First Report of the Standing Committee on Public Accounts, dated 5 February 2003:

The Standing Commmittee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Zoological Gardens of South Africa for the year ended 31 March 2002, tabled on 5 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the Zoological Gardens of South Africa for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
The Committee, however, notes that the Auditor-General has raised several issues of concern.
2. Investments
The Committee notes that the Zoological Gardens incurred a loss on an investment held in a private bank, which was subsequently placed under curatorship.
Through intervention of the South African Reserve Bank, the loss was reduced to R60 277 at 31 March 2002. The Zoological Gardens received an interim distribution of 44 cents in the Rand on 8 April 2002. The Committee recommends that the management make every attempt to recover the outstanding balance from the appointed curator, and that funds be securely invested in future.
3. Tabling of Annual Report
The Committee notes that the Annual Report and Financial Statements were tabled in Parliament on 5 September 2002.
This late tabling constitutes non-compliance with section 65(1)(a) of the Public Finance Management Act.
The Committee recommends that the management of the Zoological Gardens strictly adhere to the relevant sections of the PFMA at all times.
4. Going concern
The Committee also notes that the Zoological Gardens is totally dependent for its funding on the Department of Arts, Culture, Science and Technology. They must explain by 30 April 2003 why funds cannot be generated from patrons of the Zoological Gardens.
5. Decision on hearing
Because the audit opinion is unqualified, the Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Second Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Commmittee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the War Museum of the Boer Republics for the year ended 31 March 2002, tabled on 4 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the War Museum of the Boer Republics for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Decision on hearing
Because the Auditor-General has not cited any issues of concern, the Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Third Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the South African Heritage Resources Agency for the year ended 31 March 2002 [RP 125-02], tabled on 4 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the South African Heritage Resources Agency for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
The Committee, however, notes that the Auditor-General has emphasised several issues of concern.
2. Tabling of Annual Report
The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Late submission of financial statements
The Committee notes that signed financial statements, submitted to the Auditor-General's Office on 14 June 2002, contained several over- and understatements, which were referred back to the management. These were subsequently adjusted and resubmitted on 26 July 2002.
The Committee recommends that management avoid a recurrence of this lapse in 2003.
4. Property, plant and equipment
* The financial statements do not disclose the movement of assets, as required in terms of GAAP.
* Depreciation for additions were calculated for the full year, irrespective of the actual purchase date.
The Committee recommends that management ensure that GAAP requirements are adhered to and that depreciation is calculated correctly.
5. Decision on hearing
The Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Fourth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of Business and Arts South Africa for the year ended 31 March 2002, tabled on 9 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of Business and Arts South Africa for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the Annual Report was tabled in Parliament on 9 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Decision on hearing
The Auditor-General has not cited any issues of concern which would warrant further consideration.
The Committee therefore recommends that no hearing be held for the financial year under review.
Report to be considered.
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Fifth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Engelburg House Art Collection for the year ended 31 March 2002, tabled on 30 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the Engelburg House Art Collection for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Late submission
The Committee notes that the Annual Report was tabled in Parliament on 30 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Internal audit
The Committee notes that, due to the limited activities of this organisation, an internal audit department and an audit committee were not established for the past two financial years. This is contrary to the provisions of the Public Finance Management Act.
The Committee recommends that management attend to this issue urgently and that the Auditor-General report thereon in his next Report.
4. Decision on hearing
The Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Sixth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Freedom Park Trust for the year ended 31 March 2002 [RP 141-02], tabled on 4 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the Freedom Park Trust for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the Annual Report was tabled in Parliament on 4 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Late submission of financial statements
The Committee notes that signed financial statements were only submitted on 12 July 2002, and not 31 May 2002, as prescribed by the PFMA.
The Committee recommends that management avoid a recurrence of this matter in 2003.
4. Decision on hearing
The Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Seventh Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Pan South African Language Board for the year ended 31 March 2002 [RP 166-02], tabled on 16 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the Pan South African Language Board for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the Annual Report was tabled in Parliament on 16 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Decision on hearing
The Committee recommends that no hearing be held for the financial year under review.
Report to be considered.
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Eighth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements and Group Financial Statements of the South African Bureau of Standards for the year ended 31 March 2002, tabled in Parliament on 12 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the accounting authority for the unqualified audit opinion expressed by the Auditor-General in respect of the financial audit as well as the audit of performance information. The Committee trusts that audit opinions in future will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the SABS Annual Report and Financial Statements were tabled in Parliament on 12 September 2002.
