Fifty- Seventh Report of Standing Committee on Public Accounts, dated
28 August 2003:
INTRODUCTION
The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the external auditors (H Moosa & Co) on the Financial Statements of the Africa Institute of South Africa for the year ended 31 March 2002,reports as follows:
AUDIT OPINION The Committee commends the management of Africa Institute of South Africa for the unqualified audit opinion expressed by the external auditors, and trusts that future audit opinions will be equally unqualified.
CONCLUSION
Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered
== Fifty-Eighth Report of the Standing Committee On Public Accounts, dated
28 August 2003:
Introduction The Standing Committee on Public Accounts, having considered the Report of the external auditors (Ernst & Young) on the Financial Statements of ARTSCAPE for the year ended 31st March 2002, reports as follows:
Audit Opinion The Committee commends the Management of ARTSCAPE for the unqualified audit opinion expressed by the external auditors, and trusts that future audit opinions will be equally unqualified.
The Committee, however, notes that the directors have raised several issues of concern.
Going Concern Because of uncertain future Government funding, there appears to be doubt about the entity’s ability to continue as a going concern.
Supplementary Information The schedule containing supplementary information was not audited, as they did not form part of the financial statements.
Conclusion Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Fifty- nine ReportNinth of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Commission on Gender Equality for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Commission on Gender Equality for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee also noted the following issues raised under Emphasis of Matter:
Provision for leave had not been provided for in the books of account;
Personnel expenditure amounted to 57 per cent in relation to the total operating expenditure;
Weaknesses in internal control, and
Non-compliance with laws and regulations.
The Committee expects the accounting authority to expeditiously rectify all the issues in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Sixtieth Report of the Standing Committee on Public Accounts, dated 28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Council on Higher Education for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Council on Higher Education for the unqualified audit opinion expressed by the Auditor-General, and trust that future audit opinions will be equally unqualified.
The Committee also noted the following issues raised under Emphasis of Matter:
The accounting authority had not established an internal audit section and had not facilitated a risk assessment for the period under review;
The executive committee of the council is also serving as the audit committee of the council, and
No approval from National Treasury was obtained to open new bank accounts and also did not deposit funds in excess of R1 million with the Corporation for Public Deposits.
The Committee expects the accounting authority to expeditiously rectify all the issues in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered
== Sixty -–oneFirst Report of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Disaster Relief Fund for the financial year ending 31 March 2002, reports as follows:
The Committee notes the qualified audit opinion expressed by the Auditor-General with concern.
The Committee also noted the issue raised under Emphasis of Matter where the accounting authority only submitted the financial statements on 25 September 2002 which had to be subsequently amended.
The Committee expects the accounting authority to expeditiously rectify the issue in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Report of the Auditor-General and noting the qualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Report of the Auditor-General.
Report to be considered.
== Sixty-two Second Report of the Standing Committee on Public Accounts, dated
28 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of English Museum Literature Museum for the year ended 31 March 2002, reports as follows:
2. AUDIT OPINION The Committee notes with concern the qualified audit opinion expressed by the Auditor General. SCOPA expects that Management will pay the necessary attention to those issues which resulted in a qualified opinion, so that future audit opinions will be unqualified.
3. QUALIFICATION
3.1 The Auditor-General’s Report is qualified on the following grounds:
In terms of GAAP, property, plant and equipment were not treated as assets and shown as such in the balance sheet.
Asset Registers were not properly kept of all assets and their values.
3.2 The Committee noted that the Director takes issue with the Auditor-General that no objections were registered by the Auditor General in the past to such a practice; and therefore rejected the finding. Irrespective of the facts of the issue, SCOPA insists on strict adherence to legislative prescripts relating to the management of assets.
4. EMPHASIS OF MATTER
The Auditor General also emphasized the following:
The Financial Statements were submitted for audit on 25 June 2002 and finally on 16 July 2002. These statements differed materially from the statements issued on 13 June 2002.
According to the Auditor-General the financial statements first submitted on 13 June 2002 differed materially from the amended statements submitted on 25 June and 16 July 2002 largely because provision was not made for leave.
Internal Audit: neither an Internal Audit system nor an Audit Committee exists as required in terms of PFMA.
The Director is required to furnish particulars of the corrective steps taken to rectify the issues raised in the Auditor General’s Report within 60 days after the tabling of this report to Parliament.
5. CONCLUSION Having considered the Annual Report, and noting the qualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary except for the matters highlighted above for the financial year under review.
Report to be considered.
== Sixty-threeThird Report of the Standing Committee on Public Accounts, dated 28 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on Foundation for Education, Science and Technology for the year ended 31 March 2002, reports as follows:
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.
CONCLUSION Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Sixty- fFourth Report of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Legal Aid Board for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Legal Aid Board for the unqualified audit opinion expressed by the Auditor-General, and trust that future audit opinions will be equally unqualified.
The Committee also noted the following issues raised under Emphasis of Matter:
No evaluation of the Associated Institutions Pension Fund was performed at 31 March 2002;
Inefficiencies in internal control systems and procedures such as undetected duplicate payments;
It was not possible to determine the extent to which the results and cash flow information for the year under review may have been affected by any possible misstatement of closing balances at 31 March 2001;
It was not possible to determine the financial impact of pending litigation against the accounting authority, and
Non-compliance with the VAT Act, the Legal Aid Guide and the PFMA.
The Committee expects the accounting authority to expeditiously rectify all the issues in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered
== Sixty -fFivefth Report of the Standing Committee on Public Accounts, dated
28 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on National Film And Video Foundation for the year ended 31 March 2002 (RP193/2002), reports as follows:
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.
CONCLUSION Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered
== Sixty- sSixth Report of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the National Home Builders Registration Council for the financial year ending 31 March 2002, reports as follows:
The Committee notes the qualified opinion expressed by the Auditor-General with concern.
The Committee also noted the following issues raised under Emphasis of Matter:
An amount of R1 300 000 relating to penalties and interest for the late submission of VAT returns, is regarded as fruitless expenditure;
Various weaknesses in internal control, and
Non-compliance with laws and regulations.
The Committee expects the accounting authority to expeditiously rectify all the issues in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the qualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Sixty-sSeventh of the Report Standing Committee on Public Accounts, dated 28 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of The National Museum Bloemfontein for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee notes the unqualified audit opinion expressed by the Auditor General and trusts that the future audit opinions will be equally unqualified.
EMPHASIS OF MATTER The Committee notes that the Auditor General has cited several issues under Emphasis of Matter that need Management’s attention, as follows:
Financial position The Committee notes that:
The financial position of the museum has deteriorated with the result that it was unable to fund all its research projects.
Over the past two years the accumulated reserves decreased as this was used to fund current expenditure.
