Office of the Director-Genera I Public Works I CGO I Pretoria 1 Presentation to the Select Committee on Economic and Business Development 26 January 2016 2 Contents 1.Mandate of the Department Slide 3 2.Ministerial prioritiesSlide 7 3.Historical perspectiveSlide 9 4.Strategic realignmentSlide 11 5.High Level Performance HighlightsSlide 14 6.Programme PerformanceSlide 17 7.Financial Information Slide 26 3 1. Mandate Purpose of the Presentation Constitutional mandate The Constitutional mandate is provided for in Schedule 4, Part A, of the Constitution of the Republic of South Africa: Functional Areas of Concurrent National and Provincial Legislative Competence. Legislative mandate The legislative mandate is primarily governed by the Government Immovable Asset Management Act, The Department regulates the construction industry and built environment through the Construction Industry Development Board Act, 2000 (Act No. 38 of 2000) and the six Professional Council Acts that regulate the six Built Environment Professions (BEPs), and through the Council for the Built Environment Act (Act No. 43 of 2000) 4 1. Mandate of the Department Policy mandates DPW White Paper: Public Works, Towards the 21st Century, 1997 DPW White Paper: Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry, 1999 Construction Sector Transformation Charter, 2006 Property Sector Transformation Charter, 2007 DPW Broad-based Black Economic Empowerment Strategy, 2006 Property Management Strategy on BBBEE, Job Creation and Poverty Alleviation, 2007 Green Building Framework, Mandate of the Department Cont. Mission The Mission aligned to the mandate of the Department is to: Provide quality accommodation and related services to our clients Efficiently and effectively managing the immovable assets in our custodianship Actively contributing to the national goals of job creation and poverty alleviation through the Expanded Public Works Programme Provide expert built-environment advice to our stakeholders Provide strategic leadership to the South African Construction and Property industries 6 Mandate of the Department cont. 7 2. Ministerial priorities Purpose of the Presentation i.The creation of six (6) million work opportunities over a period of five (5) years for poor and unemployed people through the labour-intensive delivery of public services and infrastructure. ii.The operationalization of Property Management Trading Entity (PMTE) and the transformation of the core property business component of the Department. iii.The establishment of the Governance, Risk and Compliance Branch (GRC Branch) to drive anti-corruption and to spearhead the second phase of the Turnaround Strategy. iv.In consultation with all stakeholders, particularly the wider Public Works sector, a Policy Review must culminate in a Public Works Act. v.In partnership with the Departments entities, the Charter Councils and relevant stakeholders, a renewed and sustained Programme of Action to transform the built environment must be embarked upon Ministerial Priorities 9 3. Historical perspective Purpose of the Presentation 10 3. Historical Perspective The Diagnostic Report of the Technical Assistance Unit (National Treasury), released in January 2012 revealed the following critical areas to be addressed within the Department: 1.Allegations of fraud and corruption 2.National Treasury approval for PMTE not implemented 3.Lack of adequate service delivery to user departments due to slow delivery of accommodation and poorly maintained accommodation 4.Incomplete immovable asset register 5.Lack of stability in leadership positions 6.Negative audit outcomes 11 4. Strategic realignment Purpose of the Presentation To address the identified weaknesses, the Department: Developed a Seven Year Turnaround Plan guided by the TAU Diagnostic report Developed a strategy to operationalize the PMTE separating the regulatory function of the Department from the implementation functions of the PMTE based on value proposition of the PMTE to improve service delivery anti-corruption and anti-mal administration drive best practice in the provision of accommodation and management of the immovable asset life cycle an appropriate organisational structure for PMTE to attract and retain professionals proper accrual based accounting for the PMTE Strategic Realignment 13 Model of Delivery (DPW and PMTE) 14 5. Performance Highlights Purpose of the Presentation 15 Improved Audit Outcomes Disclaimer Qualified Adverse These are some of the highlights in the period under review: Compilation of a substantially complete immovable asset register toward the March 2016 target A credible lease data base with