1. Immovable Asset Register Enhancement Programme Presentation to Portfolio Committee 25 February 2014 Director-General: Mr M Dlabantu

2. Page 2 Outline of the Presentation 1.Purpose of the presentation. 2.Background. 3.Feedback on the DPW Immovable Asset Register (IAR) Programme. 4.Joint IAR action plan (National & Provincial Public Works). 5.Vesting status. 6.Other key IAR-related enhancement-related activities. 7.Extension of the Principles of GIAMA to Local Government. 8.Demonstration: Level of IAR rebuild. 9.Immovable Asset Condition Assessment Guideline.

3. Page 3 Purpose of the Presentation The Portfolio Committee has requested a briefing by the Department of Public Works on the progress made by the Department on the completion of the Immovable Asset Register

4. 2.Background

5. Page 5 Background 1.There has been continuous lack of clarity on the nature and extent of State immovable assets as a consequence of a variety of historical and current factors. The said factors include:  Existence of multiple landholding institutions pre 27 April 1994,  Organisational complexities in the management of the transition post 1994 elections, which resulted in the loss and misplacement of some land records as well as the control of some State immovable assets being placed in the hands of private parties,  Incomplete surveying of State land,  Incomplete confirmation of vesting of State immovable assets,

6. Page 6 Background cont.  Magnitude of the State immovable assets portfolio in relation to existing capacity to manage and maintain it,  Unprocessed legacy transactions: Expropriations, Sales, transfers incorrectly processed by the State Attorney or not updated correctly on deeds,  Data in deeds not accurate when compared to title deeds,  Integration / Cooperation from relevant stakeholders, and  Activities / Actions by client department (DPW not the implementing agent).

7. Page 7 Background: What needed to be done? 1.Identification of all registered State immovable assets, 2.Identification of relevant ownership records, 3.Determination of custodianship of State immovable assets in accordance with legislation, 4.Desktop and physical verification of State immovable assets, 5.Confirmation of vesting (ownership) of all State land, 6.Enhancement of State immovable asset registers, 7.Capacity enhancement to manage and maintain portfolio, 8.Identification of State immovable assets controlled by other parties, 9.Improved management and reporting requirements for State immovable assets.

8. Page 8 Overview of DPW IAR programme: ( IAR phase 2 commencement 6 January 2014 to 6 October 2016) Manage, process, QA physical assessment & pack IAR Jan 142013/142014/152015/16July 16 Registered land parcels research, reconciliation Surveyed not registered SDF’s not on State Land Municipal rates account number linked Apply FV – demo progress Remaining L&B linked PaperTrail Heritage assets policy/approach addressed Rebuild IAR Maintai n IAR Quarterly reporting, process additions, disposals, adjustments, capitalisations, ongoing deeds & SG reconciliations GRAP requirements – depreciation, impairment, useful lives, etc State land reconciliation DPW family Vesting setup Operating model design IAR system spec Sundry debtors updated OBB plan Related projects Key milestones Completeness of registered properties, progress on unregistered, FV tested State land reconciliation DPW family IAR complete for registered land & substantially complete for unregistered + FV substantially applied GRAP compliant IAR Minor snag list for follow up Apply FV - final UAMP comparison IAR/UAMP integration Heritage assets classification complete Vesting factory Operating model final PCMsTransition support Data migration support OBB dataOBB executionOBB report Link municipal rates recon required(FSP) Dedicated resources (EY, A2A Kopano & Morar inc. consortium) have been procured for a turn-key IAR solution, in addition to Secondary Service Providers for physical verification

9. Page 9 Background: What has been done? 1.DPW and DRDLR, as the main national custodians, have assumed a collective leading role in the identification and correct classification of government immovable assets. 2.In view of the existence of legislation which empower other authorities in the national and provincial sphere to control State immovable assets, mechanisms had to be devised to bring all the actors together towards determining, amongst other things, the extent of State immovable assets. 3.DPW and DRDLR created an intergovernmental structure, currently known as the Provincial State Land Vesting and Disposal Committee (PSLVDC) with a view to coordinate immovable asset disposal processes as well as confirmation of vesting of all State immovable assets in the national and provincial spheres.

