rendered the procurement irregular expenditure. In the case SAIDS business was done with bidders who did not declare that they had no relationship with government, which rendered the expenditure irregular.

 

In the area Compliance with legislation: Procurement and Contract Management it was found that BSA awarded contracts to suppliers who did not submit tax clearance certificates or who did not declare their interest in the client; procurement of goods and services with the value between R10 000 and R200 000.00 was effected without obtaining at least three quotations; contracts and quotations were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state. The root cause was found to be a lack of review that all supply chain regulations are adhered to when contracting, and a lack of consequence management of officials when transgression are identified due to lack of leadership.

 

  1. Summary of reporting requests

 

Reporting matter

Action required

Timeframe

Progress report on the facility count that the provinces have undertaken.

Briefing

Written Plan

March 2016

Action plans to address findings by the AG in relation to SAIDS and Boxing SA

Written

Briefing

February 2016

National sport and recreation amendment bill and the South African drug-free sport amendment bill

Briefing

March 2016

Transformation scorecard progress report

Brief

March 2016

 

 

 

 

 

 

 

 

 

 

  1. RECOMMENDATIONS

 

Based on the analysis of the department’s budget and the entities for the year under review (2014-15), the committee recommends that the Minister for Sport and Recreation: 

 

SRSA

  • Ensures that Community Sport programme receives attention and the necessary resources for its full implementation;
  • Oversees department's ability to align its strategic plans with the Annual performance plans to ensure compliance with National Treasury and Auditor-General requirements;
  • Increases the roll-out of the Club development programme to include more clubs and expand to other provinces;
  • Ensures that there is proper consultation with the DBE and schools which have identified as sport focused schools, and that there are properly signed service level agreements between all the parties involved;
  • Ensures that there is quality equipment delivered to schools and clubs in order to encourage participation in sport amongst learners and community members;
  • Advocates for building of sport facilities in rural communities which will benefit not only schools, but also the general communities living in the rural areas;
  • Provides adequate financial resources to support the EPG in order to ensure that federations are transforming and that the EPG is able to monitor targets on quarterly basis.
  • Pursue the discussions with the Minister of Basic Education regarding the allocation of funds for school sport intra-school programme and its implementation in schools.
  • Advance the discussion with National Treasury regarding the allocation of 15% MIG funds back to SRSA in order to ensure that there is delivery of Sport infrastructure in rural communities.

 

Boxing SA

  • Ensures that management monitor compliance using a procurement checklist, that BSA include compliance with SCM in individual performance contracts for SCM officials and that officials who incurred/permitted the irregular expenditure are held accountable;
  • Ensures that the CEO and CFO suspended cases are resolved and the following posts must be filled with skilled officials;
  • Ensures that there is stability of leadership to put necessary policies are in place;
  • Ensures that consequence management is implemented regarding compliance with legislation;
  • Ensures that management develop and implement the approved HR plan;
  • Ensures that management monitor compliance using a procurement checklist, that BSA include compliance with SCM in individual performance contracts for SCM officials and that officials who incurred/permitted the irregular expenditure are held accountable.

 

SAIDS

  • Ensures that officials are trained on technical matters and that a skills review of officials in the entity should be performed.
  • Ensures that there is compliance with regard to the SCM prescripts and adherence to PFMA provisions that relate to procurement of goods and services.

 

  1. Appreciation

 

The committee appreciates the 100% clean audit on service delivery performance of the Department and the continued improvement of their performance targets. Boxing SA has shown some regression in terms of audit outcomes, there are matters of emphasis that the AG had identified some remedial actions to and oversight over SAIDS regarding compliance with the Treasury regulations around the PFMA.

 

Report to be considered.

 

 

 

Documents

No related documents