substantiating documentation that resulted in no material audit findings on leases within the year under review Completion of construction projects within minimal variation Operationalisation of PMTE achieved a critical milestone with the transfer of functions from the Main Vote to the PMTE Successful accounting treatment of the complex transactions associated with the transfer of functions Skills development and capacity to complement the skills requirements Development of a service delivery model for DPW and PMTE Strengthened the coordination and oversight of the Public Works Sector through effective intergovernmental engagements Effective transition from Phase II to Phase III and the creation of 1,1 million work opportunities in 2014/15 16 Performance Highlights 17 6. Programme Performance Purpose of the Presentation 18 Programme 1: Administration (Pages 69-78) Programme 1 Administration Programme performance Purpose: To provide strategic leadership and support services and overall management of the Department Sub-Programmes : Ministry Management Corporate Services Office Accommodation 22 out of 27 (82%) internal audits were completed All investigations (39 allegations reported) initiated within 30 days Developed a Strategic Risk Register in accordance with the Risk Management Framework Customised Performance Indicators developed for the Provinces to serve as a base for sector deliverables (against a target of 914) Beneficiaries participating in the Department's Skills development programme. These include 189 Young Professionals, 582 interns, 249 learners, 200 artisan trainees and 55 Management trainees. 19 Programme 1: Administration (Pages 69-78) Cont. Programme 1 Administration Programme Performance Budget: R1.179 billion Expenditure: R1.174 billion Expenditure %: 100% Completed a Strategic Framework on Youth Development in the Built Environment to address youth unemployment in the built environment Disaster Recovery Site infrastructure developed and application servers updated to support the business of the Department Improvement in the payment of suppliers within 30 days 20 Programme 2: Immovable Asset Management (Pages 79-97) Programme 2 Immovable Asset Management Programme Performance Purpose: Provide and manage Governments immovable property portfolio in support of Governments social, economic, functional and Political objectives Sub-Programmes Strategic Asset Investment Analysis Inner city regeneration Key accounts management Special intervention prog Projects and professional Services Information fields on the IAR populated on properties out of a target of (GRAP compliant) 180 projects out of 542 completed within minimum prescribed variance. 33 out of 51 buildings were made accessible All (51) Land Ports of Entry were maintained across the country Spatial Development Framework approved as part of the Inner City Regeneration to ensure integrated development planning across spheres of government. 21 Programme 2: Immovable Asset Management (Pages 79-97) Programme 2 Immovable Asset Management Programme Performance Purpose: Provide and manage Governments immovable property portfolio in support of Governments social, economic, functional and Political objectives Sub-Programmes Strategic Asset Investment Analysis Inner city regeneration Key accounts management Special intervention prog Projects and professional Services retrofitting installations towards energy efficiency. 11 buildings retrofitted with water savings installations 91 buildings (sites) were retrofitted with waste management systems, i.e. the separation of waste sources 180 Smart Meters have been installed in various buildings as a means to contribute to energy efficiency initiatives The Client Survey Index developed to gauge the level of client satisfaction with the services delivered by the Department maintenance issues for Prestige accommodation (electric and plumbing) resolved within 5 days after logging a complaint 22 Programme 2: Immovable Asset Management (Pages 79-97) Programme 2 Immovable Asset Management Programme Performance Budget: R2.829 billion Expenditure: R2.758 billion Expenditure %: 98% maintenance issues for Prestige accommodation (excluding electricity and plumbing) resolved within 30 days after logging a complaint Debt (rent and rates) owed to municipalities was confirmed to be R69 million and of this amount R60 million has been paid 23 Projects Completed CLIENT DEPTPROVINCEMUNICIPALITYDESCRIPTION TENDER AMOUNT (R) Agriculture forestry and fisheries Western CapeStellenbosch local municipality Upgrading of electrical power substations and appointment to conduct a complete survey: 2012/13 2,691,786 Arts