ATC161025: Budgetary Review and Recommendations Report of the Standing Committee on Finance on the National Treasury, dated 25 October 2016

Finance Standing Committee

The 2016 Budgetary Review and Recommendations Report of the Standing Committee on Finance on the National Treasury, dated 25 October 2016

1.         Introduction

In terms of the Money Bills Amendment Procedure and Related Matters Act, Parliament must, on an annual basis, make recommendations to the Minister of Finance on the forward use of resources. The Budgetary Review and Recommendations Report (BRRR) assesses service delivery performance given the available resources; evaluates the effective and efficient use and forward allocation of resources; and makes recommendations for consideration by the Minister of Finance.


The Money Bills Amendment Procedure and Related Matters Act (2009) sets  out  a  procedure  to  be  followed  by committees to prepare budgetary review and recommendation reports. Section 5 sets out a procedure for assessing the performance of each national department before it introduces the national budget.


The National Treasury (NT) is mandated to promote national government’s fiscal policy and coordination of its macroeconomic policy, ensure the stability and soundness of the financial system and financial services and coordinate intergovernmental financial and fiscal relations. It derives its mandate from Chapter 2 of the Public Finance Management Act, as well as Chapter 13 of the Constitution.


2.         NT Financial Performance

Table 1: Overall Performance of the National Treasury for 2015/16





Budget R'000

Actual R'000


% Spent

Budget R'000

Actual R'000


% Spent



386 645

375 582

11 063


372 382

362 527

9 855



Economic Policy, Tax, Financial Regulation & Research

132 730

131 290

1 440


134 358

124 329

10 029



Public Finance and Budget Management

268 889

262 577

6 312


259 877

245 271

14 606



Asset and Liabilities

3 265 171

3 264 294



3 343 372

3 089 403

253 969



Financial Accounting & Supply Chain Systems

783 753

774 494

9 259


770 035

731 495

38 540



International Financial Relations

3 547 662

3 546 134

1 528


1 199 717

1 198 652

1 065



Civil and Military Pensions, Contributions to Funds and Other Benefits

3 967 741

3 967 698



3 730 971

3 730 935




Technical Support & Development Finance

2 755 969

2 472 246

283 723


3 086 640

2 893 348

193 292




15 108 560

14 794 315

314 245


12 897 352

12 375 960

521 392



  Source: National Treasury Annual Report 2015/16

Table 1 above, shows the overall performance of the Department in terms of actual expenditure for the year under review. NT spent R14.7 billion (97.8%) of its final appropriation of R15.1 billion .for the 2015/16 financial year. This represents an increase of 1.96% when compared to the previous year.


3.          Performance Targets – Key Achievements and Challenges per programme


Programme 1: The Department achieved savings of 0.7% in goods and services. However, the vetting of employees being an important part of prevention of fraud and corruption was a challenge for this programme. The Department failed to verify 310 employees and thus needs to improve on its vetting statistics.


Programme 2: In responding to fiscal policy and financial and regulatory systems, this programme was able to publish research papers and proposals on Budget day. The various Bills – Financial Sector Regulation and Taxation and benefit pay-outs of retirement fund are taking longer than expected due to Parliamentary consultations. The current Carbon Tax Bill is being revised after NT received public comment and is currently awaiting cabinet approval.


Programme 3: This programme continued to publish national budget documentation and meet the Medium Term Expenditure Framework goals. It disbursed General Budget Support (GBS) projects and R1.8 billion to other projects from the Reconstruction and Development Programme (RDP) Fund. There were however three outstanding expenditure reviews: School Infrastructure in Basic Education, Water Sector and Provincial Roads, and Compensation of Employees (CoE) expenditure reviews. There were delays in the draft amendments of the Municipal Fiscal Powers and Functions Act.


