1. Immovable Asset Register Enhancement Programme Presentation to Select Committee on Public Services 12 November 2013

2. Page 2 Outline of the Presentation 1. National DPW Immovable Asset Register (IAR) programme progress 2. Vesting Status 3. National Treasury Sector Specific Guide – 2013 and beyond 4. iE-Works readiness (IAR) 5. Action Plan on IAR (National & Provincial Public Works) 6. Allocation of Custodianship 7. Extension Principles of GIAMA to Local Government 8. Outcome of 2012/13 audit

3. 1. National DPW Immovable Asset Register (IAR) programme progress

4. Page 4 Overview of DPW IAR Programme ► Progress made from inception of Programme to 31 March 2013 ► Deeds download, desktop cleansing for registered land parcels and portfolio of evidence completed ► Reconciliation of Provincial DPW’s and Human Settlements completed ► Linking of structures to land parcels significantly completed ► Sourcing of other information sources, User Asset Management Plans (UAMP’s), external databases, etc ► Created repository in iE-Works for cleansed IAR data to be placed ► Procured physical verification tool and software ► Formulated Custodian Framework for National, Capitalisation Policy ► Global State Land reconciliation completed

5. Page 5 Overview of DPW IAR programme ► Plan from 1 April 2013 to March 2014 ► On-going deeds refresher for registered land parcels ► Build IAR for surveyed and unregistered land ► Build IAR for (State Domestic Facilities) SDF’s (properties not on state land) ► Conduct physical verification of all DPW properties ► Draft and implement IAR policies ► Commence capitalisation with effect from 1 April 2013 ► Apply fair value based on 2013 municipal valuations rolls ► Audit of rates and linkage to IAR ► Implement interim operating model ► Design final operating model ► Initiate Operation Amnesty (Bring-Back) ► Prepare 2013/14 Annual Financial Statements (AFS) Notes and narrative

6. Page 6 Overview of DPW IAR programme

7. Page 7 Progress on Immovable Asset Register – from 2011/2012 to 2013/2014 financial year end AFS disclosure 2011/20122012/20132013/2014Dependencies List A - Registered land parcels21 44834 73135 001Deeds analysis List D - Surveyed Unregistered land parcels3 127 Physical verification List B – Provinces registered15 87813 703N/A N/A – new sector specific guide List E – Provinces surveyed unregistered4 125N/A N/A – new sector specific guide Improvements73 39873 435 Physical verification and other sources Audit OpinionDisclaimerQualifiedTBA Satis- factory Good progress ConcernRisk

8. Page 8 State land reconciliation as at October 2013 (includes Registered, Unregistered and Sec 42 land parcels) Analysis of registered land parcels by custodian Total NDPWDRDLROther Custodians Human 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 5,0451,298-561673,636 Deemed provincial properties -10,74310,743 Revised Total – Deemed State Land 184,01133,11225,20216785,50340,027 Allocation of custodianship in progress- thus disclosed by National 1,459-1,459 Total deemed State Land 184,01134,57125,20216785,50338,568 Unregistered Land - National DPW 3,127---- Deemed provincial land (Unvested) – disclosed by National 13,703----13,703 Deemed provincial land (Surveyed not Registered) – disclosed by National 4,125---- Amounts to be disclosed in the Annual Financial Statement ending 31 March 2013 55,52625,20218885,50324,865 NDPW is currently busy resolving New deeds download has been requested. Some anomalies have been found on the download. NDPW will distribute deeds data to Provinces on receipt Section 42 transfers from National to Provinces for 2014 AFS

9. Page 9 Position with Provincial DPW’s as at October 2013 (AFS submission) (includes Registered, Unregistered and Sec 42 land parcels) Land parcels ECFSGPKZNLPMPNCNWWCTotal Total state land (download 1) 405,1236824,2869432,5711,1802,6128,99726,434 Less adjustments for: Not state land -185-361-21-26-4--61-127-786 Other Deemed provincial properties 3,0381,1665,4283,2013,019-306275746-2,18814,379 Revised total: Deemed state land 2,8935,9286,1097,4663,9362,2611,4553,2976,68240,027 Final custodianship to be confirmed (Work in progress) -40-6-69-878-2-9-220-50-185-1,459 Confirmed and final amounts to be disclosed by custodians as at 31 march 2013 - registered 2,8535,9226,0406,5883,9342,2521,2353,2476,49738,568 Deemed provincial land (Surveyed not Registered) – disclosed by National -1,333 - 1,245 -4,266-3,687-573-691-164-666-1078-13,703 Confirmed and final amounts to be disclosed by custodians as at 31 March 2013 - total 1,5204,6771,7742,9013,3611,5611,0712,5815,41924,865 NDPW is currently busy resolving S42 from National to ProvincesInconsistent numbers as per 2012/13 Sector Guide

