ATC171006: The Budgetary Review and Recommendation Report of the Portfolio Committee on Police on the Independent Police Investigative Directorate (Ipid), dated 06 October 2017

Police

THE BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON POLICE ON THE INDEPENDENT POLICE INVESTIGATIVE DIRECTORATE (IPID), DATED 06 OCTOBER 2017
 

The Portfolio Committee on Police, having considered the financial and service delivery performance of the Independent Police Investigative Directorate (IPID) for the 2016/17 financial year, reports as follows:

 

1. INTRODUCTION

 

The Money Bills Procedures 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. As part of this process, Portfolio Committees must compile Budgetary Review and Recommendation Reports (BRRR) in October of each year, containing recommendations relating to funding allocations for departments and other institutions that account to them. The BRRR are also source documents for the Standing Committee on Finance when it makes recommendations to the House on the Medium-Term Budget Policy Statement (MTBPS). The annual review and analysis of performance (entailing both financial and non-financial performance indicators) forms part of this process.

 

The Committee is guided by its interest to promote effectiveness, efficiency and professional policing in South Africa. It has a desire to see a reduction in crime. The mandate of the Committee therefore is to fulfil its constitutional function to:

• Pass legislation;
• Scrutinise and oversee executive action and the organs of state including the Department of the Police, the Civilian Secretariat for Police, the Independent Police Investigative Directorate (the Directorate) and the Private Security Industry Regulatory Authority;
• Facilitate public participation and involvement in the legislative and other processes; and
• Engage, participate and oversee international treaties and protocols.

 

The Committee has overseen the performance of the Directorate though regular oversight meetings during the 2016/17 financial year and has tracked progress during the current financial year (2017/18). The Committee has considered quarterly expenditure reports for 2016/17 and for the first quarter of the 2017/18 financial year.

 

The Committee was briefed on the annual performance for 2016/17 of the Directorate on 04 October 2017. The Committee also met with the Auditor-General on the audit outcomes on 02 October 2017. Copies of the presentations are available from the committee secretary. The Committee has already considered and reported on the respective strategic plans and budget proposals of the Directorate for 2017/18.

 

This report is structured as follows:

 

• Section 1: Mandate of the Committee. This sections sets out the mandate of the Committee, the purpose of this report (Budgetary Review and Recommendation Report) and the process to develop this report.
• Section 2: Report of the Auditor-General of SA (AGSA). This section provides a summary of the 2016/17 AGSA Report.
• Section 3: Corporate Governance. This section provides highlights of the Directorate’s Corporate Governance Structure, including fraud and corruption and the Report of the Audit Committee.
• Section 4: Financial Overview. This section provides a summary of the financial performance of the Directorate during the 2016/17 financial year, financial performance as at the end of the first quarter of the 2017/18 financial year and financial needs over the medium-term.  
• Section 5: Service Delivery Performance. This section provides the strategic overview of the Directorate, a summary of achievement on predetermined performance indicators and a summary of the statistical reports of the Directorate for the 2016/17 financial year.
• Section 6: Committee Observations. This section provides a summary of the key observations made by the Committee during the 2016/17 Annual Report hearing with the IPID.
• Section 7: Recommendations. This section contains the recommendations of the Committee.
• Section 8: Reporting Requirements. This section provides a summary of the reporting requirements of the Directorate together with timeframes.
• Section 9: Conclusion.

 

1. REPORT OF THE AUDITOR-GENERAL OF SA (AGSA) FOR 2016/17

 

The IPID received a qualified audit opinion from the AGSA for the 2016/17 financial year. The basis of the finding was:

1. Accruals: The Department did not disclose all goods and services received but not paid at year-end in accordance with Modified Cash Standards, General Departmental Assets and Liabilities. The effect on the financial statements was that accruals were understated by R9 272 000 (R9.2 million).
2. Material uncertainty related to going concern: The Department has conditions along with other matters that indicate that a material uncertainty exists that may cast significant doubt on the Department’s ability to continue as a going concern.

 

The AGSA made the following emphasis of matters:

• Accruals not recognised: As disclosed in note 20.1 to the financial statements, accruals, which exceed the payment term of 30 days as required in Treasury Regulation 8.2.3, amount to R17 682 000. This amount exceeds the voted funds to be surrendered (R380 000) as per the statement of financial performance by
  R17 302 000. The amount of R17 302 000 would therefore have constituted unauthorised expenditure had the amounts due been paid in a timely manner.