Programme 4: The programme reviewed State Owned Entities and Development Finance Institutions’ executive remuneration and performance incentives. The submissions for guarantees and funding of South African Airways (SAA) and South African Post Office were undertaken. There were challenges related to tabling the SAA and Nuclear Energy Corporation of South Africa (NECSA) annual reports. These reports were not received and could not be analysed.


Programme 5: Progress was made in respect of 14 transversal contracts which were signed for procurement of goods at national level. Some of the targets not achieved in this programme were attributed to insufficient staff.


Programme 6: Interests in shaping regional and global polices which advance the economic and financial development objectives show that South Africa is effectively represented in the discussions and negotiations. Programmes 7 and 8 were able to achieve their targets related to compliance with NT Service Level Agreement (SLA) that customer complaints are resolved within seven days. The Department complied with governance and reporting requirements.


4.         Report of the Auditor General


The Auditor General (AG) expressed an unqualified audit opinion of the Department’s 2015/16 Annual Report. However, the AG expressed its opinion with emphasis of matter.


The AG also reported on the usefulness and reliability of the reported performance information against predetermined objectives of selected programmes in the annual report, non–compliance with legislation and internal control. An investigation of irregular appointment of service providers by NT was underway, conducted by the Public Service Commission. The investigation could have an impact on the Department’s financial performance and compliance related matters.


The AG noted with concern a lack of competence and slow response of management when dealing with audit outcomes. The Department noted that they could not correct the previous year’s finding on pre-determined objectives, as the 2015/2016 Annual Performance Plan (APP) had already been submitted when the audit report was finalised. The 2016/2017 APP’s targets and indicators had been revised to ensure that they were specific and measurable within the performance framework.


The annual report on the audit outcomes for the finance portfolio are overall impressive and none of the entities had qualified reports. Two entities, Financial and Fiscal Commission and Financial Services Board had made significant improvements, however the Land Bank had regressed.  There were areas that the AG identified generally such as material mistakes on financial statements, irregular spending and supply chain management concerns. A concern over SAA not being audited by the AG is problematic for the committee. The AG has opted not to audit SAA due to capacity constraints. 


On financial management, it was shown that the most prevalent non-compliance was on financial statements. Material mistakes on financial statements had been identified, and entities had agreed to make corrections. Irregular expenditure was still prevalent, even though this should not be an issue in the finance portfolio. While internal audits and audit committees had improved, there was still room for improvement.


The Integrated Financial Management System (IFMS) is a huge responsibility and the system is still being developed. The process of consolidation for the rest of government financial statements is ongoing.  Attention in the area of procurement is also required in order to improve supply chain management.


The AG recommended that there is a need for additional training and improved supply chain management and Ministerial support.


5.         Observations and Recommendations


5.1        The Committee believes that NT performed well overall. It achieved 76.5% of its targets and spent 97.8% of its budget. However, there are several issues that the Committee believes that NT needs to attend to. These are covered below.


5.2     The Committee draws attention to the AG’s Report as covered in Section 4 above and

requires NT to address the concerns raised there. NT needs to report on progress on these issues at its Quarterly Briefings to the Committee. The Committee encourages the NT to strengthen measures that will prevent future material impairments of investments, which resulted in an emphasis of the matter reported by the AG during the reporting period.


5.3        Based on the AG’s report, there was no improvement in the quality of annual performance reports by NT, particularly the predetermined objectives in programmes 4, 7 and 8.  These three programmes collectively accounted for almost two thirds of the total budget of NT in 2015/16. The performance indicators and targets of these programmes’ are not sufficiently well defined, specific and measurable, meaning that it would be challenging for Parliament to credibly assess the Department’s service delivery performance, and efficiency and effective use of allocated resources in line with the Section 5 of the Money Bills Act. The Committee recommends that NT attends to these matters.  

5.4        While recognising the staff, resource and other constraints of the AG’s Office, the Committee believes that where possible representatives of the Office should attend the Quarterly Briefings to the Committee by the National Treasury.

5.5        The Committee believes that consideration needs to be given to amending the PFMA and/or other legislation so that departments and public entities are required to implement the recommendations in the AG’s reports.