10. Page 10 Progress on Properties Devolved to Provinces as at October 2013 Land parcels ECFSGPKZNLPMPNCNWWCTotal Total initially devolved by National 5,0763,50010,02011,9293,0353,0041,3636,4695,96850,364 Duplicates/not found/consolidations 1-0193211-50221 Confirmed National1,0873101,064219502293165791734,243 Confirmed Provincial incl.in IAR1,5771,5017,5456,3531,1231,8567721,3421,60423,673 Confirmed Provincial as vested1,0131,5101,1321,9862654394689613,04410,818 Confirmed as DRDLR161321601,2953391312001,850 Confirmed Municipalities1778032568031,155791,815 Confirmed Human Settlements--0430035759630 Parastatal & Private*91131149951,023323801,7197885,884 Remainder Further investigations required*29481055200118132711,230 Sign-off’s received from some provinces for properties confirmed (FS,WC,MP,KZN,LP and GP) Physical verification in KZN, WC, NW, and EC is underway being conducted by Provinces and DPW project managers. Investigations on devolved properties must be completed on or before 30 October 2013. Section 42 transfers to Provinces including supporting documents to be completed by 30 October 2013.

11. Page 11 Progress made on physical verification for week ending 25/10/2013

12. 2. Vesting status

13. Page 13 National Vesting Report September 2013 – per province NATIONAL ECFSGPKZNLPMPNCNWWCTotal TOTAL LAND PARCELS IN IAR * 2,9862,7865,9029,4374,4742,9082,7763,1245,41939,812 LAND PARCELS VESTED SINCE 27 APRIL 1994 1,3582,4102,6891,9186491,39517544292,43015,032 NUMBER OF LAND PARCELS STILL TO BE VESTED 1,6283763,2137,5193,8251,5131,0222,6952,98924,780 * TOTAL LAND PARCELS IN IAR = Total land parcels in DPW IAR 2013 as provided to SSP in August 2013 for physical verification.

14. Page 14 Vesting Report September 2013 – per province (National and Provinces) Custodian – statistics according to LAW ECFSGPKZNLPMPNCNWWCTotal National DPW1,3582,4102,6891,9186491,3951,7544292,43015,032 DRDLR2,1146541286353,0611,685436110509,818 Provincial DPW/GDID2,6251,1252,8545,9586701,51274115153,35820,358 Human Settlements/DLGH40546438 Total6,0974,1896,0768,5574,3804,5922,9313,0495,78845,659 ► Draft vesting business case provided to provinces to replicate National vesting business case; ► DRDLR finalised the vesting business case for their department. ► NDPW to coordinate vesting progress reports as well as targets for the year for provinces. ► Each custodian is required to reconcile the LAW statistics with own vesting records to ensure correct starting point.

15. 3. National Treasury Sector Specific Guide 2013 and beyond

16. Page 16 Sector Specific Guide – requirements for 2013/14 ► Un-surveyed land to be disclosed by Department of Rural Development and Land Reform (DRDLR) ► From 1/4/2013 onwards, once the custodian has confirmed that the registered land parcel is theirs the custodian will be required to reflect these in their IAR and AFS (vested or not vested) ► From 1/4/2013, once the custodian has received SG diagram from DRDLR (Chief Surveyor General - CSG), the custodian will be required to reflect these surveyed not registered land parcels in their IAR and AFS ► Where it is not clear or where SG diagram is received after 30 September each year, the land parcel will be disclosed by DRDLR in their IAR and AFS ► National: SDF’s All facilities used by the national government located on un-surveyed land or surveyed but unregistered land incl former TBVC States and Self Governing Territories and state land in the former RSA (pre April1994); or governed by KZN Ingonyama Trust Act; should now be disclosed by the National Department of Public Works. ► Provinces: SDF’s All facilities used by the provincial government located on un-surveyed land or land governed by the KwaZulu-Natal Ingonyama Trust Amendment Act (pre 24 April 1994) ► All properties where agreement of custodianship had been reached and a transfer in compliance with Section 42 (PFMA) had been received must be disclosed by the respective custodian. ► The Sector Specific Guide is in the process of being reviewed in conjunction with the provinces.

17. 4. iE-Works readiness

18. Page 18 iE-Works readiness ► CFO Forum tasked DDG:AIM to confirm readiness and functionality of iE- Works for Provinces. ► Currently, DPW Information Systems (IS) unit is engaging with provincial custodians at operational level on iE-Works matters. ► Work session was convened with provinces on 28 October 2013 where Provinces were taken through the status of iE-Works to date and recommendations were made, that: ► iE-Works be considered as a platform of choice by national and provincial public works custodians for uniformity; ► Business user sign off for provinces be at CFO level by 15 December 2013; ► End user review of completed modules in the 1 Quarter of 2014/15; ► Data templates be set up between DPW and provinces; ► User acceptance test and training phase by DPW; and ► Go-live pilot Provinces will be migrated to iE-Works System as and when they have completed their data cleansing exercises and after submitting and verifying their own data.

19. 5. Action Plan on IAR

20. Page 20 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 March 2013 & 31 March 2014 Continuous Ms F Rabada: CD ARM Mr S Sokhela: D ARM Provincial Representatives State land reconciliation completed for 2012/2013 Provincial Tracking Templates developed 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 3.Vesting of State land31 March 2016National Vesting Task Team (DRDLR, DPW and Provinces) DPW Vesting Business Case developed and forwarded to Provinces 4.Surveying of State Land31 March 2015Mr R Salig: CD CSG National Vesting Task team to monitor CSG assisting custodians to survey SDF’s 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 Back31 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).

