ATC121119: Report of the Select Committee on Finance on the Expenditure Review for the 2011/12 Financial Year and First Quarterly Budget Performance Reports for the 2012/13 Financial Year by Provincial Treasuries, 16 November 2012
REPORT OF THE SELECT COMMITTEE ON
FINANCE ON THE EXPENDITURE REVIEW FOR THE 2011/12 FINANCIAL YEAR AND FIRST
BUDGET PERFORMANCE REPORTS FOR THE
2012/13 FINANCIAL YEAR
BY PROVINCIAL TREASURIES, 16 NOVEMBER 2012
The purpose of this report
is to give feedback to the Select Committee on Finance following the public
hearings conducted with the Provincial Treasuries of KwaZulu-Natal,
hearings were held on 14 August 2012 at the Southern Sun Cape Sun Hotel and on
29 August 2012 at Parliament of South Africa.
The purpose of the hearings was to
engage the Provincial Treasuries on their respective plans and/or systems to deter
fraud and corruption in their provincial departments.
Firstly, the report
discusses the presentations made by the Provincial Treasuries on overall
expenditure of their respective provincial departments for the previous
financial year, 2011/12 followed by the budget performance during the first
quarter of 2012/13. These presentations largely cover the provincial revenue composition;
expenditure review and mechanisms to deter fraud and corruption including risk
management plans, Supply Chain Management policies and governance issues. Secondly,
the observations and findings made by the Committee are summarised and
recommendations are made.
KwaZulu Natal (KZN) Provincial Treasury (PT)
reported that the actual receipts for the financial year 2011/12 amounted to
R79.647 billion compared to final appropriation of R78.879 billion, resulting
in a surplus of R768.486 million. The Equitable Share (ES) forms the bulk of the
provincial receipts, contributing 79.8 per cent of proportion of the total provincial
revenue in 2011/12 financial year.
The unaudited actual figures show that the Province
received R13.348 billion (16.8 per cent) Conditional Grant (CG) funding, which
was a shortfall of R3.49 million compared to the final appropriation. The PT
attributed the shortfall to the fact that not all Expanded Public Works
Programme (EPWP) Incentive and Social Sector grants funding was transferred
following poor spending of these grants. Therefore, the National Department of
Public Works reduced the final appropriation by R55 million against the
Devolution of Property Rate Funds Grant for provinces from KZN and allocated that
amount to other provinces. Consequently, a second adjustments estimate was
tabled in the Provincial Legislature on 9 March 2012.
The provincial own revenue made up the balance
of 3.4 per cent of the share of the total provincial receipts in 2011/12. The Province
expected to collect own revenue of R1.943 billion in the beginning of the
financial year but actually collected R2.715 billion (R772 million more).
over-collected own revenue of R280.405 million in interest earned on
positive cash balances resulting from the improvement of the funds in the Pay
Master General (
PMG) and Intergovernmental Cash
The PT further indicated that the abovementioned
accounts have been cash positive since May 2010 due to cost-cutting and tight
cash management in the Province. The following provincial departments also
contributed to revenue over-collection, Human Settlements R268.032 million;
Transport R201.534 million; Education R34.27 million and the Office of the
Premier R30.118 million. However, the departments of Economic Development and
Health collected less revenue than initially planned, R45.099 million and R19.8
During the first quarter of 2012/13, the actual
revenue received amounted to R635.071 million, which was 11.6 per cent higher
than projected. Therefore, it is highly likely that the Province would
R18.456 million more than the budget estimate for the current financial
Department that expects to significantly under-collect its revenue at the end
of the financial year is the Department of Economic Development and Tourism. The
PT accounts for a larger proportion of the projected over-collection, due to
higher than anticipated collection in respect of interest from the
IGCC and PMG
According to the PT, the aggregated actual expenditure
for the financial year 2011/12 amounted to R78.649 billion compared to the
final appropriation of R78.332 billion, resulting in over-expenditure of
The current payments represented the largest proportion at 78.8 per
cent, followed by transfers at 12.2 per cent and capital payments at 9.1 per
departments of Education and Health significantly over-spent
their 2011/12 budgets by R572.216 million and R122.022 million, respectively
and so did
contrary, the following departments under spent, PT by R119.699 million; Sport
and Recreation by R50.497 million;
Governance and Traditional Affairs
by R50.091 million,
Economic Development and Tourism (DEDAT)
R41.417 million and
The aggregated projected expenditure for the year amounts to
R84.196 billion compared to the budget of R83.629 billion, resulting in a
projected over-expenditure of R566.608 million by end of the financial year.
