1. DIRCO Expenditure report Presentation to the Portfolio Committee
2013/14 Quarter 4
2014/15 Quarter 1
Presentation to the Portfolio Committee
Date 20 August 2014

2. Table of contents DIRCO report African Renaissance fund (ARF)
2013/14 expenditure
Audit outcome
2014/15 Quarter 1 Expenditure
African Renaissance fund (ARF)
Budget allocation
List of Committed projects
Progress report

3. EXPENDITURE OUTCOME 2013/14

4. Vote Expenditure as at 31 March 2014
2013/14
Adjusted Appropriation
Shifting of Funds
Virement
Final Appropriation
Actual
Variance
Expenditure as %
R'000 %
Administration -
60 606
96%
International relations
100%
International cooperation
(6 991)
323
98%
Public diplomacy and protocol
6 991
108%
International transfers
103%
Subtotal
102.0%
Compensation of employees
-7 936
104%
Goods and services
-1 223
Interest and rent on land 57 0%
Transfers & subsidies
-5 833
Payment for capital assets
1 223
64 678
76%
Payment for financial assets
454
-454
Total

5. 2013/14 Expenditure Outcome
Programme 1: Administration –The increase in expenditure is due to the inflationary adjustments mainly on office accommodation related to unitary fees for the Head Office Campus.
Programme 2: International Relations – This is mainly attributable to the depreciation of the Rand against other major currency.
Programme 3: International Cooperation –. The increase in expenditure is as a result of the higher operational cost as a result of the Rand depreciation.
Programme 4: Public Diplomacy and Protocol –The overspending is attributed to the facilitation and provision of protocol services to the Heads of State/Government attended the State funeral of the former President Nelson Mandela.
Programme 5: International Transfers –The overspending is as a results of foreign exchange rates losses in relations to the payment of membership fees and assessed contributions to United Nations, African Union and South African development Community.

6. 2013/14 AUDIT OUTCOME

7. Analysis of Audit opinion over 5 yrs.
Financial years
2009/10
2010/11
2011/12
2012/13
2013/14
Audit opinion
Unqualified audit opinion
Unqualified audit opinion with additional matters
Unqualified audit opinion with additional
Qualified audit opinion
- Repeat findings on Assets Management
Matters
- Non Existence
- Completeness
- Reconciliation not performed
Significant Improvements
Predetermined objectives
- Predetermined objectives

8. AREAS OF IMPROVEMENT Recurring findings: Asset Management
Irregular expenditure
Non compliance – 30 days payment

9. The Asset portfolio of the Department consists of the following:
Immovable assets: Consist of Chanceries (Offices), Official Residences and staff accommodation
Movable assets – Major (economic value over R5000): Consist of motor vehicle, office and domestic furniture, office and domestic equipment
Movable assets – Minor (economic value less than R5000): Consist of office and domestic furniture, office and domestic equipment, audio visual and gardening equipment.
Intangible Assets – Consist of software applications and patent.

10. The Asset portfolio of the Department consists of the following:
Description
Total Number of Assets
Total Number of Locations
Total Number of Custodians
Total value
R ’million
Immovable
135 94 75
5 126
Movable: Major
21 810
5 175
3 122
667
Intangible 44 4 3 27
Movable: minor
8 178
4 347
131
Grand Total
13 451
7 547
5 952

11. Categories - Movable minor assets
Categories (National treasury description)
Total Number of Assets
Total value
R ’million
131

12. 1. MANAGEMENT OF ASSETS Recurring Findings:
Existence: Assets not physically verifiable.
Completeness: Assets not recorded in the fixed asset register.
Reconciliations of:
Physical fixed assets on hand with assets recorded on the fixed assets register
Additions and disposals of fixed assets on the statement of financial performance versus the detail on Basic Accounting of System and HardCat
Complete reconciliation between the Asset management system and Basic Accounting of System.

