1. 1 1 DOJ & CD Briefing to the Select Committee on Security and Constitutional Affairs 13 October 2009

2. 2 2 Table of Contents 2008/09 BUDGET AND EXPENDITURE OUTCOME 2008/09 AUDIT OUTCOMES 2009/10 AUDIT ACTION PLANS 2

3. 3 3 2008/092007/082006/07 Final Budget R 8,515,525R 7,538,667R 6,478,647 Less Expenditure R 8,434,152 R 7,373,530R 6,006,254 Balance R 81,373 R 165,095 R 472,393 Percentage Expenditure 99,0% 97,8% 92,7% 2008/09 Expenditure Outcome

4. 4 4 Expenditure outcome per Programme

5. 5 5 Expenditure per Economic Classification

6. 6 6 Expenditure: Year-on-year comparison

7. 7 7 Key Observations: 2008/09 Financial year Improved departmental spending – expenditure increased from 97.8 % in 2007/08 to 99,0% in 2008/09 Under spending decreased with R83 million from R165 million in 2007/08 to R81 million in 2008/09 Spending on compensation of employees at 100 per cent of parliamentary approved budget whilst absorbing OSD expenditure within baseline through reprioritisation and cost curtailment Goods and services spending at 99,7 % Early reprioritisation to fund OSD (R280,0 million), Guarding Services and Cash in Transit services (R20 million), Masters (R38 million) and opening of new Courts (Tiyani,Northam etc) March spending as a percentage of total spending down from 16 % in previous years to 8,6% in 2008/09

8. 8 8 AUDIT OUTCOMES 2008/09

9. 9 9 Vote Account – Qualifications Third Party Funds (TPF) – (i) Departmental Revenue, (ii) Contingent Liability and (iii) Receivables for departmental revenue: Qualification refers to the impact of the financial administration of the Third Party Fund (TPF) on the Vote Account. Employee Benefits The Audit Report was qualified due to the lack of control over the timely capturing of leave taken. The late capturing of leave impacts on the provision for leave entitlement as disclosed in the annual financial statement disclosure notes. 9

10. 10 Vote Account – Qualifications Finance Lease Commitments (Disclosure note – lease commitments owing from the reporting date to the end of the lease contract) – The audit qualification relates to the availability of adequate supporting documentation requested by the auditors resulting into that lease commitment calculations could not be verified. Irregular Expenditure Condoned The qualification on irregular expenditure condoned for lease expenditure refers to the availability documents as indicated above. The auditors could therefore not examine all the underlying leaseagreements to satisfy themselves that the department’s leases did indeed conform to Treasury’s guidelines. 10

11. 11 Vote Account – Qualifications Capital and Minor Assets The Audit Report was qualified as the AG indicated that errors relating to the completeness and existence of capital and minor assets were still identified. 11

12. 12 Third Party Funds (TPF) PPP High-level timelines 12 Finalize negotiations: By end of October 2009 Obtain DG and NT TA3 approval : By 30 November 2009 Contract signature: By 31 December 2009 System development: Finalized by middle August 2010 System pilot completed: By 30 September 2010 System implementation: From 1 October 2010

13. 13 Key identified root causes for Audit Qualifications and Key initiatives to achieve NAQ

14. 14 KEY IDENTIFIED ROOT CAUSES FOR QUALIFIED VOTE ACCOUNT AUDIT REPORT GRAP Accrual Accounting Transformation & IFMS – DISCLOSURE NOTES TO AFS Lack of Financial Systems i.e. BAS & JDAS etc. Vacancies and inadequate job levels of finance staff Inadequate training / skills shortage Lack of reliable, timely, accurate management information relating to financial matters in order to be proactive

15. 15 KEY INITIATIVES TO ACHIEVE NAQ Debriefing workshops – Regional Heads / Regional Finance Directors / Human Resources Branch / Regional Directors Human Resources / Other Branches / National Office Financial Reporting and Audit Facilitation  Audit Action Plans – Compiled per Financial Statement Component – National Office Champions responsible for actions  Task team visiting Regions to follow-up on leases etc.  Task team dealing with the problems experienced with disclosure notes  Monthly financial statements wef September 2009 (October 2009) TPF - Implementation of MMT PPP (TPF) Asset Management – Deployment of asset scanners / Sustaining asset register / Quarterly verifications as per DFI / N/O monitoring and verifications / Asset Controller ’ s appointment and training SCM – SCM Business process re-engineering and organisational re-design will ensure that work in this area is conducted in a regulatory-compliant manner, is performance-driven and that the organisation (SCM unit) is staffed with appropriate capacity Extensive and ongoing consultation and interaction with Regional Heads, Branches

16. 16 Audit Action plans 2009/2010

17. 17 AUDIT ACTION PLANS FOR 2009/10 The approach with the audit action plans was changed from an action plan per Regional Office / Court / National Office to an audit action plan per financial statement component (e.g. assets) National Office Champion/s responsible for developing action steps, continuous monitoring and ensuring that actions address the audit finding/s in order to achieve NAQ and compilation of progress reports as required by CFO The following Audit Action Plans were compiled in addressing audit findings for National Office and Regions:  Expenditure Management  Performance Information  Revenue Management  Stock Management  Assets  Cash & Cash Equivalents  Compensation of Employees  Disclosure Notes to Annual Financial Statements

18. 18 AUDIT ACTION PLANS FOR 2009/10 Audit Action plans for Revenue; Cash and cash equivalents; Assets; Expenditure management; Stock Management were finalised and forwarded to Regions on 18 and 19 September 2009; Progress reports received 6 October 2009, currently being assessed by National Office Champions; Report to Accounting Officer by 15 October 2009 The Audit Action plans on the components - Employee benefits and AFS Disclosure notes were forwarded to the Regions on 9 October; Progress reports expected on 22 October 2009 Audit Action plan on Performance Information is work-in-progress Action steps developed by Champions are not restricted to audit qualifications but also include all other reported audit findings

19. 19 Thank you