Apart from 39 vacancies including, that of heads of department 7, more posts became vacant; Mainly due to lack of funds.
Museum employees received no salary increases over the past three years.
The committee notes that the State subsidy amounted to R10.69 million; that salaries totaled R6.666 million, that about R2 million contributions to Personnel Funds and that the museum generates very little funds on its own.
The Committee recommends that a progress report on how these matters are being addressed be submitted to Parliament within 60 days after tabling of this report in Parliament and that the Auditor General report thereon in his next Report.
CONCLUSION Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with entity would be necessary except for the matters highlighted above for the financial year under review.
Report to be considered.
== Sixty- eEighth Report of the Standing Committee of Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the South African Institute for Drug-free Sport for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the South African Institute for Drug-free Sport for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee also noted the issue raised under Emphasis of Matter where the accounting authority is still not registered for income tax purposes and neither was written clearance obtained from the South African Revenue Services in this regard.
The Committee expects the accounting authority to expeditiously rectify the issue in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Sixty-nNine thth Report of the Standing Committee on Public Accounts, dated
28 August 2003:
Introduction The Standing Committee on Public Accounts, having heard and considered evidence on the Annual Report, including the Report of the Auditor-General on the Financial Statements of the SA Revenue Services for 2001-2002 (Administered Revenue, and Own Accounts), tabled in Parliament on 25 September 2002, reports as follows:
Audit opinion, (par 3, page 44) The Committee has noted the progress made by the SARS in improving its business processes, including internal controls, especially the success of the Siyakha transformation programme in provinces like Kwazulu-Natal and the Western Cape. The Committee keenly await the results of the programme in other provinces.
However, the Committee noted with concern the qualified audit opinion issued by the Auditor-General with respect to the Administered Revenue owing to certain shortcomings in internal controls. The Committee therefore decided to examine the following specific matters during its hearing with the Accounting Authority (the Commissioner of SARS) on 19 March 2003.
Assurance process, (par 3.1, page 44)
The Committee took note of the progress reported on by the Commissioner, including the implementation of an automated system for the processing of reconciliations.
The Committee recommends that Parliament be provided with - a target date for the full implementation of the automated system;
detail on how full implementation at all offices will be ensured;
detail on the interim measures that will apply before the automated process is implemented at the various offices.
The Committee further recommends that the Auditor-General should comment on the process of implementation after the 2003/2004 audit.
Supporting documentation, (par 3.3, page 45)
The Committee took note of problems experienced regarding control over tax records at a number of branch offices. The Commissioner reported that an electronic document management system was to be introduced to resolve the problem.
SCOPA recommends that Parliament should be provided with a timeframe and action plan for the implementation of the Electronic Document Management System. In addition, in his report for 2003-2004, the Auditor-General should report on the interim measures applied and the impact thereof on the availability of documents by the Compliance Division.
Penalties, (par 3.4, page 45)
The Committee noted that -
the Commisioner had issued a guideline regarding penalties to be charged on certain outstanding duties in order to ensure that the correct interest will be calculated, and
extensive training interventions have taken place.
The Committee recommends that the Commissioner provide assurance that this area of risk is being adequately monitored for improvement, for example through the implementation of an effective measuring or monitoring tool of some kind. An indication should also be provided of how the prevalence of this weakness will be reduced over the next few years, for example through the monitoring of compliance with the legal framework, guidelines and controls.
Revenue not recognised - Tax evasion (par 1.4, page 52) The Committee noted the SARS’ medium to long term plans regarding tax evasion, and that it was developing its capabilities in this regard. The Committee was encouraged by the intention of measuring the "tax gap", which may include the use of an automated risk profiling system.
The Committee recommends that Parliament should be provided with a report on the:
feasibility of measuring the tax gap;
success so far in measuring the gap; and
mechanism for assessing progress and initiating improvement actions.
The Committee further recommends that the SARS seriously consider making the measurement of the tax gap one of its measurable performance objectives in terms of which it will report in its annual report in future.
Sureties The Committee took note of:
the development of a holistic credit management approach (to be completed later in year); and
attempts to ensure appropriate required levels of surety.
The Committee recommends that the Auditor General comments on the progress made with the implementation of the standardised approach for sureties after the 2003/2004 audit.
Bank reconciliations (par 5.2.3, page 46) SCOPA took note of the significant progress made with respect to the implementation of proper reconciliation processes, and that the process was ongoing. The Committee was further informed that the SARS was implementing a new enterprise resource management system (computer information system).
The Committee recommends that Parliament should be provided with a bi-annual progress report within 60 days after tabling of this report in Parliament, in terms of project implementation milestones and target dates, on the implementation of the new enterprise resource management system.
Computer audit (par 5.2.4, page 46)
The Committee was informed that the SARS was confident that all computer systems would be stable and reliable within 18 months.
The Committee recommends that the SARS confirm the timeframes envisaged for implementing acceptable levels of control in the various systems before the end of 2003/2004.
The Committee further recommends that the Auditor General report on the progress made within the computer environment with respect to the 2003- 2004 audit.
Assets [Par 4.1.1(ii), page 59 ]
The Committee was informed that the SARS now reconciles its fixed asset register and General ledger on a monthly basis.
Furthermore, that policies on the movement of assets have been enhanced, specifically with regard to large-scale movement of assets that occur as a result of transformation activities.
Note: The Auditor General will audit fixed assets as a routine part of the 2002-2003 audit, and report
accordingly.
Accrual basis of accounting [Par 4.1.1(ii), page 59 ]
The Commissioner assured the Committee that although it was not a simple exercise, SARS was committed to the successful implementation of generally accepted accounting practice as required by the Public Finance Management Act, 1999 (Act No. 1 of 1999).
The Committee recommends that Parliament be provided by with a progress report on the plan for migrating from the cash basis of accounting to accrual accounting furnished within 60 days after tabling of this report in Parliament by the Accounting Authority.
Audit Committee & internal audit function The Committee noted that according to the SA Revenue Services Act the Commissioner did not need to include a separate report from the Audit Committee. However, SARS was reminded that the PFMA requirements override any other legislation and this would include the SARS Act.
The Committee recommends that Parliament be provided with a brief report by the Chairperson of the Audit Committee on the three-year rolling internal audit plan that has been approved by the Audit Committee.
SCOPA visits to border posts in Cape Town (harbour and airport) Based on the various findings by the Committee during its visits to the border posts at the Cape Town harbour and international airport (see SCOPA's 17th Report for 2003), the Committee recommends that Parliament be provided with a high level summary of the SARS’ improvement action plans on the various risk areas at border posts linked to target dates. The summary must include detail on -
the optimum level of inspection aimed at, seeing that the current level of inspection is seems unacceptably low at present; and
the effective utilisation of modern technology such as the scanning equipment recently installed at the Durban harbour.