5.6        The Committee recommends that the Department reviews some of its performance targets and indicators so that they are easy to measure. There also needs to be greater consistency between the planned and reported performance; and reasons for not achieving targets have to be clearly set out and the risks that may arise must be mitigated. In setting targets, NT programmes must consider the previous service delivery trends, allocated budgets and whether there is adequate human capacity to deliver.


5.7        Overall underspending in Programme 8 was 93 % in 2014/15. It was 89.7% in 2015/16. The percentage spent was less in 2015/16. This programme is important because it includes the planning and administration of the Jobs Fund and the Municipal Finance Improvement Programme (MFIP) and provides specialised procurement services to departments, municipalities and public entities. The Committee recommends that particular attention be paid to the performance of this programme over the next reporting period.


5.8        The Committee will monitor NT’s progress on addressing the challenges it identified in the Annual Report which prevented it from fully delivering on its mandate. Of particular concern to the Committee are the recurring issues, at least over the last two financial years. These include vetting of employees; legislation not implemented as planned; oversight over public entities in terms of submission of the Annual Reports and Annual Financial Statements; insufficient staff capacity and delays in the recruitment process. The Committee would engage the NT further on these and other performance related challenges during its quarterly reports.


5.10       The Committee believes that consideration needs to be given to having SAA and over time all SOEs audited by the AGSA.


5.11       The Committee recommends that the Minister appoints at least one person on the new SAA Board with appropriate aviation skills.


5.12       The Committee recommends that among the criteria NT uses to decide on allocating funds to departments, it should give greater attention than it currently does to AG Reports on departments, and particularly the extent to which the AG’s recommendations are being implemented.


5.13       The Committee noted the challenges in the Supply Chain Management of the Land Bank. The Committee requires NT to report on the progress of the Land Bank in implementing the AG’s recommendations when the NT presents its next Quarterly Briefing to the Committee.


5.14       The Committee recommends that NT strengthens its oversight over SAA and the State Owned Entities (SOEs) such as ESKOM, where government funds are allocated.


5.15       The Committee recommends that NT consider how the Jobs Fund can be used to more actively support SMMEs and the participation of women in the economy.


5.16        The Committee recommends that NT work more actively with the Higher Education and Training and other relevant Departments to find a sustainable solution to higher education fees crisis. The Committee will work with the Portfolio Committees on Appropriations and Higher Education and Training and the Parliamentary Budget Office on this issue.


5.17       The Committee recommends that the preferential procurement framework being reviewed by NT be directed to ensuring that there is a significant de-racialisation of the economy and that it is the historically disadvantaged who substantially benefit from the new policy. The Committee believes that NT in particular and government as a whole has to do much more to encourage the development of African entrepreneurs and industrialists. While recognising the challenges, the Committee requires NT to report on this in its Quarterly Briefings.  


5.18       The Committee commends the NT on its payment of suppliers within prescribed 90 days but remains concerned that this is not the case with many other departments. While recognising the constraints, the Committee recommends that NT seek to do more to encourage other departments to abide by the 90-days policy.


5.19       As raised in previous Reports, the Committee is concerned about the lack of progress in implementing the Integrated Financial Management System (IFMS) model. The Committee requires NT to provide a progress report on this when it presents its next quarterly briefing to the Committee


5.20       The Committee notes the reviews done in supporting cities in exploring changes to the fiscal and regulatory structures for urban municipalities. The Committee believes that NT should allocate the necessary resources for this programme.


5.21       Following discussions during deliberations on TLAB and TALAB 2016, the committee recommends an analysis on the effectiveness and autonomy of the Office of the Tax Ombud from the perspective of the taxpayers.


