ATC181017: Budgetary Review and Recommendation Report of the Portfolio Sports and Recreation

Sports, Arts and Culture

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO SPORTS AND RECREATION

The Portfolio Committee on Sports and Recreation (hereinafter referred to as the Committee), having considered the 2017/18 financial and non-financial performance of the Department of Sports and Recreation (hereinafter referred to as the Department), Boxing South Africa and the South African Institute for Drug-free Sport, reports as follows:

 

1. INTRODUCTION AND MANDATE OF THE COMMITTEE AND THE DEPARTMENT

1.1. Introduction

Section 42(3) of the Constitution of the Republic of South Africa, 1996 bestows the oversight function over the national executive to the National Assembly (NA). The National Assembly Committees are required in terms of Section 5 of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009) to annually assess the performance of each national department, and to thereafter submit a Budgetary Review and Recommendation Report, which will provide an assessment on the department’s service delivery performance given available resources; an assessment on the effectiveness and efficiency of the departments use and allocation of available resources; and may include recommendations on the forward use of resources.

1.2. Mandate of Committee

Section 55(2) of the Constitution of the Republic of South Africa, 1996 stipulates that “the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) national executive authority, including the implementation of the legislation; and (ii) any organ of state”.

The Committee oversees the implementation of the following Acts:

South African Boxing Act, 2001 (Act No. 11 of 2001), South African Institute for Drug-Free Sport Act, 1997 (Act No. 14 of 1997 as amended), The Public Finance Management Act, 1999 as amended by Act No. 29 of 1999, Occupational Health and Safety Act, 1993 (Act No. 85 of 1993), National Sport and Recreation Act, 1998 (Act No 110 of 1998 as amended), Public Service Act, 1994 (Act No. 103 of 1994 as amended), Safety at Sports and Recreational Events Act, 2010 (Act No. 2 of 2010), Bidding and Hosting of International Sport and Recreational Events Regulations, 2010 and the Recognition of Sport and Recreation Bodies Regulations, 2011.

1.3. Purpose of the BRR Report

The purpose of this report is to account in accordance with Rule 166 of the Rules of the National Assembly for work done by the Committee in considering the 2017/18 Annual Reports of the Department and entities which were tabled in accordance with Section 40 (1) of the PFMA; and as referred in terms of National Assembly Rule 338 by the Speaker to the Committee for consideration and reporting in terms of Rules 339 and 340 respectively.

1.4. Method

In preparation for the consideration of the Department’s 2017/18 Annual Report, the Committee considered key government policy documents relevant to the work of the Department, including, among others: the Medium Term Strategic Framework (MTSF) 2014 – 2019; the 2017 State of the Nation Address (SONA); 2017/18 Annual Reports of the Departments and its entities; the 2017/18 Annual Performance Plan of the Department and its entities and the Committee’s 2017/18 financial year in-year monitoring in terms of section 32 Reports of the PFMA.

 

2. OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS

2.1. Relevant Government policy documents

2.1.1. The National Development Plan (NDP), Vision 2030

Social cohesion and transformation framework are feathered in the NDP. It encourages sports and physical education participation. They are an integral part of the holistic development of a learner. Schools are where talent is identified, career choices made (including careers in sport) and habits learnt. Given the growing problem of obesity, the habit of leading an active life-style can be developed at a young age through participation in sport. Working with the Department of Sport and Recreation, the Department of Basic Education has reintroduced school sport. This positive initiative needs to be expanded.

It further defines sport as a discipline teaching mechanism and an integral component of a healthy lifestyle and enables South Africans to share common space. Unfortunately, instead of sharing common spaces, and developing common loyalties and values through sport, South Africans and South African sport were systematically segregated and underdeveloped under apartheid. The transformation vision for sports in 2030 is that: Participation in each sporting code begins to approximates the demographics of the country. South Africa’s sporting results are as expected of a middle-income country with a population of about 50 million and with historical excellence in a number of sporting codes.

For the vision of the National Development Plan to be realised, school sports must be adequately resourced. The government must ensure, that there are adequate facilities for the majority of the population to play sport and that these are adequately maintained. This does not need expensive buildings, but recreational environments with basic facilities that can function as community hubs. Communities should organise sporting events, leagues, championships and generally look after the sports facilities once they are installed or developed. Corporate investments in grassroots sport should also be encouraged.

