1. Human Settlements: Sector outcomes 2014-15 Presentation to the Standing Committee on Appropriations Presented by: SM – Ahmed Moolla Xx Month xxxx

2. Reputation promise/mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

3. 2014-15 PFMA Discussion points 3 Financial and non financial performance 2014/15 Sector focus areas Root causes Key control analysis

4. 2014-15 PFMA 1 Financial and non-financial performance 1 10

5. Comparison of spending with delivery of key targets per province Province % of grant spent % of planned houses built % of planned sites serviced Eastern Cape100%104%121% Free State100%72%73% Gauteng99%86%83% KwaZulu-Natal100%91%48% Limpopo71%20%0% Mpumalanga90%107%0% Northern Cape100%123%103% North West100%80%227% Western Cape100%104%113%

6. 2014-15 PFMA 2 SECTOR FOCUS AREAS 2 6

7. FOCUS AREAS Sector focus areas2014-152013-142012-13 Compliance with legislation - HSDG  Management of individual subsidies  Management of transfer and advance (tranche) payments to municipalities and contractors, including funds used for rectification projects  2014-15 PFMA 7

8. 2014-15 PFMA Focus area 1: Compliance with legislation (HSDG) 8

10. 2014-15 PFMA Focus area 2: Management of individual subsidies 10

11. Sector Focus Areas

12. 2014-15 PFMA Focus area 3: Management of transfer and advance (tranche) payments to municipalities and contractors, including funds used for rectification projects 12

14. 2014-15 PFMA 14 Root Causes 3 3 3

15. 2014-15 PFMA 15 Root causes should be addressed Management’s slow response to addressing matters previously reported. Inadequate consequences for poor performance and transgressions. Inadequate review of subsidy applications to ensure that the applicants meet all the qualifying criteria prior to approving the application. Ineffective monitoring and inspections of housing projects. Defects are not being identified, resulting in beneficiaries receiving poor quality houses. Root Causes

16. 2014-15 PFMA 4 Key control analysis 4 4 16

17. Key control analysis LEADERSHIP Culture of honesty, ethical business practices and good governance Exercise oversight responsibility Effective HR management Policies and procedures Action plans to address internal control deficiencies IT governance framework FINANCIAL AND PERFORMANCE MANAGEMENT Proper record keeping Controls over daily and monthly processing and reconciling of transactions Regular, accurate and complete financial and performance reports Review and monitor compliance with applicable laws and regulations Design and implement formal controls over IT systems GOVERNANCE Appropriate risk management activities Adequately resourced and functioning internal audit unit Audit committee promotes accountability and service