2013/14 Annual Report Briefing for the Portfolio Committee On Higher Education and Training 5 November 2014

Contents  Previous period audit outcomes  Steps taken to address previous period audit outcomes and organizational performance  Current period audit outcomes and organizational performance  Steps taken towards a clean audit and improvement in organizational performance  Organizational performance status and future plans  Highlights of the financial statements  Status of action plan to address the AG findings

Previous audit outcomes 2012/13 – Qualified Audit opinion  Financial statements » The amount disclosed in the commitment schedule could not be supported  Performance information » Reported targets were not consistent with planned targets(consistency) » Performance targets were not specific (Measurability) » Performance indicators were not well defined (Measurability) » The AG could not be satisfied as to the reliability of information presented on the following programmes : Mandatory grants Funded skills development Sector development » ;

Steps taken to address previous period audit outcomes and organizational performance  Revamped the Finance Department  Instituted a process of holding management accountable for irregular expenditure  Implemented and entrenched risk management throughout the organization  Appointed a new Audit Committee  Accounting Authority exercised greater and regular oversight, and a focused approach to crisis issues  Introduced Organizational Development focusing on relevant skills transfer  Strengthened processes, and due diligence, in awarding discretionary grants

Current period audit outcomes and organizational performance 2013/2014 – Unqualified Audit Opinion  Financial statements  No material audit findings  Performance information  10,622 learners enrolled compared to 2,299 in 2012/2013  Improvements in usefulness and reliability of performance information as there is only one finding relating to qualifications and quality management because the relevant indicators were not verifiable  Still to improve in the achievement of planned targets

Steps towards a clean audit and improvement in organizational performance  Reconstituted the organizational structure  Ensuring staff occupy positions in line with their qualifications, skills, experience and knowledge  Improving business processes  Re-designing, implementation and monitoring of controls throughout the period  Forensic investigation of all projects  Introducing performance management system, performance agreements and incentives  Improving the discretionary grant allocation processes  Timely allocation of discretionary grants  Introducing performance based system to pay training providers and other core business service providers  Establishment of a Project Co-ordination Office  Continuous tracking and monitoring of action plans to address audit findings

Organizational performance status and future plans  Contracting has already begun with entities for the EOI process (discretionary grants 2013/2014)  23,612 learners already allocated to the value R511.3 million  Priority projects received and approved in principle by the AA  20,963 learners to the value R523 million  Application window for 2014/2015 discretionary grants opened on 22 October 2014 at 08:00 am and will close on 21 November 2014 at 12:00am (Midnight)  11,634 learners to the value R302.4 million  Advert for additional 2014/15 and initial 2015/16 discretionary grants will be released in December 2014 to target learners in January 2015  23,200 learners targeted to the value of R604.7 million  The total allocation between 1 April 2014 and 31 March 2015 will therefore be:  79,409 learners to the value of R1.9 billion

Highlights of financial statements Statement of financial performance  Revenue from skills development levy R 1.2 billion  Surplus of R469.5 million  Forfeited R185.3 million of surplus to National Skills Fund in terms of Grant Regulations (already paid)  Transfers to public institutions R311.4 million o NSFAS bursary support R148.7 million o NSF: Public FET infrastructure support R162.7 million

Highlights of Financial statements continued Statement of financial position  Cash balance of R2.3 billion  Commitments of R274.4 million  Reserves of R1.73 billion being allocated as follows:  Discretionary grants R1.04 billion o EOI process R511 million – already allocated o R227 million priority budget awaiting Minister’s approval o R300 million to be allocated as top-up of discretionary grants and remedial projects  Priority projects R692 million o R523 million already allocated o R169 million still to be allocated

Highlights of financial statements continued Irregular expenditure  Decreased from R141.4 million (2013) to R63.9 million in 2014  Management held accountable

Status of action plan to address the AG findings

Status of action plan to address the AG findings continued

Status of Action Plan to address the AG findings continued  The action plans are being monitored by management on a monthly basis  Audit steering committee reviews the status of implementation  The unresolved findings are attributable to:  Implementation of systems (currently in progress)  Awaiting outcomes of the forensic audit  Submission and approval of revised APP  Others have not reached the action deadlines as per the action plan

End Thank You