REPORT OF THE PORTFOLIO COMMITTEE ON WATER
AFFAIRS AND FORESTRY ON OVERSIGHT OF 2004/05 ANNUAL REPORTS AND ORAL
PRESENTATIONS OF WATER BOARDS DATED
The Portfolio Committee on Water Affairs and Forestry having considered
and oversight of 2004/05 Annual Reports and oral presentations of Water Board
from 22 – 24 March 2006, reports as follows:
1.
Background
The
Minister may by notice in the Government Gazette, in terms of the Water
Services Act, 108 of 1997, establish a Water Board. The primary activity of a Water Board is to
provide water services, mainly potable water to water-services institutions
within its service area.
On
the 12 January 2006, the Minister of Water Affairs & Forestry tabled
Bushbuckridge, Rand, Umgeni, Magalies, Botshelo, Overberg, Ikangala, Mhlathuze,
Namaqua, Lepelle Northern, Albany Coast, Sedibeng, Pelladrift, 2004/05 Annual
Reports and Financial Statements to Parliament in terms of Section 65 (1) (a)
of the Public Finance Management Act 1999 (Act No. 1 of 1999).
Upon referral by the National Assembly on
2. Introduction
The Portfolio Committee used the following documents as an oversight
tool to guide and analyse the input made by Water Boards to the water sector in
2.1 2004/05 Annual Reports and Oral Presentations of the Water Boards.
2.2 Analysis by DWAF of the Water Boards’ 2005 Annual Reports, including
its
audited Financial
Statements. The
analysis by DWAF, which is reflected as a
‘superficial analysis for the purposes
of initiating discussion on the financial
status of the Board’, was used by the
Portfolio Committee to engage the Water
Boards.
The following Water
Boards provided oral presentations to the Portfolio Committee:
Bushbuckridge, Lepelle
Northern, Botshelo,
Due
to certain constraints, the following Rand Water Board provided written submissions
to set questions, to the Portfolio Committee:
The
following two Water Boards (Namaqua and
Namaqua
apologised for being unable to appear before the Committee as they only
received the letter informing them of the event on the morning of the
3. Overview of 2004/05 Annual
Reports and Financial Statements of Water
Boards
3.1 Bushbuckridge Water
Board
In
focusing on providing water to communities, Bushbuckridge noted that the lack
of guaranteed operational subsidies proved to be a serious hindrance to the
Board’s mission. However, the Board was
exploring strategic means of attaining financial sustainability. A severe drought had affected the Board’s
areas of supply with two dams drying up completely. This had forced the Board to use alternate
water systems. The development of the
Inyaka Scheme was fast tracked, abstraction points were cleaned and consumption
was rationed in certain areas. 67% of
the Board’s operational costs were funded by the DWAF. The change in accounting policy whereby the
inventory had been included at market value increased profits by R1.9 million.
These were
some of the findings for Bushbuckridge from DWAF’s report:
3.2 Conclusions on Annual Financial Statements
Bushbuckridge
is totally dependent on DWAF subsidies, and hence not fulfilling the function
of a Water Board, that is, the self-sufficient supply of water.
In
2005, it was stated that either Bushbuckridge should conclude a payment
agreement with the customer municipalities or serious consideration should be
given to transferring its assets to the municipality and phasing out the
Board. The Water Board’s current DWAF
subsidised position is not in alignment with the Equitable Share philosophy.
Although
Bushbuckridge subsequently entered into a Memorandum of Understanding (MoU)
with the Municipality, this is not being implemented.
3.3 Recommendations
DWAF should
question whether there is any sense in maintaining a Water Board for water
provision essentially to a single municipality.
The Board
should be disbanded, and the function be transferred to the municipality or to
another Board.
