PROVINCE OF THE
PUBLIC HEARING ON CONDITIONAL GRANTS AND CAPITAL EXPENDITURE
– FOR THE FINANCIAL YEAR 2006/07 - 5TH MARCH 2007
CONDITIONAL
GRANTS
SCHOOL
NUTRITION PROGRAMME
FINANCIAL
TRENDS IN ALLOCATION / TRANSFERS / ACTUAL EXPENDITURE
The table and chart below
represent the financial trends over the last 3 financial years.
SCHOOL NUTRITION
PROGRAMME |
|
|
|
|
|
|
|
|
|
|
2004/05 |
2005/06 |
2006/07 |
|
Allocation |
177,259 |
243,951 |
243,994 |
|
Transfers |
177,259 |
243,951 |
157,613 |
|
Actual Expenditure |
170,910 |
211,726 |
157,613 |
|
Under-expenditure |
6,349 |
32,225 |
86,381 |
|
Spending as a % of total |
96.42% |
86.79% |
64.60% |
|
|
|
|
|
|
* 2006/07 relates to transfer and spending at |
1.
Motivation
We herewith request continuing of and future increases in
School Nutrition Programme Funding for the
The problems experienced in the previous SNP management
within the
However, the Premier and Cabinet intervened and have prioritised SNP for radical and effective redesign. This intervention is now well underway with
extremely tight deadlines being set and so far attained by the new SNP Manager
in collaboration with the Interim Task Team, the Provincial Task Team and also
the Finance section of the Eastern Cape Department of Education.
In fact, the SNP Programme is to
be expanded to feed all Grades from Grade R to Grade 7 (whereas previously only
Grades R to 4 were fed) and also to feed in all quintile 1 to 3 schools. This will put pressure on the requested budget
and any consideration of reduction or reduced increase will prove problematic
and detrimental to the interests of the children targeted.
The steps taken to ensure that the Eastern Cape SNP delivers
effectively and spends the full budget in the 2007 / 2008 year include the
following important milestones:
a. “Changing the Guard”
Following the intervention of the Premier and Cabinet and a
forensic investigation, the decision was taken to replace the entire SNP
Management and take other steps to renew the programme:
·
The
SNP Management was suspended at the end of 2006
·
Contracts
with suppliers were terminated
·
A
new Manager was appointed at the end of January 2007
·
New
short term tenders were advertised, adjudicated and awarded (by end January
2007 through special expedited approved procedure)
·
Feeding
resumed early in the new calendar year (2007) and by 1 February the programme was back in operation
b. Fundamental Redesign of the Claims
Processing, Verification and Supply Chain Management System
Fundamental to the redesign of the entire SNP was a
restructuring of all the procedures around claims processing, documentation,
verification and the subsequent payment of suppliers for food delivered to some
5000 schools. These steps which have
been taken in a very short space of time, include the
following:
·
The
bulk of the suppliers have engaged the services of two professional accounts
management service providers at their own cost to ensure that
i.
There
is uniform proof of delivery documentation
ii.
There
is uniform detail capturing and calculation and content of particulars on
invoices
iii.
That
there is timeous processing and requisition for
payment
iv.
That
there is proper management of deliveries to schools exactly per the tender
awards. This process is managed through
the automated generation of delivery documents which reflect not only the
address but also the date and the quantities to be delivered against which the
delivery record is subsequently compared and signed for by each school.
·
In
addition, Eastern Cape SNP will benefit from detailed automated analysis
reports from these “Accounting Administration Centres”
with exception reports being generated at our request as a free service to SNP
/ ECDOE.
·
Document
archiving facilities have been arranged to ensure the safekeeping of all the
supporting documentation and also facilitate the orderly rapid retrieval of
documents whenever needed;
·
Supplier
payments will be expedited through a smooth liaison between the SNP and Finance
Section of DOE and by their collaboration with the Accounts Administration Centres in order to synchronise
the process and complete it within deadline.
c.
Arrangements have been made for the deployment of unemployed
graduates as “interns” at the Accounts Administration Centres. Around five unemployed graduates will be so
deployed and usefully engaged where they will acquire the skills and knowledge
of the accounting systems in use and also develop IT and practical computer
skills under supervision and in an environment where they are held to a strict
work ethic. Similarly, the SNP and
Finance Section Staff who do final verification of the prepared documentation
will also benefit from the new professional environment.
d. Improved Communication Systems
For a programme such as SNP
feeding 5000 schools (900 000 pupils) efficient communication systems are not
negotiable. In the past, ineffective
communication has caused immense difficulties.