2.1.2. The 2014 – 2019 Medium Term Strategic Framework (MTSF)

The MTSF is structured around 14 priority outcomes which cover the focus areas identified in the NDP and Government’s electoral mandate. The Outcome 14: “A diverse, socially cohesive society with a common national identity”. MTSF is meant to address the sharing of common space across race, space and class will be enabled through instituting sustained community dialogues, improving public spaces and services and elevating sports at both community and school levels. Outcome 14 of the MTSF, sport and recreation is featured prominently. The society still remain unequal and skewed opportunities. Inclusion of people with disabilities in programmes (sport included) must be encouraged.

2.1.3. White Paper on Sport and Recreation 2011

In formulating this policy directive, the White Paper cognisance was taken of the strategic environment in which sport and recreation is delivered. The effective implementation of Government’s policy on sport and recreation will also require an appropriate legislative framework. The purpose of the White Paper is to pronounce clearly Government’s policy regarding sport and recreation in the Republic of South Africa. This White Paper sets out Government’s vision, strategic objectives, policy directives, outcomes and outputs for promoting and providing sport and recreation.

As an official publication of national Government, a White Paper Outlines Government policy. It is tabled in Parliament to ensure that Parliament is informed of Government policies and to give effect to the constitutional requirement that members of the Cabinet must provide Parliament with full and regular reports concerning matters under their control [Section 92(3)(b) of the Constitution of the Republic of South Africa, 1996]; and to enable the National Assembly, according to its constitutional powers of section 55(2), to maintain oversight of the exercise of national executive authority, including the implementation of legislation, and any organ of state. From the above it is clear that tabling a White Paper in Parliament was to account to Parliament and as such, it is accordingly an important link in the process of ensuring accountability and openness of Government.

2.1.4. National Sport and Recreation Plan

The NSRP is an eight-year implementation plan for the sport and recreation policy framework as captured in the White Paper. The NSRP is monitored annually to identify any hindrances which may negatively impact on effective implementation. It will be reviewed in 2020. The National Sport and Recreation Plan (NSRP) was developed through an intense and thorough consultative process with robust debates and constructive contributions from all role-players that comprised the sport and recreation sector in the country.

There can be no doubt that true accessibility and equitability can only be visible in a transformed sport and recreation sector. It is for this reason that at the core of the NSRP is a Transformation Charter whose purpose is to transform the delivery of sport in South Africa and to reap such benefits as the establishment of a competitive and demographically representative sports system. Aligned to the Charter is a multi-dimensional Transformation Performance Scorecard that will enable the sports system to measure progress made towards a transformed sport and recreation sector.

2.1.5. Transformation Charter

The purpose of this document was to support the Transformation Charter of the Department of Sport and Recreation South Africa (SRSA), in consultation with sport federations and other key stakeholders in sport. Fast-tracking a transformation charter and delivery mechanisms for all sectors and role players involved in sport and recreation. Transformation Charter is based on designing, structuring and implementing a range of broad-based transformation initiatives as part of a process of re-organising the operational and strategic initiatives of Government, SASCOC and its membership on and off the field of play. To implement, manage and monitor a transformation process in sport, a multi-dimensional Transformation Performance Score card is used. The Score card is built around a set of key strategic areas–the dimensions within which change has to be brought about if effective transformation is to take place.

 

3. SUMMARY OF THE PREVIOUS KEY FINANCIAL AND NON-FINANCIAL PERFORMANCE RECOMMENDATIONS OF THE PORTFOLIO COMMITTEE

3.1. The 2018/19 Committee Budget Vote Report

The Committee recommended that the Minister for Sport and Recreation emphasised the need to:  

  1. Ensure that Provinces had the capacity to spend allocated funds so as to avoid funds returning to National Treasury.
  2. Emphasise the need for Provincial Departments to budget for sport and recreation programmes from their equitable share budget allocated by Provincial Treasuries.
  3. Develop a framework on how Provinces use the Division of Revenue Act (DORA) funds in line with the priorities of the National Sport and Recreation Plan as approved by the National Treasury.
  4. Strengthen monitoring systems of the use of DORA funds by the Provinces;
  5. Enforce the compliance of federations towards transformation and consider rewarding federations that have achieved and exceeded the set targets on transformation.
  6. Ensure that the SRSA had clear performance indicators in line with the mandate of the sub-programmes within each programme.
  7. Ensure that both entities, the South African Institute for Drug-Free Sport and Boxing South Africa, adequately implement the recommendations of Auditor General South Africa in order to address the challenges related to governance.
  8. The Committee must continue its interaction with South African Local Government Association (SALGA) and the National Council of Provinces (NCOP) to assist in ensuring that the Municipal Infrastructure Grant (MIG) was fully utilised.