Checklist for comment:
Board,
Management |
The Board has not addressed the
continued non-payment by Bohlabela. The board’s internal audit
committee was not performing satisfactorily. The audit committee should have
raised the need for a forensic audit before the critical external auditors’
report of 2003/04. It appears that VAT may have been
paid unnecessarily on DWAF subsidy receipts – although the note needs to be
clarified. The board is not viable. |
Audit
report |
An External Auditor made the users
to the financial statements aware that the forensic investigation is still in
process of being completed and that no adjustments have been made to the
figures in the financial statements. The going concern basis has been
adopted in preparing the financial statements. The auditor has not commented
on this. |
Other |
The sole/main customer is hardly
paying for it’s water and the board is totally dependent on financial
susbsidies from DWAF as well as some hidden subsidies related to the cost of
raw water. Cash resources have decreased by
an amount of R2 million and if that trend continues, the Board will find
itself in huge financial difficulties.
|
Reserves |
Merely a reflection of subsidy
levels. Accumulated loss of R27 million.
(The actual cost to tax payers is far higher given the level of disclosed
subsidies, the R1, 9 m profit from restating inventories, the hidden water
resource subsidy etc.) |
Liabilities |
|
CAPEX |
R762 180 addition to plant and
equipment. |
Financial
Investments |
Investments in money market and
current account OK. The retirement funding is in the
Orion Money Provident Fund. This fund is not actuarially valued and it is a
condition that the staff must become members. Given the apparent lack of
financial capacity displayed at board level external assurance should be
sought that the employees funds invested in this Provident fund are safe. |
Receivables |
The non-payment by Bohlabela has
been allowed to drag on for much too long and is contrary to the equitable
share philosophy. The problem should now be addressed at National Treasury
level as neither the board nor DWAF has successfully been able to resolve the
problem. |
Current
ratio |
Just a reflection of subsidy
levels. |
Profitability |
Board is not nearly viable. |
Fixed
Assets |
It is recommended that the level
of maintenance of fixed assets should be independently confirmed. |
4. Lepelle
Northern Water Board
Lepelle
Northern had received two awards for the year under review. It was also in the top five of the 500 South
African companies. The Board had managed
to keep its tariff increase to 2.94%, which was well below the inflation
rate. The Board had also concluded a
long-term supply contract with
4.1 Conclusion
drawn from Annual Financial Statements
The high level of debtors was
identified during the two previous years as a concern. The situation appears to
have deteriorated.
Receivables are currently equal to
242 days of revenue. The Board must explain whether any of these debtors should
be written off, as this would considerably alter the liquidity position.
A substantial writing off of these
debtors could change the Balance Sheet substantially and also affect future
income projections. There is possible requirement to recast the
financial statements after discussion with debtors and redo the analysis. The
financial statements can therefore not be treated as a reliable reflection of
the position of the board.
4.2 Recommendations
An urgent meeting should be arranged
between DWAF, DPLG, National Treasury, Lepelle and Phalaborwa.
Checklist
for comment:
Board, Management |
MH Mokgobi has not attended any of the 6 board
meetings but has received a basic remuneration of R51 755. 14-person board appears to be large. |
Audit report |
Auditor should be requested in writing to indicate
the steps that they took to give them confidence that the financial
statements properly reflect current assets when accounts receivables are at
242 days. |
Other |
Board should obtain and forward a copy of the
actuarial report for Lepelle Northern Water pension fund once completed
during July 2006. What is represented by the amount allowed for the
contingent liability described in note 21, more details on that are required? Financial statements might not be an accurate
reflection of the financial situation given the high level of accounts
receivables. |
Reserves |
Accumulated deficit now only R7 million, Reserves
of R388 million OK. |
Liabilities |
Bosveld Services Council interest 5% OK DWAF loan Duiwelskloof interest 10,4% OK DBSA 10% OK. Potgietersrus Platinum 9,5% OK. |
CAPEX |
|
Financial Investments |
Not shown with whom and how funds are invested. |
Receivables |
Receivables of R110 million, 242 days. R17 million provisions for bad debts. Phalaborwa owes R95, 8 million. Serious
problem needs urgent DWAF, DPLG, National Treasury attention and if they
don’t show sufficient energy in resolving issue then court action must be
taken otherwise financial loss to Organ of State and contrary to spirit of
PFMA. |
Current ratio |
|
Profitability |
R45 million surplus OK |
5. Botshelo Water Board
Whilst a new Board was constituted, the Board faced
major challenges in the form of:
(a)
R110 million had to be recovered
from Municipalities;
(b)
Unauthorised water connections posed
major problems for both the Municipalities and the Water Board;
(c)
There were uncertainties created by
section 78 processes.
