1

Budgetary review and recommendations report Department of Basic Education

03 October 2017

2 2

Reputation promise

The Auditor-General of South Africa (AGSA) has a constitutional mandate and, as the supreme audit institution (SAI) of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

3 3

Role of the AGSA in the reporting process

Our role as the AGSA is to reflect on the audit work performed to assist the portfolio committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the committee to produce a Budgetary review and recommendations report (BRRR).

4

ANNUAL PERFORMANCE PLAN (APP)

TARGETS PER APP

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“Plan-Do-Check-Act Cycle”, also the Deming cycle , courtesy of the International Organization for Standardization

AGSA theme for the current year to improve outcomes

6

DO

PLAN

CHECK ACT

7

1

The AGSA’s Public Audit Act Promise and Focus

7

8

Our annual audits examine three areas

9

The AGSA expresses the following different audit opinions:

Unqualified

opinion with no

findings

(clean audit)

Financially

unqualified

opinion with

findings

Auditee:

• Credible and reliable

financial statements

that are free of

material

misstatements

• Useful and reliable

performance as

measured against

predetermined

objectives

• complied with key

legislation

Auditee:

• Credible and reliable

financial statements

that are free of material

misstatements

• Did not produce useful

and reliable

performance as

measured against

predetermined

objectives Did not

complied with key

legislation

Qualified

opinion

Auditee:

• had material

misstatements on

specific areas in their

financial statements,

which could not be

corrected before the

financial statements

were published.

Adverse

opinion

Auditee:

• had the same

challenges as those with

qualified opinions but, in

addition, they had so

many material

misstatements in their

financial statements that

we disagreed with

almost all the amounts

and disclosures in the

financial statements

Auditee:

• had the same

challenges as those

with qualified opinions

but, in addition, they

could not provide us

with evidence for most

of the amounts and

disclosures reported in

the financial

statements, and we

were unable to

conclude or express

an opinion on the

credibility of their

financial statements

Disclaimed

opinion

9

2

The 2016-17 audit outcomes and key messages

10

11

To improve/maintain the overall audit outcomes, financial statements processes,

1 3 …. compliance with key legislation and….

2

Three year trend – Overall change in audit outcomes

…. performance planning and reporting must be improved by….

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Change in audit outcomes over 3 years

The portfolio’s overall outcomes remained unchanged from the

prior year with all entities achieving unqualified audit outcomes

with findings. The outcomes can be improved by:

• Implement monthly disciplines of record keeping, reconciling

and reviewing transactions to ensure the credibility and

completeness of monthly financial and performance

information.

• Enhance the skills and resources in the infrastructure and

internal audit units to address capacity challenges (DBE).

• Monitoring of progress in implementing the action plans on

an ongoing basis to ensure that milestones set and

deliverables are achieved.

Non-compliance by the DBE and its entities are an

indication of deficiencies in monitoring compliance with

legislative requirements in the areas of financial

management and SCM. Monthly and quarterly

management reviews were also not adequate at the DBE

and SACE to ensure credible reporting. At the DBE, the

controls can be strengthened by monitoring and enforcing

compliance with procurement processes, when appointing

implementing agents and ensuring that the procurement

processes followed by implementing agents are aligned to

the department’s SCM policies.

An annual performance report (APR) submitted for auditing contained

material misstatements, this was due to inadequate management reviews

when performance information was reported quarterly and in the annual

report. The performance planning and reporting can be improved by:

• Reconciling the reported performance results to verifiable evidence

and against the technical indicator descriptions.

• Implementing proper record keeping in a timely manner to ensure

complete, relevant and accurate information.

• Developing and monitoring of action plans to address control

deficiencies identified relating to the planning, credibility and

completeness of the performance reported.

