1. Portfolio committee on environmental affairs
National Treasury presentation on the late tabling of the Department of Environmental affairs Annual report and Annual Financial Statements for 2016/17 financial year.
Presenter: Zanele Mxunyelwa | Accountant-General, SA ( Acting), National Treasury |
Date: 27 March 2018
Venue: S12 (A) , NCOP Building, Parliament, Cape Town

2. Portfolio committee on environmental affairs
Introduction
The Department of Environment Affairs (DAE) received an adjusted appropriation of R6,4 billion for 2016/17 financial year of which R4 billion is budgeted for as TRANSFER PAYMENTS.
The core business of DAE is derived from the following:
Section 24 of the Constitution of RSA
Chapter 2 of the Bill of Rights
Section 28(1) of the National Environmental Management Act (NEMA)107 of 1998)
Causes of delay
Consultation
Revision of Position for classification

3. Portfolio committee on environmental affairs
Consultation
The NT conducted extensive consultation after the AGSA issued its position in response to the NT position released in November 2017.
The NT resolve that there are material differences to be considered in addition to the previous reviews considered at the time of the issuing of the first position.
The role players:
AGSA teams ( Technical and legal)
Provincial Accountants- General
National Treasury : OAG teams, Budget office, Public Finance and IGR
It was necessary that the cases of DEA to be re-considered and be dealt individually, as the classification in subjective and complex.
There were 8 Projects of the DAE that were subjected to a further review at the request of the AGSA, which outcome of the review of each project is to be presented in this meeting.

4. Portfolio committee on environmental affairs
Roles and responsibilities
National Treasury
The NT has a responsibility to introduce Uniform Expenditure Classifications.
To enforce compliance with the measures established in the Constitution for these classifications.
Constitution of RSA
PFMA TR
Economic Reporting Format issued in September 2009.
The intervention of the NT in the dispute between the DAE and AGSA is informed by the above legislative provisions.

5. Portfolio committee on environmental affairs
Roles and responsibilities ( Cont.)
DAE
The DAE is responsible for ensuring that proper classification and correct accounting of the department’s expenditure is adhered to.
PFMA (S38) provides for conditions and measures to be in place during transfer of funds to another entity within or outside government:
Effective, Efficient and Transparent Financial Management and internal control systems
AGSA
Has a responsibility to express an opinion on the correctness of the classification of the expenditure.

6. Portfolio committee on environmental affairs
Challenges
Transfers and Subsidies vs Goods and Services or Capital Assets.
Subjective and complex ( each case need to be dealt individually)
Loss of identity of state assets and non maintenance
Non recognition of service delivery initiatives of government
Transparency and accountability in the use of State financial resources.
Classification defined by the mode of delivery of service or goods.

7. Portfolio committee on environmental affairs
Classification
Transfers and Subsidies vs Goods and Services or Capital Assets.
Economic Reporting Framework ( 2009)
Standard Chart of Accounts ( SCOA)
Internationally Recognised Principles of Government Finance Statistics
Modified cash standards of reporting.

8. Portfolio committee on environmental affairs
Revised classification
Transfers and Subsidies vs Goods and Services or Capital Assets.
Consideration of major elements for correct classification:
Funding of operations
Department’s Key Performance Indicators
Responsibility to deliver
Payment of Management Fees

9. Portfolio committee on environmental affairs
DAE Programmes
The DAE in terms of National Environmental Management Act may take reasonable measures to remedy a situation where there is a significant pollution or degradation of the environment.
DAE established various programmes under the auspices of governments Expanded Public Works Programme (EPWP) initiative.
The EPWP initiative is used as a vehicle for the delivery of the services by the DAE to ensure that, while delivering on its mandate, there is employment creation, or reduction of the levels of unemployment. Hence the EPWP utilises the labour intensive approach in the delivery of services.
The use of EPWP initiatives do not influence the Accounting Classification of the Expenditure incurred in the delivery of such goods or services.

10. Portfolio committee on environmental affairs
Conclusion
The NT will issue a revised position on the classification of the specific DAE expenditure reported as Transfers in the 2016/2017.
Presentation of specific cases and the changes in the classification
[ANNEXURE A: Revised Position Paper]
Transfers and subsidies
Goods and services
Capital Assets

11. Portfolio committee on environmental affairs
THANK YOU