5.1 Comments based on financial statements
Botshelo
is not nearly financially viable and is dependent on DWAF subsidies for over
half of its operating and administration costs.DWAF’s subsidies are in arrears
to a value of R41 million. Total accounts receivables total R95 million. If
this situation is not resolved the Board cannot be seen as a going concern.
Checklist for comments
Board, Management |
No internal audit committee in place during
financial year. All the relevant Board Committees should be put in
place. |
Audit report |
The
auditor notes that an amount of R41 331 477 and R52 802 908 is owed by DWAF
and other Government Debtors. The recoverability of these balances is
uncertain. No provision for these balances has been made in the Annual
Financial Statements. |
Other |
|
Reserves |
Reserves are smaller than debtors. If accounts
receivable are not recoverable, the board would be in financial difficulties. Certain reserves do not have investments to cover
them. |
Liabilities |
The board has no long-term liabilities and is not
in a financial position to raise loans. |
CAPEX |
Purchase of assets of R592 221. Loss on disposal
of assets of R96 459. Additions to computer equipment of R183 465 plus
office equipment of R99 310 could purchase many PC’s for that amount. Erf 1766, Erf 2449, Erf 2779 were disposed of.
What was the reason and to whom and how where they disposed? |
Financial Investments |
|
Receivables |
Receivables total R95 million. This includes an amount owed by DWAF of R41
million, which is offset by R27 million accounts payable to DWAF. Provision for doubtful debts of +-R58 million of
which R31 million is for Trade Receivables. The receivables situation is unacceptable. The reason that the accounts receivables had to be
written off must be discussed. Could the equitable share of the municipality
involved not be tapped directly from National Treasury to repay the funds
over time? |
Current ratio |
The current ratio is meaningless given the
uncertain over debtors and the tendency not to recover the trade debtors. |
Profitability |
Board showed a loss of approximately R37 million
before subsidies (assuming subsidies of R41 million) and is not nearly
financially viable. |
6. Umgeni Water Board
Some of the
2004/05 Key Financial highlights were:
(a) A
surplus of R55 million was generated;
(b) The
Board experienced an 11% increase in revenues, amounting to R1 billion;
(c) A
4% increase in the volume in water was experienced, amounting to R353 million;
(d) They
experienced a positive cash flow from operating activities, amounting to R221
million.
Umgeni,
Mhlathuze and uThukela Water, had developed a regional strategy to supply bulk
water for the KwaZulu Natal province.
Some of the
challenges faced by the Water Board were:
(a) R14.4
million is still owed to the Board by the Msundusi Municipality for the Waste
Water Treatment project that was undertaken at Darvill; and
(b) The delay in the transfer of Rural Schemes to
the Msundusi municipality.
6.1 Conclusions to be drawn from Annual Financial Statements
Umgeni Water still faces a liquidity
and solvency challenge. The ability to meet debt payments may have been
disguised by a large water sales increase.
Umgeni Water’s operating and
administrative costs have increased dramatically over the last year but this is
mainly due to asset impairments (possibly once off write downs).
It is recommended that the financial
situation be monitored semi-annually.
6.2 Questions and observations
(a) What assets were written
off that had such a marked effect on the costs (R70 million)?
(b) Why did raw water
purchases from DWAF fall from R71, 9 million in 2004 to R65, 5 million in 2005
when volume of water sales increased by 3,7%?
(c) The liquidity position
(current ratio of 0,7) needs to be discussed.
(d) What percentage long-term
water sales growth is assumed in the tariff cash flow model?
