1. Financial Quarter ending 30 September 2016 2016/2017 Financial Year
Finance Report to the Portfolio Committee for Women in the Presidency – RSA Parliament
Financial Quarter ending 30 September 2016
2016/2017 Financial Year

2. Financial Performance and Budget Management Financial Position.
Table of contents
Financial Performance and Budget Management
Financial Position.
Cash flow management.
Supply Chain management & Corporate Services.
Risk Management.
Audit and PFMA related matters.
Audit Action Plans

3. Introduction…1
This presentation seeks to summarize financial management activities undertaken by the Commission during the 2016/2017 financial year , particularly focussing on the results for the period to 30 September The events and matters reported are in the main for accountability to Parliament on the performance for the period against the Annual Performance Plan, Funds appropriated for the period and other obligations advanced by the Committee from time to time. Additional information is provided in this presentation in the interest of openness, transparency and completeness in reporting.

4. Summary analysis on YTD results – 30 September 2016
A Year to Date deficit of R3, 8 million against a deficit of R1,5 million in the first quarter was recorded.
A Total cumulative expenditure of R40 million against an Annual budget of R69, 9 million ( 57% already utilised).
Total Revenue includes transfers ( R34, 9 m), Interest income and Donor Funding for R1,3 million.
Drivers of expenditure are Personnel costs (R23m or 65% of total), Travel , Professional services (Audit & Legal fees in the main) and other APP related operating expenses.
The prognosis does not look good and calls for decisive intervention to sustain financial viability.

5. The deficit growing unabated quarter to quarter since the beginning of the current period.
The deficit situation is materially higher than in the same period in the prior year.
Budgetary reductions (R4, 6 million for the current year), inflation and cost of living adjustments are the key reasons for the spending pressures in the current period

7. Expenditure for the 6 months period
Commissioners programme perfectly aligned to the allocated budget at 50% of the Annual budget amount
Corp Services expenditure accelerated to 63% of the annual budget mainly due to seasonal & once-off spending drivers such as audit fees, training and legal expenses, respectively.
The ratio of COE to total expenditure has improved from 72% to 65% of total in the year under review despite the fact that the cost of living adjustment realised higher than the parameter used in the original budget.

8. Expenditure per account item – Q2 to September 2016
For the quarter the expenditure of R40 million exceeded the annual allocation.
This spending rate outstrips the available budget by 7% at 57% half way the financial year. The spending pressure would justify for a need to heighten cost containment initiatives.
Tele-phone/data use, data connectivity e.t.c about twice the budget – Cost containment measures needed.
Professional services driven by legal fees and audit fees. Forecast to be within budget at the end of the period.

9. Revenue in line; with all transfers due received from National Treasury
Additional income arose in the main from donations by SABC and interest on positive cash bank balances
Travel expenditure doubled from prior period due to costs incidental to the M&E training for which trainees must travel from various provincial offices.

10. COE grew in the main due to cost of living adjustments : Staff for 7
COE grew in the main due to cost of living adjustments : Staff for 7.6%. increase, senior management (2% to 4.5%). A provision for 6% was made in anticipation for Commissioners increase .
Leave contribution to spending is R1m for the six months period – leave plans and implementation of policy to reduce balances during Q4 have been discussed in management for immediate action.
Performance bonus provision = R1,2 m (2017) & R2,1 m(2016). It is critical to finalize assessment for staff and take relevant decision given the financial situation/viability considerations

11. Training spend due to M&E carried forward from the previous financial year.

12. The equity/net asset value is diminishing swiftly and will be eroded by the end of 2016/2017

13. Current ratio
Deteriorated from 193% in 2015 to 70% in the current year.
Provision for leave and performance bonus is responsible for the depressed liquidity situation.
Net assets are half the value of non-current assets, without enough cash cover, the going concern assumption is challenged.

