1. Budgeting and financial management in the Department of Water and Sanitation and the Water Trading Entity
Joint meeting of the Portfolio Committee on Water and Sanitation and the Standing Committee on Public Accounts
Ulrike Britton | Chief Director: Urban Development and Infrastructure, Public Finance | 27 March 2018

2. Outline Vote 36: Water and Sanitation Water Trading Entity
Budget growth: 2012/13 – 2020/21
Budget performance: 2012/13 – 2016/17
Monthly distribution of key expenditure items
Buildings and other fixed structures
Goods and services
Budget outcome 2016/17
Budget risks
Expenditure performance 2017/18
Water Trading Entity
Cash balances 2012/13 – 2016/17
PMG account balances

3. Vote 36: Water and Sanitation

4. Budget Growth 2012/13 – 2020/21
Expected to growth at average annual rate of 3.7% over 2018 MTEF
20% average annual growth in budget 2012/13 and 2015/16

5. Budget Performance 2012/13 – 2016/17

6. Monthly spending distribution – last 3 FY

7. Monthly spending distribution – last 3 FY

8. Budget Performance 2016/17

9. Budget risks (As per 2017 annual report)
Expenditure management
Unauthorised expenditure
R110.8 million on vote
R292.3 million on main division of the vote
Irregular expenditure of R1.3 billion
Fruitless and wasteful expenditure – R14 million
Accruals and payables

10. Budget risks (As per 2017 annual report)
Conditional grant oversight
Grant evaluations not undertaken as required by the Division of Revenue Act
Expenditure and non-financial information not monitored in accordance with the framework for the grant
Internal control
No system to discuss major decisions taken by one division that impacts on another division before final decision is taken
Policies and procedures to guide RBIG and WSIG not sufficiently implemented.
Reconciliation system per project to ensure all information pertaining to the project are reconciled on a monthly basis is insufficiently monitored and implemented.
No internal control system to monitor tender process of implementation agents
A system of control that includes proper project management and costing techniques in line with construction norms and standards was inadequate

11. Budget risks (As per 2017 annual report)
Procurement and contract management
Goods and services with a transaction value above R were procured without inviting competitive bids
Bid adjudication was not always done by committees which was composed in accordance with the policies of the Department
Some construction contracts were awarded to contractors that were not registered with the Construction Industry Development Board
Commitments
Multi-year contractual arrangements where payments are made over several years

12. Expenditure performance 2017/18
Spending as at 28 February 2018

13. Expenditure performance 2017/18

14. Water Trading Entity

15. Cash balances 2012/13 – 2016/17 Ave. annual growth of 11%

16. Operating expenditure growth

17. PMG monthly balances

18. Budget risks (as per 2017 annual report)
Understated financial liabilities to the TCTA
Uncertainty of financial sustainability – net loss of R3.6 billion
No proper system to support information on carrying value of assets under construction
Inadequate review of financial models which form bases of liabilities accounted for
Inadequate controls to prevent and detect non-compliance with laws and regulations

19. Thank-you