A presentation to the Portfolio Committee on women in the Presidency – Parliament of RSA

Annual Reporting on activities for 2013/14 Financial Annual Reporting on activities for 2013/14 Financial yearyear

21 October 2014 Session21 October 2014 Session

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Introduction• The Constitution of the Republic propagates and advances

the values of openness and accountability,• The PFMA bolstered further by provisions which under

chapter 1 states that the object of the Act is to secure transparency, accountability and sound management of the resources

• Against the funds appropriated by Parliament in terms of the Appropriation Act of 2013/2014, the Commission presents spending and financial management activities in support of the 2013/2014 Annual Report (AR) tabled in Parliament in terms of section 55 of the PFMA

• This presentation should therefore be read together with the said AR and financial statement contained thereto (cross referencing to this thus made herein)

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Contents• Annual Financial Statements for the period

▫ Financial performance Overview▫ Financial Position as at 31 March 2014▫ Cashflow statement for the year ending

• Corporate Services – General Overview ▫ Human Resources▫ Information and Communication technology▫ Corporate Communications▫ Risk Management

• PFMA and Audit Outcomes for the period to 31 March 2014

▫ Regularity Audit outcomes – 2013/2014

▫ Status on Audit issues and Action plans

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Annual Financial Statements to 31 March 2014

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The Net Results – Overview of financial performance

• The results for the full financial year reflect a net surplus of R2m (or 3 % of the allocation/budget). Other income mainly from interest received contributed to the surplus by R876, 654 whilst the remaining under-expenditure is attributable to savings from vacant positions

• During the financial year, under-expenditure on salaries(Compensation of Employees) of R4,6 m was utilised to defray spending pressures on goods and Services. This reallocation or adjustment to the budget were duly approved by the Accounting Officer and Executive Authority together with mid-term results

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Expenditure line Budget Adjustment to budget

Available budget

Actual expenditure

Under / (over) expenditure

Income (63 080 000)   (63 080 000) (63 080 000) -

Other income - (876 654) 876 654

Operating expenditure 14 926 400   14 926 400 20 121 701 (5 195 301)

Other administrative expenses 3 673 600   3 673 600 1 273 751 2 399 849

Personnel costs 44 480 000   44 480 000 39 904 375 4 575 625

Finance costs     - 13 542 (13 542)

Depreciation     - 639 191 (639 191)           

Operating surplus for the period to 31 March 2014   -2 004 093 2 004 093

Financial performance - Income• Transfers from National Government were R63, 080, 000 compared

to R59, 073, 000 (2012/13), a growth in allocation of 5.9% year on

year

• Other sources of income were from interest on cash balances (R766,

866 and R109, 768 sundry sources mainly discretionary grants

from Sector Education and Training Authority(SETA – Services)

• Total income was R64 million in 2013/2014 compared to R61m in

prior period. Apart from the increase in allocation from the National

Government realised in the current year, there R2, 2 million

donor income recorded 2012/213 whilst none, whatsoever was

recorded in the current year

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Programme Expenditure- 2013/2014

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Key Areas – Exceptions to Budgets – year to 31 March 2014• Service deliver was the highest spending programme at R33

million with spending variance of R349, 605 (or 1% of programme budget). This programme spending constituted 52% of the overall annual actual expenditure. This covers work performed on strategic objective 1, 2 and 3 as outlined in the APP

• Strategic Objective 4, representing the Commissioner and Corporate Services programmes spent a combined R29 million▫ Commissioners – R9, 4 million, under-spending its programme

budget by R1,4 m mainly because of vacancies of Commissioners (COE)

▫ Corporate Services – with a total spending of R20 m and an unfavourable variance of R580, 716 (3% of programme budget)

• Expanded explanations to budget variance enclosed in Annual financial Statements for the period and further in 19 therein

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Spending details – 2013/2014

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Cls Year Actuals Adjusted Budget 2013/14