Three year trend –

Compliance with key legislation

(DBE, SACE,

UMALUSI)

(DBE, SACE,

UMALUSI)

(DBE, SACE,

UMALUSI)

2016-17 2015-16 2014-15

Three-year trend –

Quality of annual

performance plans

Three year trend –

Quality of submitted

annual performance reports

(SACE

UMALUSI)

(DBE,

UMALUSI)

(DBE,

SACE)

(DBE)

(SACE)

(UMALUSI)

2016-17 2015-16 2014-15

(DBE, SACE

, UMALUSI))

(DBE) (DBE, SACE

)

(UMALUSI, SACE

)

(UMALUSI)

2016-17 2015-16 2014-15

With no material findings

With material findings

Outstanding audits

No APR/ late submitted

Unqualified

with

no findings

Unqualified

with findings

Qualified

with findings

Adverse

with findings

Disclaimed

with finding

Audits

outstanding

----------------------------------------------------

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(DBE, SACE,UMALUSI)

(DBE, SACE

, UMALUSI)

(DBE, SACE

, UMALUSI)

2016-17 2015-16 2014-15

Status of Key controls

Good Concerning Intervention required 4

… providing attention to the key controls by…

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Change in audit outcomes over 3 years - continued

The overall stagnation in key controls was mainly due to the fact that action plans to

address deficiencies reported are developed but there is inadequate monitoring of the

implementation of these which results in the recurring audit findings. There was lack of

consequence management as similar deficiencies relating to unsatisfactory performance

and transgressions were identified.. Interventions are still required in order to improve the

current status of key controls relating to:

• Daily financial management and performance management disciplines.

• Coordination between the various departments within the education sector and principal

actors and oversight of deliverables by implementing agents must be prioritised to

ensure credible financial, performance and compliance reporting.

• Monitoring and evaluation processes – The monitoring and evaluation of all information

received internally and externally must be thoroughly reviewed, monitored and

evaluated to ensure it is credible and reliable. Internal audit can be used to give

assurance on credible information.

Fir

st

leve

l

… the key role players as part of their role in combined assurance

Assurance providers per level

SACE, UMALUS

I

UMALUSI

DBE

SACE, DBE

All

All Senior

management

Accounting officer/authorit

y

Executive authority

Internal audit unit

Audit committee

Portfolio committee

Th

ird

leve

l

Sec

on

d

leve

l

DBE

Despite senior management being constantly informed on the importance of proper

record keeping; it was still a challenge to obtain information relating to infrastructure

and performance reporting at DBE. The Director-General provided some assurance

mainly because he had adequate insight into the risks and internal control deficiencies;

however, the accounting officer did not ensure that action plans were implemented

adequately to ensure daily/weekly/monthly disciplines and reconciliations that will

ensure accurate and complete financial statements and performance reports, and

compliance. The Minister was assessed as providing some assurance as there are

number of recurring findings from the prior financial years. The audit committee

operated effectively and executed their responsibilities as required during the year,

however their effectiveness and ability to influence an improved audit outcome was

negatively impacted by internal audit not functioning as intended.

SACE and Umalusi

Senior management provided some assurance due to material corrections that was

required on annual performance report and financial statements submitted.

-------------------------------------------------

----------------------------------------------

Provides assuranc

e

Provides some

assurance

Provides limited/

no assurance Vacancy

Not establishe

d

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2016-17 PFMA Improved Stagnant Regressed 12

DB

E

Um

alu

si

SA

CE

- Audit committee

- Proper record keeping

- Daily and monthly controls

- Regular, accurate & complete finanial and

- Review and monitor compliance

- Design and Implement IT controls

GOVERNANCE

- Audit Action plans

- ICT governance

- Risk management

- Internal Audit

FINANCIAL AND

PERFORMANCE MANAGEMENT

- Oversight responsibility

- Effective HR management

- Policies and procedures

LEADERSHIP

- Effective leadership

3

Performance management linked to programmes/ objectives tested & key projects audited

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14

Management and delivery on key programmes – spending, performance and reporting (DBE)

Programme Budget

spent

Materia

l

misstat

ements

Unauthoris

ed,

irregular

and

fruitless

and

wasteful

Findings on material indicators Achieveme

nt of

targets –

from

performan

ce report Indicator

Not

useful

Not

reliable Adjusted

CURRICULUM

POLICY,

SUPPORT AND

MONITORING

97.27% Yes

Kha Ri Gude:

IE – R58

million

FEW – R 11

million

Number of learners

enrolling for the Kha Ri

Gude Literacy Campaign

in 2016/17

X

11 out of 14

targets

PLANNING ,

INFORMATION

AND

ASSESSMENT

93.05% Yes IE – R303

million

4.3.1 Number of new

schools built and

completed through ASIDI³

4.3.2 Number of schools

provided with sanitation

facilities through ASIDI

X

X

5 out of 13

targets

Good Of concern Intervention required

UE – Unauthorised expenditure IE – Irregular expenditure FWE – Fruitless and wasteful

expenditure

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Management and delivery on key programmes – spending, performance and reporting (DBE) (continued …)

Programme Budget

spent

Material

misstat

ements

Unauthorise

d, irregular

and fruitless

and wasteful

Findings on material indicators Achievement

of targets –

from

performance

report Indicator

Not

useful

Not

reliable

Adjust

ed

PLANNING ,

INFORMATION

AND

ASSESSMENT

(Cont…)

93.05%

Yes

4.3.3 Number of schools

provided with water

through ASIDI

4.3.4 Number of schools

provided with electricity

through ASIDI

X

X

5 out of 13

targets

Yes No

4.4.2 Percentage of

learners from public

schools that are

successfully uploaded

onto LURITS

X

Good Of concern Intervention required

UE – Unauthorised expenditure IE – Irregular expenditure FWE – Fruitless and wasteful

expenditure

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Management and delivery on key programmes – spending, performance and reporting (DBE) (continued …)

Programme

Budge

t

spent

Material

misstat

ements

Unauthorise

d, irregular

and fruitless

and wasteful

Findings on material indicators Achievement

of targets –

from

performance

report Indicator

Not

useful

Not

reliable

Adjust

ed

Educational

Enrichment

Services

99.86

% No FWE -

No findings on material

indicators reported.

1 out of 3

targets

Good Of concern Intervention required

UE – Unauthorised expenditure IE – Irregular expenditure FWE – Fruitless and wasteful

expenditure

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Key projects selected for audit

2016-17 PFMA No material

findings reported

Material

findings reported

• No progress had been made on the two sites visited in the prior year in KwaZulu-Natal. The projects had been dormant since the previous audit in 2016, and the contractors had abandoned the

project. In addition, quality issues were noted during site visits to both of these projects. Quality issues were also noted in the other three provinces audited.

• Contractors were terminated for eight of the 20 projects in the Eastern Cape, which impacted on delays as well as the cost of projects. One of the reasons given for the terminations was that

some contractors cancelled their contract due to financial analysis and under costing. In some cases, the cost of the replacement contractor was more than the original contract. Also, in most

cases the total cost of the projects was more than the original value.

• Delays of between four and 14 months were experienced on all projects in Mpumalanga. While delays of between three and 22 months were experienced on all projects in Eastern Cape. Some

of the reasons given for these delays were as follows: Additional work carried out on site/scope changes Inability to obtain materials

• Not all information requested for audit purposes was submitted by the department. A limitation of scope was experienced in all four provinces audited, with the majority of the outstanding

information being for Kwa-Zulu Natal and Limpopo. The department did not effectively maintain their archiving system, which resulted in some procedures not being performed.

The objective of ASIDI is to eradicate the Basic Safety Norms backlog in schools without water, sanitation and electricity and to replace those schools constructed from inappropriate material (mud, plankie, asbestos) to contribute towards levels of optimum learning and teaching. The Schools Infrastructure Backlog Grant (SIBG) funds the ASIDI portfolio.

MTSF allocated budget

=

R1.979 billion

- Actual Spending =

R1.049 billion (53%).

Material

underspending of R930 million The underspending is due to payments in respect of ASIDI projects. The process of rationalisation for schools had an impact on the spending trends for the ASIDI project. Also significant matters identified with implementing agents contributed to projects not being finalised or delayed significantly

Unqualified with

finding: Controls

were not in place

with regard to the

daily and monthly

processing of

transactions

relating to the

transfer of finalised

ASIDI construction

projects from

work–in–progress

to the immovable

asset register

which resulted in

errors in the

immovable asset

register.

Procurement and

Contract

Management: Findings included the following: 1. Irregular expenditure

as a result of non-compliance by implementing agents.