 

In terms of predetermined objectives, the AGSA evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the Investigation and Information management Programme as presented in the Annual Report of the IPID for the year ended 31 March 2017. The AGSA made the following material findings:

• Reported achievement did not agree with the evidence provided. For the indicators listed below, material misstatements were identified where management reported achievement in performance but the evidence provided did not indicate that the performance was achieved. This resulted in misstatements of the reported targets:
  • Percentage of investigations of discharge of an official firearm cases by a police officer  that  are decision ready (finalised);
  • Percentage investigations of corruption  cases that are decision ready (finalised);
  • Percentage of investigations of other criminal and misconduct matters referred to in section 28(1)(h) and 35 (1)(b) of the IPID Act that are decision ready (finalised); and
  • Percentage reduction of backlog cases (excluding cases of systemic corruption).  

 

In terms of annual financial statements, performance and annual reports, the AGSA noted that the financial statements submitted for auditing were not prepared fully in accordance with the prescribed financial reporting framework as required by section 40(1) (b) of the PFMA.  Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected, which resulted in the financial statements receiving a qualified audit opinion.

 

In terms of expenditure management, the AGSA noted the following:

• Effective steps were not taken to prevent irregular expenditure amounting to
  R 21 532 000 as disclosed in note 23 to the annual financial statements, as required by section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1. The majority of the disclosed expenditure relates to contracts to services providers that have been extended on a month-to-month basis for a long period of time and the reasons for deviations did not meet the requirements of Public Finance Management Act and related practice notes.
• Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R3 230 000, as disclosed in note 24 the annual financial statements, in contravention of section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1. The expenses that could have being avoided were incurred because of strategic decisions taken on the re-organisation process of the department and suspension of a senior member.
• Contractual obligations and money owed by the Department were not met and settled within 30 days (an agreed period, as required by section 38(1)(f) of the PFMA and treasury regulation 8.2.3). Due to budgetary constraints, management made a decision to suspend some payments and prioritise settlement of money owed to certain providers.

 

In terms of procurement and contract management, the AGSA noted that quotations were awarded to bidders based on preference points that were not allocated and calculated in accordance with the requirements of the Preferential Procurement Policy Framework Act and its regulations. B-BBEE Points were awarded to bidders who did not submit original
B-BBEE certificates and an incorrect lowest acceptable offer (p-min) was used in the preferential point system formula.

 

In terms of consequence management, the AGSA noted that disciplinary steps were not taken against officials who incurred and/or permitted irregular expenditure which was incurred in the prior year, as required by section 38(1) (h) (iii) of the PFMA.

 

The AGSA noted several deficiencies in Internal control, including the following:  

Leadership

• Leadership did not ensure adherence to the formal code of conduct, as there were instances where management overrode controls relating to performance information reporting which resulted in performance information reports being overstated.  Leadership is investigating the cases, as indicated under the other reports section of this report. 
• Leadership did not perform adequate reviews and monitoring of internal policies and procedures relating to annual financial statements, performance information and compliance to laws and regulations.

 

Financial and Performance Management

• Management did not prepare regular, accurate and complete performance reports to ensure that reported decision ready cases where appropriately investigated as per the standard operating procedures.
• The performance information system is configured in such a manner, that all cases that are registered for investigation by the Department are closed off as decision-ready, even were investigation was not performed. This has resulted in the overstatement reported performance information.
• Management did not perform adequate reviews on the accruals schedules to ensure that all goods and service received at year-end but not paid were completely disclosed as accruals.

 

1. CORPORATE GOVERNANCE

 

1. Fraud and corruption

 

Corporate Governance received reports and updated the fraud allegation register, about:

• Alleged fraudulent kilometre claims by a member of the Senior Management Structure (SMS). The matter on alleged kilometre claim was resolved through Labour Relations process and the SMS Member paid the Department.
• Alleged fraud against the Acting Executive Director for appointment of Chief Director Corporate Service has been referred to the SAPS, still an on-going matter.
• Allegations of fraudulent closure of cases using usernames of people who are no longer employed in IPID or on suspension, was forwarded to the Integrity Strengthening Component for further investigations.

 

1. Report of the Audit Committee

 

Six (6) Audit Committee meetings were held in the 2016/2017 financial year, with the following committee responsibilities, amongst others, fulfilled:

• Review of quarterly financial information, including the annual financial statements;
• Review of IPID’s quarterly and overall performance in line with implementation of Annual Performance Plan;
• Approval of the 2016/2017 Internal Audit Plan and the monitoring of performance on a quarterly basis;
• Review of the AGSA 2015/2016 Final Management Letter and Audit Report; and 
• Review of Risk Management and Compliance matters.