(e) The Africa/South Africa Division
made a loss of R9 million. What was the loss in
Checklist for comments
Board, Management |
OK |
Audit report |
OK |
Other |
|
Reserves |
Accumulated
loss |
Liabilities |
Bond
issues, interest rates not visible. Build up to year 2010 liabilities
maturing +-R1.4 billion and probable need to roll over must be properly
managed. |
CAPEX |
R228
million authorised but not contracted for. R41 million contracted for but not
provided for in financial statements. |
Financial Investments |
Zero
coupon bonds OK. Current assets in money market investments. |
Receivables |
Average
age receivable 41,5 days is an improvement and OK. R14, 4 m unpaid by
Msunduzi for management fee to be dealt with (DPLG, National Treasury, DWAF).
|
Current ratio |
0,7
looks tight with non-payment of management fee not yet resolved. |
Profitability |
Profit
after taxation R53 m good turnaround from loss of R37 million but interest
cover still tight. |
6. Magalies Water Board
Some of the major achievements in 2004/05 were:
(a)
Implementation of future corporate
strategy that focused on the appointment of a new BEE Suppliers and
professional service providers.
(b)
Implemented a new organisational
structure.
(c)
Th loan from the Development Bank of
(d)
Implemented an Asset Management
Improvement Plan.
(e)
Received a PMR Diamond Award in 2005
for Public Sector Entity Service Delivery.
(f)
Entered into a Twinning Agreement
with Nkana Water in
(g)
Successfully implemented the
attainment of gender equity.
(h)
Successfully implemented the water
loss program in City of
(i)
Successfully disbursed a donation of
R18 million to 4 key municipalities identified for water services projects.
Some strategic
challenges faced by the Board were:
(a) A
need for the improvement of the fast deteriorating raw water quality in
catchment areas such as Hartebeespoort and Roodeplaat dams.
(b) A
need to accelerate assistance offered to Municipalities to deal with Project
Consolidate.
(c) A
need to align and meet the challenges posed by the President in the State of
the Nation Address of 2006.
(d) A
need to continuously ensure that the quality of portable water that is produced
and delivered remains quality consistent.
(e) A
need to accelerate access to sanitation to all consumers in areas of operation.
Checklist for comments
Board, Management |
It is
noted that Ms Molotlegi earned significantly less than other board members.
It should be enquired how many board meetings she attended. |
Audit report |
The Auditor of Magalies Water:
Bonjala states that the Financial Statements were prepared as a going
concern, taking into account the subsidy from DWAF and the financial support
from Magalies will continue. The Auditor thus treats Magalies
Water: Bojanala as a separate entity and implies that it would not be a going
concern if there was either no subsidy from DWAF or no financial support from
Magalies Water. The auditor states that the
accounts reflect generally accepted accounting practice. However, it is
argued later in this table that Magalies is using an unusual approach to
accrual accounting (eg. the treatment of depreciation, the calculation of
interest on reserve funds). |
Other |
Treatment
of depreciation is unusual and not in accordance with GAAP. In accrual
accounting interest should be shown as an expense not as an appropriation
from net surpluses. The need
for subsidies is linked to the separate treatment of the different components
of the water board. The water board should be consolidated and subsidies
should be removed. |
Reserves |
Sufficient. Showing
interest earned against general reserves (note 4), other reserves (note 5)
and depreciation fund (note 6) is unusual. Interest is money earned on funds
invested and is an income in the income statement to be allocated as part of
net surplus, and is not normally shown as an earning on reserves. Showing
the General reserve fund, depreciation fund etc as investments (Note 9) is
also unusual. |
Liabilities |
Interest
at 15% on DWAF loan is far higher than current interest rates and should be
reviewed. |
CAPEX |
Additions
total R23, 196 million in 2005 and R41, 293 million in 2004. |
Investments |
There is
an investment in In note
9 reserves are shown as investments. I.e. it could be argued that the balance
sheet partially reflects accrual accounting and cash flow accounting. This
approach could possibly explain why Magalies shows interest against
particular reserves and why depreciation is appropriated to a depreciation
fund after determining net surplus and not deducted as an expense. |
Receivables |
The increase in accounts
receivables to almost 2 months is not acceptable and needs to be monitored. |
Current ratio |
0,86
insufficient. |
Profitability |
Just
breaking even before subsidies, insufficient. |
6.1
Recommendation
The accounting approach should be
discussed with Magalies and it should be determined whether any changes need to
be made to bring the financial statements in line with the other water boards
or not.
