____________________________________________________ PRESENTATION TO PORTFOLIO COMMITTEE ON LABOUR (PCL) Presentation on the 2005/06 THETA Annual Report & Expected issues 2006/07 Auditor General

___________________________ Auditor General’s Finding on 05/06 Un-Qualified Audit Report Emphasis of Matter: Special Investigation

__________________________________ Expected issues 06/07 Auditor General Un-Qualified Audit Report Other Matters: Irregular Expenditure

Auditor General’s finding on 05/06 _______________________________ Special investigation Special Investigation: re 2003/2004 financial year on procurement Findings: No approved supply chain management system. Adequate procurement processes not followed. Tender Committee did not disclose interest Theta did not manage project efficiently

Theta Response ___________________________________________________________ A Supply Chain Management Policy and Procedure document was developed and approved by the Board on 9 March 2006. This Policy is compliant with all the relevant Acts; Regulations and other directives regarding the Supply Chain and is implemented and adhered to at all times. All procurement is now compliant to the policies and procedures as mentioned before This finding was incorrect as the Tender Committee has a standing item on all agendas regarding deceleration of interest and the relevant declarations was presented to the Auditor General. The Auditor General used the basis of the provider not completing his work and still being paid as a basis for this conclusion – The Theta Board has thoroughly investigated this matter and came to the conclusion that only payments for actual achievements or completions were done. Neither the Special Investigation nor the subsequent Theta Board investigation found any signs of Fraud or other criminal behavior.

Expected issues 06/07 Auditor General Other Matters: Irregular Expenditure During this financial year the Accounting Authority, after careful consideration of all facts, authorised THETA to settle the legal case with. This decision was made on the advice of Theta legal representatives, senior council and arbitrator. This advice concluded that the chances of the organisation in winning the mentioned court action were less than 50%. The total amount in the settlement of this case was as follows: Legal costs R 412 000 Settlement R 4 500 000 Total R 4 912 000 The estimated legal exposure to the organisation, before settlement, was legal fees and settlement cots of R20 million.

Expected issues 06/07 Auditor General (continued) During the 2005/2006 financial year the Auditor General conducted a forensic audit regarding this matter. The findings of the forensic audit were included as an Emphasis of Matter in the Audit Report of the 2006 financial year. Subsequent to the forensic audit the Accounting Authority conducted a thorough investigation into the matter. The Forensic Audit and the subsequent investigation by the Accounting Authority found no evidence of criminal, fraudulent or corrupt actions by any Theta officials involved in the mentioned court case. The Accounting Authority subsequently developed and implemented the necessary policies and procedures to ensure no repeat of this situation. These procedure manuals are revised on an ongoing basis to ensure that compliance is monitored and enhanced. As a result of this expenditure Theta is exceeding the administration expenses threshold, during the year Theta, in compliance with Regulation 3.3 of the Skills Development Act 1998; Seta’s Grant Regulations regarding monies received by a Seta and related Matters, applied to the Minister of Labour for authorisation to exceed the administration expense threshold, at the date of publishing of this report no reply have been received. As a result of the efforts by the CEO and his team the amount by which the admin expenses exceeded the threshold was limited to R 2.856 million.

Conclusion The THETA Board is committed to the objectives and principles of transparency, accountability and integrity and will continue to monitor, adjust and develop policies and procedures to ensure compliance and a clean and clear record on the future. Thank You