 

The Report of the Audit Committee identified the following:

• Two (2) specific areas of concern were noted during the year under review namely, security management and controls relating to the use of Government Garage vehicles.
• There has been a regression in the overall audit outcome as evidenced by the Audit Report. The Audit Committee engaged extensively with the AGSA on this matter and is of the considered view that the qualification was effected by the strict application of the relevant standard by the AGSA. The Audit Committee further stated that their understanding is that the quantum of the misstatement relied on by the AGSA resulted from a mathematical extrapolation of a sample and does not necessarily reflect the actual quantum of the accruals which was not disclosed in the AFS.
• The previous point reflects a symptom of a more acute challenge faced by IPID namely budgetary constraints. It is the view of the Audit Committee that based on the allocation trends witnessed by the Audit Committee since its inception; IPID cannot strictly speaking be classified as a going concern. If the matter is not addressed the risk that IPID’s budget would be reduced to an operational one with limited capacity to acquit itself of its legislative mandate is very real and will have an impact on the operations of the organisations.
• A phenomenon, which is of concern to the Audit Committee, is the cost of litigation conducted by/against IPID involving individual members of SAPS. The latter purportedly funded from the SAPS budget. The net effect is a depletion of an already constrained budget.
• The Committee has considered management’s responses to address the matters raised by Internal Audit and Auditor General (SA) and to facilitate corrective actions, improvements and monitoring the controls and procedures. The Committee, however, notes that not all the findings and recommendations of Internal Audit were implemented.
• The Committee also notes that Audit Action Plan was not fully implemented. The Committee recommended that additional effort be made to implement these recommendations, which will contribute significantly to an improved audit outcome.
• Internal Audit did not manage to fully implement the Internal Audit Plan for the year under review. The previously mentioned can be ascribed to budgetary constraints. The Audit Committee is concerned that for two consecutive years no assurance could be provided on Information and Communication Technology (ICT). The findings of the external assessment of Internal Audit are instructive and is quoted as: “The Internal Audit Activity remains unable to provide assurance on the Information Systems environment”.

 

The Audit Committee identified specific focus areas to monitor, support and advise management on:

• ICT;
• Implementation of the audit action plan;
• Coordination and cooperation on matters related to financial management and audit; and
• Improving the control environment.

 

1. FINANCIAL OVERVIEW 

 

1. Financial performance for 2016/17

 

The IPID spent 99.8% of its R241.7 million final appropriation at the end of the 2016/17 financial year. All budget programmes spent close to 100% of the allocation and left R380 thousand unspent at the end of the 2016/17 financial year, which was most pronounced in Compensation of employees.

 

The table below provides a summary of the overall Departmental spending as at the end of the 2016/17 financial year:

 

Table 1: Overall Departmental spending

IPID Programmes R’000	Final Appropriation	Actual Spent	Variance	% Spent
1. Administration	72 522	72 374	148	98.8%
2. Investigation and Information Management	155 658	155 483	175	99.9%
3. Legal Services	5 288	5 235	53	99.0%
4. Compliance Monitoring and Stakeholder Management	8 642	8 638	4	100%
Total	241 731	241 731	380	99.8%

Source: IPID 2016/17 Annual Report

 

The table below indicates that the Directorate overspent slightly on its goods and services budget (R17 thousand). The compensation of employees allocation was underspent by R397 thousand, which was mainly due to vacant posts not being filled and 35 post frozen by Treasury to contain expenditure.

 

Table 2: Spending per economic classification

Economic classification R’000	Final Appropriation	Actual Expenditure	Variance	% Spent
Compensation of Employees	169 577	169 179	397	99.8%
Goods & Services	70 712	70 729	(17)	100%
Transfers	1 444	1 444	0	100%
Capital Assets	286	286	0	100%
Total	242 111	241 731	380	99.8%

Source: IPID 2016/17 Annual Report

 

1. Virements

 

The Department has in the year under review implemented two (2) virement applications for a net amount of R1.017 million to defray excess expenditure in core function Programme 2: Investigation and Information Management mainly to cover Transfers and Subsidies (court settlement) and Payment for capital assets (emergency investigative equipment).

 

1. Irregular expenditure

 

The IPID incurred R6.289 million in irregular expenditure during the 2016/17 financial year, which is a significant increase when compared to the R2.069 million in the previous financial year. However, the Directorate had a restated amount relating to the prior financial year of R12.678 million, which brought the total disclosed irregular expenditure to R21.532 million. The closing balance in 2015/16 was only R2.565 million.