7. Sedibeng Water Board
Some of the
2004/05 achievements during the year under review were:
(a) Under
Budget and Cost Management, the Board achieved a 20% cost saving;
(b) Achieved
a net surplus of R13.8 million in the
(c) Signed
5 strategic support management contracts in the Siyanda Municipality District;
(d) Seconded
staff to
(e) Interaction
with Ward Committees, improved the responsive time and reduced interruptions and
complaints
Some of the
challenges faced by the Board were:
(a) Payment
of subsidies and equitable shares by Water Services Authorities in the
(b) Section
78 processes posed as a challenge for the Board; and
(c) Regionalisation
of Water Board posed still a huge challenge for the Board.
7.1 Conclusions
on financial statements
Sedibeng can just cover its own
operating expenditure but cannot break even after interest charges without
subsidies. The large increase in salaries and wages over the last financial
year has impacted negatively on profitability and needs to be explained.
Receivables are slipping after
earlier improvements.
Checklist for comments
Board, Management |
Board members attendance is not shown but from
stipend it is clear that M Leeu and L van der Berg have not attended many
board meetings. |
Audit report |
Audit qualified in that |
Other |
Sedibeng is reliant on subsidies of +_R32 million.
Clarity is required on availability of subsidies for future years. Volume of water sold is down. (Consider a standard depreciation framework for
all Water Boards.) |
Reserves |
Reserves are positive but have been bolstered by
subsidies. |
Liabilities |
DBSA loan of 15, 08% too expensive given current
interest rate conditions. Finance lease agreements of 15,52% also expensive
but possible that these cannot be renegotiated. |
CAPEX |
No major movements |
Financial Investments |
Invested in money market, zero coupons and fixed
deposits. OK |
Receivables |
Receivables up considerably from R46 million to
R73 million with provision for bad debt of R11, 7 million over last financial
year. Who are the major debtors? Which possible bad debt
was provided for? |
Current ratio |
1,42 OK but deceptive unless undertaking DWAF
gives firm commitment for future subsidies. |
8. Overberg Water Board
Some of the
2004/05 achievements during the period under review were:
(a) The
Board employed a dedicated person to deal with South African Bureau of
Standards compliance with regard to water quality;
(b) Established an Audit Committee;
(c) Experienced
a healthy economic base; and
(d) Developed
a Human Resource policy aligned to employment equity principles.
Some
challenges faced by the Board were:
(a) To
develop capacity and regional standing;
(b) Need
additional secondary activities (not subsidised); and
(c) The
changing political environment (offset smooth operations of the Board).
8.1 Conclusion
Overberg Water has produced good
results.The loss of Klein Karoo will
however reflect negatively on future financial statements, but the board will
still break even.
Checklist for comments
Board, Management |
Disclosures of board meeting attendance. Board
member remuneration etc not included. |
Audit report |
Unqualified. |
Other |
Although financial impact shown, the other impacts
(staff etc) of discontinuing with Klein Karoo operations to be understood. |
Reserves |
R25, 5 million OK. |
Liabilities |
Interest free DWAF loan. Method of valuing of low
interest loans with which we disagreed last financial year has been
corrected. OK |
CAPEX |
Legal process of registering all properties and
servitudes in name of the board has not been finalised. |
Financial Investments |
Do the Investec, Old Mutual, M Cubed and AIMS
portfolios represent money market funds or equities? If these funds are equities then DWAF needs a firm
policy on allowable investments with a clear time frame (say 18 months) for
compliance. Profit on realisation of Investments R860 465
needs to be understood. |
Receivables |
64 days, slightly high. |
Current ratio |
2,36 OK |
Profitability |
R1, 6 million with Klein Karoo, R680 081 without. However, the inclusion of R860 465 profit on
realisation of assets in operating profit may distort the results. The board
would make a +-R200 000 loss without both Klein Karoo and this investment
profit. The nature of the investment profit must be
determined. If it is an abnormal profit then it should preferably not be
included in operating profits but should be shown below the line. |
9. Ikangala Water Board
Some of the challenges outlined by the Chairperson of
the Board were:
(a)
Ikangala had operated over six (6)
years without proper Management structure;
(b)
The Chairperson of the Board, had to
take responsibility for management in the absence of any senior management;
(c)
The role of the Board was in
conflict with the Corporate Governance of the entity.