2. Expired MoAs with implementing agents not approved/ extended as required.

3. Expenditure incurred exceeded the contract values for which variation orders had to be applied for. The variation orders approved in this regard exceeded 20% of the contract values.

4. Inadequate project management resulted in project timeline delays of between 2 – 24 months

Material

adjustments

were noted in

the in the

infrastructure

indicators

(completed

schools, water,

sanitation and

electricity).

Furthermore it

was noted that

none of these

targets were

achieved in the

reported

annual

performance

report.

Compliance

Pre-determined Objectives Budget

vs Spending

Financial Management

18 No material

findings reported

Material

findings reported

• The lack of oversight by the department resulted in a number of fictitious learners being entered into the programme. The programme is indented for people that cannot read and write, however, as an example, the audit note that learners that have matric were registered on the programme resulting in material overpayment of stipends and the learner numbers reported.

• Instances of potential fraud noted where learners with matric were registered as Kha Ri Gude learners despite the

programme intended for learners to acquire the basic skills of literacy.

• Challenges noted to confirm existence and physical attendance of learners, VEs, coordinators and supervisors,

• Challenges noted to confirm whether actual training was taking place, and

• Material findings noted with regard to the reliable reporting of targets achieved for the Kha Ri Gude indicator

The aim of Kha Ri Gude is to empower (skills development) socially disadvantaged people to become self-reliant and to be able to participate more effectively in the economy and society.

The Kha Ri Gude

Literacy Campaign is

informed by the

Constitution of South

Africa, which states

that “Everyone has the

right to a basic

education, including

adult basic education

(Chapter 2, Clause 29,

1a). According to

Statistics SA (2001),

there were

9.6 million illiterate

adults in South Africa

above the age of 15.

Of these, 4.7 million,

including people living

with disabilities, were

illiterate and

innumerate in one of

the 11 official

languages.

- MTSF

allocated

budget =

R 384 million

- Actual

Spending = R358 million

- (93%).

The

underspending

on this

programme is

due to the low

number of

volunteers

employed in the

provinces as a

result of low

numbers of

learners

registered or the

2016 campaign.

Unqualified with finding:

Oversight over service

providers entrusted with

the payments of stipends

to monitors of the Kha Ri

Gude projectto ensure

that classes take place

and that learners exist

was not adequately

monitored to ensure

compliance with policies

and procedures and

therefore did not prevent

and detect payments of

stipends to tutors for

teaching deceased

learners. Oversight by the

department did not detect

the timely verification with

the department of Home

Affairs whether learners

were deceased for which

tutors received stipends

for

Procurement and

Contract

Management:

Based on the

significance of the

findings identified

when quantified, it

was agreed that the

department disclose

the management

fee charged by

SAB&T of

R16million as

irregular

expenditure for the

current and prior

year due to proper

SCM not being

followed in

appointment of

SAB&T the service

provider

A significant

material

adjustment was

made to the

numbers

reported after

eliminating

fraudulent

learners entered

into the

programme. It

was identified

some learners

that entered the

programme

already

completed grade

12. Due to this

R11million was

disclosed as

fruitless and

wasteful

expenditure in

the financials

Compliance Pre-

determined Objectives

Budget vs

Spending

Financial Manage-

ment

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Improvement in financial health

1 (DBE)

1 (DBE)

1 (DBE)

2014-15

2015-16

2016-17

Material uncertainty exists whether of auditees can continue to operate in future 0%

Two or less unfavourable indicators

More than two unfavourable indicators

Significant doubt that operations can continue in future and/or auditee received a disclaimed or adverse opinion, which meant that the financial statements were not reliable enough for analyses

• Included in the net assets of the department is finalised schools to the value of

R5.5billion that have not been transferred to custodian departments in terms of section

42 of the PFMA

• The commitments disclosed as per note 20 increased by R2.93 billion from R3 billion in

the 2015-16 financial year to R5.93 billion in the 2016-17 financial year. It is therefore

necessary that the department formalise the plans for the future implementation of the

ASIDI programme so that resources (financial and human) can be utilised appropriately.