The departments of Education
Transport expect to overspend their budgets by R503.102 million and R72
million, respectively. The following departments also anticipate a shortfall on
their appropriated budgets,
R15.425 million; PT R5.936 million,
by the end of
the financial year.
to deter fraud and corruption
The following measures are in place to deter fraud and corruption
Implementation of the
Biometric Access Control System
in all provincial
departments. The system provides a much better audit trail, requires the use of
a finger print to log onto Basic Accounting System (BAS) and Personnel Salary
and it replaces the password system. The system is expected to eliminate
password irregularities and fraud.
Supply Chain Management (SCM) review
draft Provincial Conflict of Interest Policy and guideline whereby all Government
employees would be required to declare their business interests, irrespective
of their levels.
Conduct of SCM officials
The PT and the National Treasury (NT) were improving the assignment of
SCM delegations to the appropriate level. The Accounting Officers were
instructed to implement clear SCM Decision Frameworks.
will enforce compliance through audits and regular
SCM compliance reviews including the enforcement of the code of conduct for SCM
this loophole with NT and an amendment will soon be made to the Public Finance
Management Act (PFMA) to define the conditions under which deviation may occur
rather than leaving it to the Accounting Officers or authorities to decide.
Inflating prices of bidders in
collusion with SCM officials:
The Province is in a process
developing a daily updated price-list of all goods and services that Government
urpose of this project is to introduce price
bench-marking in the procurement of goods and services,
o curb the problem
of price inflation by those that do business with government. This process
ensure that all Government institutions pay market related prices, and
that PT also enforces the use of transversal or general period contracts in the
Tender Appeals Tribunal:
already in place for all provincial departments and have reversed
several cases. The tribunal affords the public the opportunity to question any
process in the awarding of tenders. These are also being implemented in
Revamping of database
PT was in the process of
cleaning up and establishing a new single suppliers database for all
provincial departments and municipalities to promote accountability and
compliance, suppliers had been asked to re-register. The database was now
linked with external organizations (South African Revenue Service, Company
Intellectual Property Registration Office (
and Construction Industry Development Board (CIDB
system will identify service providers with poor track records or those under
investigation and would be used for black listing.
According to the PT, the project has been completed
and system came alive as of September 2010.
The PT reported that
the 2011/12 adjusted budget amounted to R24.203 billion. The ES amounted to
R18.154 billion (75 per cent), conditional grants amounted to R5.277 billion
(22 per cent), and the own provincial revenue R771.6 million (3 per cent). The
2012/13 allocated budget amounts to R24.870 billion of which, the ES amounted
to R18.531 billion (75 per cent), conditional grants amounted to R5.520 billion
(22 per cent), own revenue amounted to R819.3 million (3 per cent). This composition
of revenue remains similar between the two financial years.
In terms of economic
classification, current payments amounted to R18.913 billion (76.0 per cent) of
which Compensation of employees amounted R15.1 billion (60.7 per cent),
payments capital assets amounted to R2.4 billion (9.8 per cent), and transfer
payments amounted to R3.5 billion (14.2 per cent).
to deter fraud and corruption
Measures to deter fraud and corruption in the
PT provided training for Chief Risk Officers (CRO) to manage fraud in the
work place and issued guideline on Fraud prevention and detection. In addition
to that, a concept Fraud prevention policy was developed and provided to all the
departments and their entities. Key Performance Indicators were further
developed to manage fraud.