10. Page 10 Background: What has been done? cont. 4.The original idea was to prevent the possible disposal of an immovable asset controlled by one department whilst it may be required by another for its service delivery purposes. 5.The PSLVDC also serves to achieve consensus amongst all State immovable assets controlling departments on whether an immovable asset vests in the respective national or provincial sphere. 6.In 2009 Cabinet set up an Inter-Ministerial Committee (IMC) on Immovable Assets. This IMC is chaired by the Minister of Public Works and includes the Minister of Finance and that of Rural Development and Land Reform as members. 7.A national surveying programme was initiated in 2011 under the leadership of the Chief Surveyor General.

11. Page 11 Background: What has been done? cont.  The plan was aimed at identifying and surveying all un- surveyed State land and State Domestic Facilities.  The surveying has practically been completed except for minor ‘gap areas’ and ‘slithers’ of State land between river bank boundaries.  Though surveying has been done correctly in terms of the Land Survey Act, there are some few challenges relating to the separation of provincial facilities from larger national land parcels. This issue is currently being addressed. 8.As can be appreciated from the above slides, the magnitude of State immovable assets challenges has necessitated a multifaceted collaboration approach at various levels.

12. 3.Feedback on the DPW Immovable Asset Register (IAR) programme

13. Page 13 Overview of DPW IAR Programme: Progress from inception of Programme to 31 March 2013 1. Comfort on completeness of land parcels, 2. Continuous interaction with the State Land custodians, 3. Worked with the Provincial custodians to analyse and reconcile registered land, 4. Clear requirements were defined for the Immovable Asset Register and related matters, 5. Appointed vendors for physical assessments and condition assessments, 6. Physical verification commenced with the development of software, the procurement of robust tools, definition of clear processes and quality control procedures, 7. Commenced work on State Domestic Facilities (SDF’s) – State Domestic Facilities are defined as DPW buildings on someone else’s land.

14. Page 14 Overview of DPW IAR programme: Plan from 1 April 2013 to March 2014 1. On-going deeds refresher for registered land parcels. 2. Build IAR for surveyed and not registered land. 3. Build IAR for SDF’s (state domestic facilities not on state land). 4. Conduct physical verification of identified DPW properties. 5. Draft and implement IAR policies and processes. 6. Capitalise projects with effect from 1 April 2013. 7. Apply municipal values to properties. 8. Link correct municipal rates account to IAR. 9. Initiate Operation Take Back.

15. Page 15 Status of audits: (From 2011/2012 to 2013/2014 financial year end) AFS DISCLOSURE 2011/20122012/20132013/2014DEPENDENCIES List A - Registered land parcels21 44834 73134 571Deeds analysis List D - Surveyed Unregistered land parcels 3 1273 132 Physical verification List B – Provinces registered land15 87813 703N/A N/A – new sector specific guide List E – Provinces surveyed unregistered land 4 125N/A N/A – new sector specific guide Improvements (number of structures)73 39873 435 Physical verification and other sources Audit OpinionDisclaimerQualifiedTBA

16. Page 16 Graphical representation of registered land State landParastatalsMunicipalitiesPrivate 184 01110 322985 7827 423 167

17. Page 17 State land reconciliation as at January 2014: (includes Registered, Unregistered and Sec 42 land parcels) Analysis of registered land parcels by custodian Total DPWDRDLRHuman Settlements 9 Provinces Total State Land 182,34545,15025,25885,50326,434 Adjustments for: Not considered to be state land -3,379-2,593-786 Subsequent deeds download and other 5,0451,298-563,636 Deemed provincial properties -10,74310,743 Revised Total – Deemed State Land 184,01133,11225,20285,50340,027 Allocation of custodianship in progress- thus disclosed by National 1,459-1,459 Total deemed State Land 184,01134,57125,20285,50338,568 Unregistered Land - National DPW 3,132 Provincial Surveyed not Registered – s42 4,125 Amounts reconciled as at 30 Sep 2013 184,011 37,703 25,202 85,503 42,693 1 DPW is currently busy resolving And will be completed by March 2014 Disclosed by DPW for 2012/13 as per National Treasury Sector Specific Guide. Provinces will have to disclose these for 2013/14 as per the new Sector Specific Guide 2 1 2

18. Page 18 Physical verification: 1.The Department has embarked on a process of physical verification of its immovable assets to confirm information contained in its enhanced register, 2.Two service providers have been appointed to execute this task:  PWC Consortium, and  eValuations. 3.The physical verification project commenced on 11 October 2013 and the planned date of completion is 28 February 2014.