(d)
Board members had other
responsibilities and could not manage the institution;
(e)
Ikangala had only four (4) staff
members and were concerned about their future in the institution;
(f)
Board compiled the Business Plan of
the institution without management or expertise support.
(g)
The Department was aware of the
challenges faced by Ikangala Water, but had not intervened.
(h)
The Board was uncertain as to how the
transfer of assets and staff to municipalities in terms of the new legislation
was going to be facilitated.
The Board was appealing to the Committee and the
Department for their intervention.
9.1 Conclusions from financial analysis
The
Board is dependent on subsidies and is not really a self-sufficient going
concern.
Checklist for comments
Board, Management |
It must be confirmed that the Board has a strong
financial member and a strong technical member. |
Audit report |
The audit report points out a lack of compliance
with a number of requirements including internal auditing. The Board must
address this matter. |
Other |
Page 14 of the financial statements reads that the
legal processes to empower Ikangala Water to collect revenue from
municipalities has not yet been finalised. This must be explained and
discussed. Page 14 - The board claims that it could not
comply with PFMA requirements due to lack of support from DWAF. This must be
explained and discussed. Tax arrears owing to Ikangala by board members and
consultants to an amount of R97 808 + R115 211 + R28 578. The board must
execute against these amounts before they become prescribed. |
Reserves |
R683 349, which is a legal and administrative
improvement of the negative reserve position, reflected in the 2004 financial
statements. |
Liabilities |
Page 20 – Provision for impairments of loans
received R142 156 to be explained. |
CAPEX |
Nil. |
Financial Investments |
Provident fund was changed to an umbrella fund.
The impact on the benefits to the employees must be discussed. |
Receivables |
19 days. This is a reflection of the accounting
policy of only recognising revenue when paid and is not an accurate
reflection of the payments by the municipalities. In fact, of the R69 million of sales to
municipalities only R1 million was recovered. This is unacceptable given that
MIG funds are transferred to the municipalities for this purpose, i.e.
municipalities are receiving a double subsidy. |
Current ratio |
2.48 OK |
Profitability |
The board is dependent on subsidies and is not a
going concern. Dependence on subsidies is contrary to the philosophy of a
state owned business entity. Institutional solutions should be considered. |
10. Mhlathuze Water Board
Some of the
operational achievements outlined were:
(a) The
laboratory used for water purification, maintained its South African National
Accreditation Systems status;
(b) The
Board signed short-term contractual agreements and projects implementation with
(c) Conducted
an investigation into the long-term solution for the Foskor Gypsum disposal.
(d) Signed
a collective agreement with labour partners.
Some
challenges faced by the Board were:
(a)
Celebration of the 25th
anniversary of the Board was in the balance;
(b)
The appointment of a new Board;
(c)
Participation in the provincial bulk
water systems;
(d)
Entering into long-term service
provision agreement with
10.1 Conclusions on annual financial statements
Mhlathuze Water appears to be financially
secure but the short-term position (liquidity) needs to be closely monitored.
Short-term liquidity appears to be
even more finely balanced than last year considering that R23 million is tied
up in receivables.
The age of receivables appears to be
creeping up.
