1. ACTION PLAN TO ADDRESS THE AUDITOR-GENERAL OF SOUTH AFRICA FINDINGS FOR THE 2013/14 FINANCIAL YEAR Presentation to the Portfolio Committee on Basic Education Parliament, Cape Town 10 March 2015

2. FINANCIAL STATEMENT MATTERS FindingArea of emphasisProgress/Action plan Restatement of corresponding figuresAccruals on overtime and claims from examiners and moderators 1.HR issued a schedule indicating dates for submission for all claims. The circular indicates that claims received after a specific period will be declared “Invalid”. 2.A letter was sent to the Chief Director and Directors in the Examinations Unit indicating that claims received after a specified period will be returned to the Directors responsible to provide written motivations for the delay in the submission of claims. 3.Meetings were held with the Chief Director of Examinations informing him of the need to comply with due dates as far as payments are concerned. 2

3. FINANCIAL STATEMENT MATTERS FindingArea of emphasisProgress/Action plan Underspending of the budgetUnderspending on infrastructure1.IAs are required to spend 70% on the advance received and submit invoices before receiving further advances. 2.IAs to submit reconciliations of their expenditure with bank statements. 3.Bank statements are reconciled with BAS. 4.A breakdown list of invoices submitted accompanies each claim 5.Certified copies of invoices and bank statements accompanies each monthly reconciliation 3

4. FINDINGS RELATING TO ASIDI FindingArea of emphasisProgress/Action plan Interest1.Interest revenue earned for the month is disclosed on a monthly reconciliation. 2.Interest earned is paid back to DBE by the IAs on a monthly basis. Tender fees1.Tender fee revenue earned are disclosed and paid back to DBE. Accruals1.Accruals for each month are disclosed on a monthly reconciliation. 2.An accrual listing is provided by the IA as proof of the accruals. 3.Accruals at year end are provided by IAs before 31 March 2015 and included by IAs before 31 March 2015. 4

5. FINDINGS RELATING TO ASIDI FindingArea of emphasisProgress/Action plan ASIDI Financial managementAdvances1.Advances provided only once 70% of completion is reached. 2.Previous tranche reconciliation, bank statements and cash flow plans are submitted by IAs with new tranche applications. Expenditure1.Monthly reconciliations are prepared and submitted to IAs. 2.]A breakdown list of invoices submitted accompanying each claim. 3.Certified copies of invoices and bank statements accompanies each monthly reconciliation. 5

6. FINDINGS RELATING TO ASIDI FindingArea of emphasisProgress/Action plan Transfer of completed schools1.Practical and final certificates are provided by the IAs for completed schools. 2.Invoices amounts agree to BAS records. 3.Quantity surveyor provides for invoices which are clustered. 4.Final accounts prepared agree to invoices and amounts paid on BAS. SCM1.ASIDI SCM processes adheres to the Treasury regulations. 2.ASIDI approves all contractors selected for appointment. 3.All contracts are signed by both DBE and contractors. 4.ASIDI obtains and keeps records of all procurement documents from IAs. 6

7. FINANCIAL STATEMENT MATTERS FindingArea of emphasisProgress/Action plan Irregular expenditureMOAs for IAs not following government prescripts 1.MOA s amended to include clauses which specify compliance with all government prescripts. Delays in appointing IAs1.A number of IAs were appointed while tender process was in progress of being finalised. Tender advertised less than 21 days due to the word “extension” omitted 1.Department issued an addendum in the tender bulletin extending the closing date. 7

8. FINANCIAL STATEMENT MATTERS FindingArea of emphasisProgress/Action plan Transfer paymentsFunded students deviated from intended programmes 1.Directorate investigating the matter. 8

9. REGULATORY AND COMPLIANCE AUDIT FindingArea of emphasisProgress/Action plan Non disclosure of financial interests Employees not disclosing interest and remunerative work outside the Department 1.New employees will declare their interests when receiving their appointment letters. 2.New appointment letters are prepared to include disclosure of interest. 3.Any official who transgresses by not declaring his/her business interest will be required to explain to the Accounting Officer in writing for non- adherence. 9

10. REGULATORY AND COMPLIANCE AUDIT FindingArea of emphasisProgress/Action plan Human Resource ManagementNo proper record keeping of leave1.A leave register was developed to monitor the submission of leave forms. 2.Warning letters are issued to Managers who submit leave forms late. 3.HR unit commenced a process for reconciling the leave registers with all leave forms to ensure all leave forms are captured. Over-expenditure in terms of compensation of employees 1.A moratorium placed on filling of posts. 2.The COE budget is monitored on a regular basis. Transfers relating to NSFAS management of funds 1.The Department requested NSFAS to submit an approved implementation protocol for the Funza Lushaka Bursary Scheme. 10