Conclusion SARS should provide Parliament with a bi-annual progress report, within 60 days after tabling of this report in Parliament, on all the above-mentioned matters together with the comments of the Audit Committee thereon.
Report to be considered.
== Seventieth Report of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the South African Sports Commission for the financial year ending 31 March 2002, reports as follows:
The Committee notes the qualified opinion expressed by the Auditor-General with concern.
The Committee also noted the following issues raised under Emphasis of Matter:
Non-adherence to PFMA requirements as the audit committee of the accounting authority did not function during the year under review;
The internal audit function was not maintained throughout the year as required by the PFMA, and
Non-compliance with various laws and regulations.
The Committee expects the accounting authority to expeditiously rectify the issues in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the qualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Seventy-one First Report of the Standing Committee on Public Accounts, dated 28 August 2003._ The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Special Investigating Unit for the financial year ending 31 March 2002, reports as follows:
The Committee notes the qualified opinion expressed by the Auditor-General with concern.
The Committee also noted the issue raised under Emphasis of Matter. Conflicting judgements were passed by the President of the Special Tribunal and the Full Bench of the High Court of the Eastern Cape Division regarding actions being instituted on behalf of the State by the Special Investigating Unit.
The Committee expects the accounting authority to expeditiously rectify the issue in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noted noting the qualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Seventy- twoS econd Report of the Standing Committee on Public Accounts, dated 28 August 2003:
INTRODUCTION
The Standing Committee on Public Accounts, having considered the Report of the Auditor General on the Financial Statements of the Tourism, Hospitality and Sport Education and Training Authority [THETA] for the year ended 31March 2002, tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
TABLING OF ANNUAL REPORT The Committee commends the Management of THETA for having timeously tabled its Annual Report, thereby complying with requirements of the Public Finance Management Act.
AUDIT OPINION The Committee noted with concern the qualified audit opinion expressed by the Auditor General. The Committee also noted that in his Chairperson’s Report, the Chairperson indicated that the concerns raised in the Auditor General’s Report were being addressed. The Committee therefore heard evidence from the Chairperson and CEO of THETA on 02 April 2003, and wishes to report the more salient issues as follows:
FUNCTIONING & EFFECTIVENESS OF THE BOARD During the hearing it was confirmed that the Board of THETA is the legal accounting authority in terms of section 49 of the PFMA. It transpired that in the past the CEO had taken certain decisions on his own, e.g. regarding salary increases, without the approval of Remuneration Committee. Approval of the Board was not obtained either. The Board instituted disciplinary action against the CEO, but he resigned before the finalisation.
The salary package of the CEO at Theta is more than those of other SETA CEO’s. The salary structure of the Health Industry Training Board was the predecessor to THETA, and its salary structure was inherited. Currently, the Board has restructured the salary structure to be in line with other SETAs and market related.
SCOPArecommendsthat:
The Auditor General makes a comparison of the salary levels of all SETAs and report thereon in respect of the 2002-2003 financial year.
The Chairperson provides SCOPA with the framework or guidelines on the restructured salaries.
The Committee further notes that although the Board has disciplinary procedures in place for not-attending the Board meetings, the attendance of Board's meeting is poor and that the Board has been reluctant to take action against absentees members.
The Committee was informed of the recent restructuring of the Board’s subcommittees in line with best practice advocated by the second King Report on Corporate Governance. For example, the Chairperson and Vice-Chairperson are no longer members of the Remuneration Committee. THETA also reported that its policy regarding declaring conflict of interests had been strengthened.
The Committee notes that functions of the CEO are in the process of being delegated; there are revised expenditure limits, e.g. in terms of new procurement policy, and compliance with the PFMA has been made a specific focus area of the internal auditors.
From correspondence received, the Committee notes that THETA is currently capacitating the Board on issues of governance and leadership. The Committee recommends that information on this matter be forwarded to SCOPA within 60 days after tabling of this report to Parliament.
The Committee further recommends that –
The Board continues with various improvement measures, that may include appropriate action against non-attending members;
The Department indicates how the effectiveness of boards of training authorities is measured; and
The Auditor-General pays particular attention to the governance aspects of the Board during the 2002/2003 audit.
AUDIT COMMITTEE & INTERNAL AUDIT The Committee was encouraged to learn that the Audit Committee met approximately eight times during the year under review. However, the Audit Committee was not satisfied with the adequacy of internal control as well as the quality and functioning of the internal audit division, which failed to produce a three-year rolling plan.
The Committee welcomes the Chairperson’s assurance that the issues of non-compliance cited by the Auditor General have been noted, and that significant progress has been made since towards addressing the requirements.
The committee recommends that:
The Theta Board pays particular attention to the internal audit capacity, effectiveness and its usefulness to the CEO and Board. Significant progress must urgently be made so that the Auditor-General can rely on the work of the internal auditors with respect to the 2003/2004 financial year.
The Auditor-General should report with respect to the audit for 2003/2004 financial year-end whether reliance could be placed on the work of internal audit.
EXCEEDING OF 10% ADMINISTRATION COST THRESHHOLD (par 3.4 on page 10 of annual report)
The Committee noted that THETA had exceeded the administration threshold of 10%, as stipulated in the Skills Development Act, by R2,63 million, which is 4,18% more than the prescribed threshold.
The Committee was informed that in terms of the regulations issued in terms of the Skills Development Act, No. 97 of 1998, Small & Medium Enterprises (SME’s) are excluded from the levy payment requirement, but the SME’s are included in the THETA mandate. THETA thus argued that its levy income was not sufficient to remain within the 10% limit.
However, Theta confirmed that –
During the year under review, there had been unnecessary administration costs incurred by their employees;
Budgetary monitoring and control had not been up to standard.
The Committee was informed that various steps had been taken to address the situation, amongst others that -
steps had been taken to ensure better control in future;
unnecessary contracts with consultants had been cancelled;
salaries have been adjusted in line with other SETA’s; and
non-value adding or unnecessary expenditure on travel and communication costs has also been eliminated.
SCOPA requests a more detailed breakdown of administrative costs for the year under review further to the note 6 in the financial statements, and that these administrative costs be submitted to Parliament within 60 days after tabling of this report in Parliament.
SCOPA recommendsthat THETA, like all SETAs, should ensure that budgets comply with the 10% benchmark, and expenditure monitoring and control mechanisms be in place to ensure compliance.
UNAUTHORISED AND IRREGULAR LOANS GRANTED (par 3.2 on page 10 of annual reports
The Committee notes with grave concern that the former Chief Executive Officer granted unauthorised and irregular loans to himself and to a consultant contrary to the approved policies and procedures.