 

1. Fruitless and wasteful expenditure

An amount of R3 234 000 was disclosed in the financial year under review for various payment transactions mainly on:

• reorganisation of staff; and
• appointment of the Chief Director: Corporate Services on a contractual basis, when the incumbent was on suspension.

 

The identified expenditure was reported in the Department`s Fruitless & Wasteful Expenditure Register for internal investigation to determine the cause as well as the required action that is currently in progress.

 

1. Claims against the Department

 

The monetary amount of claims against the Department increased from R24.5 million in 2014/15 to R41.4 million in 2015/16 and R57.2 million in 2016/17. This is a significant escalation and raised by the Audit Committee as an area of concern.   

 

1. Financial performance for 2017/18 (looking forward)

 

As at the end of the first quarter of 2017/18, the IPID had spent R74.7 million or 29.2% of its main appropriation budget of R255.5 million. This spending was against approved projections of R72.9 million, thus resulting in R1.8 million higher than planned spending.

 

At programme level, higher than planned spending was recorded across all programmes, except in the Compliance Monitoring and Stakeholder Management programme that recorded lower than planned spending of R303 000. At economic classification level, spending on goods and services was higher than planned by R8.2 million. The main cost driver in the Directorate, which is compensation of employees, recorded slower than planned spending amounting to R6.2 million due to a continuous high vacancy rate. The Directorate had 25 vacant posts at the end of the first quarter of 2017/18.

 

1. Financial needs over the medium term

 

The highlights of the budget allocations of the IPID Vote (Vote 20) over the medium term (2017/18 – 2019/20) include the following:

• Over the medium term, the Directorate aims to provide specialised training to investigators, through intensifying the human resource development and training programme, to allow them to focus on specialised investigations.
• The Investigation and Information Management programme has allocated R4 million over the medium term for, among other initiatives, training and developing investigators.
• The Directorate plans to conduct 108 community outreach events in each year over the medium term, and provide training to officials in 180 of 1 140 police stations.

 

1. SERVICE DELIVERY PERFORMANCE DURING 2016/17

 

1. Strategic Overview

 

The IPID plays an important role in professionalising and demilitarisation of the police service through conducting investigations and making appropriate recommendations. In addition, the IPID will make policy recommendations in consultation with the Civilian Secretariat to the Minister of Police. The core mandate of the IPID contributes towards the realisation of Outcome 3 of the Medium Term Strategic Framework (MTSF) 2014-2019 - “All people in South Africa are and feel safe”.

 

1. Achievement on Annual Performance Targets

 

The IPID identified 37 predetermined performance targets for the 2016/17 financial year of which 13 performance targets were achieved, which is an achievement rate of 35.1%. This is a significant decrease when compared to the achievement rate of 75% in 2015/16. The underperformance of the Directorate’s core service delivery Programme Investigation and Information Management, which achieved only 17.6% of its predetermined targets during 2016/17, reduced the overall achievement rate significantly.

 

The performance of the IPID regressed significantly from an overall target achievement of 27% in 2013/14 and 44% in 2014/15 to 75% in 2015/16 and 35.1% in 2016/17.  The Legal Services Programme achieved five (5) of eight (8) performance targets (62.5% achievement rate), which is the best performing Programme of the Directorate in 2016/17. The Administration Programme achieved three (3) of seven (7) targets (42.8% achievement). The Compliance Monitoring and Stakeholder Management Programme achieved two (2) of five (5) targets (40% achievement rate). The core service delivery programme, Investigation and Information Management, underperformed significantly. It achieved only three (3) of seventeen (17) performance targets, which represents an achievement rate of 17.6%.

 

1. Statistical report

 

A total of 7 014 cases were reported to the IPID during the reporting period. The majority of the cases reported are within Section 28(1) (a) to (h). Of these, 3 827 were assault cases, 
1 640 were cases of complaint of the discharge of official firearm(s), 394 were cases of deaths as a result of police action and followed by 302 cases of death in police custody.