This late tabling constitutes non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. Accounts receivable (SABS)
The Committee notes with concern that:
* Accounts receivable are not followed up on a regular basis to ensure timeous recovery thereof.
* 67% of the accounts receivable were outstanding for longer than 120 days, whereas the SABS normal repayment terms are 30 days only.
* The provision for doubtful debts is currently in excess of R10,5 million, which represents 49% of the total outstanding amounts and which seems unacceptably high to the Committee.
The Committee recommends, in terms of section 51(1)(b)(i) of the PFMA, that the accounting authority take effective and appropriate steps to collect all amounts timeously.
The Committee further recommends that the accounting authority furnish Parliament with a progress report on the above recommendation by 30 April 2003.
4. Hearing
Having considered the Report, the Committee recommends that no hearing be held on the South African Bureau of Standards for the financial year under review.
Report to be considered.
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Ninth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Financial and Fiscal Commission for the year ended 31 March 2002 [RP 132-02], tabled in Parliament on 28 August 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the Chairperson and management of the Financial and Fiscal Commission (FFC) for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Emphasis of Matter
The Committee notes that the Auditor-General has raised one issue of concern under "Emphasis of Matter". This issue requires the attention of management, and the Committee deals with it in paragraph 4 below.
3. Tabling of Annual Report
The Committee commends the management of the FFC for having timeously tabled its Annual Report, thereby complying with section 65(1)(a) of the Public Finance Management Act.
4. Internal audit
The Committee notes:
* That the FFC obtained Treasury approval on 22 October 2002 for sharing the internal audit function with National Treasury.
* That the internal audit function was not operational during the financial year under review because National Treasury had obtained exemption until 30 April 2002.
* That at the time of completing its Report (June 2002), the FFC was still waiting for Treasury to complete its internal processes of contracting an appropriate service provider.
Since the Committee considers the establishment of the internal audit function as vital for the development of a fraud prevention plan, necessary for the detection and prevention of fraud, it trusts that this outstanding matter will be resolved speedily, and recommends that the Auditor-General report thereon in his next report on the FFC.
5. Matters arising from management report
(a) State of financial affairs
The Committee notes:
* That the accounts reflect a net surplus of R422 963, which has been earmarked for capital expenditure during the 2002-03 financial year.
* That estimates suggest a more sustainable budget level for the FFC to be in the region of R10 million per annum.
* That a significant part of the expenditure is related to personnel, together with the contracting in of researchers, analysts and various experts, whose inputs are essential to the FFC.
(b) IT-server network
The Committee notes that the revamping of the FFC's IT-server network was originally earmarked for implementation during the 2001-02 financial year, but that the implementation will only be effected during the 2002-03 financial year.
The Committee recommends that the Auditor-General report thereon in his next report on the FFC.
6. Decision on hearing
Having considered the Report of the Auditor-General, as well as having dealt with the Matter of Emphasis raised by him, the Committee recommends that no hearing be held on the Financial and Fiscal Commission for the financial year under review.
Report to be considered.
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Tenth Report of the Standing Committee on Public Accounts, dated 5 February 2003:
The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Financial Services Board (FSB) for the year ended 31 March 2002, tabled in Parliament on 28 August 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the Board of the FSB and the Executive Officer for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Emphasis of Matter
The Committee notes, and welcomes the fact, that the Auditor-General has not raised any issues of concern under "Emphasis of Matter".
3. Tabling of Annual Report
The Committee commends the management of the FSB for having timeously tabled its Annual Report, thereby complying with section 65(1)(a) of the Public Finance Management Act.
4. Insider Trading Directorate (ITD)
The Committee notes:
* That since its inception in January 1999, the ITD has logged 136 cases for investigation, of which 100 have been finalised, resulting in a decision to institute legal proceedings in 20 cases, of which 13 have been settled out of court.
* That the FSB will increase its resources to deal with the backlog of outstanding cases.
* That during the year under review, the ITD considered 22 investigation reports, of which four were settled out of court.
* That in terms of the settlement, the FSB received R5,4 million which, after the recovery of costs, was distributed to investors prejudiced by insider trading.
The Committee commends the progress made thus far and looks forward to the additional resources being allocated to provide further improvement in efficiency.
