1 CFO Report 25 May 2007 DOJ & CD Select Committee on Security and Constitutional Affairs

2 AGENDA /06 AUDIT MATTERS /07 EXPENDITURE OUTCOME (PRELIMINARY/UNAUDITED) 3.MTEF BUDGET ALLOCATIONS

3 2005/06 AUDIT MATTERS

4 Vote Account –Qualified audit opinion on Monies in Trust Revenue Receivable for Departmental Revenue –NAQ previous two financial years (2003/04 and 2004/05) Monies in Trust –Audit in progress (Audit opinion to be disclaimed) Guardians Fund –2002/03 to 2005/06: Disclaimer of audit opinions President Fund – Unqualified audit opinion NPA – Unqualified audit opinion CARA – Unqualified audit opinions from period 1999 to 2005/06

5 AUDIT MATTERS 2005/06 Audit Qualification Monies in Trust Revenue Receivable for Departmental Revenue / National Revenue Fund –Disclosure Note 26 – AFS –Transition to accrual accounting / GRAP –Accounting Standards Board Exposure Draft – IPSAS 23 (non-exchange revenue) –Accounting policies – “Modified cash basis of accounting” –Preliminary Legal opinion MMT PPP Legal Stream –Administering Monies in Trust (DFI, Governor Brown)

6 AUDIT MATTERS 2005/06 Audit Qualification (cont) Audit Action Plan (hand-out) –Emphasis of Matter: Financial Management (Budget Reprioritisation Process) Asset and Inventory Management (Inventory Management and Policy for Software and Intangibles) Compensation of Employees (Policies not approved, Long suspended employees, Human Resources Management) Contingent Liabilities Performance Information Forensic Audit

7 AUDIT MATTERS 2005/06 Audit Qualification – Action Plans Monies in Trust Revenue Receivable –Legal opinion/s Chief State Law Advisor –Reconciliations and Information from offices –OAG / ASB / AG discussions –MMT PPP

8 AUDIT MATTERS 2006/07 Audit on Vote and Monies in Trust? Monies in Trust audit – “…Lack of effective and efficient financial management system…” and “…not being able to prepare reliable, accurate and complete accounting records for Monies in trust…”

9 2006/07 EXPENDITURE OUTCOME (PRELIMINARY / UNAUDITED)

10 VOTE: Expenditure per Economic Classification

11 Expenditure per Branch

12 Comments and Observations : 2006/ /07 R473,5 million (7%) under spending Major contributing factors are: - average vacancy rate of 14 % in DOJ and 24 % in NPA - concurrent savings on operational and capital expenditure - most of staff appointments are through internal promotions - facilities requirements – the appointment of additional personnel requires investment in additional office accommodation. Final virement (funds shifts of savings) effected – mostly to capital for refurbishment of buildings, new court infrastructure and access to departmental facilities for disabled persons Total roll-over request : R438,8 million If roll over is approved our final under spending would be R34 million (0,5 per cent)

13 Roll Over Application: 2006/07 Roll over request : R438,8 million

14 MTEF ALLOCATIONS

15 MTEF Allocations 2006/07 – 2009/10

16 Observations on 2006 ENE Allocations Growth in budget allocations The 2007 Budget sets out additional allocations of R385,471 million in 2007/08, R542,790 million in 2008/09 and R739,261 million in 2009/10 for spending on expanded capital works, human resource capacity and reducing criminal case backlogs. This translates to an average annual growth rate of 11, 2 per cent between 2006/07 and 2009/10 financial years, which is a growth from R7, 5 billion to R10, 5 billion – the figures include the statutory appropriation. Priorities Funded The largest part of the additional allocation contributes towards taking over the personnel of the Witness Protection Unit from the Department of Safety and Security; increasing the number of personnel particularly in Court Services and the National Prosecuting Authority; setting up temporary service points to deal with criminal case backlogs; addressing the shortfall in the statutory appropriation; and providing for additional and temporary judges and magistrates. Infrastructure spending The annual average growth rate of 28,5 per cent in the allocation of Facilities Management subprogramme in programme 2 – rising from R268,1 million in 2006/07 to R569,3 million in 2009/10 - will fund the construction of new court facilities and the rehabilitation of existing court infrastructure.

17 Major areas of growth Over the MTEF, expenditure on the Lower Courts sub-programme, which accounts for 66 per cent of this programme’s budget, increase from R1,9 billion in 2006/07 to R2,5 billion in 2009/10, an average annual rate of 8,2 per cent. The increase will go towards the reduction of criminal case backlog, integrating the management of cases and people through the justice chain, human resources development and filling of vacancies Expenditure of the NPA is expected to increase rapidly over the MTEF at an average annual rate of 14.9 per cent, rising from R1,6 billion in 2006/07 to R2,4 billion in 2009/10. The main contributor to the growth is the Public Prosecutions subprogramme for which expenditure rises from R1,1 billion in 2006/07 to R1,7 billion in 2009/10, an average annual rate of 15,2 per cent. This sub-programme accounts for 71 per cent of the programme’s budget Additional amounts allocated in the 2007 MTEF budget include R57,5 million, R91,3 million and R153,5 million to increase human resources capacity in the Legal Aid Board, the Special Investigating Unit, the Commission on Gender Equality and the South African Human Rights Commission. The allocation also includes funding for the development of an electronic case management system and the integration of existing IT systems to address the operational and administrative requirements of the Office of the Public Protector. Observations on 2006 ENE Allocations

18 Regional Budget Allocation (Court Services) Expenditure is expected to continue to rise rapidly, at an average annual rate of 11 per cent between 2006/07 and 2009/10. This increase will provide for the departmental projects to reduce the criminal case backlogs, integrated case flow management, rehabilitation and day-to-day maintenance of court buildings and management capacity at court level.

19 State Legal Services

20 State Legal Services Expenditure is expected to continue to increase steadily, rising from R385,8 million in 2006/07 to R530,7 million in 2009/10, at an average annual rate of 11,2 per cent over the MTEF. The increase in spending on this programme goes towards – improving access to Guardian Fund Services; facilitating accessibility of deceased and insolvent estates services; and increasing capacity through employment of additional personnel and developing the skills of existing personnel.

21 National Prosecuting Authority

22 Within the additional amounts allocated in the 2007 Budget, R120 million, R170 Million and R199 million have been provided for each of the MTEF years to the - acquisition of a new building in KwaZulu-Natal; the refurbishment of the Innes Chambers building in Johannesburg; taking over 85 SAPS officials currently performing the witness protection functions; The revised baseline of the NPA includes additional allocations of R 118 million for the witness protection unit; and the appointment of 650 prosecutors to fully implement the initiative of assigning two prosecutors per court and to reduce criminal case backlogs. National Prosecuting Authority

23 Transfer payments Public Entities and Constitutional Institutions

24 Within the additional amounts allocated in the 2007 Budget, R27,5 million, R41,25 million, and R93,5 million have been provided for each of the 2006 MTEF years to - –increase human resources capacity in the Legal Aid Board (R120 million); and –increase capacity in the office of the Public Protector, the Commission on Gender Equality and the South African Human Rights Commission. In the 2007 budget The Special Investigating Unit receives an additional R130 million for increasing capacity. Transfer payments Public Entities and Constitutional Institutions

25 THANK YOU