All provincial departments formed risk management committees and
appointed CROs. The composition of Audit Committees for departments had been
reviewed in 2011/12. Findings showed that no Government officials serve on
Committees. Furthermore, Finance and SCM Delegations were developed to
prescribe minimum level for delegations and ensure segregation of duties. These
delegations were also issued for all transactions on the Transversal systems, namely,
BAS, PERSAL and Local Government Information Systems (
The departments report on expansion and variations of contracts to PT, submit
procurement plans in April each year and report monthly on deviations. Certain
goods are procured through a transversal contract arranged by the PT.
Cash Management and Payments:
PT handles all registration of banking details and second
verification is done by the bank before it was captured on systems. Only PT
prints cheques and processes hand written cheques. All supplier payments above
R1 million and PERSAL payments above R5 million are verified and approved by PT
before implementation by the bank. PT approves all Business online and Foreign
Exchange Payments before they can be processed and further verifies all signing
authorities on quarterly basis.
control checklists were also being implemented.
During the financial year 2011/12, the Province
received a budget of R65.6 billion.
for R50.9 billion and Conditional Grants represented R14.7 billion. All the ES
and conditional grant monies were transferred except for R9.8 million in
respect of the Gauteng Department of Educations HIV/Aids (Life Skills)
conditional grant, which was withheld by the NT. The Province strictly
ring-fenced infrastructure and conditional grants to ensure that these grants were
used for intended purposes.
PT indicated that the following departments
recorded overspending on their 2011/12 adjusted appropriations: Health (R426.5
million) of which R884.9 million was compensation of employees and R558.3
million in goods and services category. This was offset by R627 million under-spending
in the payments for capital assets category and the balance in transfers and subsidies.
An over-expenditure of R730.2 million in respect
of Compensation of Employees (CoE) was reported in 2011/12.
A significant under-spending was observed for the following
departments, Roads and Transport R573 million, of which R511.4 million occurred
under the goods and services category, R75.8 million in payments for capital
assets category and offset by R14.6 million over-expenditure in
CoE. The department of Education under spent its
budget by R315.4 million of which R147.7 million was in goods and services
category, R119.1 million in payments for capital assets (R119.1 million), R15.1
million in CoE and R33.5 million in transfers and subsidies.
The under-spending was also reported
for the department of Local Government and Housing (R130.7 million) of which R63.9
million in CoE, R16.7 million in goods and services and R41.6 million in machinery
and equipment. The department of Social Development (R99.4 million), R57.5
million in goods and services, R59 million in transfers and subsidies to
non-Profit Institutions, offset by R16.6 million over expenditure under CoE.
Of the total 2012/13 appropriation
of R69.3 billion, year-to-date expenditure
stood at R18 billion, or
26 per cent.
expenditure was significantly lower than or marginally close to the 25 per cent
threshold, except for
Infrastructure Development, which spent
R426.2 million (31 per cent) of its 2012/13 budget.
The significant slow spending was seen in the
following departments, Local Government and Housing by R649.2 million of the
R4.7 billion 2012/13 allocation. The Gauteng PT by R58.6 million of the R428.9
million allocation spent, and Office of the Premier by R44.5 million of the
R236 million 2012/13 budget spent.
to deter fraud and corruption
The Province deters fraud and corruption as follows:
Framework was revised in 2009 and approved by Executive Council (EXCO) in 2010.
It was then launched at the 2010 Gauteng Anti-Corruption Summit. The summit
passed numerous Anti-Corruption resolutions which were signed by the Provincial
Government, organised business and civil society representatives.
revised framework consists of eight strategic objectives, each with its own key
performance indicators, activities, outputs, responsible department and
timeframes. These objectives aim to promote ethical procurement, build a social
compact against corruption and fight nepotism, amongst others.
Provincial Anti-Corruption Coordinating Committee (PACCC) is the governing
structure where all provincial departments report. The PACCC in turn reports to
the Provincial Anti-Corruption Forum (PACF) which consists of Organised
Business, Civil Society Representatives, and Provincial Executive Members.
The Province identified some
achievements that improved management of theft and corruption. These
achievements included, launch of an anti-fraud awareness DVD which provided clear
fraud reporting guidelines and details of the National Anti-Corruption Hotline;
Visible Anti-Corruption poster campaign launched in all provincial buildings;
risk management units were established in all
departments to increase awareness of fraud risk, and to report such accordingly.