Disciplinary proceedings were taken against the former CEO, but the Board agreed to accept a final settlement whereby the unauthorised loans plus interest, as well as personal expenditure on the THETA credit card, were recovered.
Subsequent to the hearing, the Committee had sight of the termination agreement with the former CEO. It appears that THETA had little choice other than to accept the terms of the settlement. However, SCOPA is concerned about the seemingly lenient terms of the contract. It therefore recommends that future contracts with senior managers should be tightly framed to exclude terms unacceptable in a public sector environment, such as 24 months termination periods; and perks such as payment of a home telephone and the use of a company credit card, especially with respect to personal purchases.
The Committee further recommends that the Department of Labour provide assurance to Parliament that guidelines or minimum requirements for contracts of employment of senior managers, as well as their termination agreements, with respect to all the training authorities exist or will be implemented.
COMPLIANCE WITH CRITERIA FOR GRANT DISBURSEMENT TO EMPLOYEES (par 5.1.2 on page 11 of annual report)
The Committee was told that THETA lacked the capacity to visit employers. This resulted in an amount of R13, 4m being paid to employers during the year under review without any inspections, or reviews of performances carried out in order to ensure that employers had complied with the criteria as set out for the disbursement of grants for skills development.
THETA informed the Committee that a system had been implemented that would identify major issues, address the backlog, improve the organisation by identifying all relevant organisations in a proper database in line with the standards required.
The Committee recommends that the Board ensure that the employers comply with the criteria set out in the Skills Development Act.
It was also reported that the Chairperson had applied for exemption from the requirement that surplus funds had to be deposited with the Corporation for Public Deposits. The Committee recommends that THETA provides it with the rationale behind the required exemption.
Report to be considered.
== Seventy-three ofT hird of the Standing Committee on Public Accounts, dated
28 August 2003: The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Water Research Commission for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Water Research Commission for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee also noted the issue raised under Emphasis of Matter where National Treasury did not grant exemption to the accounting authority to invest some of their surplus funds (R29 400 166) with investment institutions other than the Corporation for Public Deposits.
The Committee expects the Chief Executive Officer to expeditiously rectify the issue in question. The Committee will await the Report of the Auditor-General on the follow-up audit work in this regard.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Seventy-fFourth Report of the Standing Committee on Public Accounts, dated 28 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of William Humphrey Art Gallery for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee notes the qualified audit opinion expressed by the Auditor General with concern. The Committee trusts that Management will pay the necessary attention to those issues, which resulted in a qualified opinion, so that future audit opinions will be unqualified.
QUALIFICATION The issues of concern that lead to qualification are as follows:
Audit of financial statements - Fixed assets not capitalised Fixed assets were written off against the income fund in the year they were purchased.
The total acquisitions for the year were as follows:
Computer equipment =R9, 472 .81
Telephone Systems = R11, 925.90
Fixed assets were not capitalised under assets in the balance sheets and written off over the expected life of each category of asset, and consequently no asset registers were kept.
EMPHASIS OF MATTER The Committee notes that the assets of William Humphrey Art Gallery were not insured against theft. If losses had occurred it could have had a major financial implication for the entity.
The Committee however notes that the matter referred to in par 3 above had been rectified with effect from July 2002.
CONCLUSION Having considered the Annual Report and the corrective steps taken, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Seventy-Fifth Report of the Standing Committee on Public Accounts, dated 3 September 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Council for Geoscience for the year ended 31 March 2002 (RP128/2002), tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the Director of the Council for Geoscience for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions shall be equally unqualified.
EMPHASIS OF MATTERS The Committee noted that the Auditor-General has cited two matters of emphasis affecting the financial statements. These are commented upon in paragraphs 4 and 5 below.
TRANSFER OF PROPERTY TO THE COUNCIL The Committee notes that certain land and buildings have not yet been transferred to the Council in terms of section 26 of the Geoscience Act of 1993, and that although the Department of Public Works has indicated that the process was in progress, the matter has not yet been finalised.
The Committee recommends that the Auditor-General report thereon in his next Report.
CASH INVESTMENTS The Committee noted with concern that no provision had been made for the possible loss of R366 633 in respect of an investment made with the New Republic Bank.
The Committee trusts that the Council has rectified the matter in its Financial Statements for 2002/2003, and that the Auditor-General's Report thereon in his next Report.
CONCLUSION The Committee, having considered the Report of the Auditor-General, and noting the unqualified audit opinion expressed, is of the view that no further interaction with the Council for Geoscience would be necessary for the financial year under review.
Report to be considered.
== Seventy-Sixth Report of the Standing Committee on Public Accounts, dated 3 September 2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the Council for Mineral Technology (MINTEK) for the year ended 31 March 2002 (RP92/2002), tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the CEO of MINTEK for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions shall be equally unqualified.
MATTERS OF EMPHASIS
Segregation of Duties The Committee noted with concern that the payroll function was under the direct control of the Human Resources department.
The Committee recommends that in order to ensure the effective segregation of duties, serious consideration should be given to the Finance department administering the payroll function.
CONCLUSION Having considered the Report of the Auditor-General, and noting the unqualified audit opinion, the Committee is of the view that no further interaction with MINTEK would be necessary for the financial year under review.
Report to be considered
== Seventy-Seventh Report of the Standing Committee on Public Accounts, dated 3 September2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor General on the Financial Statements of Vote 3: Foreign Affairs, and of the African Renaissance and International Co-operation Fund for the year ended 31 March 2002 [RP206/2002], tabled in Parliament on 11 October 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the Management of the Department of Foreign Affairs for the unqualified audit opinion expressed by the Auditor General in respect of both Foreign Affairs and the African Renaissance and International Co-operation Fund, and trusts that future audit opinions shall be equally unqualified.
TABLING OF ANNUAL REPORT The Committee notes with great concern that in terms of the Auditor-General’s Special Report relating to the delays in tabling Annual Reports, the Annual Report and Financial statements of the Department were tabled in Parliament on 11 October 2002, thereby constituting non-compliance with relevant section of the PFMA
EMPHASIS OF MATTER The Committee notes that under Emphasis of Matter for both the Vote and the Fund, the Auditor General has raised several issues of concern, which need attention of Management, and on which the Committee makes comments/recommendations in points 5, 6,7,8,9 and10 below.
TREASURY REPLIES The Committee notes that Treasury Replies dated 14 October 2002 to SCOPA’s Ninth Report for 2002 were received by the Committee.
The Committee notes that the Department has transferred all monies that were standing as a credit in the previous Economic Co-operation Promotion Loan Fund Account to the African Renaissance and International Co-operation Fund; and, that all loans that were granted from the former Loan Fund have been transferred and recorded against the new Account.