5.22       The Committee notes with concern that the Government Technical Advisory Centre annual report was not tabled.


5.23       The Committee has previously expressed strong support for the Office of the Chief Procurement Officer and believes that NT should carry out an investigation into the veracity of the allegations of irregularities against the Chief Procurement Officer as soon as possible. Having received a report from the Director General and a Deputy Director General, the Committee is concerned about the lack of cooperation from the person making the allegations with NT. The Committee requires NT to report to it when the matter is finalised.


6.         Core Functions and Policy Priorities of SARS


SARS is a revenue collection entity and was established in 1997 by South African Revenue Service Act of 1997, to collect all state revenue as they become due, to ensure maximum compliance with tax and customs legislation and to provide a customs service that will maximise revenue collection, protect South African borders and facilitate trade. 

7.         Performance Assessment SARS 2016

7.1          Financial Performance

Table 2: Financial Performance and Position- with comparative analysis






Total revenue





Total Expenditure





Employee Costs





Operating surplus












Total Assets





Current assets





Non-current assets





Total Liabilities





Current Liabilities





Non-current liabilities







Net Cash flow from Operating activities





Net cash from investing activities





Cash equivalent year end





Source: SARS 2015/16 Annual Report

Table 2 above, shows that the overall revenue, mainly from government transfers decreased by 0.7% compared to the previous financial year. The transfer from government decreased in line with budget reductions applied across government and in line with the MTEF approvals. However, SARS continued to do well despite the economic pressures which impacted on the growth outlook. Its expenditure grew by 8% in 2015/16 which was higher than the transfer from NT. The largest expenditure was employee cost which grew by 6%. SARS made significant losses in 2015/16. Although its assets exceed its total liabilities, the entity must be mindful not to continue making perpetual losses.

8.         Performance Targets

Table 3: Delivery service targets for the 2015/16 financial year

Performance Area

Achievements /Challenges







Increased customs compliance


  • Importers submitted more declarations and preferred traders resulting in additional clients and trade volume
  • Exchange rate adjustment, increased focus on textiles and clothing in new tariff heading


  • Customs revenue collected for the year resulted in deficit of R0.92 billion. Import VAT collected lower than revised estimate- due to constraint growth of taxable imports
  • Underperformance due to electronic manifests from air and sea. This potentially reflects a global trend. Increase in volume of cargo moved across border but a decrease in manifest







Increased Tax Compliance


  • SARS conducted 12 892 in depth audits
  • PIT received equal 4.198 million out of 4.556 required.
  • Conducted over 1.8 million audits. The bulk of the audit coverage comprised verification interventions on 1.3 million PIT cases. Increased focused was directed at improving the quality of third party data.


  • Debt book up to R96.3 billion. CIT debts cases and higher inflow of VAT. Difficult to resolve debt cases due to adverse economic conditions




Increased ease and fairness of doing business with SARS


  • Taxpayers are moving towards electronic submissions and payments.
  • Maturity in the assessment system and improvement on the service standards.


  • Processing time took 134minutes excluding items routed for audit and manual assessment, 94% of all the returns were assessed within 5 seconds
  • Increase in VAT refunds due to increase in suspected VAT fraud cases.

Increased cost, effectiveness, internal efficiency and institutional respectability


  • Employee index is above target and continues to improve
  • Females comprise of 48.5% of management and Black workforce represents 74.5% of headcount


  • The overall Labour Effective Index was below target.
  • Employment equity disability was below target due to attrition and low recruitment rate


9.         Audit Report

The Auditor General (AG) expressed a clean audit opinion of SARS 2015/16 Annual Report.


10.       Observations and Recommendations  

10.1       The Committee once again commends SARS for its overall good performance during the reporting period. This included passing a R1 trillion revenue collection milestone, despite a constrained economic environment.


10.2       As previously raised, the Committee questions whether the targets set might not be somewhat conservative and would like SARS to explain at its next quarterly briefing on how these targets are decided on.  The Committee also requires SARS to explain what the drivers of improved revenue collection are in the next quarterly engagement.


