(a) National Interest , (b) Needs and interest of the national government determined by the objective criteria, (c) The needs and interests of the National Government determined by the objective criteria

The KwaZulu Natal Housing Department, allocation is linked to the National

Housing Department’s priorities which are linked to the State of the Nation’s

Address. The important priorities are:

(d) The need to ensure that provinces and municipalities are able to provide services and perform functions allocated to them.

Municipalities can then contribute additional financial resources to get a higher level of services.

Municipalities that have the fiscal capacity and efficiency are the ones that have more allocation of financial resources e.g. Housing Department allocates about 32% of the Provincial Housing Department Housing Fund budget to eThekwini Municipality because of its efficiency and its capacity to be a housing developer.

(f) The need to ensure that provinces and municipalities are able to provide basic services and perform the functions allocated to them.

Capacity building is one of the key priorities for the Department. It focuses on providing skills necessary to executive constitutional mandate from both Provincial Department staff and municipalities. Financial resources for capacity building however is allocated from the voted funds not from the conditional grant

(i) The development and other needs of provinces and municipalities.

The budget allocation is based on the municipal IDP’s which forms part of the Provincial Housing Development Plans. These plans inform the Department on the need of housing by the municipalities.

(j) The desirability of stable and predictable allocations of revenue shares. This is achieved through the Medium Term Expenditure Framework, which enables the Department to plan ahead for other housing projects that can be approved during the MTEF period.

The need for flexibility in responding to emergencies or other temporary needs and other factors based on the similar objective criteria.

Chapter 12 of the Housing Code makes provision for providing Emergency Relief Emergency situations can be in a form of:

The other criteria that will be used by the KZN Housing Department is the allocation in terms of housing typologies i.e. traditional dwelling/hut structure/ structure made of traditional materials.

1. Accuracy of accounts receivable balance of R470 339 000 could not be verified due to no reconciliations being performed between debtors system and basic accounting system; and

1. The Department is presently working with National Housing to rectify discrepancies in balances contained in the new Basic Accounting System to the Housing Debtors System.

The process is now in an advanced stage and it is anticipated it will be finalized prior to the drawing up of financial statements for 2005.

2. A Debt Recovery policy and Debt Forgiveness policy has been developed within the Department to address the management of defaulting debtors.

Advisory Committee, and have been subsequently referred back for minor corrections at their last meeting on 8 February 2005. It is anticipated that this policy will be finalized during March 2005.

The Debt Recovery policy was presented to the KZN Housing Portfolio Committee on 22 October 2004. The committee was satisfied with the content contained in this document and recommended that this policy be made available to Municipalities for application.

1. Details relating to a credit amount of R32 096 000 appearing as a prior adjustment in the financial statements could not be produced.

qualified by the Office of the Auditor-General in the financial statements of 2002/03. At that stage, the General Account of the fund carried an amount of R566,537,000 as a reconciling item.

Whilst compiling the financial statements for the financial year ending 2003/04, this account was reconstructed to address this matter. A prior year adjustment relating to a journal entry incorrectly duplicated in the 2002/03 financial year for a sum R531,513 000, was adjusted to the Provincial Treasury balance which effectively reduced the General Account of the Fund.

The net effect of this transaction after reconstruction and adjustment resulted in a credit amount being carried forward as an adjustment for old balances brought forward.

This adjustment related to adjustments in respect of ex-own affairs balances where details were not available when balances were taken on in 1999/2000.

Historically, the balances contained in the General Account of the Fund have been carried forward, since the construction of Financial Statements for 1994/95 financial years. These statements were compiled by outsourced consultants until the Department started compiling Financial Statements since 2000/01.

Presently, the Department is back tracking through records to establish, how the credit arose in the 1999/2000 financial statements.