11. REGULATORY AND COMPLIANCE AUDIT FindingArea of emphasisProgress/Action plan Asset ManagementFinancial reporting of movable and immovable assets as far as PEDS are concerned 1.Assist the PEDS by reviewing their internal control processes including internal control policies, identifying weaknesses and providing necessary recommendations. 2.Assisting the PEDs with the process of reconciliation between the asset register and BAS in connection with movable and immovable assets. 3.Assisting the PEDS with the compiling of the notes to the financial statements. 4.Ensuring continuous communication between the transferring and receiving Departments in connection with section 42 transfer of assets. 11

12. REGULATORY AND COMPLIANCE AUDIT FindingArea of emphasisProgress/Action plan Tender administrationNon-compliance with Treasury prescripts 1.Appointment of external auditors to audit the bidding process for all bids with the estimated value of 5 million. 2.Submission of a report to Accounting Officer indicating fairness of the process. Supplier database and compliance on awarded purchase orders 1.The Department upgraded IQUAL system to IQUAL net which is a system to register prospective suppliers on the Department database. Payment of suppliers within 30 days 1.Developed and implemented an invoice register which serves as a tool to track and monitor invoices. 2.Appointed a dedicated official to monitor payments. 3.Enhanced the invoice register by developing and implementing a spreadsheet which is monitored by a dedicated recordkeeping official. 12

13. FINDINGS RELATING TO PERFORMANCE AUDIT – KHA RI GUDE FindingArea of emphasisProgress/Action plan Reporting inaccuratelyRecruitment of learners1.An approved recruitment policy in place. 2.Registration forms completed and copy of ID attached. 3.Verification of learners on the Home Affairs website. Recruitment of volunteers1.Clear guidelines are incorporated into the recruitment policy. 2.A checklist is prepared to confirm submission of all necessary documents. 3.The checklist is signed by a delegated official from SAB&T prior to capturing. 4.All exceptions are signed off by a DBE official. 5.Proper reporting channels on all issues identified by SAB&T are in place. 13

14. FINDINGS RELATING TO PERFORMANCE AUDIT – KHA RI GUDE FindingArea of emphasisProgress/Action plan Monitoring1.Roles and responsibilities of SAB&T and DBE are documented and communicated. 2.Standard operating templates for ach component of the reporting structure are provided. 3.Check lists are signed off by a delegated DBE official. 4.Monthly meetings between SAB&T and DBE. 5.Audit trail on all issues raised and resolved. 14

15. PERFORMANCE INFORMATION MATTERS FindingArea of emphasisProgress/Action plan Reliability of strategic objectiveInformation reported is inaccurate, unreliable and incomplete 1.The Planning Directorate is verifying all documentary evidence, where figures are overstated by reporting units. 2.A report is sent back to the Branch for corrections to be effected or were additional evidence is provided. 3.Validity of records are checked every quarter. 15

16. Audit Action Plan of Performance Information FindingArea of emphasisProgress/Action plan Lack of evaluation of evidence for performance indicators Lack of evaluation of evidence for performance indicators received from PDEs and NDoH 1.The NSNP unit conducts provincial visits to perform spot-checks on the data provided by schools. 2.In the interim, SPR will work with the relevant units e.g. NSNP to provide 5% of their outputs for SPR to verify provincial data. 16

17. Action Plan of Performance Information FindingArea of emphasisProgress/action plan No technical indicator descriptions for indicators Technical indicator descriptions1.The Technical Indicator Descriptions were developed for the approved APP 2014/15 has Technical Indicator Descriptions. 2.For 2015/15 all the drafts had technical Indicator descriptions. 17

18. IMPROVEMENT ON AUDIT OUTCOMES FOR 2014/15 FY BETWEEN DBE AND PEDS 1.Finding1.Area of emphasis1.Progress/action plan 1.Qualifications of PEDSRegulatory and compliance1.DBE requested all action plans for the PEDS and consolidated the plan to provide a means of a strategy for the sub committee. 2.A letter was submitted to HODs to inform them to include the annual audit on Division of Revenue Act and provide reports to DBE: Internal Audit. 3.A letter submitted to the AGSA for a response on the postponement of Instruction note relating to SCM. 1.Qualifications/disclaimersPerformance information1.Internal audit reports to be submitted to DBE: Internal Audit for inclusion in quarterly audits of performance information. 18

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