14. Cash inflows do not meet the current operating activities.
The reduction in the net cash held will also result in less interest income

16. Corporate Services overview
Supply Chain Management
Fleet Management
Facilities and office accommodation

17. SCM – Demand Management
Some of the key transactions procured during the period
1. Procurement of employee wellness services
2. Procurement of background check services
3. Procurement of radio slots
4. Installation of tracking devices on all CGE vehicles
5. Removal of servers, installation at new offices and network points
6. Maintenance, hosting and management of the CGE social media

18. SCM – Acquisition Management
6 formal quotations (RFQs) were issued in the Second quarter ending 31 September 2016.
5 formal quotations were finalised and service providers appointed as per table below:
RFQ for procurement of vehicle tracking services is pending due to contractual negotiations with the outgoing service provider. (RFQ 05/2016/17)
No formal quotation was cancelled in the second quarter
No deviation was recorded for not following the procurement processes in terms of the CGE procurement policy and related national treasury regulations.
No irregular expenditure was identified/recorded in the second quarter.
Bid Number
Description
Amount
Company
CGEQ 03/2016/17
Procurement of air conditioners and maintenance service
R ,80
Kgatelopele Aircon and Building Projects
CGEQ 04/2016/17
Procurement of radio slots
R ,20
NCRF
CGEQ 06/2016/17
Removal of servers, intallation at new offices and network points
R ,00
Kuluma Technologies
CGEQ 07/2016/17
Maintenance, hosting and management of the CGE social madia
R ,00
Meltwater (Pty) Ltd
CGEQ 08/2016/17
Employee Wellness Program Services
R ,00
Execuprime Holdings

19. SCM – Performance Management
As part of a regular contract management activities, the following are contracts are under performance review:
Duma Travel on account of under performance
EOH from whom the CGE is leasing copier machines but has not as yet fulfilled installations to the required level, particularly at head office.
The Contract Register and related administrative, compliance issues subjected to audit by the internal audit unit. All identified shortcomings are been addressed.

20. SCM – Assets & Disposal Management
Donations of ICT equipment to institutions of learning were completed during July/Aug 2016 except for the Gauteng and KZN offices. Corrective plans for the delays will be made during Q3 of 2016/17 period.
The physical assets verification are planned to be undertaken during Q3 in line with the internal policy on assets management. An automated system will be utilised in this regard.
There are losses to laptops under investigation by management. Although this risk has been transferred to insurance, effective controls must be instituted as the prevalence could have negative implication such as higher premiums in the future but as well serious implications due to loss of information (information security, PI and/or POPI obligations).

21. SCM – Logistics Management
Office Accommodation:
The Eastern Cape and Pretoria offices have relocated successfully to new premises respectively at the beginning of August and September 2016.
There are two procurement instructions in progress for the alternative accommodation for both the HQ and Western Cape Offices
Generally, apart from the poor conditions at HQ & CT, there is satisfaction across offices. The Communication Unit is currently exploring the feasibility to procure directional signage to improve CGE visibility and access by members of the public.
For the 6 months period, the CGE fleet of 22 vehicles has travelled 147, 581 km’s overall at a total cost of R194, 051.

22. Risk Management
Strategic Oversight – Risk Committee and all Plenary sub-committees reviews progress on the assessment and the effectiveness of the mitigating interventions employed by senior management
Operational activities – The existing risk register and the Identified risk treatment plans are implemented by Management and embedded into the day to day operations.
Overall assessment as of 30 September 2016
Operational, ICT and other major strategic risks are within management appetite but within a cautionary range (medium residual risk in terms of the policy)
Budget – there is eminent threat for spending and budgetary pressures, however, in the medium term, the challenge mitigated through cost control and expenditure management
Emerging risks
None, whatsoever identified during period under review and/or any reassessment on existing risks was considered to adversely impacting the achievement of any objectives of the organisation.

23. These are top risk areas important and with potential/direct impact to the achievement of key strategic goals and objectives

24. 2015/2016 Year end reporting and Audit
The AFS, Annual Report and Audit report were tabled in parliament during September 2016.
Management has compiled Action Plans to remedy/address the issues and areas of weakness identified by AGSA. These plans are subjected to oversight and monitoring by the Audit Committee and further tracking by sub-committees of Plenary and management committees on a regular basis in accordance with commitments made by responsible officials.
The Key Control assessment (dashboard) for the second quarter to 30 September will be conducted by the AGSA during December of 2016.

25. Audit Action Plans – 2016/2017

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