5. Chairperson's review
The Committee notes that, in the environment of recent conglomerate failures and other factors, the shortcomings of corporate governance, more specifically the duties of directors, should increasingly receive attention from the FSB (also the responsibilities of auditors).
6. Internal controls
The Committee notes and welcomes the following aspects in relation to internal controls:
* That management maintains a comprehensive system of internal controls.
* That these controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable assurance that assets are safeguarded and transactions executed and recorded in accordance with generally accepted business practices and the Board's policies and practices.
* That these controls are implemented by trained and skilled personnel with an appropriate segregation of duties.
* That monitoring by management includes a comprehensive budgeting and reporting system operating within strict deadlines and an appropriate control framework.
* That the internal audit function conducts operational, financial and specific audits and co-ordinates audit coverage with the external auditors.
7. Decision on hearing
Having noted the unqualified audit opinion expressed by the Auditor-General, the Committee recommends that no hearing be held on the Financial Services Board for the financial year under review.
Report to be considered.
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Eleventh Report of the Standing Committee on Public Accounts, dated 25 February 2003:
The Standing Committee on Public Accounts, having considered the Report, including the Annual Report of the Independent Auditors of the Financial Statements, of the Development Bank of Southern Africa Limited for the year ended 31 March 2002, tabled in Parliament on 5 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of the DBSA for the unqualified audit opinion expressed by the Independent Auditors, and trusts that future audit opinions will be equally unqualified.
2. Tabling of Annual Report
The Committee notes that the DBSA's Annual Report was tabled in Parliament on 5 September 2002, thereby constituting non-compliance with section 65(1)(a) of the Public Finance Management Act.
3. General matters
(a) Risk management
The Committee notes that:
* A risk management framework is being implemented for the entire Bank, which will consolidate risk management oversight to include all risk categories across all business and functional areas.
* It is anticipated that the framework will be fully operational during the next financial year.
(b) Internal audit
The Committee notes that the DBSA's Internal Audit Unit:
* Aims to be an independent, objective assurance and consulting service to add value and improve the Bank's operations.
* Reports directly to the Managing Director.
* Has unlimited access to the Chairperson of both the Board and the Audit Committee.
* Has considered the strategic impact of changes within the bank and its operating environment.
(c) External audit
The Committee recommends that the CEO indicate the extent to which external auditors of the DBSA provide consulting and/or advisory services to the Bank.
4. Conclusion
Having noted some issues of special concern, which are being addressed, and as the Report is unqualified, the Committee is of the view that no hearing is necessary on the DBSA for the financial year under review.
Report to be considered.
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Twelfth Report of the Standing Committee on Public Accounts, dated 25 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Energy Sector Education and Training Authority [ESETA] for the year ended 31 March 2002 [RP 98-02], tabled in Parliament on 10 September 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management of ESETA for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Emphasis of Matter
The Committee notes that under "Emphasis of Matter", the Auditor-General has raised one issue, on which the Committee makes comments in paragraph 4 below.
3. Tabling of Annual Report
The Committee notes that ESETA's Annual Report and Financial Statements were tabled in Parliament on 10 September 2002.
This late tabling constitutes non-compliance with section 65(1)(a) of the Public Finance Management Act.
4. Internal audit
The Committee notes that no internal audit was conducted during the year under review. This is contrary to section 51(1)(a)(ii) of the Public Finance Management Act.
The Committee, however, notes that the internal auditor was officially appointed only towards the end of the financial year, and therefore was not in position to conduct an internal audit.
5. Conclusion
Having considered issues of special concern, addressed under "Emphasis of Matter", and as the report is unqualified, the Committee is of the view that a hearing on ESETA for the financial under review is unnecessary.
Report to be considered.
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Thirteenth Report of the Standing Committee on Public Accounts, dated 25 February 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Media, Advertising, Publishing, Printing and Packaging Sector Education and Training Authority [MAPPP-SETA] for the year ended 31 March 2002 [RP 105-02], tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee notes with concern the qualified audit opinion expressed by the Auditor-General. The Committee trusts that management will pay the necessary attention to those issues which resulted in the qualified opinion, so that future audit opinions will be unqualified. The Committee comments on these matters in paragraphs 4, 5 and 6 below.
2. Emphasis of Matter
The Committee notes that under "Emphasis of Matter" the Auditor-General has raised several issues, in respect of which the Committee makes comments and recommendations in paragraphs 7 and 8 below.