PT reported that these measures
eightened fraud risk awareness and
helped reduce year on year fraud risk incidents and losses.
At the end of the financial year the Province managed to
spend 98.1 per cent of the allocated budget. Most of the departments spent above
the average spending of the Province except for the Department of Health and the
Provincial Legislature, which spent 95.7 percent and 91.9 percent,
The Department of Social Services recorded 97.7 per cent
(R21.206 billion) expenditure while non-social services spent R8.186 billion or
99.1 per cent of its adjusted budget of R8.257 billion. None of the departments
In terms of economic classification the Province reported
that it has spent R17.004 billion on CoE; R5.930 billion on goods and services;
and R2.709 billion on payments for capital assets.
The Province has an annual budget of R30.968 billion for the
2012/13 financial year. As per the trend, the bulk of the budget is allocated
to the departments of Education and Health, which received R13.983 billion and
R7.544 billion, respectively. The Province is projecting an overspending of
R55.693 million by the end of the financial year. The over expenditure is
mainly attributed by Non-Social services departments. However, significant
overspending has been recorded in the departments of Agriculture, rural
development and land administration and DEDAT, which project to overspend by
R34.378 million and R19.792 million,
At the end of the first quarter, the Province managed to
spend 22.9 per cent of its total budget. Most of provincial departments spent
almost 20 per cent except for Social Development which spent 16.9 per cent and
Culture, Sport and Recreation having spent only 15.8 per cent. Education has
spent 25.2 per cent while Health has spent 20 per cent.
CoE spending stood at R4.294 billion or 23.0 per cent of the
allocated budget and the Province projected to overspend in this component of
the budget by R970 000. With respect to goods and services, the Province has
spent R1.344 billion or 22.2 per cent. On Transfers and subsidies the province
has spent R1.019 billion of the allocated R3.759 billion which is 27.1 per cent
of the allocated budget. A significant under-expenditure was on payment for
capital assets which was at 17.4 per cent of the allocated R2.521 billion.
to deter fraud and corruption
Fraud and corruption is managed as follows in
Rotation of the SCM
PT issued a circular PFMA/SCM1/2009 to all provincial departments,
public entities enlisted in schedule 3C to rotate their SCM officials within
the 5 sub-division of the SCM unit (Demand, Acquisition, Logistic, Performance
and Disposal). The circular aims to eliminate corrupt and fraudulent practices
in the public sector procurement system.
Vetting of SCM officials:
issued another circular to all delegated departments, public entities and
municipalities to screen all officials responsible for the procurement of goods
and services. The screening encourages officials not to involve themselves in
corrupt practices because their individual profile will be screened. In
addition to that, PT in collaboration with the Office of the Premier held an
awareness workshop to capacitate officials about the importance of vetting.
PT and NT jointly
provided regular training to departments, public entities and municipalities on
As a way of increasing
awareness, PT together with the
Code of Ethics:
PT encourages departments
to set a requirement that whenever they appoint the Bid Committee members, a
declaration of confidentiality and impartiality form must be signed by the
member responsible in any of the three departmental Bid Committees. A number of
training courses were conducted in various institutions in respect of the code
of conduct to ensure compliance.
A procurement system was
introduced to all departments in order to promote transparency, fairness,
integrity, value for money and equality in the treatment of suppliers or
contracts in the procurement process. The system assists the departments to
increase internal control in their procurement process in order to eliminate
corrupt activities and improve efficiencies in contract management.
The PT allocated the provincial departments a
budget of R54.3 billion in 2011/12 financial year, an ES portion of R44.6 billion,
R8.8 billion conditional grants and
revenue of R817 million was generated within the Province. The Province
estimated to collected own revenue of R729.5 million but actual own revenue
recorded amounted to R817.3 million, an over-collection of R87.8 million.
Department of Health
over spent by R79.7 million on CoE due to the
appointment of employees without a budget; provincialisation of state aided
hospitals; Occupation Specific Dispensation (OSD) carry through costs; and
remnants of Human Resources Operational Project Task Team (
Department of Education also overspent by R29.2 million as a result of cost
pressures on CoE budget; the implementation of the Court Order re-instating temporary
educators, non-movement of additional educators, OSD carry through costs and
he Human Settlements Department under
spent its conditional grants allocation by R472 million (20 per cent).