• There was material underspending of the budget during the current and prior year. The

department indicated that it was as a result of the rationalisation and mergers of

schools. The latter will have to be prioritised as it is necessary for determination of future

commitments to the department.

• Debt collection particularly for the recovery of contingent assets is long outstanding and

will need to be followed up. The processes with regard to construction guarantees will

need to be evaluated especially if the commitments approved and not contracted are

realised

Key concerns identified

20

Movement on the quality of financial statements, annual performance reports and compliance

100% (DBE, SACE, UMALUSI)

100% (DBE, SACE, UMALUSI)

2016-17 2015-16

100% (3)

100% (3)

100% (3)

100% (3)

100% (DBE, SACE

, UMALUSI)

33% (DBE)

67% (SAC

E, UMALUSI)

2016-17 2015-16

100% (3)

33% (DBE)

100% (DBE, SACE,UMALUSI)

100% (DBE, SACE,UMALUSI)

2016-17 2015-16

Audit of financial statements Findings on

annual performance reports

Findings on compliance

with key legislation

Unqualified Qualified Adverse Disclaimed AFS submitted

on time AFS and APR submitted with no material misstatements

With no findings

With findings

Unauthorised, irregular as well as fruitless and wasteful expenditure

disclosed in the financial statements in DBE 2016-17

PFMA

R 727 million (DBE)

R million

R 6 million (DBE)

R600 million (DBE)

R 2 million (DBE)

R 6 Million (DBE)

R622 million (DBE)

R 11 million (DBE)

R 6 million (DBE)

Irregular expenditure

Fruitless andwasteful expenditure

Unauthorisedexpenditure

Expenditure

incurred in

contravention

of key

legislation;

goods

delivered but

prescribed

processes

not followed

Expenditure

not in

accordance

with the

budget vote/

overspending

of budget or

programme

Expenditure

incurred in

vain and

could have

been avoided

if reasonable

steps had

been taken.

No value for

money!

Definition UIFW amounts incurred by entities in portfolio Nature of UIFW expenditure R’million

2016-17 2015-16 2014-15

• The unauthorised expenditure is with regard to the amount paid for the National Teacher Awards amounting to R6.488 million in the 2014/15 financial year. The Department wrote a letter to National Treasury and requested the approval by Parliament; the Department is awaiting the response.

• During the 2016/17 financial year, the Department conducted an investigation on the Kha Ri Gude campaign. The investigation was to establish whether volunteers offered classes. The investigation revealed that there were centres were no classes took place and volunteers received stipends, also some learners already had matric. The funds paid to the affected volunteers, learners and stationery distributed has been disclosed as fruitless and wasteful expenditure.

• The extensions on the MOAs were not renewed on time for the IAs.

• When appointing the Adopt-A-School, the deviation on procurement requirement without required appropriate approval.

• During the 2015/16 financial year, it was discovered that during evaluation 1 of the stages was misinterpreted and where site visits should have being done to all bidders. Based on these, the management fee paid to the service provider was declared as irregular expenditure.

• The SCM processes were not followed in the replacement of non performing contractors.

Audit report

impact

None

Fruitless and

wasteful

expenditure was

reported and the

impact and internal

control deficiency

were reported in the

audit report

Irregular

expenditure was

reported and the

internal control

deficiency was also

reported in the audit

report

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Most common findings on supply chain management

33% (DBE)

33% (DBE)

33% (DBE)

Non-compliance with SCMrequirements during the

appointment of replacementcontractors

Non-compliance with legislationon contracts (expired MoA's with

Ias not renewed)

Three written quotations notinvited

23

Fraud and consequence management

Previous year unauthorised, irregular and fruitless and wasteful expenditure

reported for investigation

33% (DBE) (Irregular

expenditure reported during the prior year)

33% (DBE) (Irregular

expenditure reported during the prior year)

2016-17 2015-16

Not investigated Investigated

• The DBE had findings on non-compliance with legislation on consequence management which had material findings

24

Supply chain management findings reported to management for investigation

33% (DBE), 10 IDT

projects were under

investigation by the SIU

0% (0), 0 instances

33% (DBE), 10 instances

Other SCM findingsreported for investigation

Employee(s) failed todisclose interest in supplier

Supplier(s) submittedfalse declaration of interest

SCM findings reported for investigation during the

2015-16 audit process

(all auditees)

Follow-up of the previous year’s SCM

findings reported for investigations.

