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DOJ & CD Briefing to the

Select Committee on

Security and Constitutional Affairs13 October 2009

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Table of Contents

2008/09 BUDGET AND EXPENDITURE OUTCOME

2008/09 AUDIT OUTCOMES

2009/10 AUDIT ACTION PLANS

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2008/09 2007/08 2006/07

Final Budget R 8,515,525 R 7,538,667 R 6,478,647

Less

Expenditure R 8,434,152 R 7,373,530 R 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

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Expenditure outcome per Programme

Budget Expenditure % Expenditure

'000 '000

934,862 930,693 99.6%

3,373,424 3,348,402 99.3%

526,080 525,272 99.8%

2,111,809 2,071,975 98.1%

1,569,350 1,557,809 99.3%

46,193 46,193 100.0%

838,120 838,120 100.0%

86,475 86,473 100.0%

60,603 60,603 100.0%

116,297 116,297 100.0%

8,515,525 8,434,152 99.0%

Budget Expenditure % Expenditure

370,315 504,775 136.3%

1,019,014 1,096,316 107.6%

1,389,329 1,601,091 115.2%

Special Inv estigating Unit

Of which:

South African Human Rights Commission

Total Direct Charges

Magistrates' salaries

Judges' salaries

Total Vote

Commission on Gender Equality

Legal Aid Board

Public Protector

5. Auxiliary and Associated Services

4. National Prosecuting Authority

3. State Legal Services

2. Court Services

1. Administration

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Expenditure per Economic Classification

Budget R'000 Expenditure R'000Percentage actual

SpendAvailable Funds

R'000

BUDGET

Current payments

Compensation of employ ees 3,877,141 3,877,139 100.0% 2

Financial Transactions in Assets & Liabilities 3,745 3,744 100.0% 1

Goods and serv ices 2,820,302 2,811,113 99.7% 9,189

Total current payments 6,701,188 6,691,996 99.9% 9,192

Transfers and subsidies to: - -

Depart. Agencies & accounts/Municipalities 1,241,542 1,239,960 99.9% 1,582

Foreign Gov & International Organisations 5,086 5,084 100.0% 2

Households 18,715 17,335 92.6% 1,380

Total Transfers and Subsidies 1,265,343 1,262,379 99.8% 2,964

Payments for capital assets

Buildings and other fix ed structures 423,188 416,824 98.5% 6,364

Machinery , Equipment and Motor Vehicles 121,393 62,795 51.7% 58,598

Softw are and other intangible assets 4,413 158 3.6% 4,255

Total payments for capital assets 548,994 479,777 87.4% 69,217

8,515,525 8,434,152 99.0% 81,373

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Expenditure: Year-on-year comparison

DOJ & CD

314,794

587,024

518,357

439,634

545,010

989,866

444,993

565,756

412,103426,149

515,018

396,491396,069

877,829

551,810

591,038

692,538

400,812

493,289645,838

563,562

484,643494,381

1,032,780

723,608

817,626

711,130

758,555

751,778

842,110

711,921

755,813745,963

641,943

509,777

463,927

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

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2006/07 2007/08 2008/09

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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

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AUDIT OUTCOMES 2008/09

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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.

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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 lease agreements to satisfy themselves that the department’s leases did indeed conform to Treasury’s guidelines.

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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.

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Third Party Funds (TPF) PPP High-level timelines

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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

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Key identified root causes for Audit

Qualifications and Key initiatives to achieve NAQ

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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

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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

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Audit Action plans2009/2010

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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

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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

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Thank you