According to the PT, all departments
under spent on CoE due to the non-payment of the budgeted 5.5 per cent increase
in Improvement in Conditions of Service (ICS) which was supposed to be paid
with effect from
April 2012. The wage agreement was only signed in
August 2012. Failure to fill critical vacant posts also contributed to the low
spending on CoE.
During the first quarter of 2012/13, the
following departments under spent their allocated budgets, Education by R394.9
million; Health by
R102.5 million; Human Settlements by
and Economic Development and Environmental Affairs and Tourism by
ransfer of funds to the Rural Development Agency of R60.6 million could
due to late submission of supporting
documentation by the department of Rural Development.
Plans to deter fraud and corruption
Plans and systems in place to deter fraud and corruption in
Ethics and Fraud and Corruption Prevention:
conducts anti-corruption and ethics awareness workshops, conducts training on
professional ethics in collaboration with the Ethics Institute of
Combating fraud and corruption:
Blowing Policy was developed and approved by the EXCO. The policy is consistent
with the Protected Disclosure Act and Code of Ethics for the Eastern Cape
Public Service. An electronic-web database was also developed through which cases
reported through the National Anti-Corruption Hotline can be loaded onto the
system and categorized accordingly.
was considering implementing a policy forbidding public servants from trading
with government. The Province made inroads at municipal level where
municipalities are being assisted with the development of Fraud Risk
Assessments and the development of Fraud Prevention Plans. The Province
approached the Public Administration Leadership and Management Academy (
to assist with capacity building in this
Oversight, Transparency and Accountability:
submit monthly reports on incidents of financial misconduct, irregular, fruitless
and wasteful expenditure in terms of the provincial accountability model to the
PT. These reports are escalated to the Member of Executive Council (MECs) on a
quarterly basis to raise accountability for possible fraud related activities
This therefore promotes reporting on these activities to different
government institutions and structures such as Legislature, Parliament, Public Service
Commission (PSC) and EXCO. Status reports are prepared and submitted to these
structures on a quarterly and annual basis or upon request.
Provincial Anti Corruption Forum and Council:
An Anti Corruption
forum was established in 2005, represented by Business, Organized labour,
fraternity, Public Service and members of the EXCO.
The Honourable Premier appointed a member of
the EXCO as political Champion and ultimately Chairperson of the Forum.
of the forum is to contribute towards the establishment of a provincial
consensus through coordination of cross sectional efforts against corruption.
The abovementioned forum also advises political
administration on the implementation of effective strategies to combat
corruption and shares information and best practices on sectoral anti-
corruption work. In addition to that, the Forum advises sectors on the
improvement of sectoral anti-corruption strategies.
exists an Anti Corruption Council which comprises of Head of Department (HODs);
South African Police Service (SAPS); Special Investigating Unit (SIU), Public
Protector, the State Security Agency (SSA) and the PSC. The Director General
chairs the structure.
In 2012/13, the Province got appropriated an annual budget
of R11.355 billion. The key budget drivers, the Department of Education received
R4.197 billion while the Department of Health got R3.121 billion.
By the end of the financial year, 2011/12, the Province
spent 99 per cent of its allocated budget. All provincial departments have
spent more than 90 per cent except for the PT, which spent 88.5 per cent. Most
of departments were close to 100 per cent spending at the end of financial
Overall in terms of economic classification the Province has
spent R10.763 billion or 99.0 per cent of the allocated R10.866 billion
adjusted budget. Spending on current payments shows that the Province has spent
R7.932 billion, which is almost 100 per cent of the current payments budget
allocation. R1.348 billion or 95.2 per cent of transfers and subsidies was
spent and R1.481 billion or 97.7 per cent paid for capital assets
At the end of the first quarter of 2012/13, the provincial
expenditure reflected total spending of 22.6 per cent. By July 2012, the Province
had spent 30.5 per cent of the provincial budget. The majority of departments
were slightly above 30 per cent with its expenditure performance.