21. Page 21 Provincial reporting template – sample extract

22. 6. Allocation of Custodianship

23. Page 23 Custodian summary # of user departments # of users who are also custodians Public Works or DID Human Settlements/ Local Government & Housing Office of the Premier Eastern Cape131 Free State122 Gauteng132 Kwa-Zulu Natal161 Limpopo121 Mpumalanga121 North West111 Northern Cape131 Western Cape142 National526 Public WorksDefence Endowment Environmental & Water Affairs Rural Development & Land Reform Agriculture and Forestry International Relations National custodians Provincial DPW – Cabinet resolution dated 13/06/2007 Provincial Housing – Act 4 of 2001, Housing Amendment Act ** There is a need to define and confirm the accounting treatment (control) in each province given the current legislative environment Letters to all provinces to confirm custodianship have been sent out. All the Provinces have responded ConfirmedOutstanding

24. 7. Extension Principles of GIAMA to Local Government

25. Page 25 Fundamentals of GIAMA: National/Provincial vs. Local Government  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.  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.  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.

26. Page 26 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.

27. Page 27 National/Provincial vs. Local Government (Contd…) 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.

28. Page 28 National/Provincial vs. Local Government (Contd…)  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.

29. Page 29 National/Provincial vs Local Government (Contd…)  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.  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.

30. Page 30 Current position: Extension of structured Immovable Asset Management to Municipalities  Due 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.  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.

31. Page 31 Current position: Extension of structured Immovable Asset Management to Municipalities (Contd…) Alternative 2: Specific legislation could be developed, based on the requirements, organisational structure and existing legal framework governing municipalities.  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.

32. 8. Auditor General Response on National DPW IAR submission for the year ending 2012/2013

33. Page 33 AG Opinion on DPW IAR 2012/2013 AssertionApproachComment Completeness (Main Focus for 31 March 2013) -Use of deeds download in conjunction with DRDLR & extensive reconciliation of data with other state land custodians for all registered properties. -Deeds / Aktex is used as a basis and substantiated with other documents & Sources e.g. Copy Original Title deeds & SG diagrams -IAR fields checked against NT minimum requirements Compliance with the Sector specific guide Position with provinces confirmed (List A/B) to determine who discloses what. Dependencies: -Extent of Un-surveyed land to be received from the CSG -Reliant on Deeds for the registration of unregistered land -Completion of Vesting process for National and Provincial properties -Provinces confirming properties supplied to the AG and Provincial Usage properties(List A/B) Accuracy & Reliability -Initial reference is made to the Aktex and substantiated by original title deeds and SG diagrams for accuracy. -Data cleansing performed and fieldwork to be performed Dependencies: -Availability of original title deeds/ docs -Surveying of land Ownership Rights & Obligations -Ownership is confirmed as per Aktex / Title Deed -Vesting process is also confirming ownership -Surveying of state land to confirm ownership -Physical verification to prove property use & confirm custodian Dependencies: -Surveying & Vesting process scheduled to be completed by 31 March 2016 Existence-Conducting physical verification and other desktop methodologies to prove existence and have photos, GPS Coordinates & SG diagrams as portfolio of evidence -Desktop exercise performed to prove existence. -Physical verification to commence Jun 2013 Valuation-Fair Value model – (1) Municipal values (where Valuation Roll not qualified) and then (2) Sales Comparison Method (where there are no valuation rolls ) & (3) Depreciated Replacement Costs (where there are no valuation rolls) for specialised buildings. -Intention is to use 2013 municipal values and this will be available for the 2015 year. Presentation & Disclosure Comply with the NT requirements and sector specific guideReliant on other National Custodians and provinces providing their List A &B in order to identify what DPW must disclose. UnqualifiedQualified

34. Page 34 AG Opinion on DPW IAR 2012/2013…cont ► " The immovable asset disclosure note is not accurately valued to the effect that an amount of R664 million has been included – relating to renovation and refurbishment costs. The department was unable to establish which portion of the amount in question should have been capitalized and failed to allocate the R664 million to specific individual assets, thus resulting in the inability to verify the fair presentation with regards to valuation of immovable assets." AG ► DPW IAR has been qualified on work-in-progress (valuation).

35. Page 35 AG Opinion on DPW IAR 2012/2013…cont ► In order to address the valuation assertion in the DPW IAR for 2013/2014 the following will take place with the effect from 1 April 2014;  Fair Value model will be applied to all properties and components (as required by GRAP)  Capitalization policy will be applied to all work- in- progress amounts

36. Page 36 Audit opinion 2012/13 - Provinces Province2012/2013 AG audit opinion Eastern CapeDisclaimer Free StateQualified GautengUnqualified Kwa-Zulu NatalUnqualified LimpopoDisclaimer MpumalangaUnqualified North WestDisclaimer Northern CapeUnqualified Western CapeUnqualified The above information has been confirmed with the Provinces

37. Page 37 Thank you