3. Tabling of Annual Report
The Committee commends the management of MAPPP-SETA for timeously tabling the Annual Report and the Financial Statements, thereby complying with section 65(1)(a) of the Public Finance Management Act.
4. Levy income
Although the completeness of levy income could not be confirmed, the Committee notes that the South African Revenue Services did not submit substantiating evidence and detail in respect of the levies transferred to MAPPP-SETA.
5. Value-added tax
The Committee notes that no proof could be submitted for audit purposes that reconciliations had been performed between the VAT 2001 returns and the VAT control account.
6. Post-retirement medical aid benefits
In terms of generally accepted accounting practice, certain disclosures are necessary for post-retirement medical aid benefits. The Committee notes that these disclosures have not been complied with in MAPPP-SETA's financial statements for the year under review.
However, the Committee notes, and welcomes, the actuarial valuation of the employer's ability in respect of health care benefits for retirees, that was performed by actuarial consultants for the previous and financial year under review.
7. Receipting
The Committee notes with concern that the audit procedures regarding the accuracy and completeness of income could not be carried out satisfactorily.
The Committee welcomes the indication by management that receipt detail will be recorded in the relevant register to confirm that payments received were accurate and complete.
The Committee recommends that the Auditor-General report thereon in his next Report.
8. Internal control
The Committee notes with concern that there are certain shortcomings in MAPPP-SETA's internal control measures.
The Committee welcomes management's assurance that the necessary steps will be taken to place the relevant checking and control measures on a sound footing.
The Committee recommends that the Auditor-General report thereon in his next Report on MAPPP-SETA.
9. Conclusion
Despite the qualified opinion expressed by the Auditor-General, the Committee, having considered the various issues of concern raised by the Auditor-General, recommends that no hearing be held on MAPPP-SETA for the financial year under review.
Report to be considered.
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Fourteenth Report of the Standing Committee on Public Accounts, dated 25 February 2003:
The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Compensation Fund for the year ended 28 February 2002 [RP 118-02], tabled in Parliament on 6 August 2003 and referred to it, reports as follows:
1. Audit opinion
The Committee notes the reasons for the qualified audit opinion expressed by the Auditor-General. It trusts that management will pay particular attention to the aspects which led to the qualification and will address the concerns raised, with a view to avoiding such negative audit opinions in future. The Committee deals with these in paragraphs 4 and 5 below.
2. Emphasis of Matter
The Committee notes that the Auditor-General has cited several issues under "Emphasis of Matter", which need management's attention. The Committee comments on these issues in paragraphs 6, 7 and 8 below.
3. Tabling of Annual Report
The Committee commends the management of the Compensation Fund for having timeously tabled its Annual Report in Parliament, thereby complying with section 65(1)(a) of the Public Finance Management Act.
4. Disallowances
The Committee notes with grave concern that disallowances consisting of overpayments and duplicate payments in respect of medical, compensation and pensions payments had increased by nearly 23% to more than R6,78 million, compared to the previous year.
The Committee strongly recommends that, as a matter of priority, management put in place effective control measures to prevent such payments, and that it submit to Parliament, by 30 April 2003, a report indicating the nature of those controls and their effectiveness.
5. Property plant and equipment
The Committee notes that there was a net difference of R1,01 million between the general ledger and the fixed assets register as at 28 February 2002, compared to the R1,24 million the previous year.
The Committee notes the Auditor-General's assurance that the difference had been identified, and welcomes his indication that it will be corrected in the following financial year.
6. Financial management structure of fund
The Committee notes that, in terms of the relevant legislation, the Director-General of Labour accepted the responsibility as the accounting authority of the Compensation Fund.
The Committee notes the Auditor-General's recommendation that, due to several practical difficulties being experienced, the Director-General should consider obtaining the required approval for appointment of the Compensation Commissioner as the accounting authority.
7. Information system environment
The Committee notes with grave concern that:
* Control weaknesses still exist in the control environment as a whole.
* The most significant control weakness is that a formal documented disaster recovery plan has still not been developed and implemented.
* There is no assurance that it would be possible to recover business activities in the event of a disaster.
The Committee therefore recommends that Auditor-General assess the adequacy of corrective action taken to rectify the weaknesses in the information system environment and report thereon in his next Report.