 

Table 3: Intake comparisons

Section of IPID Act	Intake of cases	2015/16	2016/17	Percentage change
28(1)(a)	Deaths in police custody	216	302	40%
28(1)(b)	Deaths as a result of police action	366	394	8%
28(1)(c)	Complaint of the discharge of official firearms(s)	865	1 640	90%
28(1)(d)	Rape by police officer (on or off duty)	112	112	0%
28(1)(e)	Rape in police custody	23	20	-13%
28(1)(f)	Torture	145	173	19%
28(1)(f)	Assault	3 509	3 827	9%
28(1)(g)	Corruption	112	160	43%
28(1)(h)	Other criminal matter(s)	88	169	92%
28(1)(h)	Misconduct	31	149	381%
28(2)	Systemic corruption	11	6	-45%
29	Non-compliance with section 29 of the IPID Act	41	62	51%
Total		5 519	7 014	27%

Source: IPID 2016/17 Annual Report

 

IPID has experienced an overall increase of 27% compared to the 2015/2016 year intake. The increase was noted in most categories except in rape in police custody cases (13%) and systemic corruption cases (45%). The rape in police custody was steady when compared with the previous financial year 2015/2016.

 

The IPID was investigating 6 880 cases which involves the SAPS members and 119 cases involving the Municipal Police Services on various criminal offences. The remaining 15 cases reported to the IPID involved civilians held in police custody committing further offences of rape against other inmates.

 

A total of 4 914 cases were closed during the period under review. The largest share of the closed cases were closed as decline (48%), followed by closed as unsubstantiated (30%) and closed as referred (9%). A total of 382 SAPS member were convicted for different misconduct. The conviction details range from:

• written warning (145);
• verbal warning (38);
• fined (27);
• dismissal (19);
• corrective counselling (17);
• suspended without salary (14);
• final written warning (12); and 
• reprimanded (4).

 

1. PORTFOLIO COMMITTEE OBSERVATIONS

 

The following are key observations of the Committee with regard to the Directorate’s financial performance and service delivery performance for 2016/17:

 

Qualified audit: The Committee noted its disappointment on the qualified audit opinion from the AGSA, which is the first since the establishment of the IPID. The qualified audit opinion is based on two (2) aspects, namely the increased accumulation of accruals and material uncertainty related to the Department remaining a going concern. The Committee raised the following in terms thereof:

 

• Material uncertainty on remaining a going concern: The Committee raised significant concern on the material uncertainty identified by the AGSA on the Department’s ability to remain a going concern. The Committee questioned the possibility of additional funding to be allocated over the MTEF and whether the Department has entered into engagements with SAPS, Treasury and the Executive Authority to secure adequate funding. The Department indicated that the fear is that without additional funding, it will only be able to pay salaries, goods and services without having an impact on police conduct and fulfilling their Constitutional mandate. The Department indicated that the Minister has engaged with Treasury and SAPS. In principle, the SAPS agreed to surrender R150 million over the MTEF, but no allocation letter has been received to date.   

 

The Department further indicated that if engagements are not successful, accruals will continue to accumulate, affecting the ability of the Department to remain a going concern. The Committee stressed that three processes or engagements need to happen congruently to ensure success, namely the plan going forward, support from the JCPS Cluster and engagements with Treasury.  

 

• Accruals: The Committee raised a number of concerns about the increase in accruals during the 2016/17 financial year. The Committee stated that the increase in accruals is problematic in many ways, most notably that it is against section 38 (1)(c) of the PFMA, 1999. In non-technical terms, it means that the Department expended funds on goods and services with money that they do not have, which means that service providers could not be paid within the 30 days threshold and that the spill-over of accruals to the next financial year will be classified as unauthorised expenditure. The Committee further indicated that although there is understanding of the budgetary constraints, it is unable to condone the accumulation of accruals, as this will be unlawful. The Committee requested the Department to indicate what measures have been put in place to limit the further accumulation of accruals.   

 

The Department indicated that the accruals mainly relate to security and cleaning services that could not be stopped. The cleaning services contract was renewed on a month-to-month basis because of challenges experienced during the tender process. The Department further indicated that no provisions were made for inflationary and contractual cost increases during the budget allocation process. The Department engaged with Treasury on these challenges relating to commitments that could not be honoured. Treasury advised the Department to engage in negotiations on payments with service providers. 

 

Irregular expenditure: The Committee raised concern about the increase in irregular expenditure during the 2016/17 financial year compared to the previous financial year, as highlighted by the AGSA.

 

Fruitless and wasteful expenditure: The Committee questioned the increase on fruitless and wasteful expenditure, especially relating to reorganisation costs to the value of R1.9 million. The Department indicated that the expenditure relates to the irregular transfers/relocation of personnel.   

 

Financial health: The Committee noted its overall concern about the regression in the financial health of the Department, as highlighted by the AGSA. The AGSA indicated that the financial health of the Department has regressed significantly over the past financial years to the point of a qualified audit opinion.