The Committee notes with concern that the Department has not responded to the issue of long term loans raised in SCOPA’s Ninth Report for 2002. Since the Auditor General has again raised this issue of concern under Matters of Emphasis for the financial year under review, the Committee deals with the matter under point 10 below, but requests the department to furnish reasons to SCOPA as to why it had not addressed the issue in the Treasury Reply.
RECEIVABLES – INTERDEPARTMENTAL BALANCES The Committee is concerned that amounts owed by various National and Provincial departments in respect of agency services have been disputed by some departments; and that although the Department made provision for an amount of R50m in respect of possible disputed agency services claims, confirmations received from some of the departments indicated that the differences might be in excess of R150m on interdepartmental balances disclosed on their financial statements.
The Committee notes that the Department has taken steps to resolve the amounts owing by the other departments, and has an agreed process with the departments to verify the disputed amounts.
The Committee recommends that:
the Department resolves the matter with other departments as speedily as possible;
a progress report on the matter be furnished to Parliament within 60 days after tabling of this report in Parliament and,
the Auditor General reports thereon on his next Report on Foreign Affairs.
UNAUTHORISED EXPENDITURE The Committee notes that certain unauthorized expenditure in respect of previous financial years has not yet been approved.
The Committee is in the process of engaging the Department of Foreign Affairs and the Auditor General on the matter with the view to finalizing and clearing the unauthorized expenditure for previous years.
COMPUTER AUDIT The Committee notes with concern that a computer audit of the general controls at the Department indicated that although some controls were in place, significant weaknesses existed in the control environment as a whole.
The Committee also notes with concern that a computer audit of the application controls within the foreign currency system indicated a number of weaknesses, which could compromise the system of internal control and data integrity.
The Committee notes and welcomes the fact that the Office of the Auditor General has issued a detailed Management Report in respect of the above matters to the Department.
The Committee therefore recommends that:
the Department indicates the nature and impact of the corrective steps it intends to take to rectify the situation; and,
the Auditor General report thereon in his next Report.
SUBMISSION OF SUPPORTING DOCUMENTATION The Committee notes with serious concern that, although the Department had offered its full co-operation in furnishing supporting documentation, the remaining documents required for audit purposes were only submitted on 12 August 2002.
Consequently, the Auditor General was unable to fulfill his reporting responsibility within the prescribed period, which elapsed on 31 July 2002.
The Committee views non-compliance with prescripts of the PFMA in a serious light, and directs the attention of the accounting officer to Section 41 of the PFMA.
The Committee recommends that the relevant sections of the PFMA be strictly adhered to all times.
INTEREST ON INVESTMENTS The Committee notes that in terms of the African Renaissance and International Co-operation Fund Act of 2000, "any money in the Fund which is not required for immediate use must be invested by the Director General", and that the Fund consists of "interest derived from any investment of money standing to the credit of the Fund".
The Committee notes with concern that money invested with the Corporation for Public Deposits did not earn interest for the period 22 January to 31 July 2001, and that the potential interest amounts to R12m.
The Committee notes the efforts made by the Department to resolve the matter, and that the matter has now been referred to the Department’s Legal Advisors for their opinion and guidance.
The Committee recommends that:
the Department furnish SCOPA with a report on the matter, once the legal advisors have expressed their opinion; and,
the Auditor General reports thereon in his next Report.
LONG TERM LOANS The Committee notes with concern that there are various long-term loans with installments in arrears; that no installments were received on these loans; and that the amount in areas has increased from R23, 13m in 1999/2000 to R26, 9m in 2000/2001 and to R30, 6m for the financial year under review.
Although the Committee notes the Auditor General’s indication that it seems unlikely that these loans will be recovered, the Committee recommends that the Department submits a report to Parliament within 60 days after tabling of this report in Parliament indicating the age analysis of the various loans, and the nature of the measures it has taken or intends taking to recover the installments in arrears.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinions on both Reports, it is the view of the Committee that no further interaction would be necessary except for the matters as matter highlighted for the financial year under review.
Report to be considered
== Seventy-Eighth Report of the Standing Committee on Public Accounts, dated 3 September 2003. The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Department of Health for the financial year ending 31 March 2002 and having heard evidence on 6 November 2002 from the Accounting Officer as well as certain papers referred to it, reports as follows:
The Committee notes the qualified opinion expressed by the Auditor-General with concern.
Noting the above, however, the Committee wishes to bring the following to the attention of the Accounting Officer:
Reversal of stale warrant voucher (Par 3.1, page 121 of AR) It was reported that the Department issued a warrant voucher amounting to R20 million to the South African National Aids Trust as per approval in the 2000/01 financial year. It was later discovered that the trust deed of the South African National Aids Trust had not been finalised at the time of effecting the payment and that finalisation thereof was expected to take place early in the 2001/02 financial year.
However, the warrant voucher had become stale but had not been cancelled and the relevant accounting entries reversed.
Conditional Grant (Par 5.1.1, page 122 of AR) In terms of section 38(i) of the PFMA, the Accounting Officer must ensure that the provisions of the Division of Revenue Act, 2001 (Act No. 1 of 2001) (DORA) are complied with when transfer of funds takes place. The Committee took note that the Department does not have a framework in place to monitor the conditional grants transferred to the various provinces, and expressed its concern.
The Committee also took note of the Department’s frustration and administrative burden that accompanies compliance with the DORA’s monitoring framework. However, the Department may not use National Treasury as a scapegoat for its inefficiencies and inability to fill vacant positions that often result in capacity problems and lack of monitoring conditional grants. The Department should consider reprioritizing its budget to be in line with its mandate if the Department concurs with SCOPA that service delivery is a national priority.
Donor funding [Par 5.1.3(b), page 123 of AR] An amount of approximately R32,7 million, which was made up of a donation of R68 583 and the balance being interest earned on other donations which were withdrawn by the Department, was available to the Department in the Reconstruction and Development Fund at 31 March 2002. However, there was some uncertainty as to whether the interest earned should be claimed by the Department or whether this interest should be refunded to the relevant donors.
The Committee notes the comments made by the Accounting Officer that donations reflected in the RDP Fund register are not necessarily available for utilisation by the Department.
Having noted the above, the Committee will follow up on these matters when reviewing the 2002/03 audit report on those matters that was still not resolved.
Report to be considered
== Seventh- Ninth Report of the Standing Committee on Public Accounts, dated
3 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (KPMG Inc.) on the Financial Statements of Industrial Development Corporation for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee commends the management for the unqualified audit opinion expressed by the External Auditors, and trusts that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Eightieth Report of the Standing Committee on Public Accounts, dated 3 September 2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor General and Financial Statements of Insurance Sector Education and Training Authority for the year ended 31 March 2002, reports as follows:
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.