and cultureEastern CapeO R Tambo district municipality Heritage - Nelson Mandela museum: upgrading 35,586,608 Correctional servicesWestern CapeWest coast district municipality Old prison: upgrade of kitchen and refurbishment of equipment, including paintings & flooring 4,597,287 Drakenstein district municipality Upgrade kitchen and refurbish equipment, including flooring and painting 2,075,248 KwaZulu-NatalUthungulu district municipality Construction of a freezer/cold room 522,928 Northern CapeFrances baard district municipality Maintenance of integrated security system 16,761,413 Karoo district municipality Installation for backup power generator 583,224 Karoo district municipalityInstallation for backup power generator 416,000 24 Projects CLIENT DEPTPROVINCEMUNICIPALITYDESCRIPTION TENDER AMOUNT DefenceGauteng City of Tshwane metropolitan municipality Ada formation: dequar road: barrier free project for people with disabilities: building h3: one outdoor platform lift, conversion of toilets and ramps / pathways 2,299,500 Home affairsGauteng Ekurhuleni metropolitan municipality Brakpan: DHA district office: r & r of existing bld on cnr voortrekker /high str 14,275,498 Gauteng City of Tshwane metropolitan municipality DHA: new corporation building: power distribution and other related work. 14,138,608 Gauteng City of Tshwane metropolitan municipality DHA new corporation building: refurbishment of 13th floor 4,240,452 Justice and constitutional development Western CapeOverberg district municipalityUpgrading, repairs and renovations14,117,845 Western CapeTheewaterskloof local municipality Security measures & conversion of existing vacant residence into office facilities: 8,278,355 Western CapeWest coast district municipalityAdditional accommodation10,601,921 Western CapeKannaland local municipalityAdditional accommodation1,573,300 Western Cape City of Cape town metropolitan municipality Upgrading of installing sliding gate and steel roof at the prisoner's off-loading area 293,111 KwaZulu-NatalUthungulu district municipality Eshowe: installation and replacement of air- conditioning unit t 404,250 Ugu district municipality Construction of facilities for people with disabilities 545,190 Ndwedwe local municipalityConstruction of facilities for people with disabilities 389,450 25 Projects CLIENT DEPTPROVINCEMUNICIPALITYDESCRIPTION TENDER AMOUNT Rural development and land reform Western Cape City of Cape town metropolitan municipality Land claims office: refurbishment543,907 Gauteng City of Tshwane metropolitan municipality Heritage - replacement of lifts3,305,323 SA Police ServiceNorthern Cape Namakwa district municipality Installation of air conditioners160,854 Northern Cape Siyanda district municipality Replacement of air conditioners140,862 Eastern Cape Cacadu district municipality Supply, delivery and complete installation of air conditioning units including electrical 1,069,847 Eastern Cape Amatole district municipality All saints: installation of air conditioners, upgrade of fresh air supply & electricity power supply 2,045,415 Eastern Cape Amatole district municipality All saints academy: resurfacing of driveway and parking area 2,211,820 Eastern Cape Amatole district municipality Bisho academy: complete construction of overhead water supply tanks (old & new academy) 5,813,311 GautengCity of tshwane metropolitan municipality SAPS Pretoria west training college: replacement of kitchen floor and fire damage 5,742,341 26 Programme 3: EPWP (Pages 98-99) Programme 3 EPWP Programme Performance Purpose To provide work opportunities and income support to poor and unemployed people through labour intensive delivery of public and community assets and services Sub-Programmes Expanded Public works programme. Performance based incentive allocations Budget: R1.946 billion Expenditure: R1.925 billion Expenditure %: 99% work opportunities created (against a target of ) work opportunities created in the rural municipalities (against a target of ) 100% Incentive allocations disbursed to eligible public bodies across all sector Beneficiaries trained through the National Skills Fund (against a target of 800) 27 Programme 3: EPWP Work Opportunities Province and Municipalities Provinces MunicipalitiesTotal Annual TargetWk Opp Reported %Annual TargetWk Opp Reported %Annual TargetWk Opp Reported % EC FS GP KZN Lim Mp NC NW WC Total % - Percentage of work opportunities reported against target Wk Opp Reported Work Opportunities reported to date Source: Targets Infra and Social sectors: EPWP Business Plan (Dated April 2014) Environment & Culture Sector: E&C Sector Plan (June 2014) 28 Programme 3: EPWP Expenditure