Annual Budget 2013/2014

Actuals - as % of total

Bad debts 90 244 -  Bank Charges 42 652 48 278 51 600 0%CAPEX - 0%Compensation of Employees 39 904 540 40 921 581 44 479 979 64%Computer Servicing, Internet & Website 873 432 980 825 639 900 1%Courier Services 224 879 198 656 127 800 0%Depreciation & Amortisation 639 191 - 1%Employee Assistance Program 75 000 300 000 0%Interest Paid on Bank overdraft 13 542 427 0%Media Outreach - - 0%Office Cleaning, Maintenance, Plants & Security 1 251 631 1 345 521 1 615 821 2%Office Consumables 163 224 133 514 35 700 0%Others - - 0%Printing & Stationery 753 038 612 584 352 300 1%Professional Services 5 115 258 5 862 583 4 032 200 8%Report writing,Printing & Publishing 1 204 447 1 580 366 1 862 500 2%Subscriptions 2 434 4 868 0%Telecommunication Expenses 2 085 303 2 083 383 2 142 000 3%Training and Development 271 174 650 000 650 000 0%Travel, Accomodation and Related Expenditure 7 822 093 6 665 906 4 134 100 13%Vehicle expenses, maint, fuel and other 293 973 313 400 661 900 0%Venues, Catering & Event Management 1 201 507 2 005 988 1 994 200 2%Grand Total 61 952 561 63 482 880 63 080 000

85% of expenditure arose from COE (64%), Travel & accommodation(13%) and Professional Services (Auditing, consulting by third parties) at a combined 8% contribution to total spending

Expenditure by location/office• R40 m spent at head office R40 m spent at head office

with minimal budget over-runwith minimal budget over-run• R22m was total spending for R22m was total spending for

9 provincial offices9 provincial offices• 32% (R10, 5 m) on the core 32% (R10, 5 m) on the core

was spent at HQ. Since HQ is was spent at HQ. Since HQ is not only administration but not only administration but includes Line functions – includes Line functions – Service delivery departmentsService delivery departments

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Expenditure by location      Data Location   Annual Budget 2013/2014

Actual Expenditure for the year

 

Head Office Provincial Office

Head Office Provincial Office

 Total

39 253 318

23 826 682

39 828 786

22 123 775  

  62% 38% 64% 36%  

Head Office      Data      Programme Annual

Budget 2013/2014

Actual Expenditure for the year

Variance % Variance

COMMISSIONERS: GOVERNANCE & SUPPORT

10 749 984

9 391 434

1 358 550 13%

CORPORATE SUPPORT SERVICES 19 361 454

19 942 170 (580 716) (3%)

SERVICE DELIVERY PROGRAM 9 141 879

10 495 182

(1 353 302) (15%)

Grand Total 39 253 318

39 828 786

(575 468) (1%)

Comments

•There was redirection of the budget; virements of savings on COE to defray some of the overspending lines under Goods and services

•The overall/net under-spending for the year was R1,1 m or 2% of the allocation/budget

•This together with other income (R876, 654) accounts for the net surplus reported for the year ended 31 March 2014

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Expenditure per economic classificationExpenditure per economic classification  Data    

Economic Classification

Annual Budget 2013/2014

Actual Expenditure for the year

Variance

% Var.

Compensation of Employees

44 479 979 39 987 253

4 492 726 10%Depreciation & Amortisation

639 191

-639 191

 

Goods & Services 18 600 021 21 326 117

-2 726 096 -15%

Grand Total 63 080 000

61 952 561

1 127 439

2%

Financial Position – Status as at 31 March 2014• There are no solvency or liquidity challenges, the financial

position remain strong . Planned recapitalization projects will however diminish the liquidity strength in the near term

• Non-current asset base at net carrying amounts estimated at R1, 5m compared to R1,7 m as at 31 March 2013. Net of Depreciation at R640, 000 and new assets purchased for R374,000

• Current assets mainly cash (R19,4 m) more than 3 folds above the net asset situation and covers liabilities by more than 27% (R19, 4m v R15,3m)

• Included in cash balance, is the surplus to be utilised for the recapitalization of CGE assets (R8,5 m conditionally approved Treasury)

• Current liabilities R15,3 m (minus R8,5 m) = R7 m (Exchange R2 m, remainder is due to staff and payroll creditors(SARS, AF)

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Breakdown of non-current assets

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Note11: Property, Plant and Equipment

Reconciliation of carrying value 2014 Office equipment

Motor vehicles

Office furniture Computer equipment

Total

Opening net carrying amount 204 325 373 201 559 642 584 134 1 721 302

Cost 1 932 030 1 765 080 3 394 509 6 520 453 13 612 072

Accumulated depreciation (1 727 705) (1 391 879) (2 834 867) (5 936 319) (11 890 770)