10.3       The Committee commends SARS on its clean AG audit opinion and its trend of achieving financially unqualified opinions.  The Committee also congratulates SARS for the CCMG Award it received for best technology innovation internal solution and for being voted the revenue agency with the best detector dog capability in Southern Africa. However, the Committee recommends that SARS addresses the recurring issue of IT systems control. The AG in his presentation to the Committee expressed concern over the IT systems control.


10.4       The Committee acknowledges the progress made with regards to scanners and dog units as per the previous commitment.  SARS should report further progress made in its next engagement with the Committee, given that project implementation continues in 2016/17.


10.5       The Committee considered presentations from the SARS Commissioner, Mr Tom Moyane, and the Financial Intelligence Centre Director, Mr Murray Mitchell on the allegations of irregularities against a senior SARS official and another SARS official. The Committee welcomed the decision to refer the matter to the SAPS. It requires the SARS Commissioner to report on progress on the matter by the SAPS at the first Quarterly Briefing of SARS to the Committee in 2017. In the context of: 

  • the matter having been referred to SAPS;
  • the presentations of SARS;
  • the presentation of FIC; and
  • the response of the Minister of Finance to two questions in the House on the matter,


The Committee’s views on the matter for now are:

  • there is no significant evidence before the Committee that the SARS Commissioner did not act on the allegations referred to him by the FIC;
  • there is no significant evidence before the Committee that the FIC did not cooperate with the SARS Commissioner;
  • the SARS Commissioner has to comply with the need to report to the Minister  allegations of criminal conduct by a senior SARS official;
  • it was inappropriate in the circumstances for the SARS Commissioner to allow the official concerned to appear before the Standing Committee at the 23 August 2016 meeting;
  • the Minister of Finance and other relevant Ministers need to consider amendments to the FIC Act to:
    • provide that a relevant Parliamentary Committee can in certain cases get a briefing from the FIC on the processes related to a particular case of allegations of criminal behaviour, not the merits of the case;
    • provide that the FIC can follow up on progress on a case it has referred to the SAPS.   


11.       Public Investment Corporation


11.1       Introduction


The principal purpose of the Public Investment Corporation (PIC) is to invest certain monies received or held by, for or on behalf of the Government of the Republic of South Africa and certain bodies, councils, funds and accounts. As custodian of substantial assets generated by the labour of generations of South Africa’s public sector employees, the PIC has a responsibility to conduct its affairs with integrity, transparency and in an accountable way. As a public entity, the PIC is listed in Schedule 3B of the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA) and thus has to comply with the requirements of the Act.

The deliverables of the PIC remains important within the South African investment management sector, particularly because of the developmental investment role it plays in the economy as an investor, a catalyst for private sector investment and an advocate for social impact investing.  The PIC has adopted its Vision 2030, premised on thematic investing for economic growth. The approach supports South Africa’s key developmental objectives and priorities that foster economic growth and drive socio-economic transformation.


11.2  Performance information

Table 4: High Level Performance Dashboard: Corporate Scorecard





Cost containment measures were implemented and actual costs remain within the budgeted amounts (Cost to income ratio amount to 56.61%).


Internal Business

Inherent risk level was maintained at 100% and the residual risk level by 20% for the financial year under review and at acceptable levels.


Customers/ Stakeholders

PIC delivered investment performance for the Compensation Commissioner Fund and Guardian Fund

The Unlisted property market and bond assets are the main contributors to the underperformance of individual top 5 funds.



Transformation of the Asset Management industry- PIC facilitated a total of R11.5 billion allocated to BEE managers who graduated from development programme


A good deal pipeline contributed to the partial achievement of this target of growing the economy through investments in Africa (non-domestic) listed and unlisted investments). The target is depended on approval from clients as it related to unlisted investments. These approvals were not obtained in time for further investment.

Human Capital and Knowledge Management

PIC staff defined as black in terms of the Employment Equity Act amounted to 88.2% which exceeded the target of 86%.