by Municipalities of disbursed EPWP Integrated Grant funds provinceAllocated (R'000)Transferred to date Transfers as % allocation Expenditure to date Expenditure as % allocation Expenditure as % transferred Eastern CapeR %R % Free StateR %R % GautengR %R % KwaZulu NatalR %R % LimpopoR %R % MpumalangaR %R % Northern CapeR %R % North WestR %R % Western CapeR %R % TOTALR %R % 29 Programme 3: EPWP Expenditure by Province of disbursed EPWP Integrated Grant funds ProvincesFinal Grant Allocation (R'000)Actual YTD Transfers (R'000)Total Expenditure to date (R'000)Expenditure % on Allocation EC % FS % GT % KZN % LP % MP % NC % NW % WC % Total % 30 Programme 4: Property and construction Industry policy regulation (Pages ). Programme 4 Property and construction Industry policy regulation Programme Performance Purpose Promote the growth and transformation of the construction and property industries Sub-Programmes Construction Industry Development programme. Property Industry Development programme. Budget: R34 million Expenditure: R31 million Expenditure %: 91% Expropriation Bill completed and submitted to Parliament for consideration. Agrment South Africa Bill completed and submitted to Parliament for consideration. Revised Business Case for IDT developed and currently under consideration by all relevant stakeholders Programme 5: Auxiliary and Associated Services (Pages 102) 31 Programme 5 Auxiliary and Associated Services Programme Performance Budget: R132 million Expenditure: R132 million Expenditure %: 100% Infrastructure support provided for 23 Prestige Events (against a target of 13) 32 7. Financial Information Purpose of the Presentation 33 DPW PROGRESS ON AUDIT OUTCOMES 2013/14 - Unqualified 2012/13 Qualification 2014/15 - Unqualified 2011/12 - Disclaimer Disclaimer matters: 1. Irregular Expenditure 2Fruitless & Wasteful Expenditure 3. Immovable Tangible Assets 4. Operating Leases 5. Lease Commitments (Operating) 6. Commitments 7. Related Party Transactions 8. Receivable for departmental revenue Qualification matters: 1. Irregular Expenditure 2. Immovable Tangible Assets 3. Commitments Emphasis matters: 1. Immovable Tangible Assets 2. Restatement of corresponding figures 3. Material Impairment 4. Material under spending Emphasis matters: 1. Restatement of corresponding figures 2. Material Impairment 3. Material under spending 34 DPW Main Account Appropriation Statement Purpose of the Presentation DPW SHIFTING / VIREMENT PER PROGRAMME (Page 172 to 205) 2014/15 APPROPRIATION STATEMENTAdjusted Appropriation Shifting of funds Virement Final appropriation R ADMINISTRATION Current payments (121)(13 336) Transfers and subsidies Payment for capital assets Payment for financial assets IMMOVABLE ASSET MANAGEMENT Current payments (4 748) Transfers and subsidies Payment for capital assets (39 294) Payment for financial assets DPW SHIFTING / VIREMENT PER PROGRAMME (Page 172 to 205) 2014/15 APPROPRIATION STATEMENTAdjusted Appropriation Shifting of funds Virement Final appropriation R EXPANDED PUBLIC WORKS PROGRAMME Current payments (114) (3 839) Transfers and subsidies Payment for capital assets (976)1 803 Payment for financial assets PROPERTY AND CONSTRUCTION INDUSTRY POLICY REGULATIONS Current payments (2 010) Transfers and subsidies Payment for capital assets AUXILLIARY AND ASSOCIATED SERVICES Current payments Transfers and subsidies Total EXPLANATORY NOTES TO THE VIREMENT 2014/15 FromAmount ToAmountMotivation R Administration2. Immovable Asset Management Goods and services (13 336) Goods and services Underspending due to invoices that could not be processed as a result of changes in banking details. Funds utilized to offset increased expenditure for maintenance and repairs (R125 million) in Programme 2 which was higher than the adjusted budget of R94 million. 2. Immovable Asset Management5. Auxilliary and Associated Services Payment for capital assets (39 294) Goods and services Underspending relates to infrastructure projects. Funds were approved by National Treasury to augment unforeseen and unavoidable expenditure relating to one official state funerals which include the two reburials 37 EXPLANATORY NOTES TO THE VIREMENT 2014/15 FromAmount ToAmountMotivation R Immovable Asset Management1. Administration Payments for capital assets1 055 Under spending on machinery and equipment to be utilised to offset high spending in Programme Expanded Public Works Programme 2. Immovable Asset Management Compensation of employees (3 839) Goods and services Underspending due to vacant positions that were not filled until the latter part of the financial year. Funds utilized to offset increased expenditure for maintenance and repairs (R125 million) in Programme 2 which was higher than the adjusted budget of R94 million. 