Additions 54 903 - 20 486 298 450 373 839

Depreciation (123 193) (113 872) (402 125) (639 190)

Disposals carrying amount - - - - -

Cost

Gross disposal accumulated depreciation

Closing net carrying amount 136 035 373 201 466 256 480 459 1 455 954

Cost 1 986 933 1 765 080 3 414 995 6 818 903 13 985 913

Accumulated depreciation (1 850 898) (1 391 879) (2 948 739) (6 338 444) (12 529 959)

Breakdown of current liabilities in balance sheet

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Notes to the annual financial statementsfor the year ended 31 March 2014

2014 2013

R R12 Payables from exchange transactions

Trade creditors 1 607 693 2 880 950Accruals 556 175 526 703

2 163 868 3 407 653

13 Payables from non- exchange transactionsPayroll creditors 2 618 408 2 563 222 Conditional grant # 8 544 442 494 864

11 162 850 3 058 086

14 ProvisionsProvision for annual bonus 518 368 429 450Provision for performance bonus 1 504 691 1 011 912

2 023 059 1 441 362

Provision for annual bonusBalance at the beginning of the year 429 450 434 739Less utilised during the year (429 450) (434 739)Raised during the year 518 368 429 450

518 368 429 450 Provision for performance bonus

Balance at the beginning of the year 1 011 912 1 344 298.00 Less utilised during the year (1 350 371) (1 344 298) Raised during the year 1 843 150 1 011 912

1 504 691 1 011 912

Cashflow statement for the year ended31 March 2014

• For all income, cash of R64 million was received added to R18 million at hand at the beginning of the financial year, bringing in cash available for use in the financial year at R82 million

• The CGE utilised for purposes of it’s operations, R62 million to pay employees and service providers for goods and services

• In the period, there was only R373, 839 cash outflow for purposes of acquisition of fixed assets – note 11 of the AFS provides further details

• As at 31 March 2014, the net cash held in the CGE bank account was R19, 4 million compared to R18 million at the beginning of the financial period

• This cash is available to service the current liabilities (R15, 4 million) as shown in the statement of financial position and will therefore be spend within the 12 months period of the 2014/2015 financial year, in the main for the ICT infrastructure and motor vehicle fleet acquisition (combined funded for R8, 5 m)

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Corporate Services – An Overview

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Corporate Services – HR – Personnel Costs• Senior management and Commissioners constituted 17 of the

112 filled establishment and consumed about 26% of current year’s spending,

• Of the 49 officials in the highly skilled category to level 12 , forty(40) are focussed on direct (Less administrative/managerial)/Core Service delivery roles

• 98 of the 110 funded positions were filled, in addition to 14 interns to the total cost of employees(COE) was R39, 9 million against a budget of R44, 5 million – Under-expenditure reported (refer to note 19 of the AFS). Recruitment to fill vacancies underway

• Annual performance bonus was paid to 64 officials in lieu of 2012/2013 (previous financial year’s performance) – R1, 350, 371 was paid out. A provision (R1,8 m – not paid out) was made for the 2013/2014 – refer to note 14 of the Annual Financial Statement for the same period

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Corporate Services – HR (Leave)

• Against available leave days (accrued in the year, at 22 days per person per

year = +/- 2100 for 98 persons for the year), 1645 annual leave days were

taken at an average of 14, 7 days per person – a good measure in compliance

to section 22. 23 of the Basic Conditions of employment Act. However, leave

liability/provision at reporting time remains high at R1, 7 million due to

accumulated days from previous cycle. The CGE leave policy has enabling

provisions to remedy the situation during the 2014/2015 Financial year

• Sick leave taken was at an average of 3 days per person for the year

• In the overall, Senior managers and Commissioners took less leave than the

average during the reporting period. Leave planning in the new year will

seek to resolve this situation to ensure compliance (BCEA) and effectiveness

in human resources management

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Corporate services – HR ( Employment Equity)• All employees (112 in the period) were from the designated group

of previously disadvantaged (PDI’s – Black or women)