The Department of Agriculture, Land Reform and Rural
Development recorded significant under-spending, which was at R101.744 million
or 13.9 per cent of the departments allocated budget. Some departments have
projected over-expenditure at the end of the 2011/12 financial year. At top of
the list, Health projected overspending by R94.554 million and Roads and Works
expected to spend R63.342 million more than its initial budget. An overall
projection of the provincial overspending was R226.995 million in August 2012.
and corruption prevention mechanisms
After the briefing by the Northern Cape PT on their plans
and/or systems in place to deter fraud and corruption in the Province, the
Committee was of the view that these issues were not adequately addressed. The
Committee then requested the PT to submit a written response within seven
working days after the meeting.
On 07 September 2012, the Northern Cape PT provided the
Committee with the written response summarised below.
The PT indicated that the short term
strategy to deter fraud and corruption was to centralise within the PT, the
system controllers function that authorise the creation of users for both PERSAL,
BAS and LOGIS.
In addition to this, the Province
was investigating the implementation of a system that would on a daily basis
provide information on suppliers banking details that have changed and then
investigate the reasons for change. The Province was also working on the
centralisation of supply data base to improve its functionality.
In the long run the Province was
working towards the implementation of the biometric system as the final
solution to bring an end to fraud and corruption perpetrated using transversal
government financial systems.
Provincial Revenue and expenditure
overall expenditure of the Province at the end of the fourth quarter of 2011/12
was R23.939 billion, which is 95.6 per cent of the adjusted budget.
spending of 90 per cent and below was registered for the Office of the Premier,
the departments of Sport, Arts and Culture, Economic Development; Environment;
Conservation and Tourism, Public Works, Roads and Transport and Agriculture and
Highest spending was registered in
the Provincial Legislature, departments of Health, Education and Training,
Social Development, Women; Children and Person with Disabilities and Human
Settlements; Safety and Liaison (Human Settlement Branch), all above 97 per
According to the PT, under-spending in
the Department of Education and Training was mainly on CoE. This was attributed
to failure to appoint the Grade R
educators were trained and placed in those posts. The Department of Public
Works, Roads and Transport under spent on its conditional grants, of which the
Provincial Roads and Maintenance Grant (
The review of the
committed projects with the
finalized in March 2012. A rollover of R107 million has been approved
As at the first quarter of 2012/13,
all the departments spent below the estimated 25 per cent threshold. The
highest spending was recorded by the Provincial Legislature with 24.84 per cent
and Human Settlements, Safety and Liaison (Human Settlement Branch) with 24.78
per cent. Lowest spending was registered in the Departments of Public Works,
Roads and Transport with 11.58 per cent and Agriculture and Rural Development
spending only 14.24 per cent of the budget.
Spending on all economic classification items was
below the estimated 25 per cent with the highest spending of 23.29 per cent on
CoE (R3.533 billion of the allocated budget of R15.174 billion). It appears
that the bulk of the budget is actually spent more on CoE, with lack of
planning, implementation and spending on core service delivery areas, such as land
and buildings and goods and services categories, which all registered spending
below 14 per cent.
The low spending trend by
departments on these economic classification items may have a negative impact
on areas such as maintenance of schools, clinics, hospitals, roads and
government buildings. This might also result in under spending at the end of
this financial year, particularly, on infrastructure.
The departments of Social Development, Women,
Children and Person with Disabilities and Human Settlements, Safety and Liaison
(Human Settlements Branch) project to overspend on their CoE budgets by R26.9
million and R20 million respectively, whilst the Department of Agriculture and
Rural Development projects to under spend its budget by R7.5 million.
and corruption prevention mechanisms
According to the PT, the Province prevents fraud and
corruption as follows:
The Province enforces compliance through regular audits and compliance reviews;
assesses delegations and segregation of duties. All service providers are
registered on a Central Supplier Database and an E-Procurement tool was
acquired. The automated system ensures supplier rotation. The Province issues
directives to departments to rotate the SCM Officials within their SCM units, vetting
of all SCM Officials, and provides frequent training to departments and Public
Entities on SCM Policies and practices.