 

Slow implementation of internal and external audit outcomes: The Committee highlighted the finding of the AGSA that the Department is slow to implement recommendations of internal and external auditors. The Department indicated that a Task Team has been established to address the concerns raised and recommendations made. The Department has also tasked the Integrity Manager to verify all reported compliance to legislative prescripts to ensure that compliance to legislation moves out of the negative findings of the AGSA.

 

Consequence management: The Committee raised significant concern about the lack of consequence management by the Department, as highlighted by the AGSA. The Committee indicated that consequence management must be prioritised and that feedback on progress must be provided to the Committee. The Audit Committee indicated that the lack of consequence management is further compounded by delays in the finalisation of internal disciplinary procedures.

 

Vacancies and leadership instability: The Committee expressed concern about the vacancy rate of the Department, especially in terms of the Investigation and Information Management Programme and the vacancy in the Chief Financial Officer (CFO) position. The Committee requested the Department to indicate when the CFO position will be filled. The Department indicated that the shortlist will be compiled within the next two (2) weeks and that interviews will commence a week thereafter. The Department committed themselves to fill the position of CFO within the coming month (October 2017).

 

Underperformance: The Committee raised concern about the overall low achievement rate on predetermined performance indicators during the 2016/17 financial year, especially in the core service delivery Programmes of the Department. The Department indicated that the special closure of cases has already been identified by the AGSA in 2015/16. The Department further indicated that targets were set unrealistically high and based on a misinterpretation of achievements in previous financial years.     

 

Performance management: The Committee expressed concern about the quality of performance management of the Department and the role of management in ensuring that the required proof and record keeping are adhered to. The Committee questioned what steps are taken to improve day-to-day controls that is completely within the control of the Department.   

 

Performance Rewards: The Committee expressed concern about the awarding of performance rewards to 91 officials despite the underperformance and qualified audit opinion of the IPID. The Department indicated that the performance rewards relate to the 2015/16 financial year that was only paid out in June/July 2017. The awarding process is currently under review. The Department assured the Committee that no performance rewards will be awarded to personnel during, or relating to, the 2016/17 financial year.

 

Capacity constraints: The Committee expressed concern about the significant capacity constraints in the Legal Services Programme and requested the Department to indicate what steps will be taken to improve the capacity of the Programme. The Directorate indicated that they are engaging National Treasury to establish a Panel of Experts to call on when they are in need of legal advice to mitigate against the internal capacity constraints.

 

Civil claims: The Committee expressed concern about the significant growth in civil claims brought against the Department during the 2016/17 financial year compared to the previous financial year. The Committee requested an explanation on the drivers of the growth. The Department indicated that the majority of civil claims brought against the Department related to the unlawful suspensions and transfers of employees during the 2015/16 financial year.

 

Fraud and corruption cases: The Committee requested an update on the outcomes of cases related to internal fraud and corruption, including the fraudulent closure of investigations. The Department indicated that three (3) cases were investigated and that an official has been suspended and that the other two (2) officials are no longer in the employment of the Department and as such, no further steps can be taken against these officials.

 

Increase in case intake: The Committee requested the Department to indicate what factors, in their opinion, led to the increase in the case intake of the Department in the 2015/16 financial year. The Department indicated that their strategic approach to focus on ‘high impact, low volume’ cases led to the IPID being perceived as being able to impact successfully on police conduct. This increased trust led to more cases being reported to the IPID. The Department stated that the strategic shift will bear fruit in the 2017/18 financial year, when the impact of the ‘high impact, low volume’ approach will be seen. 

 

Comments from Audit Committee: The IPID Audit Committee was represented during the Portfolio Committee’s engagements on the Annual Report. The Chairperson of the Audit Committee indicated that the qualified opinion was a disappointment, but stated that the basis of the opinion was not due to malicious intent by the IPID. The accumulation of accruals resulted from inadequate funding of the IPID. The Audit Committee stated its concern on the increase in accruals and irregular expenditure. The Audit Committee has requested quarterly status reports on the steps taken to address irregular expenditure and indicated that the question remains on how to remove the historic irregular expenditure relating to 2008/09 from the books. The Chairperson of the IPID Audit Committee indicated that, in his opinion, the position of CFO is the most critical position in the Department and further indicated that the Audit Committee will hold the management team to the commitment.  

 

Strategic review: The Committee requested the Department to indicate whether a Strategic Review, such as an ‘80/20 Review’ has been done to realign the strategic focus of the Department and to improve effectiveness despite the various constraints being experienced by the Department. The Department indicated that the approach of the Department has been reviewed and further indicated that several district offices will have to be closed down if additional funding cannot be secured. The location of the closures have not yet been identified, as the criteria for closure has to be developed.