19. Page 19 Physical verification: Progress as at 17/2/2014 cont.

20. Page 20 DPW IAR improvement programme: Phase 2 key elements 1. Service Provider on boarded w.e.f January 2014: 2. Work stream leads & resources secured to deliver 2016 target:  Management the physical assessment stream & QA,  GRAP compliance,  IAR on iE-Works and suitable accounting platform,  Vesting of DPW properties to meet March 2016 target,  Supplement current DPW teams and ensure skills transfer. Registered Land Surveyed not registered State Domestic Facilities Physical assessment Registered Land Surveyed not registered State Domestic Facilities Physical assessment Fair value Property rates Heritage assets GRAP Accounting Fair value Property rates Heritage assets GRAP Accounting Vesting GRAP IAR finance specification Vesting GRAP IAR finance specification Operating Take Back Operating Model PaperTrail Operating Take Back Operating Model PaperTrail Immovable Asset Register Other related projects

21. Page 21 DPW IAR improvement programme: Key successes to date 1. Increased confidence in data & numbers being reported as evidenced in 2013 Audit results. 2. Physical assessment to corroborate and enhance cleansed IAR. 3. Identified transactions for investigation & follow up (OTB). 4. Vesting factory set up to meet 2016 vesting target. 5. System enhancement on iE-Works ahead of envisaged go-live during 2014 and integrate IAR with required accounting & reporting system. 6. iE-Works being availed to the Provinces. 7. Suitably qualified team to see enhancement through to 2016 target on boarded.

22. 4.Joint IAR action plan (National & Provincial Public Works)

23. Page 23 Action Plan on IAR: (National and Provincial Public Works) #ITEM/ ACTIONTIMEFRAMERESPONSIBLE PERSONSSTATUS/ PROGRESS 1.Address Management Assertions (completeness, existence, rights & obligations, accuracy & valuation, presentation & disclosure) and Reconciliation 31 May 2014 Continuous Ms F Rabada: CD ARM Mr S Sokhela: D ARM Provincial Representatives State land reconciliation is work in progress and will be completed by May 2014. 2.Capitalisation of State Immovable Assets 31 March 2014Ms F Rabada: CD ARM Mr S Sokhela: D ARM Provincial Representatives DPW draft policy currently being reviewed by all stakeholders for completion and approval by CFO by March 2014 3.Vesting of State land31 March 2016National Vesting Task Team (DRDLR, DPW and Provinces) DPW Vesting Business Case developed and forwarded to Provinces. Next steps are to process bulk applications 4.Surveying of State Land31 March 2015Mr R Salig: CD CSG National Vesting Task team to monitor CSG assisting custodians to survey SDF’s. Next steps CSG to start surveying process 5.Devolution of Immovable Assets to Provinces 31 March 2014Mr S Sokhela: D ARM Regional Project Coordinators Provincial Representatives 90% complete Provinces to confirm custodianship 6.Compliance of IAR to relevant prescripts (PFMA, GIAMA, National Treasury guidelines) 31 March 2013 & 31 March 2014 Continuous Mr S Sokhela: D ARM Provincial Representatives Audit Action Plan for national and provinces to address compliance at each financial year end. 7.Custodians of State Immovable Assets – DPW Framework 31 March 2014Ms F Rabada: CD ARM Provincial Representatives Draft framework has been developed for national Provincial custodianship confirmed with the Premiers Framework for provinces to be developed 8.Operation Bring Back (Take Back)31 March 2014, 31 March 2015 & 31 March 2016 Ms F Rabada: CD ARM Provincial Representatives Work in Progress (Deeds Reconciliation and physical verification of properties). OTB strategy is being reviewed

24. Page 24 Key results- Position with Provincial DPW’s as at September 2013 (interim AFS submission)

25. 5.DPW Vesting Status

26. Page 26 DPW Vesting Status: Progress as at 31 December 2013

27. Page 27 DPW Vesting – projected delivery of land parcels to be vested by March 2016

28. 6.Other key IAR enhancement-related activities

29. Page 29 Other key IAR related activities cont. 1.In reconciling State land:  land parcels in the former TBVC states have been recorded in the Immovable Asset Register of DRDLR;  Facilities used by the National Government in the former TBVC states have been recorded in DPW’s Immovable Asset Register, and  facilities used by the Provincial Government in the former TBVC states have been recorded by the respective Provinces. 2.An immovable asset policy document for the PMTE has been drafted covering all the asset management and accounting requirements.