Source: PIC Annual Report



11.3       Financial Analysis


The financial analysis of PIC is based on the audited consolidated annual financial statements for the year ended 31 March 2016. Revenue increased to R1.0 billion (FYE15:R955 million) mainly attributed to management fees earned. The PIC is an asset manager which manages funds based on mandates prescribed by clients for which it is paid a fee and therefore the PIC does not own these investments.


The PIC’s financial results demonstrate positive growth mainly due to a resilient net interest income and operating expenses managed within budgeted levels. The company ceased providing property management services in order to concentrate on its core business of asset management services. There was a decrease in staff costs of R26 million which is an approximately 6% decrease in employee costs.


Cash available from operating activities increased to R430 million (FYE15:R349 million). Total assets were recorded at R2 074 million, R434 million more than in the previous year. There was a positive fair value of financial instruments traded in the active market in the financial year. Cash and cash equivalents declined to R605 million (FYE07:R829 million).

PIC has no long-term interest bearing debt on its balance sheet. The net gearing position is cash flush as they have sufficient cash to cover their liabilities. The entity has raised provisions against leave entitlements accrued to the employees for the financial period. The long term incentive relates to the scheme by the company to attract, retain and reward high performing management at PIC. Short term provision is linked to performance contracts payable annually after the board approves the annual results.


12.       Auditor General’s Report           


The AG expressed an unqualified audit opinion. However the AG drew attention to the following matters: outsourcing of property management, lack of oversight by management in addressing the deficiencies noted regarding financial reporting, compliance and related internal controls.


13.       Observations and Recommendations


  1. Although PIC did not highlight findings on performance information, the AG however noted disclosure findings. The Committee recommends that the PIC develops a remedial action plan to address the AG’s findings in respect of governance and report progress within 6 months of the adoption of this report.


  1. One of the strategic objectives of the PIC is to contribute to the development and transformation of the South African economy’s financial services and asset management. The PIC should consider increasing the number of women asset managers and its outreach programmes to rural universities. The committee noted the current initiatives undertaken to increase participation of female asset managers.


  1. The PIC should expand its social investment programme, by amongst other things, investing in agriculture and renewable energy and work together with the relevant Departments of Agriculture Forestry and Fisheries, and Rural Development and Land reform.


  1. The Committee noted significant fluctuations in returns on investment between the last two reporting periods and recommends that the PIC ensures that the Fund and its investments remained sustainable over time and avoid investments with zero or negative returns.


  1. The Committee noted an increased number of withdrawals from the GEPF by the beneficiaries and the long term impact this might have on its returns.  The net contribution was affected by large numbers of resignations. While this is obviously not the responsibility of the PIC, GEPF and GPAA only, they need to improve their communication and alleviate the misperceptions of the Tax Amendment Law.


  1. The PIC should increase its representation of black fund asset managers on externally funded investments and consider disposing some of its assets to the previously disadvantaged individuals.


  1. The PIC should play a more effective appropriate role in the way it manages its investments in government’s efforts in tackling Base Erosion and Profit Shifting.


  1. The Committee welcomes the PIC’s tabling of details of its unlisted investment portfolio as requested by the Committee. At this stage, it seems clear that much of this investment serves transformative goals and is geared towards the deracialisation of the economy. The majority in the Committee notes the wild and reckless allegations made against the PIC regarding how it was managing its unlisted investment portfolio and inaccurate claims that the PIC had to be forced to release details about it. The Committee encourages the PIC to do more to deracialise the economy.


14.       Government Pensions Administration Agency


14.1       Introduction


The Government Pensions Administration Agency (GPAA) is a government entity which reports to the Minister of Finance to administer pensions on behalf of the Government Employee Pension Fund (GEPF) and NT in respect of Post-Retirement Medical Subsidies, Military Pensions and Special Pensions. GPAA derives its mandate from the two customers - NT and GEPF and is responsible for contributing towards Outcome 12 of the 14 Government priority outcomes.