: These units were developed in the departments with
the aim to increase awareness of fraud and corruption and to deter such
: The Province intervenes in municipalities
regarding the Annual Financial Statements, capacity building, appointments and
skilling of staff through financial training.
PT conducts daily scrutiny of exceptions
generated by the PERSAL system to identify any irregular payments and take
necessary actions to stop the payments. Furthermore, PT imposes thresholds of
approval at stages of contracting or contract administration processes and
addresses the institutional weaknesses in the SCM processes through
establishment of structured committees and the appointment of competent
PT also encourages the departments
to do a pre-employment screening thorough background checks, such as prior
employment history, tertiary qualifications and memberships of professional
associations of employees and contractors, service providers, etc.
Provincial Revenue and Expenditure
R36.949 billion (99.6 per cent) of the adjusted
estimate of R37.088 billion, which was R2.890 billion (8.5 per cent) more than
what was spent as at 31 March 2011. The Province registered net under spending
of R138.459 million (0.4 per cent). This occurred mainly in the Transport and Public
Works (R45.451 million), Health (R41.147 million) and Education (R15.999
received R13.361 billion against the revised
provision of R13.377 billion while the department of
amounted to R13.388 billion of the revised
appropriation of R13.429 billion. The department of
aggregate budget amounted to R1.317
billion compared to a revised provision of R1.332 billion.
Province projected an overspending
of R55.048 million
comprising of the following departments, R53.664 million from
due to the opening of beds to
accommodate the shift of services to the Khayelitsha District hospital and
R1.384 million from
due to an incorrect PERSAL interface and the difference between
budgeted cost of living increase and negotiated salary increase.
to prevent fraud and corruption
of the governance environment:
full review of PT Instructions; development
of a departmental SCM systems and delegations policy; development of Standard Operating
Procedures (SOPs), transaction checklists, reporting tools, frameworks etc; Strengthened
and Evaluation (M&E)
process via compliance assessment, reporting; introduced Annual Financial
Governance Review and Outlook process and the introduction and use of
The Province centralised access
control and user account management; enforces the use of LOGIS for all payments
for goods and services; limited payments via BAS; develop monthly expenditure
reports to departments; monthly monitors personnel establishments and
expenditure; expects to introduce spending analysis tool;
The E-procurement system has been upgraded. The
electronic procurement for purchases between R10 001 to R500 000 and above R500
000 had been introduced. Contract management system would still be explored.
Having considered the above issues, the Select Committee on
Finance noted that:
Government departments do not draft
contracts in terms of specifications that need to be followed by service
Most provinces had a challenge with
the vetting of supply chain management officials by the National Intelligence
Unit as this compromised the quality of personnel that departments employ;
Provincial Treasury of the
Some provinces had projected over-expenditure
at the end of the financial year of 2012/13, while they do not have plans to
address such estimates; and
Provinces lack management frameworks for managing people working
on systems such as BAS, PERSAL, and LOGIS in government departments.
Based on the findings and observations mentioned above, the
Select Committee on Finance recommends as follows:
Government departments should consider
drafting contracts themselves so that service providers sign what the
departments requires from them;
National Intelligence Agency should consider taking at least 21
days when it comes to the vetting of officials working on the supply chain
management for departments;
Provinces should look at
implementing the use of a biometrics system in preventing fraud and corruption
within government departments;
Provinces should consider developing
management frameworks for managing people working on systems such as BAS,
PERSAL, and LOGIS in government departments;
Units that are responsible for awarding of Government
contracts should frequently check the expiry date of contracts to avoid the
wasteful expenditure that is taking place;
Free State Provincial Treasury should monitor and verify
spending performance trends by the department of Health and Education as this
is of great concern to the Committee;
Northern Cape Provincial Treasury should monitor the overall
spending of the Department of Education and Health;
Northern Cape Provincial Treasury should
develop proper plans to deter fraud and corruption in the Province within three
months after the adoption of the report by the House; and
Provincial Treasuries should consider
adopting the KZN model of preventing fraud and corruption when developing plans
for their respective Provincial Governments.
Report to be considered.
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