13. 1. MANAGEMENT OF ASSETS Measure implemented:
Updating of Assets Register – the measures as per the assets procedure have been updated to deal with timeous updating of the asset register.
A directive has been issued to missions that all forms in relations to updating of the assets register must be included in the mission accounts pack as from July 2014.
Decentralised the use of asset management system to missions.
Verification of assets performed through the use of scanning devices.

14. 1. ASSETS MANAGEMENT Measures implemented in first quarter
Implement Assets Management turnaround strategy which includes:
Missions will send the data files to Head Office through the HUBS and get interfaced to HARDCAT to prevent human intervention.
Asset catalogue is being developed with a full implementation 01 October 2014
Corrective action is being implemented against officials who fails to implement the directives/procedure on assets procedures.
CSM to functionally report to the CFO through the Foreign Service Administration office.

15. 2. IRREGULAR EXPENDITURE
Findings:
Goods and services procured without following supply chain management practice notes, policies and procedures as required by Treasury Regulation 16A6.1.
Contracts and quotations awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed in order to comply with Treasury regulation 16A8.3.

16. 2. IRREGULAR EXPENDITURE
Measure implemented:
Established (centralised approach) bid committees
- Specification
- Evaluation
- Adjudication
Updated Financial Delegation of Authority.
Reviewed Supply Chain Management and Financial Management policies & Standard Operating Procedure’s
Procurement being done in accordance with Demand Management Plan
Implemented tracking system to identify deviations from 01 July 2014
Implemented a quality assurance unit to perform pre and post checking of expenditure vouchers.

17. 3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD
Findings:
Payments to suppliers not made within 30 days of receipt of invoice.
This may also lead to the department being charged interest and penalties for late payment. It may also lead to fruitless and wasteful expenditure.

18. 3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD
Measure implemented:
Implemented a central point of receiving of all invoices at Head Office.
Implemented an electronic invoice tracking system for Head Office.
Developed the Service Delivery Improvement Plan.

19. QUARTER 1: EXPENDITURE OUTCOME

20. Vote Expenditure per programme (R’000)
Programmes
Vote Appropriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Administration
72.2%
27.8%
International Relations
101.4%
-1.4%
International Cooperation
88.5%
11.5%
Public Diplomacy and Protocol
68 545
45.0%
55.0%
International Transfers
62 772
92 409
147.2%
-47.2%
Total
89.6%
10.4%
Economic Classification
Compensation of employees
103.5%
-3.5%
Goods and services
75.0%
25.0%
Transfer payments
62 784
94 333
150.3%
-50.3%
Payments for capital assets
85 144
Expenditure/projection as % of total budget
25.9%
23.2%

21. Vote Expenditure continued…
Total expenditure for the Department as at the end of the first quarter amounts to R1.335 billion or 23.2% of the appropriation.
This expenditure is 10.4% lower than the projected expenditure for the period.
The low expenditure trend is mainly under Programmes 1 and 4. In terms of economic classification, the slow spending is visible mainly under goods and services as well as Payments for capital assets.
The details of the variances are discussed under each Programme.

22. Programme 1 – Econ Classification (R’000)
Prog Appropriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Econonic Classification
Compensation of employees
90 315
85 994
95.2%
4.8%
Goods and services
86 317
54.7%
45.3%
Transfer payments 82
Payments for capital assets
81 264
78.9%
21.1%
Total
72.2%
27.8%
Expenditure/projection as % of total budget
25.1%
18.2%

23. Programme 1 continued….
Total expenditure for the Programme as at the end of the first quarter amounts to R253.7 million or 18.2% of the programme’s total appropriation. This expenditure is 27.8% lower than what had been projected for the period.
Reasons for the low spending:
ICT projects– payments relating to ICT contracts that were not processed in the first quarter as it was planned.
Foreign fixed assets management – low expenditure trend is due to slow progress in the construction of Dar es Salaam and renovations projects in The Hague. This is a result of adverse site conditions.