All investigated Some investigated None investigated

0

0

0

0

0

0

1

0

1

Other SCM-related allegations

Employee(s) failed to disclose interest in supplier

Supplier(s) submittedfalse

declaration ofinterest

25

If officials who deliberately or negligently ignore their duties

and contravene legislation are not held accountable for their

actions, such behaviour can be seen as acceptable and

tolerated.

Management (accounting officers/ authorities and senior

management), the political leadership (executive authorities)

do not respond with the required urgency to our messages

about addressing risks and improving internal controls.

Root causes

100% (DBE, SACE,

UMALUSI)

100% (DBE, SACE,

UMALUSI)

Slow response to improving key controls and addressing risk areas

Inadequate consequences for poor performance and transgressions

4

AGSA audit methodology improvements

26

Status of key focus areas

Oversight and

monitoring

(Unchanged) Financial management

(Unchanged)

Performance management

(Unchanged)

Procurement and contract management

(Unchanged) Compliance management

(Unchanged)

HR management

(Unchanged)

IT management

(Unchanged)

Financial health

(Improving)

Status of

records review

Pro-active

follow up

procedures

Financial and non – financial information

(internal and external reports/documents

& discussions with senior managers)

Feedback linked to Focus Areas

AGSA audit methodology improvements

Engaging accounting officers in conversations that are insightful, relevant and have

an impact

Identify matters that add value in putting measures

and action plans in place well in advance to

mitigate risks

Assess progress made in implementing action

plans/ follow through with commitments made in

previous engagements

Provide our assessment of the status of key focus

areas that we reviewed

Identify key areas of concern that may derail

progress in the preparation of financial and

performance reports and compliance with relevant

legislation and consequential regression in audit

outcome

Key control engagements / status of records review – objectives

27

27

28

29

Sou

rce:

Rob

ert K

litga

ard

(aca

dem

ic a

nti-c

orru

ptio

n re

sear

ch)

Correlation between low accountability, corruption and impact on service delivery

Corruption

Service Delivery

29

5

Sector audit outcome – (2016 -17)

30

31

Sector audit outcomes – (2016-17)

Auditee Movement

Outcomes (2016/17) Outcomes (2015/16)

Audit Opinion PDOs

Non-

compliance

with laws and

regulations

Audit Opinion PDOs

Non-

compliance

with laws and

regulations

Eastern Cape Qualified Yes Yes Qualified Yes Yes

Free State Qualified Yes Yes Qualified Yes Yes

Gauteng Unqualified with

findings No Yes

Unqualified with

findings No Yes

KwaZulu-Natal Unqualified with

findings Yes Yes

Unqualified with

findings Yes Yes

Limpopo Qualified Yes Yes Disclaimer Yes Yes

Mpumalanga Qualified Yes Yes Qualified Yes Yes

Northern Cape Unqualified with

findings Yes Yes

Unqualified with

findings Yes Yes

North West Unqualified with

findings Yes Yes

Unqualified with

findings Yes Yes

Western Cape Unqualified

without findings No No

Unqualified

without findings No No

Basic Education Unqualified with

findings Yes Yes

Unqualified with

findings Yes Yes

Yes No

No material

findings

reported

Material

findings

reported

6 School Infrastructure

32

33

Key phases of service delivery – (Value Chain Analysis – School Infrastructure)

1.

Demand

management

5.

Reporting &

Impact analysis

3.

Project

management

2.

Acquisition

management

4.

Commission and

Utilisation

34

35

Value Chain Analysis – School Infrastructure

Project name: School Infrastructure (Education sector) High level overview of the value added findings on infrastructure according to value chain stages,

1. Demand management Infrastructure needs were not correctly identified and identified during the needs determination process. The latter resulted in the construction of schools in locations that will be possibility deemed as not being viable projects. There are presently a number of projects that were started and had to be terminated on account of it not being viable projects that should not have been approved for construction. Expenditure incurred in this regard is presently being investigated to determine whether it was indeed wasteful expenditure and whether officials responsible should be held accountable. We take note of the subsequent intervention via the rationalisation of schools and the guidelines developed.