14.2         Performance information


Table 5: High Level Performance Dashboard: Corporate Scorecard




Programme 1: Corporate Services

  • 14 various policies were revised and approved by EXCO including:
  1. A Risk strategy and implementation framework was developed
  2. A Risk appetite and tolerance framework was approved
  3. An Anti-corruption policy was approved and fraud and ethics assessments were conducted
  4. Carbon footprint methodology was developed to support:
  • Paying suppliers within 30 days (93% target achieved)
  • Building a modern and resilient ICT environment
  • Informing employees regarding the Tax Harmonisation law changes
  • The unavailability of ICT services due to system downtime
  • Delays due to supply chain processes which require strict compliance
  • Lack of capacity, retention of key resources is hampering modernisation projects, high turnover in IT Audit
  • Lack of automated processes
  • Low response rate to surveys

Program 2: Special, Military and Other Benefits Administration

  • 91% client satisfaction level against target of 90%, as well as 100% of benefits paid accurately against target of 80%, by paying the right amount accurately.
  • THE GPAA paid out pensions and benefits of R3.9 billion in 2015/16 (2015:R3.7 billion).
  • Military medical account payments and access to medical treatment by pensioners remains a challenge. This function will be outsourced to a service provider in the new financial year.
  • Need to intensify its communication to members

Source: GPAA Annual Report 2016



14.3       Financial Analysis


The financial analysis of GPAA is based on the audited consolidated annual financial statements for the year ended 31 March 2016. Revenue increased marginally to R948 million (FYE15:R918 million) mainly attributed to administration fees earned from GEPF (93%) and NT (7%). All costs incurred by the GPAA are refunded by these entities on a monthly basis. Total assets recorded at R505 million, R434 million more than in the previous year. GPAA has no long-term interest bearing debt on its balance sheet.


The GPAA has a number of highlights including: 100% of benefits were paid accurately; 84% were paid on time after receipt of duly completed documentation; and delivering on its majority of predetermined objectives. The overall performance was 91% with 21 of the 23 performance targets being achieved.


14.4       Auditor-General’s Report         


The AG expressed an unqualified audit opinion. However, the AG drew attention to the following matters:


  1. Irregular and fruitless and wasteful expenditure


The AG reported irregular expenditure of R33.5 million (2015: R48.3 million) as a result of non-compliance with supply chain and human resources management processes. Fruitless and wasteful expenditure of R365 000 (2015: R68 000) was also incurred in the year under review. Effective steps were not taken to prevent irregular and wasteful expenditure as required by PFMA and Treasury regulations.


  1. Compliance with legislation


  1. In contravention of the Public Service Act, a performance bonus was paid to a member of the Senior Management Service who did not conclude and sign a performance agreement before 31 May 2016.
  2. a) A contract was awarded to a foreign supplier without obtaining a tax clearance    

    certificate as required by NT and Procurement regulations.

      b) Goods to the value of R500 000 were procured without obtaining the required price   

           quotations as required by Treasury regulations.


  1. Internal Control.

There was no oversight from management to ensure compliance with internal controls regarding the timely signing of performance agreements, confirmation of a foreign supplier and obtaining three quotations. Where the procurement process was not followed, the deviation process was not adhered to.


15.       Observations and Recommendations


  1. The Committee notes the issues the AG raised in section 14.4 and recommends that the GPAA develops a remedial action plan to address them The Committee requests a progress report on the 14 investigations conducted.


  1. The committee believes that GPAA needs to consider improvements in the turnaround time for paying the beneficiaries after retirement. While recognising the challenges, the Committee believes a more accurate member database and better communication and education could help in this regard.


  1. The committee noted the presentation on the desktop research done by GPAA. However, the Committee wants the results to be presented in a clearer way to better understand the reasons for resignations and withdrawals from the fund.


  1. The Committee recommends that NT at its next Quarterly Briefing explain to the Committee exactly what the GPAA governance structures are, how it relates to the GPAA and how it exercises its oversight role.


Report to be considered.











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