24. Programme 2: International Relations (R’000)
Prog Appropriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Africa
87.9%
12.1%
Asia and middle east
110.7%
-10.7%
Americas and caribbean
102.9%
-2.9%
Europe
107.2%
-7.2%
Total
101.4%
-1.4%

25. Programme 2 – Econ Classification (R’000)
Prog Appropriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Compensation of employees
105.7%
-5.7%
Goods and services
99.1%
0.9%
Transfers and subsidies
1 393
1 567
Payments for capital assets
23 370
14 265
2 966
20.8%
79.2%
Total
101.4%
-1.4%
Expenditure/projection as % of programme budget
28.4%
28.8%

26. Programme 2 continued….
Total expenditure for the Programme as at the end of the first quarter amounts to R809.4 million or 28.4% of the programme’s total appropriation.
The expenditure is 1.4% higher than what had been projected due to foreign exchange losses.

27. Programme 3: International Cooperation (R’000)
Prog Approriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Global system of governance
65 762
62 422
94.9%
5.1%
Continental cooperation
40 737
28 290
69.4%
30.6%
South-south cooperation
7 402
1 942
1 585
81.6%
18.4%
North-south dialogue
69 152
17 225
18 924
109.9%
-9.9%
Total
88.5%
11.5%

28. Programme 3 – Econ Classification (R’000)
Prog Approriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Compensation of employees
68 939
71 571
103.80%
-3.80%
Goods and services
56 134
39 035
69.10%
30.90%
Transfer and subsidies 42
Payments for capital assets
856
593
569
95.95%
4.22%
Total
88.50%
11.50%
Expenditure/projection as % of programme budget
25.80%
22.90%

29. Programme 3 continued….
Total expenditure for the Programme as at the end of the first quarter amounts to R111.2 million or 22.9% of the programme’s total appropriation.
This expenditure is 11.5% lower than projected expenditure for the period.

30. Programme 4: State Protocol and Public Diplomatic
Prog Approriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Public Diplomacy
61 473
18 290
12 764
69.80%
30.20%
Protocol Services
55 781
41.60%
58.40%
Total
68 545
45.00%
55.00%
Economic Classification
Compensation of employees
31 434
30 802
98.00%
2.00%
Goods and services
37 305
30.90%
69.10%
Transfer and subsidies 41
252
234
92.86%
7.69%
Payments for capital assets
1 585
334
203
60.80%
39.20%
Expenditure/projection as % of programme budget
48.00%
21.60%

31. Programme 4 continued….
Total expenditure for the Programme as at the end of the first quarter amounts to R68.5 million or 21.6% of the programme’s total appropriation.
Expenditure for this programme is 55.0% lower than what had been projected for the period.
Slow spending is attributable to the expenditure relating to Presidential Inauguration due to non submission of claims by other departments:

32. Programme 5: International Transfers
Prog Approriation
Quarter 1
Projection
Actual
% of Actual to projection
Variance
Departmental agencies
Membership contribution
62 772
92 409
147.2%
-47.2%
Total
Economic Classification
Transfer payments
Expenditure/projection as % of programme budget
6.6%
9.7%

33. Programme 5 continued….
Total expenditure for the Programme as at the end of the first quarter amounts to R92.4 million or 9.7% of the Programme’s total appropriation.
This expenditure is 47.2% higher than what had been projected for the period mainly due to due to foreign exchange losses.
In total the projected foreign exchange losses in the first quarter is estimated at R121 million.