 

Investigations relating to the Farlam Commission recommendations: The Committee sought clarity on the status of the investigation into cases relating to the recommendations of the Farlam Commission to reconstruct Scene 2. The Department indicated that the case dockets were handed over to the NPA and that decision to prosecute (or not) is pending. The Department further indicated that it was unable to reconstruct Scene 2 due to the non-allocation of an additional R5 million that was necessary for the reconstruction. The NPA will consider whether prosecution will be possible without the reconstruction of Scene 2, if not, the scene will be reconstructed by independent experts.    

 

Independence: The Committee requested the Department to indicate what Memorandums of Understanding (MOUs) have been entered into and what measures are put in place to ensure that the MOUs do not affect the independence of the Department. The Department indicated that a significant MOU was signed with the Inspector General of Intelligence to gain access to the so-called Crime Intelligence ‘slush fund’. This is seen as a great achievement of the Department. The Department assured the Committee that the MOUs ensure the independence of the Department.

 

Deaths in police custody: The Committee raised concern about the increase in the number of deaths in police custody during the 2016/17 financial year when compared to the previous financial year. The Committee requested the Department to indicate what possible reasons could account for the increase. The Department indicated that deaths in police custody was mainly due to natural causes, followed by suicides and injuries sustained prior to custody through vigilantism. 

 

1. RECOMMENDATIONS BY THE PORTFOLIO COMMITTEE ON POLICE

 

The Portfolio Committee on Police recommends the following:

 

1. Audit Action Plan: The Committee recommends that an Audit Action Plan must be developed and implemented by the Directorate as a matter of priority in order to ensure that the Directorate has an unqualified audit opinion in the 2017/18 financial year. The Directorate must provide quarterly feedback on the progress of the implementation of the Audit Action Plan to address poor audit outcomes.  
2. Vacancies: The Committee recommends that funded vacancies must be filled as a matter of urgency, especially in the Investigation and Information Programme. The appointment of a qualified Chief Financial Officer (CFO) must be prioritised in an effort to ensure stability within the financial services component of the Directorate. The Directorate must provide quarterly feedback on the progress made on filling of key vacancies. The Department should also provide feedback on the appointment of the CFO by the end of October 2017, as it was stated that the position will be filled by this date.
3. Consequence Management: The Committee recommends that the Department must adhere to section 38(1)(h)(iii) of the PFMA, which provides that Accounting Officers must take appropriate disciplinary steps against officials who make or permit irregular or fruitless and wasteful expenditure. Appropriate consequence management also applies to general poor performance and dereliction of duty. The Directorate must provide quarterly feedback on the progress on consequence management actions taken against transgressing officials, including the manner in which provincial heads are held accountable for poor performance and noncompliance with legislative prescripts.     
4. Procurement and contract management: The Committee recommends that the Supply Chain Management (SCM) environment must be strengthened and upskilled to ensure that all quotations are awarded to bidders based on preference points allocated and calculated in accordance with the requirements of the Preferential Procurement Policy Framework Act and its regulations. The Directorate must provide quarterly feedback on the implementation of preventative controls.
5. Financial health: The Committee recommends that the Directorate must provide quarterly feedback on the improvement plans relating to the financial health of the Directorate. This should focus on all material misstatements relating to accruals and irregular expenditure.
6. Future funding: The Committee recommends that the Department enhance engagements with the National Treasury, Executive Authority and JCPS Cluster (especially SAPS) to secure additional funding over the MTEF.
7. Expenditure management: The Committee recommends that the Department should develop a strategy to honour all goods and services commitment within the prescribed period (30 days) or go without the service. Strict expenditure management controls must be put in place by the Department to ensure that service providers are paid within the allowed timeframe. The Directorate must provide quarterly feedback on the implementation of the strategy to improve expenditure management and addressing the increase in accruals.
8. Conflicts of interest: The Committee recommends that the Public Service Regulation (2016) must be implemented as a priority. Regular checks must be conducted to identify whether any IPID official is doing business with the state. This has been criminalised through section 13(c) of the Regulation and must be enforced. The Directorate must provide a report (see reporting requirements) on the number of officials doing business with the State and provide quarterly feedback on the implementation of preventative controls.
9. Capacitation of finance (training): The Committee recommends that a skills audit be conducted in the Financial Services Subprogramme. All skills shortages found must be addressed through skills training before the end of the current financial year (2017/18). The AFS must be prepared in accordance to the relevant prescripts. Any deviation thereto must be explained to the Committee. The Directorate must provide quarterly feedback on the skills audit and training provided to officials within the Financial Management Subprogramme.
10. Performance Management System: The Committee recommends that the Directorate must perform a critical assessment of the Performance Management System to analyse performance indicators and the process behind ensuring proper records management. The Directorate must ensure that the Performance Management System must be able to give reliable performance information. This must be included in the Audit Action Plan of the Directorate.
11. Underperformance: The Committee recommends that the Directorate must address the overall underperformance on predetermined performance indicators in future years. The disjoint between expenditure (high at 99%) and performance (low at 35%) should be brought in line with each other. This must be included in the Audit Action Plan of the Directorate.
12. Claims against the Department: The Committee recommends that efforts should be made to reduce the number of claims brought against the Department. The Committee further recommends that the Department must submit an analysis report on the claims identifying possible trends and areas of improvement.
13. Independence: The Committee recommends that the independence of the Directorate must be protected while cooperating with the NPA, DPCI and SAPS in conducting investigations.

