The Committee recommends that the Accounting Officer:

1. Immediately take all appropriate steps to finalise the outstanding agreement with Medcor, as well as all other outstanding matters currently limiting the extent to which Auditor-General can audit the Medcor expenses;
2. Ensure that full and complete records of payments made to Medcor for the 2004/05 financial year audit are provided to the Auditor General;
3. Compile and maintain an accurate membership database;
4. Limit the employer' contributions to the maximum amount permissible per member per month in line with the rest of the public service;
5. Ensure compliance with schedule 7 of the Income Tax Act (Act No. 58 of 1962) relating to taxation of medical aid fringe benefits;

Consider the possible liability to the state should Medcor not have the necessary funding levels that are required in terms of section 35 of the Medical Schemes Act, Act No. 131 of 1998.

Internal control shortcomings were reported for the third year in a row, including a lack of management reviews, and non-compliance with laws and regulations.

The Committee is aware of a number of corrective actions that the Accounting Officer can consider, including –

• Revisiting and updating all policies and procedures,;
• Ensuring proper monitoring structures and accountability at all levels;
• Implementing and monitoring proper management controls, especially in terms of overtime;
• Ensuring that individual performance contracts of staff include measurable key performance areas that are revised on an annual basis; and
• Investigating alternative systems to address the control shortcomings with respect to leave administration especially relating to process flows for approval. .

However, these are regular management actions required of accounting officers and should not be pointed out by a committee of Parliament.

The Committee therefore recommends that the Accounting Officer ensure that;

1. He takes all appropriate steps to fully comply with the requirements of section 38 of the Public Finance Management Act, or run the risk of being guilty of financial misconduct in terms of section 81 of the Act.
2. If the Accounting Officer is unable to comply with any of the responsibilities determined for accounting officers in the aforementioned section, he must promptly report the inability, together with reasons, to the Minister and the National Treasury.

The Accounting Officer should inform the Committee and the Auditor General of the progress made with regard to addressing the problems of internal controls capacity.

3. Information technology (par. 4.2.5, page 53)

A number of weaknesses were reported by the Auditor General regarding co-ordination on management levels between the Department and the State Information Technology Agency (SITA) with respect to the various software and hardware needs of the Department.

The Committee recommends that the Accounting Officer urgently ensure –

1. proper consultation and co-ordination with SITA;
2. an appropriate service level agreement with SITA;
3. proper consideration of the cost benefit analysis relating to the change over to Microsoft solutions, including aspects such as the purchasing costs of software/hardware and data conversions required;
4. compliance with the SITA Act; and
5. The finalisation of the IT strategic plan, which has to incorporate the finalisation of a disaster recovery plan.

[Note: A general recommendation could also be considered by SCOPA following its intended meeting with SITA (on 25 Feb?) in order to address the reported dissatisfaction by client departments with the service / support provided by SITA.]

The Committee is concerned about the return on investment received for the Department’s training expenditure of R4,471 million during the year in question. The Committee is also concerned that the Department had apparently overlooked the opportunity to make use of the services of the SA Management Development Institute (SAMDI) – the designated public sector management training institution – seeing that the training related to leadership development of junior and middle managers.

The Committee recommends that in future the Department ensures that they give full consideration to the services available from public sector institutions such as SAMDI.

[Note: A general recommendation must be considered by SCOPA following the workshop with DPSA, SAMDI, and NT that will address the adequacy of the role of the DPSA (SAMDI) and NT in ensuring that adequate training courses are available from designated public sector training institutions, and that there are guidelines on measuring the funds spent on training across the public service.]

There were no unauthorised expenditure disclosed for the 2003/2004 financial year. With respect to the unauthorised expenditure of R41,642 million incurred during the previous year, the Committee took note that the funds were spent on essential services for prisoners.

In the light thereof that the Accounting Officer management to contain excess expenditure during the last year, the Committee recommends that Parliament authorise the amount of R41,642 million in respect of the previous year.

However, the Committee noted that in numerous instances of virement in the various programmes and sub-programmes which seems to indicate lack of proper planning and budgeting controls.

The Committee recommends that the Accounting Officer:

1. Improve the budgetary controls within the Department; and
2. Take disciplinary actions against all officials causing overspending.

The Committee is not satisfied with the slow progress being made with the investigation into possible fraudulent qualifications. The extent of overpayment and unjustified remuneration is therefore still unknown.

The Committee is of the opinion that this investigation, reported in 2000/01 already, has to be completed by the end of March 2005. If this is not possible, reasons must be provided to Parliament, as well as a commitment to a finalisation date.

In the case of three comparable departments, the following information was disclosed to Parliament in their respective annual reports for 2003/04 financial year

The Committee wishes to emphasize the responsibility of the Accounting Officer for the management of leave and overtime in terms of the PFMA and the Public Service Act. The Committee will in future focus on the proper management of leave and overtime, specifically whether -

1. proper compliance with policies and procedures in respect of leave and overtime and the necessary controls to enforce compliance are in place to ensure that leave and overtime is not misused;
2. the responsibility for monitoring and authorizing overtime is clearly assigned;
3. human resource information exist, capable of meeting the needs of management with regard to various issues as such leave use and cost; and
4. all reasonable means of eliminating the need for overtime has been assessed.

7. Monitoring of Progress

In view of the monitoring role of the Audit Committee as determined by the PFMA and the Treasury Regulations pertaining to the internal control environment, the Committee wishes to recommend that the Audit Committee, on a quarterly basis, monitor and evaluate the progress made with respect to all of the above areas of concern identified. The Audit Committee must report thereon in the next annual report of the Department.

 

8. Vacancies and personnel turnover (par 4.1.3, page 46, and par 4.1.9, page 48)

The Annual Report indicated that out of an approved and funded staff establishment of 35,675, only 32,832 departmental posts were filled at the end of the financial year under review. An additional number of posts have subsequently been approved, bringing the approved establishment to 48,674.

The Committee recommends that the Portfolio Committee on Correctional Services consider:

1. monitoring the progress with the filling of all vacancies, especially critical top management positions;
2. ensuring that, overall, the issues raised by the Committee in this Report, are addressed in the Department’s next strategic plan, and are monitored for implementation.