Speaker of the National Assembly, in terms of section 8(3) of the

Public Finance Management Act, 1999 (Act No 1 of 1999), explaining

the delay in the tabling of the consolidated financial statements for

2003-2004:

Dear Madam Speaker

I am writing to advise that the tabling of the consolidated financial

statements in terms of section 8(3) of the PFMA will be delayed and

to request an extension for the tabling thereof in Parliament as

required by the Act.

Section 8(3) of the PFMA stipulates ‘‘The Minister must submit the

consolidated financial statements and the audit report on those

statements within one month of receiving the report from the

Auditor-General, to Parliament for tabling in both houses’’. The

timing referred to in this instance is by the end of October 2004.

Section 8(5)(a) requires me to provide a written explanation setting

out the reasons for failing to submit the statements on time.

The cause for the delay is due to the following:

* The financial year that ended on 31 March 2004 is the first for

which such consolidated financial statements are required.

Departments and entities have thus been exposed to the

complexities of these requirements for the first time. The formats

for the consolidation thus pose a challenge to all the stakeholders;

* The sequence of submitting the financial statements in terms of

section 40 of the PFMA results in certain difficulties in meeting

timelines;

* The consolidations done on the previous years’ information

raised serious issues with regard to the integrity of the

information, hence the need for a more thorough approach

during the first year of consolidation;

* The systems are not functioning optimally and are not readily

aligned to cater for the new requirements. As a result, the

consolidation is essentially done manually with the use of

spreadsheets;

* Most public entities did not comply with the deadline for

submitting the statements; and

* The audits for most of the departments were only finalised

during September 2004. This was largely due to problems

experienced with the quality of the information submitted to the

Auditor-General.

The National Treasury expects to table the consolidated financial

statements in terms of section 8(3) of the PFMA by February 2005. I

have instructed the National Treasury to put mechanisms in place to

prevent the recurrence of these problems in future.

The National Treasury and the Auditor-General have discussed the

possibility of delaying the consolidated financial statements. Both

parties have agreed that it would be sensible to delay publishing and

first allow for the issues to be addressed comprehensively in order to

ensure a firm foundation for the future.

Kind regards,

signed