1. Nols du Plessis National Treasury 20 October 2006

2. Overview of Presentation  The Constitution and oversight  PFMA requirements for tabling of annual reports  Proposed oversight process  Roles of Portfolio Committees and SCOPA  Other role-players in evaluation process  Annual report oversight process  Interrogating & evaluating annual reports  Oversight of technical quality of annual reports  Oversight of entities performance  Conclusion

3. The Constitution and Oversight

4. The Constitution and Oversight  Section 55(2) says the National Assembly: “must provide for mechanisms to ensure that all executive organs of state in the national sphere of government are accountable to it; and to maintain oversight of the exercise of national executive authority, including the implementation of legislation; and any organ of state.”  Section 92(3)(b) requires that: “Members of Cabinet must provide Parliament with full and regular reports concerning matters under their control.”

5. PFMA requirements for tabling of Annual Reports

6. PFMA requirements for tabling  Section 40(1)(d) & 55(1)(d) –The Accounting Officer must submit within five months of the end of the financial year to the Minister responsible for that Department an Annual Report on the activities of the Department.  Section 65(1) of PFMA –the Minister responsible for a department must table the annual report in the relevant legislature within one month after the Minister received the annual report.  Section 65(2)(a) of PFMA –a Minister who fails to table an annual report for an entity by 30 September (6 months after year end) must table a written explanation in the legislature setting out the reasons why the report was not tabled and indicating when the report will be tabled

7. Annual Reports: Closing the accountability loop  Departments produce Strategic Plans setting out performance measures and targets for the coming financial year  Through the Budget the executive indicates what funds are required to implement these Strategic Plans  The legislatures approve the Budget, and so appropriate funds for the implementation of the Strategic Plans  The Annual Reports indicate how the executive have used the appropriated funds to implement the Strategic Plans  The legislatures should exercise oversight of the Annual Reports to check whether the executive has performed acceptably and used the appropriated funds for the intended purposes

8. Proposed oversight process

9. Proposed Oversight Process Review of AG’s General Report Timely tabling process Late tabling process Preparation Phase Joint Workshops (provincial concurrent functions) Report Writing Phase Announcement of completion of tabling process Annual Report Tabling Processes Referral to Portfolio Committees Tabling of Oversight Reports Ongoing Oversight Processes Timeline 30 September First two weeks in October Third week in October First week in November Second week of November Follow-up Phase Preparation Phase Referral to Public Accounts Committee Annual Report Oversight Process Portfolio Committee process Public Accounts Committee process Day of Delivery Tabling of a weekly update of outstanding Annual Reports Recommendations for the preparation of the Finance Bill Before 31 March Hearings Phase Last week in October

10. Roles of Portfolio Committees and SCOPA

11. Role of the Public Accounts Committee  Specialised role of ‘protector of the public purse’  Focus on the following: (i)The General Report of the Auditor General (ii)Financial probity (e.g. fraud) (iii)Compliance with the PFMA and its associated Treasury Regulations (iv)The interrogation of over-expenditure (relative to appropriations), and other instances of unauthorised expenditure (v)The interrogation of fruitless and wasteful expenditure (vi)The functioning of internal control and risk management systems (vii)Supply chain management and procurement, particularly large tenders, large capital projects and Public Private Partnership transactions (viii)The disposal of significant state assets, and any major financial or related losses suffered by government (ix)Corporate governance of departments and public entities

12. Role of Portfolio Committees  Close accountability loop by exercising oversight of service delivery  Focus on the following: (i)The technical quality of the annual reports (ii)Whether reports cover all performance targets set out in strategic/corporate plans; (iii)The quality of performance information (iv)The economy, efficiency and effectiveness of service delivery as measured by the performance indicators or by the AG in a performance audit, or by way of other information (v)Implementation of the entity’s service delivery improvement plan; (vi)Evaluating management’s explanations why service delivery was not in line with targets set in the strategic plans and budgets; (vii)Investigating under or over expenditure, the impact on service delivery and the measures taken to comply with the Budget

13. Links between Committees  Committees need to share information to improve the overall effectiveness of oversight  Portfolio committees in the various clusters should consider holding joint hearings  The Public Accounts Committee should provide information to other committees on key issues raised in the AG’s General Report  Portfolio committees may consider appointing rapporteurs to brief the Public Accounts Committee on important issues it has identified in its oversight process