 

4. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2017/18 FINANCIAL YEAR FINANCIAL PERFORMANCE

4.1. Overview and assessment of the overall budget and expenditure

Table 1: 2017/18 budget allocation and expenditure

Sports and Recreation Programme

 

 

 

 

2017/18 FINANCIAL YEAR

Adjusted Appropriation

Virement

Final Appropriation

Actual Expenditure

Variance

Expenditure as % of final appropriation

R’000

R’000

R’000

R’000

R’000

%

 

  1. Administration

 

 

 

 

127 856

(7 117)

120 739

118 745

1 994

 

 

 

98.3%

 

 

  1. Active Nation

 

 

 

 

704 081

12 807

716 888

716 260

   628

 

 

 

99.9%

  1. Winning Nation

 

71 911

(6 100)

65 811

64 163

1 648

 

97.5%

 

  1. Sport Support

 

 

 

150 661

1 410

152 071

151 990

    81

 

 

99.9%

  1. Sport Infrastructure Support

 

 

   12 055

(1 000)

11 055

9 213

1 842

 

 

83.3%

 

Total

 

1 066 564

    -

1 066 564

1 060 371

6 193

 

99.4%

 

 

 

 

Final Appropriation

Actual Expenditure

 

 

TOTAL (brought forward):

 

Reconciliation with statement of financial performance.

 

 

ADD

 

Departmental receipts

 

 

 

 

 

 

 

 

153

 

 

 

 

 

Actual amounts per statement of financial performance (total revenue)

 

1 066 717

 

 

Actual amounts per statement of financial performance (total expenditure)

 

 

1 060 371

 

               

 

For the 2017/18 financial year, the Department of Sport and Recreation received an appropriation of R 1,066 billion and the Departmental receipt amount of R153 000 which increased the total revenue of the Department to R 1.067 billion for the year in review. The Departmental actual expenditure was R1.060 billion.

The expenditure for Programme 2: Active Nation constituted the largest expenditure, representing 99.9 percent (R716.260 million) of the Departmental total budget, followed by Programme 4: Sport Support representing 99.9 percent (R151. 990 million) then Programme 1: Administration which represented 98.3% (R118.745 million).

 Program 5: Sport Infrastructure Support constituted the largest underspending, representing 83.3% (R9.213 million) followed by Programme 3: Winning Nation which constituted 97.5% (R64.163 million). Therefore, the overall underspending at the end of the financial year under review was R6,193 million.

The Department has a variance of R 6 193 million which is used to compare financial performance changes from one month to the next, or perhaps from one quarter to another or year to year.

Typically, actual financial results are compared to a budget, or a budget is compared to a forecast. This comparison process and the resulting variances help management identify problems, investigate issues and make changes rapidly.

 

4.1.2. Expenditure Estimates Per Economic Classification

Table 2: The 2017/18 allocation and expenditure per economic classification

 

Economic Classification

 

 

 

 

 

2017/18 FINANCIAL YEAR

Adjusted Appropriation

Shifting of funds

Virement

Final Appropriation

Actual Expenditure

Variance

Expenditure as % of final appropriation

R’000

 

R’000

R’000

R’000

R’000

%

Current payments

 

267 566

 

(1 038)

3 693

270 221

264 168

6 053

 

97.8%

Compensation of employees

 

106 104

 

(873)

(7)

105 224

99 905

    5 319

 

94.9%

Goods and services

 

161 462

 

(165)

3 700

164 997

164 263

734

 

99.6%

Transfers and subsidies

 

796 051

 

873

(3 693)

793 231

792 975

   256

 

100.0%

Payments for capital assets

 

      2 947

 

165

   -

3 112

3 106

6

 

99.8%

 

Total

 

1 066 564

 

    -

    -

1 066 564

1 060 371

6 193

 

99.4%

 

As per the economic classification, the total budget of R 267. 566 million was for the current payments. These current payments were adjusted up by R1. 038 million during the shift of funds. The current payments amounted to R 270. 221 million after the shifting of funds.

In terms of compensation of employees, the Department had R 92. 397 million budget but managed to utilised the amount of R 88. 608 million on salaries and wages. The 95.9 percent was utilised to compensate employees through salaries and wages.

On Goods and Services, the Department had the expenditure was R 792 975 million. The bulk of money was paid to contractors at the amount of R65. 446 million which constituted 102.3 percent. The Department also paid large sum of money for travel and subsistence amounting to R21. 486 million. High expenditure on advertising at the amount of R21. 890 million. The expenditure for the transfers and subsidies was R792 975 million which was distributed to Provinces as well as the Departmental agencies and accounts. For the payments for capital assets, the expenditure was R 3. 106 million which became 99.8% of final appropriation at the end of the financial year in review.