• 40 males compared to 72 females were employed – 62% skewed in

favour of women. Where of the 72 , sixty were African women

• There were 2 employees with disabilities. This represented 1,8 % of

the establishment, marginally deviant from a two percent minimum

target - The redress planned into the recruitment in the new year

for the vacant/existing positions as part of the approved EE plan

• Representation of women at decision making level is strong with

Commissioners ( 8 of 11 as at 31 March 2014) and SMS at 50/50

but led by female CEO

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Corporate services – HR (Human Capital Management)• 3 upward placements/promotions were made during the period – in

the finance department and two provincial offices

• There has been disciplinary action taken against an employee on

transgressions of financial misconduct (PFMA section 81) and is

reportable to Parliament in terms of National Treasury Regulation

(T.R. 4.3.1 & 4.3.2) – Termination took effect from January 2014

following a formal disciplinary process undertaken by management –

There were no monies recoverable/ No direct claim from the former

employee

• 38 employees were trained at the total cost of R271, 174 down from

spending of R491, 679 in 2012/2013 year (Note 6 of AFS and table

12.3.14 of AR)

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Corporate Services – Information technology

• Information and Communication Technology services at the Commission stagnated pending a total revamp of the environment; from reconfiguration of the Governance Framework, through to the replacement of the old and obsolete hardware and software resources

• A project is already underway in the new financial year where the feasibility evaluation has been completed, ICT strategy and implementation being finalised internally already at the time of reporting. The conceived project plan is estimated to cost R4, 2 m

• The project is funded from Conditional grant from National treasury – refer to note 15 and 24 of the AFS)

• All processes and protocols followed in the planning and rollout are consistent with the guidelines proclaimed by DPSA

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•The unit employed 2 officials for the

period under review

•The unit provided alternative channels

to deliver the CGE services, leveraging

the traditional outreach, advocacy and

information dissemination methods. This

was done through the use of multiple

platforms, ranging from broadcasting,

print media to social media

•The total expenditure for the unit in

the period was recorded at R3,1

million

• With the reach and coverage of

audience, it is submitted the unit

delivered added value to the work of

the CGE

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Corporate Services – Risk Management• Policies, management structures and processes in place complying to

the requirements of section 38 of the PFMA

• Refer to chapter 14 of the 2013/2014 Annual Report on approach and

philosophy followed by the Commission

• The overall risk exposure is within the acceptable levels except on ICT

and some internal control focus areas. Obsolete technology impacting

information security plus weaknesses in SCM, also highlighted in the

report of AGSA

• The CGE financial instruments do not have exposure to credit,

currency or price risk and have limited exposure to interest rate risk

because of the amounts of cash currently held in the current bank

account

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Risk management - DashboardSignificant Risk areas by category as of 31 March 2014    

Number of Risks

Average of Inherent Risk

Average of Residual Risk

Financial management and controls 7 20

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Information and communication Technology 5 20

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Strategic and critical objectives 13 21

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Overall assesment 25 21

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       Legend -risk tolerence rating grid    Broad tectical intervention by management Exposure rating Overall assessment  Assurance on the identified controls will be validated by internal Audit Unit

Low – from 1 -5 Acceptable  

Management have reviewed risks and assessed the exposure against the risk appetite. It is considered that at this level of exposure effective internal control measures must be implemented by management

Medium – from 6-12 Acceptable with caution

 

Management will implement corrective actions urgently High – From 12.5 – 25 Unacceptable  

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Fraud, Contingencies and litigation• No instances of fraud were detected or reported to

management during the period under review

• No new litigation matters. CGE v Gasa and Axolute v CGE

are the only litigation matters still to go on trial or to

which the CGE is exposed

• A contingent asset in the form of a receivable is

specifically disclosed in the AFS and been followed up with

the insurer

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Audit and PFMA outcomes

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Regularity Audit Outcomes 2013/2014

•Unqualified opinion on AFS

•Weaknesses currently

addressed inn terms of the Audit

action plans developed subsequent

to receipt of management letter of

the 2013/2014 regularity audit read

•Apart from summary on the left of

slide, detailed action plans have

been developed, implemented and

tracked by oversight

structures/leadership of the CGE on

a continuous basis

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Audit status28

Unfavourable Unfavourable Favourable Favourable

2013/14 Matters of emphasis

• Contingent liability due to claim under litigation estimated to R814, 0002013/14 Compliance with laws and Regulations issues•SCM – needs vast improvements•Irregular, fruitless and wasteful expenditure reduced materially reduced

Thank youQ&A

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