14. Other role-players in Evaluation Process

15. Input by other role-players (1)  Auditor-General –Auditing of annual financial statements –Auditing of performance information –Performance audits of selected entities  National Treasury –Annually prepares a Guide to the technical requirements for annual reports’ –In process to develop a framework for non financial information –Treasury do prepare a consolidated report for Cabinet on audit outcomes  Constitutional institutions –Provide inputs to the oversight hearings dealing with issues within their mandate

16. Input by other role-players (2)  Committee researchers –Be familiar with the challenges, policies and other developments –Review strategic plans, budgets, in-year reports and previous annual reports –Monitor developments in their area of focus on an ongoing basis –Talk to the relevant treasury, auditors and other stakeholders  Stakeholders and the public –Request subject experts to evaluate the performance of entities

17. Annual Report Oversight Process

18. Overview of Oversight Process Review of AG’s General Report Timely tabling process Late tabling process Preparation Phase Joint Workshops (provincial concurrent functions) Report Writing Phase Announcement of completion of tabling process Annual Report Tabling Processes Referral to Portfolio Committees Tabling of Oversight Reports Ongoing Oversight Processes Timeline 30 September First two weeks in October Third week in October First week in November Second week of November Follow-up Phase Preparation Phase Referral to Public Accounts Committee Annual Report Oversight Process Portfolio Committee process Public Accounts Committee process Day of Delivery Tabling of a weekly update of outstanding Annual Reports Recommendations for the preparation of the Finance Bill Before 31 March Hearings Phase Last week in October

19. Oversight preparation phase  Start preparations well before 30 September  Committee staff ensure: –members have access to all relevant documents –identify and contact subject experts for hearings  Members’ preparations: –read all relevant documents –review current year’s performance compared to outcome of previous oversight process –consult with subject experts and other stakeholders –prioritise issues and questions  Committee should meet prior to hearing to: –identify key issues –identify what they want to get out of the hearing –prioritise certain key questions

20. Oversight hearings phase  Hold hearings in period 15 to 31 October  Request Minister to give an overview of the performance of the department  Options for structuring the oversight hearings: –A presentation by the Minister and/or the accounting officer and then a page-by- page review of the annual report –A presentation by the Minister and/or the accounting officer followed by a presentation by a designated member of the Committee dealing with key issues as identified by the Committee, followed by a question and answer session –A presentation by the Minister and/or the accounting officer followed by inputs by invited experts or stakeholder organisations, followed by a question and answer session. –A presentation by the Minister and/or the accounting officer followed by a full- scale public hearing, followed by a question and answer session

21. Oversight report-writing phase  Each portfolio committee should prepare an Oversight Report for each entity they oversee  Oversight Reports should deal with: –Compliance with the tabling deadlines –Compliance with the technical requirements for annual reports –The usefulness of the General Information section –Comments on the entity’s reported performance –Comments on the entity’s human resource situation and policies –Key issues that the committee would like to draw to the entity’s attention as regards its performance –Recommendations in relation to any of the issues noted above

22. Tabling of Oversight Reports  Oversight Reports should be tabled in the House not later than 14 November or, at latest, before the December recess  In certain circumstances the House may consider debating certain issues contained in the Reports  Once accepted, Reports should be sent to the relevant Minister for response to resolutions

23. Follow-up phase  Legislatures need to put in place systems to manage and track resolutions  Aim of such systems –to bring resolutions regularly to the attention of Ministers –to ensure Ministers respond to resolutions –to ensure issues raised in resolutions get resolved

24. Interrogating & Evaluating Annual Reports

25. Aim of Portfolio Committees’ Oversight  Clear understanding of purpose of oversight helps to achieve objectives  Fulfil constitutional obligation to hold executive accountable  Ensure departments and public entities are: –producing high quality services, economically, efficiently and effectively –complying with constitutional and/or legislative mandates, strategic plans and budgets –contributing to the realisation of government’s objectives  Gather information on the views of customers and clients  Make recommendations on improving the quality and responsiveness of services

26. Preparing to exercise oversight The oversight process is about the legislature exercising oversight of the executive in accordance with the Constitution It is NOT about opposition parties exercising oversight of government The committee needs to work as a team in exercising oversight. Oversight Preparation Checklist Be ready-think about the issues and information needs well in advance of the start of the oversight process. Be disciplined-set clear start, interim milestones and completion targets. Be aware-know about other oversight processes that may be relevant, e.g. of other departments of entities, or of provincial departments. Be focused-tailor the oversight process to where it can have the most impact, i.e. set clear priorities. Be intelligent-be flexible enough to take on board new issues and options should they arise in the course of the oversight process. Be open-consult with outside experts, organisations and clients throughout. Be forward looking-remember that the purpose of oversight is to improve service delivery in future.