 

4.1.3. Virements and shifting of funds

 

There was no shift of funds under the year in review. According to the Chapter 5, section 43 of the PFMA, virement between main divisions within votes — (1) An accounting officer for a Department may utilise a saving in the amount appropriated under a main division within a vote towards the defrayment of excess expenditure under another main division within the same vote, unless the relevant treasury directs otherwise.

 The vote must never exceed 8% virement. SRSA had virements in three programmes, which were from Programme 1: Administration which was R 7.117 million; Programme 3: Winning Nation which was R6. 100 million; and Programme 5: Sport Infrastructure Support which was R1 million.

In 2017/18 financial year, the Department applied virements across its programmes amounting to R13.21 million. Programme 2: Active Nation adjusted appropriation was R704.081 million to final appropriation of R716. 260 million (increase by R12.807 million). Programme 4: Sport Support adjusted appropriation was R150. 661 million to final appropriation of R152. 071 million (increased by R1.410 million). The Department has 1.3% virement which is very low and acceptable.

 

4.2. Overview and assessment of the programme budget and expenditure for 2017/18 financial year

 

4.2.1. Programme 1: Administration

Purpose of this programme is to provide strategic leadership, management and support services to the Department. Programme 1 comprises of the following sub-programmes: Ministry; Management; Strategic Support; Corporate Services; Office of the Chief Financial Officer and Office Accommodation.

 

Overview and assessment of the 2017/18 service delivery performance:

for the year under review, the programme had 4 targets spread across its six sub-programmes. The programme was able to achieve 75% against its set targets and one (25%) was not achieved. Only one target was not achieved as planned which included: resolving the issue of paying the invoices within 30 days, overall achievement of this indicator is still a challenge. This could be attributed to, among other things, system challenges, such as its slowness. The fourth quarter transaction volumes put pressure on the (BAS) payment system, with some payments ending up not being captured.

 

  1. Programme 2: Active Nation

Purpose of programme two is to support the provision of mass participation opportunities in sport and recreation. Programme 2 comprises of the following sub-programmes: Active Recreation, Community Sport, School Sport, Provincial Sport Support and Coordination.

 

Overview and assessment of the 2017/18 service delivery performance:

For the year under review, the programme had 11 targets spread across its five sub-programmes. The programme was able to achieve 90.9% against its set targets and one (9.1%) was not achieved. One target was not achieved as planned which included: The number of people actively participating in sport and recreation promotion events.

 

  1. Programme 3: Winning Nation

Purpose of this programme is to support the development of elite athletes. The Programme achieved 100% against its set targets. This programme has three sub-programmes which include: Scientific Support, Major Events Support and Recognition Systems.

Overview and assessment of the 2017/18 service delivery performance:

For the year under review, the programme had 7 targets spread across its three sub-programmes. The programme was able to achieve 100% against its set targets. Sub-programme: Scientific Support is the core business in this programme 3.

The sub-programme is also responsible for the development, implementation, monitoring and evaluation of relevant policies and procedures. It thus plays a coordinating role to ensure that athletes are able to benefit from holistic support services at various levels of sport development.

 

  1. Programme 4: Sport Support

Purpose of this programme is to develop and support an integrated system to enhance the delivery of sport and recreation. This programme has two sub-programmes which include: Sport and Recreation Service Providers and International Relations.

 

Overview and assessment of the 2017/18 service delivery performance:

For the year under review, the programme had 10 targets spread across its two sub-programmes. The Programme achieved 80% against its set targets. However, the construction of Multi-purpose sports courts built, not all courts were built on time because of a slow consultation process that becomes longer where the community was not united and properly briefed, and municipalities’ lengthy decision-making processes was not achieved by the Department.

 

 

 

  1. Programme 5: Sport Infrastructure Support

Purpose of this programme is to regulate and manage the provision of sport and recreation facilities. This programme has two sub-programmes which include: Sport and Recreation Facility Planning and Sport and Recreation Facility Management.

 

Overview and assessment of the 2017/18 service delivery performance:

For the year under review, the programme had three targets spread across its two sub-programmes. The Programme achieved 100% against its set targets.

 

4.3. Concluding remarks on the 2017/18 financial and service delivery performance for Sport and Recreation South Africa

 

The Department to raise awareness among relevant stakeholders on the challenges experienced by government departments in the payment process with regard to outsourced services. To facilitate the identification of bottlenecks in the payment of service providers and the fast-tracking of the process

There are still challenges with reporting from Provinces but this has been brought to the attention of the MECs for Sport and Recreation and they have committed to ensure that there is compliance. However, there is progress and commitments made in interactions with AG regarding achieving some of the performance indicators at Provincial level. Should provinces not comply it was eminent that this should be elevated to Provincial political principals so that the can ensure that HODs do comply with reporting requirements.