30. Page 30 Other key IAR related activities 3.In relation to foreign State-owned immovable assets:  The Department of International Relations and Cooperation (DIRCO) was assigned custodianship of foreign assets during 1999 and they have been responsible for the management of such assets including presentation and disclosure in Annual Financial Statements, except disposal of such assets which currently remains the responsibility of DPW.  13 immovable assets abroad superfluous to the needs of DIRCO have been identified for disposal comprising, inter alia, the former Chancery and Official Residence in Bonn, Germany,  An Immovable Asset Disposal Policy was approved by the Minister of Public Works on 30 May 2013,  The Department has embarked on a process of developing country- specific disposal strategies, in consultation with DIRCO, with a view to the disposal of these assets within the 2014/15 financial year. The proceeds realized from such disposals will be returned to the fiscus.

31. 7.Extension of the Principles of GIAMA to Local Government

32. Page 32 Fundamentals of GIAMA: National/Provincial vs. Local Government 1.GIAMA provides a framework of basic principles in accordance with which national and provincial departments must manage the immovable assets that they utilise or control in executing their mandates. 2.GIAMA is structured around the following building blocks: A.Role-players involved in the acquisition, operation and disposal (custodians) and the utilisation (users) of the State’s immovable assets; and B.Management processes within government. 3.Whilst the management of all spheres of government stem from the same fundamental principles, the role-players involved in immovable asset management and the strategic management processes of local government differ significantly from national and provincial government.

33. Page 33 National/Provincial vs. Local Government A) Role-players: National & Provincial Government  Users: Departments who utilise immovable assets in the performance of their functions. Required to compile annual user asset management plan (U-AMP).  Custodians: Departments who perform “caretaker” functions in relation to immovable assets. Required to (1) provide information on immovable assets allocated to users, to inform compilation of U-AMPs; and (2) compile annual custodian asset management plan (C-AMP). A) Role-players: Local Government  No standard institutional delineation between users and custodians of immovable assets.  No separate accounting officers in various departments within a Municipality.

34. Page 34 National/Provincial vs. Local Government cont. B)Management Processes: National & Provincial Government:  National / Provincial Departments (both users and custodians) are obliged to compile annual immovable asset management plans as part of their annual strategic planning process.  User and Custodian Asset Management Plans must be submitted to relevant Treasury to inform annual budget allocations. B)Management Processes: Local Government:  In terms of Municipal Systems Act, 2000 a Municipality is obliged to develop an Integrated Development Plan (IDP) at least every 5 years, which serves as its principal “strategic management planning instrument”.  Municipalities are required to annually review their IDP and this should inform their annual budget.

35. Page 35 National/Provincial vs. Local Government cont. 4.Municipalities are governed by specific body of legislation, of which the Local Government: Municipal Systems Act, 2000 (MSA) and the Municipal Finance Management Act, 2003 (MFMA) are most relevant to immovable asset management -  The principal strategic planning document of a Municipality is its Integrated Development Plan (IDP).  The MSA prescribes a specific process for the compilation of IDPs, which must also be aligned with provincial development plans and national priorities.  The MSA also prescribes comprehensive consultation requirements in relation to the compilation of IDPs.

36. Page 36 National/Provincial vs Local Government cont. 5.An IDP is an inclusive strategic plan guiding all development within a Municipality. In terms of the existing regulatory framework, an IDP may, as part of its financial strategy, contain an asset management strategy. 6.The shortcomings in the existing IDP process, however, are that  it does not detail a specific immovable asset management planning process,and  it does not make immovable asset management mandatory, as is the case in GIAMA.

37. Page 37 Extension of structured Immovable Asset Management to Municipalities: Current position: 1.Owing to key differences in the legal framework and organisational structure of local government compared to national and provincial government, it would be problematic to incorporate Local Government into the existing legislation (GIAMA) rendering it very convoluted. 2.DPW therefore holds the view that a different approach would be advisable to extend the principles of GIAMA to local government: Alternative 1: The requirements for immovable asset management could be incorporated in (a)separate set of regulations issued in terms of the Municipal Systems Act, or (b)amendment to the existing Local Government: Municipal Planning and Performance Management Regulations, 2001 issued in terms of that Act.

38. Page 38 Extension of structured Immovable Asset Management to Municipalities: Current position cont. Alternative 2: Specific legislation could be developed, based on the requirements, organisational structure and existing legal framework governing municipalities. 3.DPW has renewed discussions with the Department of Cooperative Governance regarding the optimal approach and timeline to extend the principles of GIAMA to local government. The objective is to reach agreement on specific objectives commencing in 2014/15.