27. Oversight of technical quality of Annual Reports

28. Aim of overseeing technical quality  To ensure that entities’ annual reports comply with the legal and policy frameworks for: –the structuring of the annual reports –the compilation of information –tabling of annual reports

29. Necessary background information  Guide for the Preparation of Annual Reports issued by National Treasury  Familiarity with the technical terms and methods used to –describe service delivery performance  esp. economy, efficiency and effectiveness –describe human resource issues  Strategic plans and budgets for the entity

30. Typical technical focus questions  Was the report delivered on time?  Is the report in line with the prescribed formats?  Does the layout of the report facilitate understanding?  Is the information communicated simply and clearly?  Is the report original, or are key portions copied from previous reports?  Does the report deal faithfully with each aspect of the strategic plan?  Is each measurable objective specified in the strategic plan reported on in the report?  Is the service delivery information presented in the report reliable? – Are the performance measures robust? – Can the performance information be verified? – Can the human resource information be verified?  Was an excessive amount spent on the production of the annual report?

31. Oversight of entities’ performance

32. Necessary background information  Information on the entity –its mandate, structure, way of operating, strengths and weaknesses  The entity’s strategic plan and budget  Information on external and internal challenges faced by the entity  Information from clients

33. Organisational concerns and options  How effectively does the entity contribute to the delivery of government objectives, as reflected in its mandate?  Should the mandate be changed to better reflect the priorities of government, and the needs of clients?  Is there a continuing need for the functions being delivered by the entity as a whole, and by each of its programmes? –If not, can the entity be closed down, or certain of its programmes be terminated?  Is there a need for new programmes?

34. Evaluating Past Performance  Is the annual report transparent about the entity’s performance? - Or is it simply a public relations document?  Has the entity met its aims, objectives and performance targets and quality standards? - What were the reasons for any failures?  Have the entities performance targets changed over time? - Are targets increasing with increases in funding?  Are there examples of good practice in how the entity has delivered its services?  What changes have been made in the services provided to clients? - How can greater client choice be provided in future?  What are clients’ views on the nature and quality of services? - Have these views altered over time?

35. Evaluating Future Performance  Are the entity’s objectives and performance targets linked to government’s overall aims?  Are the objectives and targets sufficiently comprehensive?  Do the performance targets drive continuous improvement?  Is there continuity in the performance targets between years?  Does the entity have too many performance targets?  Are any additional/alternative performance measures and targets needed?  How well do the performance targets measure the delivery of outputs and the achievement of outcomes?  Does the entity have the right balance between output and outcome performance targets?  Are effective information systems in place to measure performance? - How could these be improved?

36. Evaluating Efficiency of Performance  Are there systems to identify clients’ needs and monitor the extent to which they are met?  Has the entity delivered value for money? ̵ Over time, is it delivering its outputs at reduced cost?  Has the entity been innovative in managing costs and improving performance? ̵ What steps has it taken in this regard? ̵ Is there any scope for increased efficiency savings?  Are staff hampered by internal bureaucracy? ̵ What has been done to encourage greater flexibility and creativity in delivering services? What can still be done?  How effective have the relationships with other entities operating in the same or related areas been?  Have service delivery risks been managed adequately?  Does the entity comply with the Access to Information Act?

37. Human resource development  Has progress been made with the implementation of the Service Delivery Improvement Plan? –Is there evidence that services are improving as a result?  What has been done to fill key vacancies? –What more can be done?  What progress has been made with employment equity? –What strategies have been adopted to promote greater equity?  What is the status of the skills development programme? –Is the programme making a difference to staff’s ability to deliver services?  How much was paid out in performance bonuses? –How much did the accounting officer and other senior managers receive as performance bonuses? –Are these rewards in line with the entity’s delivery performance?  How many disciplinary matters are outstanding? –What is the age profile of these complaints? –What is the entity doing to ensure the speedy conclusion of matters?  How many senior management posts do consultants fill? –How will the entity reduce its reliance on consultants for routine functions?

38. Conclusion

39. Aim of overseeing Annual Reports  To test whether the annual report is an accurate record of the entity’s performance  To evaluate whether the reported performance is in line with the entity’s strategic plans and budgets  To evaluate whether performance is acceptable given the operating environment  To assess how the entity might improve on its performance in future Focus is on: How can the entity deliver services better in future?