3. Expanded Public Works Programme 1. Administration Payments for capital assets (Machinery and equipment) 976 Payments for capital assets (Machinery and equipment) 976 Funds utilized to offset high spending in Programme 1 38 EXPLANATORY NOTES TO THE VIREMENT 2014/15 FromAmount ToAmount Motivation R Property and Construction Industry Policy Regulations 5. Auxilliary and Associated Services Goods and services (2 010) Goods and services Underspending due to lower than projected expenditure under travel and subsistence and outsourced services. Funds utilized to augment the shortfall in Programme 5. 39 DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER PROGRAMME (Page 172 to 205) 2014/15 APPROPRIATION STATEMENT Final Appropriation Actual Expenditure Variance Expenditure as % of final appropriation R'000 % 1. ADMINISTRATION Current payments % Transfers and subsidies % Payment for capital assets % Payment for financial assets % % 2. IMMOVABLE ASSET MANAGEMENT Current payments % Transfers and subsidies % Payment for capital assets % Payment for financial assets % % 40 DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER PROGRAMME (Page 172 to 205) 2014/15 APPROPRIATION STATEMENT Final Appropriation Actual Expenditure Variance Expenditure as % of final appropriation R'000 % 3. EXPANDED PUBLIC WORKS PROGRAMME Current payments % Transfers and subsidies % Payment for capital assets % Payment for financial assets % % 4.PROPERTY AND CONSTRUCTION INDUSTRY POLICY REGULATIONS Current payments % Transfers and subsidies (10 832)0.0% Payment for capital assets % % 5. AUXILLIARY AND ASSOCIATED SERVICES Current payments % Transfers and subsidies % % TOTAL % 41 EXPLANATORY NOTES TO PROGRAMME VARIANCE 2014/15 ProgrammeMotivation 1. Administration Underspending of R4.4 million equivalent to 0.5%. Underspending of R3.7 million under compensation of employees was due to posts that became vacant towards the end of the financial year and were not immediately filled. Transfers and subsidies for household (under spent by R ) due to actual expenditure for leave gratuities being lower that the projections. 2. Immovable Asset Management Underspending of R71 million equivalent to 2.5%. Under spending on payments for capital assets (R71 million) for buildings and other fixed structure is due to payments made under PMTE in March but could not be claimed by the end of the financial year from the department. 3. Expanded Public Works Programme Underspending of R21 million equivalent to 1%. Compensation of employees (R17 million) under spending is due to vacant positions within EPWP that were filled in the latter part of the financial year. Goods and services (R3 million) is due to committed services, but not delivered before the end of the financial year. Transfers and subsidies (R1 million) under spending is due to withheld payments to two Limpopo Provincial Government departments not complying to the condition of the 2014 DoRA. 42 EXPLANATORY NOTES TO PROGRAMME VARIANCE 2014/15 ProgrammeMotivation 4. Property and Construction Industry Policy Regulations Underspending of R2.9 million equivalent to 8.7%. Underspending on compensation of employees (R1 million) and goods and services (R12.7 million) and over spending of R11 million on transfers and subsidies. Compensation of employees (R1 million) underspent due to vacant positions which were not filled during the financial year. Goods and services (R12.7 million) underspending relates to accruals (R5.2 million) for invoices that were received late and could not be processed due to changes in banking details and the balance (R11 million) relates to the budget allocation for Agrement SA which was processed under transfers and subsidies resulting in overspending and irregular expenditure has been reported for payment made to Agrement SA. 5. Auxiliary and Associated Services There is no variance in Programme 5. 