CONCLUSION
Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Eighty-First Report of the Standing Committee on Public Accounts, dated 3 September 2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of the National Electricity Regulator for the year ended 31 March 2002, tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the Board and the CEO of the National Electricity Regulator for the unqualified audit opinion expressed by the Auditor-General, and trusts that future audit opinions shall be equally unqualified.
EMPHASIS OF MATTER The Committee notes with concern that the Chairperson of the Audit Committee was also engaged in consultancy services with the audit firm, which conducted the internal audit function for the National Electricity Regulator.
The Committee expects the Accounting Officer to expeditiously rectify the issue in question.
CONCLUSION Having considered the Report of the Auditor-General, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the National Electricity Regulator would be necessary for the financial year under review.
Report to be considered.
== Eighty-Second Report of the Standing Committee on Public Accounts, dated 3 September 2003.
INTRODUCTION The Standing Committee on Pubic Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of Vote 7: National Treasury for the year ended 31 March 2002, [RP 176/2002], tabled in Parliament on 23 September 2002 and referred to it, reports as follows.
AUDIT OPINION The Committee commends the Director-General and the Management of the Department for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions will be equally unqualified.
TABLING OF ANNUAL REPORT The Committee notes that by tabling the Annual Report on the 23 September 2002, the Department has not complied with relevant section of the PFMA
EMPHASIS OF MATTER The Committee notes that under Emphasis of Matter, the Auditor General has raised several issues, some of which need the attention of Management, and on which the Committee makes comments and recommendations in points 5,6,7 and 8 below.
AUDIT COMMITTEE The Committee notes that the Audit Committee met for the first time on 24 May 2002, and it is currently in the process of finalising the Audit Committee mandate and the Audit Charter.
The Committee recommends that:
SCOPA be furnished with an indication as to when the mandate and the Charter will be finalised; and,
SCOPA be furnished with the Minutes of the Audit Committee’s first meeting within 60 days after tabling of this report in Parliament.
INTERNAL AUDIT The Committee notes that the Department had been exempted from Treasury Regulation 3.2.3, requiring them to establish an internal audit unit, until 30 April 2003.
The Committee notes the Department’s decision to outsource the internal audit function, and that the outsourcing has now been finalised.
CONTROL OVER ASSETS The Committee notes with concern that although the Department has performed a complete asset count during the year under review, serial numbers had not been allocated to assets for identification purposes, and that assets had not been assigned to specific purposes.
Consequently, it was not possible for the office of the Auditor General to verify the completeness and accuracy of the asset register.
The Committee welcomes the indication by the Department that it is in the process of compiling a new asset register, which will address the problems outlined above.
The Committee recommends that the Department indicates to Parliament within 60 days after tabling of this report in Parliament when the new asset register will be finalised, and that the Auditor-General report thereon in his next Report.
SPECIAL PENSIONS BOARD The Committee notes that in terms of section 9 of the Special Pensions Act of 1996, the Department has the responsibility of administering the payment of benefits to beneficiaries who qualify in terms of the above Act, and that these payments amounted to R338, 6m for the financial year under review as compared to R128, 8m for the previous year.
The Committee notes, however, that the Special Pension Board is the accounting authority, and therefore audited separately from the Department.
The Committee notes with concern that the Annual Report of the Special Pensions Board has not been tabled as yet.
The Committee recommends that the matter of listing of Special Pension Board as a public entity should be attended to as a matter of urgency.
GENERAL MATTERS From the Management Report and from the Notes to the Annual Financial Statements, the Committee notes several issues of interest and/or concern. These are commented on in points 10, 11, 12 and 13 below.
CORPORATE GOVERNANCE ARRANGEMENTS The Committee notes from the Management Report that a risk assessment process was concluded during April 2002 and a final report was expected by June 2002; and that a fraud prevention plan will be developed as soon as the internal audit function is established, including the establishment of a Fraud Prevention Committee, which will develop and maintain the Treasury’s fraud prevention strategy.
The Committee recommends that a progress report on these matters be submitted to Parliament within 60 days after tabling of this report in Parliament, and that the Auditor General report thereon in his next Report.
CAPACITY CONSTRAINTS The Committee notes with concern that there is a general dearth of skilled expertise in the economic and financial fields that are central to National Treasury’s work.
The Committee commends the Department for being pro-active on the matter by developing an active recruitment campaign to acquire the skilled personnel required; and that it makes extensive use of intensive training and development programmes both nationally and internationally.
What is not known to the Committee is the impact of the above measures on the acquisition of the skilled personnel required by Treasury.
The Committee therefore recommends that the Department submits a report to Parliament within 60 days after tabling of this report in Parliament.
PROFESSIONAL AND SPECIAL SERVICES The Committee notes that the Department acquired professional and special services amounting to R260, 2m during the financial year under review; and that of this amount, R210, 9 (or 81%) has been classified as "Other".
The Committee recommends that the Department furnish a detailed account of what constitutes "Other" to Parliament within 60 days after tabling of this report in Parliament. UNAUTHORISED EXPENDITURE The Committee notes that certain unauthorised expenditure in respect of previous financial years has not yet been approved.
The Committee is in the process of engaging the National Treasury and the Auditor General on the matter with the view to finalising and clearing the unauthorised expenditures for previous years.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction would be necessary except for the matters highlighted above for the financial year under review.
Report to be considered.
== Eighty-Third Report of the Standing Committee on Public Account, dated
3 September 2003 The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Office of the Public Protector South Africa for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Public Protector for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Accounting Officer on matters, which according to the Committee needed attention.
Having considered the written replies, the Committee is satisfied that the Accounting Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Noting the above, however, the Committee wishes to bring the following to the attention of the Accounting Officer:
UNAUTHORISED EXPENDITURE The Committee notes the unauthorised expenditure of R640 118 due to the over-expenditure in relation to the Office budget.
With effect from 1 April 1999, the former Ombudsman’s Office in the North West Province was incorporated into the Office of the Public Protector. As the Ombudsman’s Office was a fully operational office with 37 staff members on its establishment, a budget of approximately R5 million was needed in addition to what was approved for this Office in order to meet all expenditure. At the time of take over, no additional funds were made available.
During the adjustment budget vote hearings, the Office of the Public Protector forwarded a submission to National Treasury requesting that an additional R4,7 million be made available in order to provide for all unbudgeted financial obligations relating to the take over. Unfortunately, the Office was unsuccessful in its request.
Furthermore, the amount in question was to have been committed against the budget for the 1998/1999 financial year. The department, however, processed the payment in the wrong financial year 1999/2000 and the matter was brought to their attention for the purpose of rectification.