The Department must review its Facility Audit tools in consultation with stakeholders e.g. questionnaire. The Department must also utilise the Facility Audit conducted in partnership with SALGA Eastern Cape as a pilot study to attain the National Facility Plan. Technology Apps must be used to locate the sport facilities as part of building the Geographic Information Systems (GIS) of the department. Department need to advice Municipalities to appoint Project Management Units (PMU’s) that will be responsible for the planning and handling of sport facility projects. The Programme 5: Sport Infrastructure Support has very few personnel, the Department need to employ more people in this programme in order to have capacity to implement the sub-programmes.

The Department must consider to remove this performance indicator (Number of Multi-purpose sports courts built) to Programme 5: Sport Infrastructure Support. The Department need to come present the overview, terms and conditions that it has implemented with Australia, Bulgaria, China, Cuba, Palestine, and Zimbabwe for purpose of future oversight study of the committee. The Department to brief the committee on the BRICS Games (Brazil, Russia, India, China and South Africa) as well the future plans to build a Team SA that will complete in the next edition of these games.

Programme 3: Winning Nation has many annual events as compared to sustainable sport programmes. The Department need to relook at this programme. Maybe the Department can consider reworking performance indicator that address (Number of Recognition & honouring events), this is not a programme but once of events. Sustainable sport programmes are very important to be included in the Programme 3.

The Department need to relook at Programme 2 holistically. Some Sub-programmes e.g. Community Sport, School Sport, Provincial Sport Support and Coordination must be moved to Programme 4: “Winning Nation” because. The Department was in need to advocate “Recreation” equally as they have for “Sport”.

 

  1. Committee Observations and Responses from SRSA

 

  • Service delivery performance

SRSA had 35 targets and 32 of those were achieved and this translates to 94% of the budget spent. Izimbizo and other public participation programs were continuing within the communities to promote mass participation in sport and recreation activities. Activism around sport is improving and the Thuma Mina Walks have contributed positively toward achieving social cohesive society and healthy lifestyle as a habit.

 

  • Public Participation and community development through sport and recreation

The realisation of transformation of sport and recreation sector requires a conscious effort and firm commitment from government, non-governmental organisations (NGOs), the private sector and South African society in general.

 Within this triad, each stakeholder has a particular role to play in laying the foundation for the culture of sport and recreation participation. Generally, public participation seeks and facilitates the involvement of those potentially affected by or interested in a decision.

This can be in relation to individuals, governments, institutions or any other entities that affect public interests. The principle of public participation in sport and recreation programmes and events holds that those who are affected by a decision have a right to be involved in the decision-making process. Public participation implies that the public's contribution will influence the decision.

 

 

 

  • Late submission of Bills

In terms of legislation, the letter was written and there was a publication in the gazette and it is a section 76 Bill. It was submitted to the Bills office and there was no timeframe as to how long the Bill was being edited. The Bill will be tabled as soon as the parliamentary process were finalised and the office of the chairperson to assist in fast tracking the process. Priority should be given to the National Sport and Recreation Amendment Bill and will be tabled in the next 6th Parliament.

  • Leak of SASCOC Report

The committee needed an exact date on when it was going to receive the SASCOC Report but the minister has to go through the correct processes and release it once the minister has analysed the report after the input from the stakeholders involved. The main issue was that this report was damaging to sport fraternity in general. The committee must respect the process and not rely on social media for information.

The committee must also remember that this was a committee of enquiry and not a commission of enquiry and these two were very different in terms of their legality.  Promotion of Justice Act must also be taken to consideration and Minister was compelled to give the affected parties an opportunity to respond before the release of the report otherwise, it would be costly for the department to flout the process. The sooner the date is set for the release of the report the better for every stakeholder concerned.

  • Construction of Sport Facilities

The Department has managed to build a number of sport facilities using the ring fenced R300 million Municipal Infrastructure Grant (MIG). Municipality were unable to construct and manage sport facilities because they end up redirecting MIG portion for sport and use it for building other basic services.

Eight Metropolitan Municipalities were using Urban Settlements Development Grant (USDG) and this grant is managed by Housing Department not by the Department of Sport and Recreation. However, SRSA has approached Treasury to ring fence 30% allocation for sport facilities in order to build more facilities for sport and recreation.

 

  1. Emphasis of matter
  • The Department to meet and discuss late payment with service providers to avoid legal battles.
  • Recreation must be prioritized as a programme not just a once of events.
  • Programme 3: Winning Nation must include more sustainable programmes than the events.
  • Some indicators needed to be revisited to align them into relevant Programmes.
  • More people to be employed in Programme 5: Sport Infrastructure Support in order to improve service delivery.
  • The committee was of the view that the Minister must work on a funding model to support the implementation of the National Sport and Recreation Plan.
  • Sport activism and public participation was important to promote a social cohesive society and a healthy lifestyle.

