1. MISA Presentation to SCOA
Briefing on the Fourth Quarter Expenditure Report for 2016/17 Financial Year
25 August 2017

2. PRESENTATION OUTLINE Introduction Summary of Audit Outcomes
Budget Variance Report Per Programme
Summary of 2016/17 Performance Per Programme
2016/17 Performance Information Per Programme
MISA Interventions in relation to 2015/16 Audit Outcomes
Programme to Improve Infrastructure Provision
Support Measures for Severely Challenged Municipalities
Key Challenges and Remedial Actions

3. INTRODUCTION
MISA’s 2016/17 Annual Report and Financial Statements were audited by the Auditor-General of South Africa (AGSA).
An Unqualified Audit Opinion on the Annual Financial Statements has been received for the fourth consecutive year.
The AGSA has also expressed a Unqualified Opinion on performance information for Programme 3 (Technical Skills).
A Disclaimer Opinion has been expressed on the usefulness of performance information for Programme 2 (Technical Support). However, MISA has lodge an objection with the AG on two grounds:
Classification of irregular expenditure arising from advertisement of certain tenders for less than 21 days; and
Disclaimer opinion on performance information for Technical Support Programme.
This matter is currently being considered by the AGSA in consultation with National Treasury.

4. AUDIT OUTCOMES FINANCIAL YEAR ANNUAL FINANCIAL STATEMENTS
PERFORMANE INFORMATION
TECHNICAL SUPPORT
TECHNICAL SKILLS
2015/16
Unqualified
Disclaimer
Adverse
2016/17

5. BUDGET VARIANCE REPORT per PROGRAMME
R’ MILLION
BUDGET 2016/17
ACTUAL
2016/17
% SPENDING
AVAILABLE
REASONS FOR VARIANCE
ADMINISTRATION
58,2
50,8
87%
7,4
COE
18,4
13,9
76%
4,5
Under-spending due to delayed approval of organisational structure.
Goods and services
39,8
36,9
95%
2,9
Savings on catering, and consultants and bursaries.
MSTS
187,5
147,2
79%
40,3 12
12,7
105%
(0,7)
175,5
134,5
77%
41,0
Funds committed towards year end and spending will be in 2017/18 financial year
CAPACITY BUILDING
84,6
82,2
98%
2,4
34,2
25,2
74%
9,0
50,4
57,0
(6,6)
Increase in accommodation payments for artisan and apprentices programme
VENDOR AND LEGAL SERVICES
19,6
15,5
4,1
6,6
1,4
21.1%
5,2 13
14,1
108%
(1,1)
Increase in legal fees
Total
349,9
295,7
85%
54,2

6. SUMMARY OF 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Programmes
Total number of 2016/17 annual targets
Number and % of targets achieved
Number and % of targets partially achieved
Number and % of targets not achieved
Programme 1: Administration 14
7 (50%)
5 (36%)
2 (14%)
Programme 2: Municipal and Sectoral Technical Support 7
6 (86%)
0 (0%)
1 (14%)
Programme 3: Capacity Development 5
4 (80%)
1 (20%)
Programme 4: Strategic Support 1
1 (100%)
Total 27
17 (63%)
5 (18.5%)
5 (18.5%)4 6

7. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 1.1: Improve the Usefulness and Reliability of Performance Information
Annual targets
Performance
Reasons for variance
Corrective actions
Compliant 2017/18 APP approved and submitted on time
Achieved
Approved APP was tabled in Parliament within the deadline
None
Six (6) approved performance reports (4 quarterly performance reports, 1 performance information report and 1 annual report)
Partially Achieved
Annual Report for 2015/16 was not tabled in Parliament within the prescribed timeframes
Non-compliance with the prescribed timeframes was due to delayed completion of the audit by the AG.
Efforts are being made to ensure that outstanding audit issues are resolved timeously.

8. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 1.1: Improve the Usefulness and Reliability of Performance Information
Annual targets
Performance
Reasons for variance
Corrective actions
Two (2) approved programme and/or project monitoring and evaluation reports per year as per approved Monitoring and Evaluation Plan
Partially Achieved
Evaluation of one of the planned evaluation projects was delayed until the end of the financial year.
Delays in the appointment of a service provider to evaluate the Project Management Units (PMUs) resulted in late start of the project.
The evaluation process started at the beginning of the current financial year and is being managed properly to avert further delays

9. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.2: Improve the Effectiveness of Internal Controls, Risk Management and Governance Structures
Annual targets
Performance
Reasons for variance
Corrective actions
Risk Register updated and approved by Risk Management Committee by 31 March 2016.
Not Achieved
Risk Register was not developed and approved within the prescribed timeframes due to lack of capacity.
Management has since appointed the Chief Audit Executive who is driving the implementation of projects in the 2017/18 APP.
Four (4) Risk Assessment Reports.
Partially Achieved
Progress reports for the first two quarters were not prepared due to lack of capacity.
The CAE is also responsible for overseeing Risk Management Function and the Risk Management is functional.

10. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.2: Improve the Effectiveness of Internal Controls, Risk Management and Governance Structures
Annual targets
Performance
Reasons for variance
Corrective actions
Produce a 3-Year rolling Strategic Internal Audit Plan and Annual Coverage Audit Plan and submit to the Audit Committee by 30 June 2016.
Partially Achieved
The 3-Year Rolling Audit Coverage Plan was not developed due to capacity challenges.
A 3-Year Audit Coverage Plan for 2017/18 has been developed and approved by the Audit Committee.
Produce and submit Four (4) internal reports to Audit Committee.
First quarter progress report on the audit was not prepared due to capacity challenges.
After the appointment of the CAE reports for the remaining three quarters were submitted to the Audit Committee.

11. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.3: Provide Effective and Efficient Corporate, Financial and Legal Support Services for MISA to Deliver on its Mandate
Annual targets
Performance
Reasons for variance
Corrective actions
Achieve 90% of submissions of performance agreements, reviews and assessments by due date.
Achieved (98%)
None
Approved ICT Security P Policy, ICT Governance Framework, and ICT Equipment Policy by the end of the financial year.
Partially Achieved
ICT Policies were not approved within the set timeframes due to delays is the review caused by the resignation of the Head of ICT .
ICT Policies have since been approved and a comprehensive review of all policies will be undertake before December 2017.

12. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.3: Provide Effective and Efficient Corporate, Financial and Legal Support Services for MISA to Deliver on its Mandate
Annual targets
Performance
Reasons for variance
Corrective actions
90% of contracts and/or legal opinions drafted and feedback provided within 15 working days of receipt of request.
Achieved (100%)
The annual target was exceeded due to efficiency improvements.
None
Achieve at least 98% spending by financial year end.
Not Achieved
Spending was below the target due to delays in the approval the revised structure resulting in low spending on COE and delays in the appointment of a Service Provider for RMSC Project.
The implementation of the new structure approved in January 2017 is currently under way and the implementation of the RMSC project has started in two of the three pilot regions.

13. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.3: Provide Effective and Efficient Corporate, Financial and Legal Support Services for MISA to Deliver on its Mandate
Annual targets
Performance
Reasons for variance
Corrective actions
90% of contracts and/or legal opinions drafted and feedback provided within 15 working days of receipt of request.
Achieved (100%)
The annual target was exceeded due to efficiency improvements.
None
Achieve at least 98% spending by financial year end.
Not Achieved
Spending was below the target due to delays in the approval the revised structure resulting in low spending on COE and delays in the appointment of a Service Provider for RMSC Project.
The implementation of the new structure approved in January 2017 is currently under way and the implementation of the RMSC project has started in two of the three pilot regions.

14. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic objective 1.3: Provide Effective and Efficient Corporate, Financial and Legal Support Services for MISA to Deliver on its Mandate
Annual targets
Performance
Reasons for variance
Corrective actions
Achieve unqualified audit opinion on Annual Financial Statements.
Achieved
None
Procurement Plan approved and submitted to National Treasury on Time
Approved and verified assets register

15. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 2.1: More Effective Support and Interventions with Greater Impact on Citizen’s Lives
Annual targets
Performance
Reasons for variance
Corrective actions
Five (5) approved municipal infrastructure assessments.
Achieved
None
Strategic Objective 2.2: Improved Technical Capacity and Enhanced Technical Skills in Municipalities
40 municipalities with which annual technical support plans are signed and reported against quarterly.

16. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 2.2: Improved Technical Capacity and Enhanced Technical Skills in Municipalities
Annual targets
Performance
Reasons for variance
Corrective actions
20 municipalities for which municipal infrastructure master plans are developed or reviewed.
Achieved (21)
The target was exceeded due to additional response for support from Ehlanzeni District.
None
10 municipalities for which Spatial Development Frameworks, Land Use Management Schemes and Land Audits are developed or reviewed
Achieved (11)
The target was exceeded due to recruitment of additional planners.

17. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 2.2: Improved Technical Capacity and Enhanced Technical Skills in Municipalities
Annual targets
Performance
Reasons for variance
Corrective actions
20 municipalities for which infrastructure operations and maintenance plans and/or policies and/or procedures are developed or reviewed
Achieved
None
20 municipalities provided with training on the use of the asset register module and/or other modules of MIPMIS
Achieved (28)
The target was exceeded due to some officials attending the training without prior confirmation at no additional costs to MISA.
One (1) Regional Management Support Contract (RMSC) awarded and reported against
Not Achieved
The start of the project was delayed due to cancellation of the tender for appointing a service provider
The implementation of the project has since started in two of the three pilot regions

18. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 3.1: Improved Technical Skills in Municipalities
Annual targets
Performance
Reasons for variance
Corrective actions
350 apprentices provided with theoretical training and/or workplace experience towards meeting the requirements for qualifying as an artisan.
Achieved (372)
The target was exceeded because the number of apprentices at the beginning of the financial year was higher than the annual target
None
90 Learners provided with workplace (experiential) Training.
Not Achieved (55)
MISA could not secure placement opportunities for the learner because municipalities prefer to host young graduates for workplace training.
Through engagements with provinces and municipalities the targeted number of learners have since been placed in municipalities.
50 Graduates recruited and placed with municipalities for workplace training and/or mentorship towards professional skills training.
Achieved (66)
More young graduates were enrolled in the programme in response to requests from municipalities.

19. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 3.1: Improved Technical Skills in Municipalities
Annual targets
Performance
Reasons for variance
Corrective actions
300 municipal officials provided with technical skills training.
Achieved (887)
The target was exceeded due to requests for training of more officials than planned and allocation of additional from retained surplus from the previous financial year.
None
164 students provided with bursaries for studies in technical professionals.
Achieved

20. 2016/17 PERFORMANCE INFORMATION PER PROGRAMME
Strategic Objective 4.1: More Efficient and Effective Municipal Infrastructure Procurement
Annual targets
Performance
Reasons for variance
Corrective actions
Two (2) National Framework Contracts for municipal infrastructure goods and services
Not Achieved
The target was not achieved due to delays in the procurement process arising from non-responsiveness of the received bids from potential service providers
The tender process has been restarted and will be concluded in the third quarter of 2017/18.

21. MISA INTERVENTIONS IN RELATION TO AUDIT OUTCOMES
2015/16 AUDIT ISSUES
MISA INTERVENTIONS
EFFECTIVENESS
Targets set for 35% of Infrastructure Projects funded through MIG not achieved and lack of effective contract management leading to incomplete MIG Projects
46 Engineers (Civil and Electrical) deployed in 40 targeted municipalities to assist with MIG projects management.
Training of municipal officials on the General Condition of Contracts (GCC) and other short courses.
32 municipalities improved their spending on MIG to at least 85% in 2016/17
Non-compliance with SCM Prescripts in the procurement of goods and services for infrastructure projects
Regional Management Support Contractors (RMSC) focusing on institutional turnaround and Framework Contracts aimed at easing the burden of procurement on municipalities.
Rollout of RMSC programme has commenced in Amathole, OR Tambo and Sekhukhune District Municipalities.
Lack of policies and plans for maintenance of water and roads infrastructure and inadequate budget for maintenance of existing infrastructure
21 municipalities supported with the development of operations and maintenance plans/policies. Training and placement of Artisans in municipalities.
372 apprentices trained in 2016/17 and planned placement of 100 qualified Artisans in 2017/18

22. MISA INTERVENTIONS IN RELATION TO AUDIT OUTCOMES
2015/16 AUDIT ISSUES
MISA INTERVENTIONS
EFFECTIVENESS
Inadequate capacity for project management
An evaluation on the state and effectiveness of Project Management Units (PMUs) is under way
887 municipal officials, 66 graduates and 372 apprentices were trained in 2016/17
Decline in financial viability of municipalities due to low revenue collection
Municipalities were support to develop and implement Revenue Enhancement Strategies
One of the success story is Oudtshoorn LM that reduced its overall debt level from R110m to R28.5m and debt to Eskom from R54m to R8.3m
Poor infrastructure planning (Infrastructure Master Plans)
Support to municipalities on the development of Infrastructure Master Plans
21 municipalities supported in 2016/17 to develop master plans for water and sanitation, waste management, electricity services, and roads and storm-water