The Committee further noted that the expenditure is regarded as unauthorised owing to certain procedural contravention of Treasury directives. As the contravention was of a technical nature, the services were rendered and the State suffered no loss, the Committee therefore recommends that the amount be authorised by Parliament.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the Public Protector, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Eighty-Fourth Report of the Standing Committee on Public Accounts, dated 3 September 2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (KPMG Inc) on the Financial Statements of SASRIA Limited for the year ended 31 December 2002, tabled in Parliament on 06 June 2003 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the management of SASRIA for the unqualified audit opinion expressed by the Auditors, and trusts that future audit opinions shall be equally unqualified.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with SASRIA Limited would be necessary for the financial year under review.
Report to be considered.
== Eighty-Fifth Report of the Standing Committee on Public Accounts, dated 3 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (PricewaterhouseCoopers Inc and MSGM Masuko Jeena Inc) on the Financial Statements of the South African Nuclear Energy Corporation Limited (NECSA) for the year ended 31 March 2002, tabled in Parliament on 30 August 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the Board of Directors and the CEO of NECSA for the unqualified audit opinion expressed by the Independent Auditors, and trusts that future audit opinions shall be equally unqualified.
MATTERS OF IMPORTANCE The Committee notes that:
The Government has undertaken to provide the necessary funds as and when long-term loans to the amount of R243,4 million were to be redeemed;
The Government has accepted responsibility to provide the necessary funds for the decontamination and decommissioning of certain strategic plants and national facilities after shutdown, but that this liability could not be estimated at that stage; and that
The Corporation has undertaken to contribute certain medical aid contributions of employees after retirement, but that the liability of R167,7 million has not been provided for in the annual financial statements, as Government has undertaken to finance the expense concerned on an annual cash requirement basis.
CONCLUSION Having considered the Report of the Independent Auditors, and noting the unqualified audit opinion, the Committee is of the view that no further interaction would be necessary with NECSA for the financial year under review.
Report to be considered.
== Eighty-Sixth Report of the Standing Committee on Public Accounts, dated 3 September2003
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor General on the Financial Statements of South African Tourism for the year ended 31 March 2002, reports as follows:
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.
CONCLUSION
Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Eighty-Seventh Report of the Standing Committee on Public Accounts, dated
10 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report and Financial Statements of the Auditor General of African Exploration Mining and Finance Corporation (Ltd) for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee commends Management for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered
== Eighty-Eighth of the Standing Committee on Public Accounts, dated 10 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (PricewaterhouseCoopers Incl. and SAB & Incl) on the Financial Statements of Airports Company South Africa Limited for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee commends Management for the unqualified audit opinion expressed by the External Auditors, and trusts that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Eighty-Ninth Report of the Standing Committee on Public Accounts, dated
10 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on Council for Scientific and Industrial Research (Report No. RP98/2002), reports as follows:
AUDIT OPINION The Committee commends Management of CSIR for the unqualified audit opinion expressed by Auditor General, and trust that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Ninetieth Report of the Standing Committee on Public Accounts, dated 10 September 2003
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (KPMG Inc.) on the Financial Statements of Export Credit Insurance Corporation of South Africa Limited for the year ended 31 March 2002, reports as follows:
2. AUDIT OPINION The Committee commends Management for the unqualified audit opinion expressed by the External Auditors, and trusts that future audit opinions will be equally unqualified.
3. CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Ninety–First of the Standing Committee on Public Accounts, dated
10 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the External Auditors (Nkonki Sizwe Ntsaluba Inc. and Deloitte & Touché) on the Financial Statements of Khula Enterprises Finance Limited for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee commends Management for the unqualified audit opinion expressed by the External Auditors, and trusts that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual Report, and noting the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Ninety- Second Report of the Standing Committee on Public Accounts, dated
10 September 2003.
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the National Skills Fund (Report No. RP71/2002), for the year ended 31 March reports as follows:
Audit opinion The Committee notes the qualified opinion expressed by the Auditor General with concern.
The audit opinion was qualified in view of the fact that the income of National Skills Fund may have been understated by an unknown amount. The Committee expects the Accounting Officer to expeditiously rectify this issue.
The Committee will await the Auditor General's report on the follow up audit in this regard.
Conclusion Having considered the Annual Report, and noting the qualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary except for the matters highlighted above for the financial year under review.
Report to be considered.
== Ninety-Third Report of the Standing Committee on Public Accounts, dated 10 September 2003.
INTRODUCTION
The Standing Committee on Public Accounts, having considered the Report of the External Auditors (SAB&TINC.) on the Financial Statements of Trade and Investment South Africa for the year ended 31 March 2002, reports as follows:
AUDIT OPINION The Committee commends Management of Trade and Investment South Africa for the unqualified audit opinion expressed by the External Auditors, and trusts that future audit opinions will be equally unqualified.
CONCLUSION Having considered the Annual Report, and having noted the unqualified audit opinion, it is the view of the Committee that no further interaction with the entity would be necessary for the financial year under review.
Report to be considered.
== Ninety- Fourth Report of the Standing Committee on Public Accounts dated 10 September 2003. The Standing Committee on Public Accounts, having heard and considered evidence on the Annual Report and the Report of the Auditor-General on the Department of Water Affairs and Forestry and certain trading accounts administered by the Department of Water Affairs and Forestry for the financial years ending 31 March 2001 and 31 March 2002, as well as certain papers referred to it, reports as follows:
A. DEPARTMENT OF WATER AFFAIRS AND FORESTRY (Pages 105 - 138 of AR)
Introduction The audit opinion issued by the Auditor-General on the financial statements of the Department for the 2000/01 financial year was qualified. The situation seemed to have deteriorated in view of the adverse opinion expressed by the Auditor-General on the financial statements for the 2001/02 financial year. The Committee further expressed its concern that the Accounting Officer's responses to his responsibility on the financial management as reported in the Report of the Auditor-General, was not convincing.
The Committee wishes to bring the following areas of concern to the attention of Parliament. Risk management and internal control weaknesses (Par 5.1.5, page 107 of AR) Various shortcomings in internal control were reported in the financial years under review. The Accounting Officer is aware that internal controls are essential to any sound system of financial management. It is also fundamental to curbing fraud and corruption.
Furthermore, the Public Finance Management Act (PFMA) requirement for efficient and effective risk management systems needs to be complied with at all times. It is only through proper planning, arranging and controlling of activities and resources, based on an effective annual risk assessment, that the impact of all risks to the State can be minimised.
The Committee noted and acknowledged the work done by the Department in terms of its delivery, mandate and objective. The Committee also noted the steps taken by the Department to comply with section 38(1)(a)(i) of the PFMA, which include the establishment of the Financial Inspectorate Unit and a Fraud Hotline.
However, the Committee was perturbed that a fraud prevention plan, as required by the PFMA, was not in place during the financial years under review. The Department cannot be allowed to compromise on internal controls.
