Presentation to Portfolio Committee: Annual Report 2016/17

Key Events that influenced Annual Report Apologies Board Chairman Delegation CFO Audit and Risk Committee Chair Oversees audit by Auditor General Key Events that influenced Annual Report 2016 Rio Olympics Largest Olympic team that represented SA Suspension of Bloemfontein laboratory’s accreditation Suspension of “back up” Doha Laboratory’s accreditation

Annual Report 2017: Performance Number of tests conducted, inclusive of urine and bloods, reduced from target of 3650 tests to 2343 tests Increase costs after Bloemfontein and Doha laboratories were suspended Volatility of ZAR against foreign currencies Managed deficit High return of positive dope tests 38 cases opened Anti-Doping Education Overwhelmingly funded by Lottery grants Internationally Quality Certified: ISO 9001

Audit Opinion Financial Statements - Unqualified audit opinion with findings on Compliance and Supply Chain Management (SCM) - Findings related to the following aspects: Revenue management (outstanding debtors e.g. Kenya ( R 138 K: > 120 days, provision raised) Material uncertainty relating to going concern (Net deficit = R 663 000 and TL > TA by 5 million) Budget overspend (due to pressures experienced in doping control in the lead up to the 2016 Rio Olympics. The largest Team SA team to participate in Olympic Games. SCM – deviation (x1) not deemed valid and no declaration of interest received (x2) 4

Performance information Audit Opinion Irregular expenditure Resulting from budget overspend: R 1,046 m (2016: R 4,651 m) Procurement processed not followed accordingly: R 181 K (2016: R 2m) IT services (deviation not seen as valid): R 155 K No declaration of Interest (iStore and Sage Pastel): R 23 K Lowest price not selected: R 4 K Performance information - Unqualified with adjustments but NO material findings - Targets Doping control Test numbers reduced due financial challenges experienced Targets were exceeded in the first quarter due to 2016 Rio Olympics

Audit Opinion Education Finance Targets exceeded as a result of increased networking and outreach efforts by the Education unit and increased demand by national sports federations Education is largely funded by the Lottery grants Finance Targets achieved, ENE process completed and database submitted within deadlines Quarterly reports submitted to Lottery, SRSA and National treasury within the prescribed deadlines

Current Status: 2017 Treasury/SRSA grant Lottery funding Budget allocation of R 22.991 m Amount received to date: R 11.495 m (50%) Two tranche payments continue to be a challenge because doping control equipment is purchased is purchase beginning of year. Overseas laboratory costs are paid quarterly Actual expenditure incurred to date: R 9.794m (43%) Manage cash-flow, tranche payments are often not on time Lottery funding Budgeted spending for the year: R 7.837 m Amount above includes new funding of R 5 m (R 4m: Education, R 1m: Doping Control) Actual spending to date : R 1.843 million “Old” Lottery grant: R 1.2 million New Lottery grant: R 643 K

Current Status Audit Action Plan Austerity measures and budgetary controls in place to prevent deficit Irregular expenditure presented to board for condonation and board resolved to condone irregular expenditure Provision raised for long outstanding debtors (especially those considered doubtful). Monthly statements issued and followed up via email and telephonically. Procurement practices have been improved with stricter compliance i.e. tax clearance certificates, declaration of interest have been made mandatory regardless of value of transactions and all quotations are written (no verbal quotes) 8

Budget and Sustainability Analysis of Sustainability To comply with World Anti-Doping Code and the testing targets for priority sports codes International and national compliance Actively follow up and prosecute on steroid manufacturing and trafficking Implement comprehensive schools testing program Implement comprehensive anti-doping curriculum (life orientation) in high schools Funding SAIDS underfunded by 25%, year on year over the medium term R5,7 million per year

Input from Audit and Risk Committee Adv. Dave Mitchell (CA)

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