Checklist for comments
Board, Management |
Dr
MJ Ngcobo has only attended 2 of the 8 meetings. |
Audit report |
Unqualified
audit opinion. OK |
Other |
|
Reserves |
Retained
income R81, 6 million, reserves R89, 9 million OK |
Liabilities |
Interest
bearing borrowings appear expensive compared with today’s rates, a number
with fixed rates of +-16,6% (obviously taken out in different financial
environment). These are with private institutions so it may be correct to
assume that these are not possible to renegotiate, i.e. it should be
questioned whether there an early repayment clause in the instruments of
debt. |
CAPEX |
+-R11,
5 million work in progress for Ticor’s Fairbreeze mine. Is the mine
definitely proceeding? |
Financial Investments |
List
of investments not provided. |
Receivables |
R23,
7 million, 49,9 days. Slightly on the high side but OK |
Current ratio |
1.08
Very finely balanced considering greater than 50% of current assets
comprising receivables. |
Profitability |
R12
million after finance costs. OK |
11. Presentation by DWAF on general issues pertaining
to Water Boards
The
presentation focused on, consolidated financial performance of Water Boards,
tariff composition, Water Board subsidies, the Department’s changing and future
roles as sector leader, public private initiatives, borrowing capacity of Water
Boards, institutional reform plan, the Department’s oversight role.
Some of the
points raised were:
Under the
Consolidated Financial Performance of the Water Boards, it was noted that the
Finance Cost in 2004 was R669 million, but the interest costs declined in 2005
to a total of R547 million, a -18.2% decline. The Fixed Assets in 2004, were
R10.5 billion, but experienced a depreciation during 2005 to a total of R9
billion, a –14.3% depreciation.
The
Department’s current role is to scrutinise the Business Plans of the Water
Boards to determine whether the 5-year plans were viable and appropriate to
ensure services were provided to communities. Its future role, it has to keep
more close scrutiny to determine whether Business Plans were implemented and
consolidate Water Boards financials to its Annual Report as from 2007. There is
a need to establish Norms and Standards and ensure compliance to water quality
and drinking water standards.
It was vital
also to involve private public sector existence in water related matters.
Water Boards
need to obtain National Treasury’s approval to exceed their borrowing limits
through the Department via the Certification Committee. The Department has to
play an active monitoring role in terms of Water Boards compliance to the
Public Finance Management Act.
12.
Observations from Committee
Based on the
2004/05 Annual reports and audited financial statements presented, the
Committee observed that:
The 2004/05
annual reports of the Water Boards had not clearly provided information on the
Presidents’ State of the Nation Addresses of 2004-2006 and the overall service
delivery against performance targets. The Committee would however, want to
conclude the sessions and recommends as follows:
-
That some of the Water Boards did
not comply with Section 65 (1) (d) of the Public Finance Management Act.
Therefore, the Minister responsible to conduct oversight over Public Entities
is required to table the Annual Reports and Strategic Plans of the Department.
-
If an entity fails to appear before
Parliamentary Committees, the responsible Minister needs to provide reasons and
the Rules of Parliament need to be applied.
13.
Conclusion and recommendations
Having
considered the 2004/05 Annual Reports and Financial Statements of the Water
Boards ending
(a) Water
Boards to align their Annual Reports and Business Plans to the strategic
objectives of government laid out in the Five-Year Plan, State of the Nation Addresses
of 2004, 2005 and 2006;
(b) The
Committee to call the Department before it to report on the mechanisms put in place to ascertain
compliance;
(c) The
Department to intervene where Water Boards are non-functional and provide the
Committee with a report as to what intervention strategies had been put in
place to get the Water Boards operational;
(d) The
Department to come before the Committee and report in detail on the financial
viability of Water Boards;
(e) Water
Boards to come before the Committee to report on the institutional reform;
(f) The
Minister to come before the Committee and report to the Committee as to what
steps it took against Water Boards that did not comply with the Public Finance
Management Act provision to submit its 2004/05 Annual Report;
(g) The
Committee to further review the analysis undertaken by DWAF on Water Boards and
to interrogate the recommendations, conclusions on Annual Financial Statements
and Checklist for Comments, with a view to recalling certain Water Boards
before the Committee; and
(h) To
interrogate DWAF on the process undertaken to review the consolidation of the
work of Water Boards.
Report to be
considered.