The Committee therefore recommends that the Accounting Officer take appropriate corrective steps as a matter of urgency to prevent a recurrence of the reported shortcomings. The Accounting Officer should report back to Parliament within 60 days after tabling of this report, on the measures implemented in terms of section 38(1)(a)(i) of the PFMA.
The Committee further recommends that the Accounting Officer should:
On an on-going basis evaluate the effectiveness of the Financial Inspectorate Unit, and consider requiring it to report to the Audit Committee at least on a quarterly basis;
report to the Minister, within 60 days after tabling of this report, whether full compliance with the appropriate PFMA requirements has been achieved, and
provide an appropriate high-level summary on the performance of the Fraud Hotline to the Audit Committee on a regular basis.
Late submission of annual financial statements due to supporting evidence not submitted during the audit (Par 5.1.7, page 107 of AR) The Committee took note that the annual financial statements for both financial years under review were not submitted to Parliament within five months of the end of the financial year, which constitutes non-adherence to section 40(1)(d) of the PFMA.
In terms of section 40(1)(a) of the PFMA, it is the Accounting Officer's responsibility to keep full and proper records of the financial affairs of the Department in accordance with prescribed norms and standards. These records support the information contained in the annual financial statements. However, the Committee was informed that important supporting audit evidence requested by the Department from its regional offices could not be submitted timeously. The late submission of the requested information resulted in the Auditor-General not being able to fulfil his audit responsibility within the prescribed period.
The Committee recommends that the Accounting Officer takes appropriate steps to adhere to the relevant sections of the PFMA. Where the Department lacks clarity on the format of the financial statements, the assistance of National Treasury must be sought.
Clearing of suspense accounts (Par 5.1.1, page 106 of AR) The Auditor-General reported that the controls over the majority of the clearing of suspense accounts were severely lacking, and the controls required in terms of the Treasury Regulations had not been followed.
The Committee is also concerned about the increase in debtors, especially the increase in salary overpayments. An essential element of the stewardship over public funds, with which an accounting officer has been entrusted, is to prevent potential losses such as those often arising from salary overpayments.
The Committee recommends that the Accounting Officer:
Take urgent and effective steps to recover outstanding debt within 90 days. The Committee expressed its concern that debtors are kept longer than 3 years on the system and the recovery of long outstanding debt should be included as a standing agenda item at management meetings.
Take appropriate steps against regional managers who do not submit required information on time. Details on such steps will be requested at future hearings of the Committee.
Separation of accounts: Department and trading entities (Par 3.1, page 105, par 3.2, page 139, 143 and 147 of AR) The Auditor-General reported that full and proper records of the financial affairs of the three trading entities (Water Trading Account, Industrial Plantations Trading Account and Equipment Account), had not been maintained separately from those of the Department. Certain transactions, balances and information that should have been reflected in the financial statements of these trading entities, were consequently erroneously included in the financial statements of the Department.
The Committee further expressed its concern that the Department still shared a bank account and warrant voucher series with these three trading entities. This practice creates additional risk and hampers control over, and administration of the accounting system.
It became evident during the hearing that, although the Department had initiated separate bank accounts, the National Treasury, as custodian of the system, had postponed the Department's migration from the Financial Management System (FMS) to the Basic Accounting System (BAS) to the 2003/04 financial year. However, on 8 April 2003, the Accounting Officer informed the Committee that the Department had been able to introduce BAS with effect from 1 April 2003.
Having noted the above, the Committee recommends that the Accounting Officer confirms to Parliament within 60 days of tabling of this report, whether the BAS were now operating fully in terms of the separate bank accounts.
B. TRADING ACCOUNTS (Pages 139 - 158 of AR) Introduction On all three trading accounts (Water Trading Account, Industrial Plantations Trading Account and Equipment Account) an adverse audit opinion had been expressed in respect of the last two financial years. The Committee wishes to bring the following areas of concern to the attention of Parliament.
Basis of preparing annual financial statements (Par 3.1, pages 139, 143 and 147 of AR) The Committee noted with concern that the financial statements of the three trading entities did not conform with generally accepted accounting practice as required by section 18.2 of the Treasury Regulations read together with section 40(1)(b) of the PFMA. The statements were prepared on a cash basis and do not encompass accrual accounting or capitalisation and depreciation of property, plant and equipment.
The Committee recommends that the Accounting Officer, as a matter of urgency, take the necessary steps to adhere to the requirements of the PFMA and the Treasury Regulations. The Accounting Officer should submit a report to Parliament within 60 days after tabling of this report, whether the annual financial statements of these three trading entities for the 2002/03 financial year were prepared as required in conformance with generally accepted accounting practice.
Water Trading Account: Debtors management system (Par 5.1.1, page 140 of AR) The Department did not have a uniform billing system in place for the past two financial years under review to facilitate an effective debtors management system and effective controls over revenue collections as required by section 11.2 of the Treasury Regulations.
This was mainly owing to the delay in the implementation of the Water Authorisation and Registration Management System (WARMS). The Committee is concerned at the apparent lack of preparedness and testing of the system a few days ahead of implementation. The Committee further took note that the system was to be implemented with effect from the beginning of the 2002/03 financial year.
The Committee therefore recommends that the Accounting Officer:
Report to Parliament, within 60 days after tabling of this report, on the implementation of the WARMS that was scheduled for April 2002, specifically indicating whether it has been fully implemented and whether it provides the uniform billing function required; and
Take steps to ensure that the billing system will facilitate an effective debtor management system and effective controls over revenue collection.
The Committee further recommends that the Auditor-General evaluates these steps and the implementation of WARMS and to report to Parliament thereon in the 2003/04 audit report.
Industrial Plantations Trading Account: Disposal of government forests (Par 5.1.1, page 144 of AR) The Committee took note of the transfer of the category-A commercial forestry operations to new entities by the Department of Public Enterprises and that the sale proceeds receivables have been distributed to the Department of Public Enterprises.
The Committee recommends that the Accounting Officer submits a final report to Parliament on the closure of the Industrial Plantations Trading Account.
Operation of the National Forest Recreation and Access Trust (Par 4.1.1, page 154 of AR) The Committee was informed that the National Forest Recreation and Access Trust was established with effect from 1 April 1999. However, the Committee was further informed that the trust has not been operational since the 1999/2000 financial year as no formal approval to start utilising the trust funds has been granted by the Executive Authority.
The Committee recommends that the Accounting Officer reports to Parliament, within 60 days after tabling of this report, on:
The progress made with the utilisation of the trust funds, and
The Department should seek clarity from the National Treasury whether the National Forest Recreation and Access Trust should not be listed as an entity in terms of the PFMA as the trust was established in terms of legislation and is accountable to Parliament.