PORTFOLIO COMMITTEE PRESENTATION: PROGRESS REPORT ON KEY CONTROLS (MOVING TOWARDS UNQUALIFIED REPORT) TO MONITOR AND EVALUATE RELIABILITY OF FINANCIAL INFORMATION

2 CONTENTS 1.Asset Management 1.1 Moveable Assets Verification of assets Correct asset classification and valuation Monthly reconciliations between LOGIS and BAS Increasing awareness of asset management Updated asset management policies 2.Finance 2.1 Goods and Services Payment of all invoices within 30 days from receipt of the invoice. Verification procedures of payments below R 1 million 2.2 Updated and reviewed revenue policies implemented 2.3 Prepare monthly financial statements 2.4 In Year Monitoring (IYM) 2.5 Appropriation Statement 2.6 Suspense and Zero Accounts 2.7 Reconciliations performed 2.8 Debt Management

3 CONTENTS (cont…) 3.Compliance with all statutory requirements and PPP agreements

4 1. ASSET MANAGEMENT 1.1Moveable Assets Verification of assets, including the eradication of all audit findings related to asset management (tangible, intangible, immovable or minor asset) o DCS and National Treasury - Office of the Accountant-General (NT OAG) meet on a monthly basis to assess progress with regard to areas of audit qualification o Management areas conduct monthly asset spot-checks with a view to improve the capturing of assets and regions submit their findings to Head Office o Head Office team conducts monitoring visits to all big and other key management areas that had challenges with regard to asset management in the previous financial year o 496 Interns have been appointed and deployed to all management areas to assist with asset verification

5 1. ASSET MANAGEMENT (cont…) 1.1Moveable Assets (cont…) o From 07 th February 2011 to 18 th February 2011, the team from OAG conducted, on a sample basis, visits to management areas focusing on asset verification and asset reconciliations o The process of asset verification by OAG is to provide some basis for agreeing on the opening balance for assets that should be adjusted o It is envisaged that by the end of May 2011, DCS and OAG would have agreed on the adjustment to the opening balance and consultations on this matter done with AGSA and Audit Committee

6 1. ASSET MANAGEMENTS (cont…) 1.1Moveable Assets (cont…) Correct asset classification and valuation o The BAS expenditure reports are compared to additions on the LOGIS asset register on a monthly basis. All regions are then instructed to rectify any identified discrepancies o Discrepancies picked up on March 2011 reconciliation were rectified during April and May 2011 and will be disclosed on the AFS accordingly

7 1. ASSET MANAGEMENTS (cont…) 1.1Moveable Assets (cont…) Monthly reconciliations between LOGIS and BAS, at Head Office and all regions o The monthly asset reconciliations have done up to March 2011 Increasing awareness of asset management to all employees affected by the use of assets o Asset management information sessions were held in Head Office with all asset and sub-asset controllers. All regions have conducted awareness programmes during November o Asset controllers and sub asset controllers have been appointed in writing by all regions o Currently we are visiting all management areas that are being audited to monitor progress and get feedback from auditors if they are satisfied with co-operation of the staff in terms of providing information on time and asset management.

8 1. ASSET MANAGEMENTS (cont…) 1.1Moveable Assets (cont…) Updated asset management policies for all aspects of asset management o The asset management policies and procedures have been revised through circulars to address identified shortcomings

9 2. FINANCE 2.1Goods and Services Ensure payment of all invoices within 30 days from receipt of the invoice o Reports reflecting payments after 30 days of receipt of invoices are drawn and distributed to each region and Head Office branches on a monthly basis o Monthly finance meetings are held where payments after 30 days of receipt of invoices are monitored and reasons for payment after 30 days are addressed o Each region/Head Office branches payments after 30 days of receipt of invoices and address the problems encountered

10 2. FINANCE (cont…) 2.1Goods and Services (cont…) Verification procedures of payments below R 1 million o All suppliers for payments R1 million and above (BAS and PERSAL) are verified on Safety-web. Supporting documents are also checked after payments are approved on safety-web o Financial Circular no 20 of 2009/10 was issued to implement the Entity form as instructed by National Treasury o Financial Circular No 4 of 20010/11 was issued to instruct regions and head office to submit details of suppliers which will received payments above R ,00 to verify their banking detail on safety-web o Financial Circular No 9 of 20010/11 was issued requesting regions and head office to submit details of suppliers which will receive payments above R10 000,00 to verify their banking details on safety-web

11 2. FINANCE (cont…) 2.2 Updated and reviewed revenue policies implemented o The Department is reviewing its revenue collection policy by reviewing revenue tariffs each and every year. The revenue tariffs for 2011/12 have been approved by the Commissioner and Finance Circular no 01 of 2011/12 has been issued and also placed on the Department’s intranet 2.3 Prepare monthly financial statements to increase monitoring and evaluation practices within the department o The monthly financial statements have been prepared from June 2010 to February The interim financial statements for the period ended September 2010 and December 2010 have been compiled and submitted to National Treasury

12 2. FINANCE (cont…) 2.4 In Year Monitoring (IYM) o The IYM reports have been submitted monthly up to March 2011 (preliminary figures) to National Treasury and the Executive Authority as prescribed by PFMA 2.5 Appropriation Statement o The Appropriation Statements have been prepared monthly up to February 2011

13 2. FINANCE (cont…) 2.6Suspense and Zero Accounts On a fort night basis the task team meets to scrutinise all accounts with a special focus on zero accounts. There is a significant improvement on zero accounts and the struggling management areas have been assisted by Head Office staff to clear certain suspense accounts o As at 31 st March 2011, all zero balance accounts were cleared except the Debt Suspense account 2.7 Reconciliations performed The following reconciliations have been performed on a monthly basis: o Bank Reconciliation – March 2011 o Tax Reconciliation – March 2011 o PERSAL and BAS reconciliation – March 2011 o Revenue Reconciliation – March 2011 o Salary Deduction Accounts - March 2011

14 2. FINANCE (cont…) 2.8Debt Management As at 01 st April 2010 staff debtors amounted to R62,730 million In an attempt to manage down the book value of debtors, Head Office reviewed the monthly installments paid by members and recovered 70% of service bonus to reduce outstanding debts of relevant members The above was fully implemented for all Head Office debts and centralised debts (bursary and state guarantee debts) For non-current debts the services of an ITC company have been procured during May 2011 and the tracing system has been installed to assist in tracing debtors Following Head Office completion of reviewal of installments and recovering from service bonuses; a financial circular was issued in September 2010 for all regions to do the same

15 2. FINANCE (cont…) 2.8Debt Management (Cont…) All regions are supposed to confirm the implementation of the said financial circular to Head Office by 16 th May 2011 The unaudited figure as at 31 st March 2011 is R59,563 million

16 3. Compliance with all statutory requirements and PPP agreements The Department enforces compliance with all statutory requirements as stipulated in the PFMA, Treasury Regulations, Practice Notes and PPP agreements