2. Acquisition management Instances of non-compliance were still identified in the areas of supply chain management and asset management processes performed at implementing agents because of ineffective oversight by the departments (DBE and PED’s) over compliance with laws and regulations by the implementing agents. The departmental oversight was ineffective in detecting matters of non-compliance by implementing agents. In addition, amendments to construction contracts were approved which was greater than 20% or R20 million (including all applicable taxes) of the original approved contract without approval for the deviation from National Treasury.

3. Project management The findings from the site visits revealed instances of poor quality workmanship of projects. This was due to deficiencies in project management processes specifically with attention to regular site visits by professional service providers (architects, quantity surveyors and engineers) not being conducted which resulted in corrective measures not being able to be implemented before final completion of construction projects. Of particular concern is the impact on service delivery where significant delays of between 2 – 24 months was experienced and schools such as the Adopt-A-School Foundations were still not in-use. Teaching and learning therefore took place in inappropriate structures potentially impacting the quality of education provided to learners.

36

Value Chain Analysis – School Infrastructure

Project name: School Infrastructure (Education sector)

4. Commissioning and utilisation During the current and previous three years, we reported a number of cases where it was found that immovable assets which came into being because of the ASIDI construction projects have not been transferred to the custodian department concerned. These immovable assets were constructed by implementing agents on behalf of the department. From this we further identified that there was an unnecessarily long period to finalise transfer of the assets despite the fact that practical and or final completion certificates were received and the assets were being utilised by the beneficiaries. Follow-up of the prior year findings revealed that during June 2017, there were still no PFMA section 42 certificates signed by the department and the custodian departments, hence no immovable assets were disposed of. Based on the delays, the department has not taken timely action to ensure that projects at the practical and final completion certificate stages are finalised and transferred to the custodian departments in accordance with the requirements of section 42 of the PFMA within the required timeframe. We furthermore noted during the site visits that classes were not always used for the purposes intended which is teaching and learning. The latter is illustrated where in one of the schools visited; the security guard lives in one of the classrooms and makes food inside the room with a paraffin stove. As a result, the floor has been damaged and the walls and cupboards are soiled with food spatter and other foreign matter.

5. Reporting Record keeping for school infrastructure was lacking and resulted in modified opinions and material adjustments to both financial and performance reporting. The departments (DBE and PED’s) could not provide credible financial information from implementing agents necessary for the disclosure items in the financial statements of the department, e.g. commitments, accruals and immovable tangible capital assets.

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Value Chain Analysis – School Infrastructure

Project name: School Infrastructure (Education sector)

CONCLUSION

• Certain departments did not have enough capacity to implement projects. There was heavy reliance on

consultants/project managers by certain departments.

• The lack of consequences for poor performance and transgressions resulted in matters previously reported being

repeated and action plans developed not being implemented as desired.

• Projects were not planned and managed effectively by the provincial departments and their implementing agents.

This resulted in the following;

• Poor quality of work and poor workmanship occurred in six provinces. Furthermore, in four provinces, the

assessment and certification of work performed was not well managed which resulted in payment of

substandard/poor quality work.

• There were delays in completion of the projects in eight provinces. In three provinces; the delays were due

to late payment of the contractors by the departments and/or their implementing agents.

• The Standards for Infrastructure Procurement and Delivery Management (SIPDM) was not fully

implemented in certain provinces..

• There were high number of variation orders in four provinces (FS, GP, KZN and NC), these variation orders

were approved for items that should have been included in the scope, and this resulted in increased contract

values for projects.