23. MISA INTERVENTIONS AND EFFECTIVENESS IN RELATION TO 2015/16 AUDIT OUTCOMES
2015/16 AUDIT ISSUES
MISA INTERVENTIONS
EFFECTIVENESS
Misalignment between projects implemented and areas of backlogs
A collaborative programme to align the development of bulk infrastructure and reticulation in 18 municipalities has been initiated by the IMC on Service Delivery
Seven municipalities in the Eastern Cape, Kwazulu-Natal, Limpopo and North West have been selected for the pilot phase. Engagements with these municipalities have been initiated
50% of municipalities with water losses above 30%
In collaboration with DWS, MISA is supporting Water Service Authorities to develop 5-Year Reliable Water and Sanitation Service Delivery Plans
Plans have been developed for 16 Water Service Authority municipalities and implementation support being provided by MISA and DWS

24. PROGRAMME TO IMPROVE MUNICIPAL INFRASTRUCTURE PROVISION
Through the PMO, MISA is championing the following two strategic interventions:
Regional Management Support Contracts (RMSC) Programme; and
Addressing misalignment between bulk and reticulation Infrastructure.
The RMSC is an institutional turnaround that seeks to improve infrastructure delivery systems and processes in selected municipalities. Its implementation has started in three District Municipalities, namely, Amathole, OR Tambo and Sekhukhune.
Programme to address misalignment between bulk and reticulation infrastructure is a collaborative initiative involving such national stakeholders as DCOG, MISA, DBSA, National Treasury, DWS, SALGA and DOE.
Seven municipalities in the Eastern Cape (2), Limpopo (2) and North West (1) have been selected for the pilot phase. Technical teams have been established to assess state of readiness and conduct project costing.
MISA has initiated the process of conducting an assessment of the impact of technical support to municipalities, through an independent service provider.

25. SUPPORT FOR SEVERELY CHALLENGED MUNICIPALITIES
Municipalities with record of persistent under-spending on conditional grants have been identified for assistance through direct delivery support programme.
This initiative will involve the conversion of MIG allocations for targeted municipalities into Schedule 6B Grant in terms of the Division of Revenue Act (DORA), to enable MISA to implement approved projects on their behalf.
MISA’s APP for 2017/18 includes the deployment of qualified Artisans in municipalities with limited capacity for infrastructure operations and maintenance.
The target for 2017/18 is to deploy 100 Artisans through this programme and to increase the number in the two outer MTEF years to 170 and 200 respectively.
MISA also plan to enhance technical capacity in municipalities by training general workers in selected municipalities towards qualifying as Artisans over 2017/18 in terms of the Recognition of Prior Learning (RPL) Framework.
MISA is involved in the task team driving the implementation of support packages for three Free State Municipalities under section 139 intervention. These are Mafube, Masilonyana and Metsimaholo Local Municipalities.

26. KEY CHALLENGES AND REMEDIAL ACTIONS
PROGRESS
High rate of vacancies across the organisation
Implementation of the revised organisational structure
The revised structure was approved by DPSA in January Implementation of the structure is underway and 18 priority posts were advertised in July 2017
Capacity challenges within the Supply Chain Management (SCM) Function
Strengthening of capacity within the SCM Unit and improvement of SCM processes and systems
Some of the positions in SCM have been filled and a service provider is supporting the unit on a co-sourcing arrangement
Lack of staff for Internal Audit and Risk Management Function impacting on performance in 2016/17
Filling of vacancies within Internal Audit and Risk Management Unit and complementing internal support through co-sourcing arrangement
The position of Chief Audit Executive (CAE) was filled in the third quarter of 2016/17 and the process of appointing a service provider to complement capacity is under way
Appointment of technical professionals on short-term consultancy contracts resulting in instability
Recruitment of engineers and planners as permanent staff in terms of the Occupation Specific Dispensation (OSD)
Technical positions on the newly approved structure are being prioritised for recruitment

27. Thank You!