34. PROPERTIES MANAGEMENT

35. Property Acquisitions
Property Portfolio Abroad:
Consist of Chanceries, Official Residences and staff accommodation
Present ownership status: 135 State Owned and approximately 700 rented properties
DIRCO rental budget in excess of R 500 million per annum
Property Acquisition Strategy:
Aims to increase state owned property portfolio and reduce
operational lease budget via strategic acquisitions of properties
abroad
Strategy focuses on whole life cycle of property - acquisitions, long
term maintenance, renovations/refurbishment and disposals
Consideration will be given to grouping projects to achieve economies of scale and render projects more attractive for investment purposes

36. Property Acquisition Strategy
Acquisition mechanisms:
Development of state owned land and purchasing of properties
Funding mechanism:
In principle approval has been received from National Treasury to enter into finance leases

37. Property Acquisition Strategy
Work done to date:
Draft acquisition strategy submitted to National Treasury and comments received;
Motivation for priority projects submitted as part of MTEF submission;
Way forward:
Finalise high level strategy by end of the third quarter.
Engaging professionals for the preparation of costed feasibility studies – including legal, financial and technical due diligence as well as the development of a standard design for all facilities, taking into account issues of maintenance and sustainability.

38. African Renaissance Fund (ARF) Quarter 1: 2014/15

39. African Renaissance Fund
2014/15 Appropriation
Cash available as at 31 April 2014
Commitments
withdrawals
Available funds
ARF FINANCIAL REPORT FOR THE FINANCIAL YEAR 2013/2014 -
Cash and expenditure
PROJECT DESCRIPTION
APPROVED AMOUNT PER CONCURRENCE
OPENING BALANCE AS AT 1 APRIL
AMOUNT SPENT TO DECEMBER 2013 (CURRENT YEAR)
AMOUNTS PAID OUT OF DIRCO ACCOUNT (CURRENT YEAR)
BALANCE
R'000
Amount owed to Related Party Annexure 3
34 206  
28 837
Government of Malawi
92 055
South Africa’s Intervention in Sahel Region  
Government of Guinea-Rice Production, waste management and Technical assistance
69 157  
68 380
South African participation in the upcoming AU Election observer mission
17 000
13 570

40. ARF Financials DPSA DRC Census 10 000 1 772
Cash and expenditure
PROJECT DESCRIPTION
APPROVED AMOUNT PER CONCURRENCE
OPENING BALANCE AS AT 1 APRIL
AMOUNT SPENT TO DECEMBER 2013 (CURRENT YEAR)
AMOUNTS PAID OUT OF DIRCO ACCOUNT (CURRENT YEAR)
BALANCE
DPSA DRC Census
10 000
1 772
Madagascar Election Support
16 585
474
Humanitarian Assistance to Niger
96 000
5 099
Saharawi
52 000
 International Diplomatic Training Programme (IDTP)    
2 843
Humanitarian Assistance to Somalia
17 900  
VIP Protection Training to the Democratic of Republic of Congo Protection Unit-SAPS
648
The Cuba Economic Aid Package
IGM Expansion project (Madagasca)
41 100
Emergency Assistance Aid Congo
10 700 21

41. Independent Electoral Commission – Democratic of Republic of Congo
Cash and expenditure
PROJECT DESCRIPTION
APPROVED AMOUNT PER CONCURRENCE
OPENING BALANCE AS AT 1 APRIL
AMOUNT SPENT TO DECEMBER 2013 (CURRENT YEAR)
AMOUNTS PAID OUT OF DIRCO ACCOUNT (CURRENT YEAR)
BALANCE
R'000
Independent Electoral Commission – Democratic of Republic of Congo
1 200
262
Government of Comoros – Electoral assistance projects
37 871
5 084
Sudan Elections
4 000
827
Guinea- Museum Project in Kindia
5 000
Timbuktu Manuscript Project
20 000
2 928
African Capacity Building Foundation(ACBF)
3 900
2 422
 University of South Africa (UNISA)
27 000  
Democratic Republic of Congo Mission  
SAPS to Purchase Riot Equipment – DRC
24 000
United Nations Mission in Liberia for the rebuilding of the Liberian National Police)
7 500
7 141
 African Ombudsman Research Centre (AORC)
21 200    
Mozambique – Operation BAPISA
13 008
Cuban Medical Brigade
5 369 -
TOTAL  
6 165

42. Thank you