 

  1. Auditor-General’s Report

The Auditor-General (AG) awarded the Department an unqualified audit opinion with no findings; hence, a clean audit.

 

 

  1. PUBLIC ENTITIES OF THE DEPARTMENT OF SPORT AND RECREATION.

8.1. Boxing South Africa (BSA).

BSA has 29 performance indicators and 3 programme areas and we were able to meet 26 out of 29 indicators. Two sources of revenue, grant from the Department of Sport and Recreation as well as sanction fees/levies that come from promoters. BSA has taken a decision that as of 1 October 2018 no tournament was to take place if the sanction fees were not paid. The relationship between SANABO and Boxing South Africa be improved in order to produce quality boxers.

The issue of sanction levies has been resolved and all promoters have agreed to pay their sanction levies and are in the process of making arrangements for repayments. A number of former employees have taken the organisation to labour court and the CCMA and these litigations impact negatively on the finances of the organisation. BSA was in a process of resolving the litigations and avoid them in future.

 

Programme 1: Governance & Administration

The purpose of this programme is to provide strategic leadership, good corporate governance and the overall administration (including Finance, HR, ICT, etc.) of boxing. It comprises of the following sub-programmes:

  • The Board
  • Office of the CEO and Corporate Services.
  • Stakeholder mobilization and lobbying

 

In this program area BSA achieved 11 out of its 12 targets. This performance equates 92 % achievement and this is an improved when compared to the 67% achieved in the prior year. This programme area has twelve indicators. During the period under review we managed to achieve eleven (11) out of the twelve (12) indicators. There has been an under achievement on one indicator, (i.e. Number of capacity development sessions held).

 Despite the underachievement we managed to conduct two sessions, one was a training session for professional boxers in the Eastern Cape on 28-29 June 2017, the other was a workshop of promoters in Auckland park on 11-12 July 2017. This represents 50% of the annual target achieved for the above-mentioned indicator.

 

Programme 2: Boxing development

The purpose of this programme is to ensure compliance with the key aspects of Boxing Act, and rules regulations and enforce their application where non-compliance is observed.

The vision going forward is to make the application of the boxing act and its regulations the cornerstone of the turnaround for the governance and administration of the sport going into the future. Accordingly, this programme features the key activities that are in line with the regulatory requirements of BSA. Sub-Programmes: It comprises of the following sub-programmes:

  • Licensing, sanctioning and ratings.
  • Licensees training and development.
  • Regulations compliance and enforcement.

In this program area BSA achieved 7 out of its 9 targets. This performance equates 78% achievement and this is an improvement when compared to the 44% achieved in the prior year. This programme area has eight (8) indicators. During the period under review we managed to achieve seven (7) out of the eight (8) indicators. There has been an under achievement on one indicator in respect of Training of licensees.

 

Programme 3: Boxing Promotion

The purpose of this programme is to promote and market boxing to improve its public profile, increase its brand value as well as coordinate premium BSA events across the country. The overall purpose and goal of this programme is to raise the public profile of BSA and boxing and to increase its brand value to such an extent that the general public and sponsors will compete for a space in boxing programmes and enlist their support and resources for its development further. It comprises of the following sub-programmes:

  • Marketing and branding.
  • Communication
  • Events Coordination.
  • Revenue generation

 

In this program area BSA achieved 7 out of all the 7 performance targets. This equates 100% achievement and a great improvement in comparison to the 50% achievement of the prior year. This programme area has eight indicators. The targets under this program have been achieved.

 

Committee Observations to Boxing South Africa

 

  • Exceeded Budget

Remedial action was the revenue collecting strategy in order to maximise collection of revenue at BSA.  These issues have been flagged to first priority to ensure that they do not occur again. Training of staff members to ensure compliance was important. Promised that there will be an improvement in future on budget allocation projections. BSA was concern because the baseline to allocate funds was incorrect due to inadequate funding.

Review of the budget was done and a report of the boxing indaba was tabled and the proposed budget was R32 million versus 5 million. BSA budget baseline was revised to R10 million and they are currently at R14 million and SRSA knew that it was not enough. An application for an additional R5 million has been forwarded to Treasury because it was in the interest of SRSA to ensure that Boxing South Africa must improve. Time frame for written responses regarding wasteful expenditure was to come through from the Minister’s office within 30 days.