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Picture 1: School hall broken down due to excessive cracks

(Rood pan Secondary School: Northern Cape)

Picture 2: Excavation of foundation (Roodepan

Secondary School: Northern Cape

Picture 3: Damaged bricks used to build walls (Phutlo

Secondary School: Limpopo)

Picture 4: Cracks from foundation through bricks (Valspan

Secondary School: Northern Cape)

Infrastructure: ASIDI/EIG

7

Early Childhood Development (ECD):

GRADE R

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ECD Grade R: Background • Follow-up audit

• Previous audit conducted in 2010-11

• Findings included in 2013-14 Education Sector Report

• Sub-focus areas for 2016-17

• Policy, guidelines, strategy and planning

• Enabling resources

• Systems and processes

• Outputs and outcomes (postponed to 2017-18)

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ECD Grade R: Findings 2016-17

Improved. Regressed. Unchanged. New finding

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ECD Grade R: Findings 2016-17

8

School management and governance

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School management deficiencies

Annual management processes not adhered

School Improvement plans not informed by self diagnostic assessment and also not

aligned to annual reports

Deficiencies on educator utilisation

and leave management

Learner discipline, and curriculum coverage not

adequately reported

School data not managed

adequately and consistently

Deficiencies on school governing body and asset

management record keeping

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National school management audit

Audit

criteria

Key findings Root causes

Policy directive

for adherence to

annual

management

processes.

Adherence to annual management processes is still an issue in

some provinces as they are guided by different circulars on how

to report. Although Goal 21 of the Action Plan to 2019 stipulate

the need to adhere annual management processes, the national

department did not monitored whether provincial education

departments have put measures in place to ensure that

education districts and schools adhere to annual management

process of submitting annual academic performance report to

the Head of Department or the delegated officials.

The DBE did not provide a clear

directive for the provincial

education departments to adhere

to annual management

processes. Monitoring of whether

provinces are adhering to annual

management processes was also

not undertaken.

There is awareness for underperforming secondary schools to

prepare and submit APIP in almost all provinces. However, there

are no clear directives for underperforming primary schools to

submit APIP.

The Provincial education departments did not provide a clear

directive for the education districts to support schools to adhere

to annual management processes. The provincial departments

do not have a consolidated record of which education districts

provided support and which did not provide support to schools

so that corrective actions could be taken.

There need to guide education

districts on how to support

schools to adhere to annual

management processes was not

prioritised by provincial education

departments in their strategic

planning documents.

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Provincial audit result

Audit criteria Deficiencies identified EC FS GP KZN LP MP N

C

NW WC

Guidance for

adherence to

annual

management

processes.

The Provincial education departments did not

provide a clear directive for the education

districts to support schools to adhere to annual

management processes. The provincial

departments do not have a consolidated

record of which education districts provided

support and which did not provide support to

schools so that corrective actions could be

taken.

Root cause

There need to guide education districts on how to support schools to adhere to annual

management processes was not prioritised by provincial education departments in their strategic

planning documents

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Education district audit result

Audit criteria Deficiencies identified EC FS GP KZ

N

LP MP N

C

NW WC

Support and

monitoring

schools for

adherence to

annual

management

processes.

The education districts did not provide

support for schools to adhere to annual

management processes. Monitoring of

whether schools are adhering to annual

management processes was also not

undertaken.

Root cause

The need to monitor and support school was not articulated by the respective provincial

education departments.

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School management findings

Key Findings EC FS GP KZN LP MP NC NW WC

Completion and submission of annual reports, quarterly

reports and annual plans

School records keeping and reporting of learner discipline,

learner enrolment, educator composition, development,

utilisation and leave management.

Functionality of the school governing body through

meetings and record keeping of minutes, agendas and

attendance registers.

Analysis and reporting of learner performance.

Monitoring and reporting of curriculum and content

coverage.

Adherence to policy guidelines and requirement such as

LTSM, Nutrition and Finance.

School asset management (physical and learning facilities

such as ICT equipment) by keeping an updated register.

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Improving school performance School planning processes • Self diagnostic assessment • Whole School Evaluation • School Improvement Plan

School performance management

• School management team (SMT)

• School committees – DSG, LTSM, Discipline. Facilities

School performance monitoring and oversight

• School Governing Body oversight

• Education districts

• National and provincial monitoring

School Reporting Systems

- Monthly reports

- Quarterly reports

- Annual School Performance Report

Sch

oo

l Man

agem

en

t an

d A

dm

inis

trat

ion

Sys

tem

s

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