PRESENTATION ON THE FINANCIAL MISCONDUCT CASES ( DSD) 23 NOVEMBER 2016

The Role of DSD on Public Entity Oversight The South African Social Security Agency (SASSA) and the National Development Agency (NDA) are Schedule 3A Public Entities in terms of the PFMA and are accountable to Parliament through the Minister of Social Development. The Minister has a responsibility to exercise oversight over these public entities in terms of Section 63(2) of the PFMA including their founding legislations, i.e. South African Social Security Agency Act, No. 9 of 2004 and the National Development Agency Act, No. 108 of 1998, as amended. SASSA and the NDA are funded through the Vote of the Department of Social Development.

The Role of DSD on Public Entity Oversight SASSA is accountable for the grant money (referred to as big money) and the administration budget of the agency. The Department has a responsibility to administer and account for the grant money to the Minister via the Director General The CEO of SASSA is the accounting authority in terms of Section 49 of the PFMA and has a responsibility to account for the administration budget related to the running of the agency.

SUMMARY OF FINANCIAL MISCONDUCT CASES FINANCIAL YEARS NO OF CASES IRREGULAR EXPENDITURE FRUITLESS AND WASTEFUL 2014/2015 86 R 5,611,711 20 R 151 945 2015/2016 132 R8 311 433 (Including SASSA) 15 R666 447

FINANCIAL MISCONDUCT CASES 2015/2016 FINANCIAL YEARS TYPE OF EXPENDITURE TOTAL CASES RECEIVED FINALISED CASES (LCC) TOTAL CASES REMAINING IRREGULAR 132 DSD R8 046 565 SASSA R264 867 FRUITLESS AND WASTEFUL 15 R666 447 R0.00

Reasons for the Financial Misconducts cases related to Irregular Expenditure The majority of irregular expenditure arose from not following the SCM policy.  Un-competitive procurement process due poor planning, expost-facto approvals Not being able or possible to obtain at least 3 written quotations especially for events held in rural areas with limited service providers.  Due to unavoidable and unforeseen need for additional goods or services at short notice at or on the day of events where more than planned community members attend or arrive Loss Control Committee not condoning cases before payment

Remedial Action to reduce Irregular Expenditure The SCM policy was revised.  Also all cases were referred to the Loss Control Committee to condone the expenditure where it was justified and the State suffered no loss; or To recommend to Labour Relations to issue the sanctions such as written warnings, final written warnings Labour relations to commence with disciplinary hearings Objective: no repeat cases (0) Workshops were held with all line functions to discuss, identify risk areas and weak internal controls to prevent future occurrence Presentations on SCM policies, procedures and financial misconduct at all induction training for new New DG to sign off on finalised disciplinary cases

Reasons for the Financial Misconducts cases related to Fruitless and Wasteful Expenditure Hotel no-shows due to late cancellations (R3 450) Hired car damages (R77 912) Administration fees paid to service provider to administer damage and traffic fines incurred by officials travelling on official duties (R2 435) One case of possible collusion between bidders for procurement of promotional material for an event (R485 000) One case of abuse of departmental cellphone ( R97 643)

Strategies to reduce Irregular Expenditure Review the composition of the Loss Control Committee Provide training to members to allow them to perform efficiently Improve planning in the Department for the procurement of goods and services The Loss Control Committee to fasttrack reviewing all outstanding cases of Irregular Expenditure and condones cases where the Department suffered no loss.

Remedial Action to reduce Fruitless and Wasteful Negotiate contracts with Service providers (e.g. late cancellations of hotel accommodation, venues and admin fees) Recover costs from the relevant officials immediately Refer the case of possible cover quoting for procurement of awareness ribbons and posters for Orange Day to Internal Audit for further investigation Directorate Labour Relations investigate the case of abuse of Departmental Cellphone Loss Control Committee be reconstituted with new members to deal speedily with all cases

Strategies to reduce Fruitless and Wasteful Expenditure Policy revised Negotiation with Service Providers Enforcement of SCM Policies Conduct study to benchmark price of major commodities required by the Department Delegation framework has been revised to provide more powers to the Loss Control Committee ( issue sanctions) LCC been instructed to reduce cases before 31 January 2017 9 Days (3 per month November to January ) has been set aside to finalised all cases Objective: no repeat cases (0)

9 May 2018 THANK YOU Budget Committee