 

1. SUMMARY OF DIRECTORATE’S REPORTING REQUIREMENTS

 

The following table provides a summary of the additional information requested from the Directorate during the 2016/17 Annual Report hearings and other reporting requirements:

 

REPORTING MATTER	ACTION REQUIRED	TIMEFRAME
Findings of the AGSA	The Directorate must provide quarterly feedback on the progress of the implementation of the Audit Action Plan to address poor audit outcomes.	Present to Committee on 24 October 2017 and quarterly thereafter. The quarterly report must reach the Committee within one (1) week of the end of each quarter.
	The Department must provide a report on the engagements with Treasury, Executive Authority and JCPS Cluster to secure additional funding in an effort to ensure that the Department remains a going concern.
	The Directorate must provide quarterly feedback on the progress made on filling of key vacancies, especially that of the CFO position.
	The Directorate must provide quarterly feedback on the progress on consequence management actions taken against transgressing officials.
	The Directorate must provide quarterly feedback on the implementation of preventative controls within the SCM environment to address deficiencies in procurement and contract management
	The Directorate must provide a report on the number of officials doing business with the State quarterly feedback on the implementation of preventative controls to address the prevalence of conflicts of interest. The report must include all officials that were awarded a state contract, including the 2015/16, 2016/17 and 2017/18 (to date) financial years. The report should further include details of all officials performing remunerative work outside the Department.
	The Directorate must provide quarterly feedback on the skills audit and training provided to officials within the Financial Management Subprogramme.
	The Directorate must provide quarterly feedback on the implementation of the strategy to improve expenditure management and addressing the increase in accruals.
	The Directorate must provide quarterly feedback on the review of the Performance Management System, including the analysis of performance indicators and the process behind ensuring proper records management.
Additional Funding	The Department must submit a report on the engagements with Treasury, the Minister of Police and the JCPS Cluster (especially SAPS) on securing additional funding over the MTEF. The report must contain supporting evidence.	24 October 2017.
Government Garage Vehicles	The Department must provide a comprehensive report on the use and/or future use of GG vehicles.	30 November 2017.
Claims against the Department	The Department must submit a report on all civil claims brought against the Department during the 2016/17 financial year. The report should contain an analysis of the cases to identify possible trends and areas for improvement in respect of IPID Investigators.	30 November 2017.
Farlam Commission Recommendations	The Department must submit a report on the engagements with Treasury to secure an additional funding of R5 million to reconstruct Scene 2 as per the recommendation of the Farlam Commission.	30 November 2017.

 

 

1. CONCLUSION

 

The inability of the Directorate to prepare annual financial statements that complies with the prescribed financial performance frameworks and further inability to correct material misstatements led to a qualified audit opinion from the AGSA. This is the first qualified audit in eight (8) financial years. The Committee also reiterates the importance for the improvement of first and second levels of assurance, specifically in terms of the internal audit unit capacity of the Directorate.

 

The second key concern of the Committee relates to the underperformance of the Directorate on predetermined performance targets, which was mainly due to capacity constrains exacerbated by the failure to fill critical vacancies within its core programme.

 

The Committee strongly indicated that the IPID is ideally positioned to have a positive effect on the professionalism of the SAPS, as the Directorate holds the legislative mandate to oversee the behaviour of police members. The IPID must realise the full potential of its mandate and address criminality within the police services of SA without fear or favour.   

 

Report to be considered.