Steps are already in place to redesign the communication systems with
the use of effective modern technology to transmit e-mails and fax reports even
from rural locations at low cost. This
will greatly enhance not only the reporting, but also the ongoing monitoring of
performance at individual schools and within districts. It will facilitate rapid response to problems
and effective trouble shooting.
e. Staff Morale
The rebuilding staff morale and enthusiasm around the SNP Programme is a priority and Management has already begun to
attend to this aspect but obviously this will take longer.
f.
Internal Controls
All possibility of significant abuse or fraud will be
mitigated by a totally revised comprehensive system of the internal
controls. This will be built on two
pillars:
·
Reliance
on an analysis of accurate and comprehensive financial data and analysis
reports; and
·
The
independent reporting from Principals through the District Offices (SNP
District Co-ordinators and their respective staff
components) through to Cluster Chief Directors, DDG and the Programme
Manager and finally the Superintendent General and MEC for Education. These operational reports will be independent
and used to confirm the analysis of financial data and supplier
performance.
g. Conclusion
The package of remedial steps outlined above will not only
create an efficient environment but through that also rekindle the enthusiasm
of all involved in SNP in the
Forensic
Investigation
A forensic investigation initiated by the Office of the
Premier commenced in August 2006. The outcome of this investigation was
released on
There were flaws in the procurement processes
·
Feeding
was not properly taking place in the identified schools and as such claims are not coming forward
·
It
is alleged that payments were effected to service providers without necessarily
rendering/providing the services to the schools
·
Conflicts
of interest from officials within the department and other government
departments were identified
·
Internal
control weaknesses within the administrative processes of the Department more
especially within the SNP.
Recommendations from
the investigation included the:
·
Immediate
cancellation of all SMME contracts and
Secondary Cooperatives; and
·
Suspension
of all management and officials involved in the SNP programme.
This above has resulted in
delays, due to contracts of service providers being terminated. A new tender
was awarded on
Factors
contributing to R 86,381 under–expenditure as at
Budget for the 4th
quarter which would have resulted in 53 days of feeding is estimated at R60,7 million. Therefore there is a real under-expenditure of
R25,6 million as at
MONITORING
OF SPENDING IN THE 2006/07 FINANCIAL YEAR
Spending is monitored
weekly by the newly appointed project manager and on a monthly basis by the
Financial Committee of the Department and Executing Authority.
Routine conditional
grant monitoring and reporting
Monthly Report to be submitted by the Receiving
Provincial Department of Education to transferring National Department of
Education to Provincial Treasury according to the format provided by the
national Department of Education:
Evaluation
Evaluation is conducted annually in every district. The
process includes an explicit appraisal of whether the programme
has met its stated objectives (for example: ‘Has it contributed to the
alleviation of the pupils’ temporary hunger on a day to day basis?’ ‘Has
nutrition knowledge among the children’s teachers and parents been changed for
the better?’ Reasons for any unintended effects on stakeholders are clearly
analyzed. The evaluation process itself will be conducted using participant
observations, by external experts so as to get objective reports.
CAPACITY
CONSTRAINTS THAT IMPACT ON SPENDING
Capacity within the unit was
adequate for the first three quarters. The Department however are intending to improve the systems in place to receive and
reconcile invoices for payments, in this area there is room for improved
internal controls. Subsequent to the forensic report, all management of the programme has been suspended and until the reconciliation
process is complete the existing staff is temporarily being seconded to other
areas of the Department. This has resulted in a significant slow down in
payments towards the end of December 2006. This will further impact on spending
to the extent that feeding in the last quarter only commence on
Corrective
mechanisms
Challenges currently being faced
have been addressed by changing the management of the project, and outsourcing
reconciliations to ensure payments being made are for services delivered and
due and putting in place a more effective system to management payments.
Immediate priority will be given to the following:
·
Gaining
the committed active involvement of school governing bodies (SGB's), School principals
and staff and linking them to the creation of a more efficient and
reliable independent reporting chain to inform the SNP on:
- How many meals are actually served
- Meal content and general standard
This information chain must be sufficiently accurate to
facilitate reconciliation within acceptable risk limits to the food supplier
records and SNP payments for services.
·
Ensure
timeous accurate reporting and invoicing by suppliers
and improved internal controls to verify quantities delivered and quality
standards.
·
To
ensure timeous processing of invoices and supply
payments in order to safeguard the financial security and sustainability of
suppliers.
·
Facilitate
the payment of services delivered up to November 2006.