1. Compliance Score Card Performance Contract

2. Introduction Contract Compliance Score card & checklist have been designed to underpin compliance with and effectiveness of the Performance Contract Simple and easy to use tool to assist the DWD Regulation Unit establish an effective mechanism for PC compliance Designed to ensure effective implementation and monitoring of WA’s for compliance with specified terms and conditions PC

3. Purpose of Score Card In combination, the Checklist & Scorecard form a tool to assist WAs in exercising oversight and supervisory functions over water operators Helps users to make concise references to requirements of the contract on a Clause by Clause basis Enables ease of assessment of technical, commercial, financial and management performance and reporting requirements Ensures that stakeholders to the contract fully understanding their respective mandates The checklist also suggests the nature of inquiry to make regarding activities, documents or assets defined in the scope of the PC

4. Scope of Checklist Responses to and issues arising from the inquiry are against indicators to determine the extent of compliance to a specific contract requirement Checklist prescribes a documentary evidence approach to verification of testimonials and documents pertaining to the oversight function by the WA/WSSB Checklist has clustered all Clauses and Schedules of the Performance Contract into six broad contractual obligations

5. The Contractual Obligations 1. Holding, control, management and use of assets 2. Legal and regulatory compliance 3. Compliance with technical requirements 4. Compliance with financial management requirements 5. Compliance with commercial requirement 6. Transparency, governance and reporting requirement

6. Holding, Control, Management & Use of Assets Specific area of focus; Tracking location of network assets Identifying & safeguarding water supply assets and network infrastructure Following up implementation of asset and network investments to increase service coverage Developing a mechanism for monitoring policy requirements for network expansion Tracking and accounting for conditional grant utilization for asset acquisition and extension

7. Legal and Regulatory compliance Regulatory requirements are broader than water policy elements and extend to; a. Local Government Act, b. Aspects like financial reporting, procurement, environmental issues are governed by other legislation e.g. Audit Act, PPDA and Local Governments (PPDA) Procurement Regulations, NEMA Act, Public Finance & Accountability Act, Water Act etc. Legal and regulatory compliance is intended to check on WA’s level of compliance with relevant laws and regulations Focuses is on availability of the relevant legal & policy documents whose level of application is checked elsewhere in the checklist.

8. Compliance with technical obligations Is aimed at achieving the following objectives; 1. Management of operation & maintenance costs at optimal levels 2. Enhance efficiency & effectiveness in operations management 3. Create/develop an efficient operations management monitoring system 4. Ensure adequate water and sanitation services 5. Ensure reliability and sustainability of service quality & delivery 6. Development & implementation of effective process control & monitoring to ensure water & sewerage effluent conform to National Standards 7. Ensure efficiency in conditional grants and CAPEX buffer utilization 8. Deploymentment of appropriately qualified and trained staff

9. Compliance with financial management requirements Compliance with financial management obligations is aimed at ensuring; 1. That cash collections are banked intact and secure 2. Compliance with meeting financial obligations including management fees, statutory obligations and energy (UMEME) bills 3. Monitoring eligibility of payments and prompt accountability 4. Accuracy, integrity and completeness of financial reports 5. Reconciliation of accounts and financial statements 6. Proper control & prompt recognition of income due to the Authority 7. Complete and accurate staff records 8. Adherence to the approved business plans

10. Compliance with commercial obligations Compliance with commercial management obligations is aimed at; 1. Enhancing timely, accurate and proper billing by Authority and to collect, maintain and update customer information 2. Increasing customers willingness to pay by strengthening the WA’s obligation in respect to correct tariff application, billing, metering, 3. Ensuring that integrity and safety of the customer billing databases at the WA is enhanced and guaranteed 4. Enhancing a system to provide services to the urban poor in line with the pro-poor policy 5. Instituting a customer complaints and feedback system to achieve efficient service delivery 6. Instituting customer care systems for enabling communication with customers in respect of service interruptions

11. Transparency, governance and reporting obligation Objective of this obligation is to ensure that there is a mechanism for policy monitoring; an avenue for the Minister to review and measure the effectiveness and compliance with the terms and conditions of the Performance contract

12. Using the Scorecard Scorecard adopts the same layout as checklist for ease of use in assigning scores Presentation of the six broad PC obligations along with maximum points under each header aims to underscore the significance of the obligation Scorecard breaks down specific contract requirements into a number of result areas Each results area requirement is allotted a maximum possible score for full compliance Points are scored individually for each requirement upon document or physical verification Scores for each key result area under the six obligations are summed up for the total score against which general PC compliance is assessed

13. Basis of the Score The extent of severity in the event of breach of the contract requirement to the overall goal and strategic objective of the Performance Contract The amount of effort needed by the WA/WSSB to achieve compliance

14. Criteria for Determining Individual Score To determine the score, the checker needs to probe for answers from WA/WSSB, review documents submitted & evaluate testimonials of compliance against specific contract requirements under scrutiny. Compliance is then examined & scored against a predetermined maximum point as guided by e.g. Availability 50% Accessibility 30% Security 10% Currency/ Accuracy 10%

15. Preparing for the Audit Prior to conducting a contract compliance audit the auditor should ensure that WA/WSSB targeted are availed a copy of the Checklist and Scorecard Ample notice is given explaining the objective and purpose of the audit The above help in reducing the amount of effort required to bring respondents in tandem to ensure their full participation.

16. Conducting the Audit Inquiry The checklist is the main guide for the inquiry into compliance The checker needs to have a copy of the New Generic Contract and other sector documents for reference The auditor needs to understand not only the contract but policy related issues within the Water and Sanitation sector for effective guidance to WAs in respect of PC compliance. The auditor needs to understand scheme specific issues particularly those which may be outside the control of the WAs

17. Feedback The scorecard is designed to give instant scores for each entry Results of an audit can be availed to the WA being audited instantly Checker should keep an audit register of contract infractions for ease of compiling a trip report and for purposes of engaging the Authority in developing a compliance and remedial action programme The officer conducting the exercise should be empowered to enjoin WAs into a time bound commitment and action plans for redressing contract infraction and shortfalls in the oversight oversight function

18. Question/Comments