8. Control over fixed assets
The Committee is concerned that:
* Physical control over fixed assets is not effective.
* The disposal of assets were not recorded in the asset register.
* The incorrect classification of fixed assets has resulted in the understatement of depreciation.
The Committee recommends that Auditor-General, during the 2002-03 audit, assess the effectiveness/adequacy of corrective measures with regard to control over fixed assets and report thereon in his next Report.
9. Conclusion
Having considered the reasons for the qualified audit opinion expressed by the Auditor-General, and despite having noted various issues of concern which will be reported on, the Committee is nevertheless of the view that a hearing on the Compensation Fund for the financial year under review is not necessary.
Report to be considered.
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Fifteenth Report of the Standing Committee on Public Accounts, dated 25 February 2003:
The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor-General on the Financial Statements, of the Construction Sector Education and Training Authority [CETA] for the year ended 31 March 2002 [RP 136-02], tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
1. Audit opinion
The Committee commends the management for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions will be equally unqualified.
2. Emphasis of Matter
The Committee notes that the Auditor-General has cited various issues under "Emphasis of Matter" which need the urgent attention of management. The Committee comments on these issues in paragraphs 4 to 10 below.
3. Tabling of Annual Report
The Committee commends the management of CETA for having timeously tabled its Annual Report in Parliament, thereby complying with section 65(1)(a) of the Public Finance Management Act.
4. Recovery of levy payable by employers
The Committee notes that:
* Any levy which remains unpaid on the last day of payment thereof, may be recovered by instituting action in a magistrate's court.
* CETA or its collecting agents must obtain approval from the Minister of Labour to follow up the outstanding levies, but that such approval has not been received.
* CETA cannot collect current levies, except in terms of a determination issued by the Minister.
The Committee is concerned that there are a large number of outstanding levies which have not been followed up by CETA, and that this could result in losses to CETA if no effective debt recovery procedures are in place.
The Committee recommends that this matter be accorded the urgent attention it deserves, and welcomes the indication that additional information will be compiled by the staff of CETA, after consultation with the Auditor-General's Office, for presentation to Parliament.
5. Accumulated surplus funds
The Committee notes that:
* Surplus funds from operations for the period under review exceeded R4,5 million.
* Written approval should be obtained from National Treasury to retain the said surplus funds.
* Application for the above has been made, but CETA has not received a response yet.
The Committee recommends that CETA indicate to it whether they have received approval from National Treasury, and if not, why not.
6. Transfer of assets and liabilities
The Committee notes with concern that the transfer of assets amounting to more than R5,8 million and liabilities in excess of R4,2 million, belonging to the now abolished Building Industry Training Board (BITB) and the Building Industry Training Scheme (BITS), has not been finalised.
As this matter increases managerial and financial risk, the Committee recommends that the matter be finalised as a matter of urgency and that the Auditor-General report thereon in his next report.
7. VAT liability
The Committee notes that:
* An amount in excess of R1,38 million under current liabilities in the balance sheet represented grant levies when they were committed to projects.
* There is uncertainty on whether VAT should be paid when the liability is raised or when project claims are paid.
* As a result of this uncertainty, the timely payment of VAT could not be properly managed.
* A response from SARS to clarify the matter is still being awaited.
The Committee recommends that management resolve all the above issues raised by the Auditor-General, and that the Auditor-General report thereon in his next report.
8. Risk assessment
The Committee notes with concern that CETA did not conduct a full risk assessment for the year under review, as required by the PFMA and the Treasury Regulations of 2001.
The Committee notes that this non-compliance impacted negatively on the completion of a fraud prevention plan.
Having noted that the outsourced internal audit function had begun facilitating a risk assessment subsequent to the end of the financial year, the Committee recommends that the Auditor-General report thereon in his next report on CETA.
9. Audit Committee
The Committee notes that the composition and functioning of the Audit Committee was in accordance with the PFMA, but that it was not fully operational for the year under review, as it was only established during the year.
The Committee recommends that the Auditor-General report thereon in his next report.
10. Internal audit
The Committee notes that the internal audit function will only be fully operational during the next financial year, as it was established during the year under review.
The Committee recommends that the Auditor-General report thereon in his next report.
11. Conclusion
Having noted that some issues of special concern are being addressed, and as the report is unqualified, the Committee is of the view that a hearing on CETA for the year under review is not necessary.
Report to be considered.