 

  • Performance Indicators not well defined

Performance Indicators supposed to evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it engages. Often, success was simply the repeated, periodic achievement of some levels of operational goal (e.g. zero defects, 10/10 customer satisfaction, etc.), and sometimes success is defined in terms of making progress toward strategic goals. As for Boxing South Africa, there were some of the performance indicators and targets that were not clearly defined, measurable and not specific to the overall strategy of the organization.

 

  • Poor Leadership at Boxing South Africa

Departmental leadership also inhibits the development of synergy at Boxing South Africa. Poor management may result in more fragmented entity and work roles. This means that each employee neglects the importance their work play in achieving organisational objectives. Leadership, especially the accounting authority at Boxing South Africa has failed to exercise sufficient oversight responsibility regarding financial, performance reporting and compliance as well as other related internal control systems.

 

 

FINANCIAL STATEMENT OF BOXING SOUTH AFRICA

Table 4: Financial Statement

 

BUDGET

ACTUAL

DIFFERENCE

 

REVENUES

‘R 000

‘R 000

‘R 000

Sanctioning Fees

1 988

1 678

310

License Fees

568

683

-115

Other Income

368

878

-510

Forfeit Fees

25

25

0

Interest

44

697

-653

Transfer from SRSA

12 028

12 028

0

Sponsorship

306

306

0

TOTAL:

15 327

16 295

-968

 

BUDGET

ACTUAL

DIFFERENCE

Expenditure

‘R 000

‘R 000

‘R 000

Compensation of Employees

7 307

7 307

0

Depreciation and amortisation

99

99

0

General Expenses

7 921

10 403

2 482

TOTAL

15 327

17 809

2 482

 

The approved budget covers the fiscal period from 01/04/ 2017 to 31/03/2018 financial year under review. The R2,63m of BSA’s budget of R14,66m has to be raised through licensing, sanction levies, grant funding as well as sponsorship. This model of funding has its own challenges particularly with respect to sanction levies.

 

Table on irregular expenditure and fruitless and wasteful expenditure for Boxing South Africa.

Table 5: Irregular expenditure and fruitless and wasteful expenditure.

 

Entity

 

2017/18

Total

Boxing SA

 

Irregular expenditure

R 1.5 million

Boxing SA

 

Fruitless and wasteful expenditure

R 2.4 million

 

The entity had a deficit of R 2.4 million and that the entity total liabilities exceeded its assets by R704 069. The fruitless and wasteful expenditure was the interest charged on overdue account for office rental and the rental of Samsung PBX the contract which ended in October 2015 but the equipment was not used from April 2015.

The irregular expenditure included an amount of R25 617 for DHL courier services, R20 400 for cleaning services, R77 022 for computer expenses, R67 638 for the medical allowance of staff members, and R1. 5 million for over spending on approved budget. The irregular expenditure amounting to R 82 190,59 for computer expenses was restated for 2016/17 financial year.

 

Auditor’s Report

The results were a slight improvement compared the previous years. The entity has achieved an unqualified audit opinion with findings but has to improve if it is to achieve a clean audit outcome.

 

  1. South African Institute for Drug-Free Sport.

The entity had a budget allocation of R 21 896 million from Sport and Recreation South Africa and Budget amount (carried over from prior year) R 4 960 000 from Lottery. For the financial year under review, the Audit General provided an unqualified audit report to South African Institute of Drug-Free Sport with findings. Irregular expenditure during the course of the external audit, the Auditor-General identified expenditure on specialised gym towels (branded and embroidered promotional items) amounting to R 1 227 000 million as irregular because the purchase of the basic unbranded item did not satisfy local content procurement requirements.

Irregular Expenditure was disclosed which was caused by local production and content, when the entity did not specify the requirements for local production and content when requesting quotations and suppliers did not furnish the entity with a declaration of local production and content. Even though this transaction was identified, SAIDS recognised that the entity continues to apply strict supply chain management processes and no other material irregular expenditure occurred. There was also fruitless and wasteful expenditure amounting to R3000.

The entity leases offices from the Sports Science Institute of South Africa from 1 June 2017 to 31 May 2018 with a lease payment of R 82 499.52 per month. No contingent rent was payable. The lease agreement was renewable at the end of the lease term. The entity generated a surplus of approximately a deficit of R 700 000 in the year under review. The financial position remained in a net liability position with total liabilities exceeding total assets by approximately R 4.9 million. Net liability position stems from accumulated deficits that have carried over year on year, which were a result of overspending in previous years.

Auditor’s Report

On performance information, the entity got an unqualified audit conclusion with findings (unqualified with adjustments in the prior year). All objectives and indicators were clearly defined. All targets and actual results were accurately disclosed.

 

  1. RECOMMENDATIONS
    1. Sport and Recreation South Africa (SRSA).

The Portfolio Committee on Sport and Recreation recommends the following:

  1. That the Minister of Sport and Recreation to work on the funding model for the National Sport and Recreation Plan (NSRP). It is a programme of eight-year sustainable implementation plan for the sport and recreation policy framework as captured in the White Paper. Whilst it is envisaged that the White Paper will remain relevant until 2019, the NSRP will be closely monitored annually to identify any hindrances which may negatively impact on implementation. NSRP will be reviewed in 2020.
  2. The Department to capacitate its own staff members in order to do the work rather than relying on contractors.
  3. The Minister to lobby Provincial counterparts in the promotion of health and well-being of the nation by providing mass participation opportunities through active recreation programmes and do a proper reporting on these programmes.
  4. The total variance of R 6 193 million must be reduced for the 2018/19 financial year. The Director-General to work with his management team to plan programmes properly so that the same thing does not happen again at the end of the year.
  5. That the Minister fast-tracks the implementation of the Memorandum of Understanding (MoU) between both the Department of Sport and Recreation and the Department of Basic Education. This is going to contribute to the development of school sport and community sport clubs programmes.

 

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

The Portfolio Committee on Sport and Recreation recommends the following:

  1. SAIDS needed to update its Supply Chain Management (SCM) and Procurement Policy to include the requirements for local production and content, and continue with the strict compliance practices currently in place.
  2. The Department ensures that SAIDS fully comply by practising austerity measures and budgetary control in order to prevent the incurrence of a deficit.
  3. That the Department advises SAIDS against the lease payment of R 82 499.52 per month which was too much, SAIDS needed to consider building its own office premises.
  4. With the assistance from the Department through school sport and community sport programmes, SAIDS must consider reaching out to townships and rural areas to implement the anti-doping education projects specific to youth sports.
  5. Through engagements with the Department, SAIDS needs to look at crafting a legislation that will address drug testing at school sport level to avoid resistance from coaches and parents.

 

  1. Boxing South Africa (BSA)

The Portfolio Committee on Sport and Recreation recommends the following:

  1. That the Department ensures that Boxing South Africa fully comply with legislative prescripts to avoid future adverse findings from the Auditor-General and that the issues regarding the audit status of BSA be addressed.
  2. Consequence Management must be implemented by the accounting authority and the action plan to deal with investigations for previous cases of irregular, fruitless and wasteful expenditures to ensure that matters of discipline and financial misconduct and recovery were dealt with.
  3. Boxing South Africa should familiarise itself with the Framework for Managing Strategic Plans and Annual Performance Plan (FSAPP) and Framework for Managing Programme Performance Information (FMPPI).
  4. That the Minister continues her engagement with the Boxing South Africa leadership on changing the following performance indicators because were not planned according to the FSAPPI:
  • Marketing and Communication strategy is approved and implemented.
  • Report on implementation of boxing information provision.
  • Revenue generation strategy approved and implementation.
    1. That the Department advises Boxing South Africa to stop irregular expenditure by contravening the Boxing Act, because the committee’s hands were tied from lobbying the Department to adequately allocate extra R5 million while the entity cannot manage the current budget they were allocated.
    2. The Department of Sport and Recreation to assist Boxing South Africa with compliance of the Annual Performance Plan (APP) and a new strategic planning of the overall financial and performance management.

 

  1. Summary

The committee was satisfied with a clean audit report for Sport and Recreation South Africa, but very worried about the poor performance of Boxing South Africa. Boxing South Africa needed to be monitored closely with regards to compliance with the Annual Performance Plan (APP), Public Finance Management Act and Performance Indicators. The South African Institute for Drug-Free Sport has since made some improvements but more work needed to be done in dealing with irregular expenditures and fruitless and wasteful expenditure.

 

  1. APPRECIATION

The Chairperson wishes to acknowledge the oversight work done by the portfolio committee members this term. As we come to the end of the term and closing the fifth parliament, we appreciate the effort made by committee members in shaping the sport and recreation agenda in South Africa. The R300 million ring fenced for construction of sport facilities and the transformation of sport and recreation were the main highlights contributed by this committee during the term.

We as the committee members also appreciate the work done by the support staff members. Their dedication and teamwork will never go unnoticed. We also like to thank the Minister, the Deputy Minister, Department of Sport and Recreation, the office of the Auditor General South Africa, Boxing South Africa, the South African Institute for Drug-Free Sport, and all other stakeholders for their contribution towards the work and achievement of clean audit by the Department.

 

 

Report to be considered

 

Documents

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