43 DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER ECONOMIC CLASSIFICATION (Page 173 to 175) 2014/152013/14 Final Appropriation Actual Expenditure VarianceExpenditure as % of final appropriation Final Appropriation Actual expenditure R'000 % Current payments Compensation of employees %1,480,6281,471,497 Goods and services %1,363,3051,315,755 Interest and rent on land99-100%-- Transfers and subsidies Provinces and municipalities %1,225,7781,221,445 Departmental agencies and accounts %803,694802,412 Foreign governments and international organisations %20,51017,555 Public corporations and private enterprises %100,000 Non-profit institutions (11 021)102.3%438,281448,679 Households %6,9256,463 Gifts and donations Payments for capital assets Buildings and other fixed structures %626,206567,365 Machinery and equipment %85,67647,511 Software and other intangible assets %16,47016,184 Payments for financial assets %7,788 Total %6,175,2616,022,654 44 Compensation of employees Under-spending of R19 million is mainly due to vacant positions (EPWP) that were filled and those that became vacant in the latter part of the financial year. Goods and services Under-spending of R14 million relates to late receipt of invoices (R3 million) that could not be processed before financial year-end and the balance (R11 million) relate to the budget allocation for Agrement SA which was processed under transfers and subsidies. Transfer payments Provinces and municipalities under-spending of R1.2 million relates to withheld funds for EPWP Social Sector (Limpopo Provincial Government) due to non-compliance to DORA requirements. Non-profit Institutions R11 million over-spending relates to transfer payment to Agrement SA (Programme 4) which was classified under the budget allocation for goods and services. Payments for capital assets Buildings & other fixtures R71 million underspending due to delay in processing claim for expenditure relating to infrastructure projects (Programme 2). EXPLANATORY NOTES TO EXPENDITURE VARIANCE 45 46 DPW Main Account Financial Statements Purpose of the Presentation DPW FINANCIAL PERFORMANCE (Page 209) Note2014/15 R /14 R000 Year on Year comparative R000 Revenue Annual appropriation (53 941) Departmental revenue (39 338) Expenditure Compensation of employees Goods and services Interest and rent on land 59-9 Transfers and subsidies (18 780) Tangible capital assets ( ) Intangible assets Payments for financial assets Surplus for the year (92 663) 47 Annual appropriation Reduced budget allocation compare to the previous financial year. Compensation of employees Annual inflationary salary increase (average of 7%) as well as the grading of positions. Goods & Services Year-on-year increase of R112 million for reclassification of maintenance and repairs from capital to goods and services. Transfers and subsidies R18 million decrease due to budget reduction under EPWP conditional grants for both Provinces and Municipalities (Integrated and Social Sector Grants). Tangible capital assets Year-on-year reduction in buildings and other fixtures of R195 million due to reduced allocation and increase in expenditure in the machinery and equipment. Reclassification of the infrastructure budget during the adjustment from capital to goods and services. Intangible assets R15 million decreased expenditure due to less IT software acquired compared to 2013/14. EXPLANATORY NOTES TO EXPENDITURE VARIANCE 48 DPW FINANCIAL POSITION (Page 210) Note2014/15 R /14 R000 Year on Year comparative Assets Unauthorised expenditure Cash and cash equivalents Prepayments and advances Receivables Liabilities Voted funds to be surrendered to the Revenue Fund Departmental revenue to be surrendered to the Revenue Fund Bank overdraft Payables Net assets Unauthorised expenditure R6 million increase due to the honouring of contractual commitments of projects - expenditure of which was declared unauthorised in the previous years. Prepayments and advances Improved spending on advance payments compared to the previous financial year. Less prepayment made for software licences compared to the previous financial year. Receivables Decrease in staff debts from R4.6 million in 2013/14 to R1.3 million at the end of 2014/15. Outstanding debt Construction and Service SETAs increased from R7.7 million in 2013/14 to R14.6 million in 2014/15 South African Institute of Architects (SAIA) debt increased from R5.6 million in 2013/14 to R8.1 million at the end of 2014/15 Voted funds to be surrendered to the Revenue Fund Reduction in the budget allocation and the balance unspent at the end of the financial year resulted in the reduced funds to be surrendered. EXPLANATORY NOTES TO EXPENDITURE VARIANCE 50 Departmental revenue to be surrendered to the Revenue Fund Refunds from PMTE as an outcome of reconciliations received in the month of March 2014, surrendered later. No refund received in 2014/15. Bank overdraft Surrendered funds (R215 million) during the year against the net surplus of R115 million and the positive movement in working capital movement of R39 million resulted in the increased bank overdraft by R61 million. Payables Payables relates to R10 million received from Eastern Cape Provincial Department of Public Works for construction of bridges and R68 million received from the Department of Higher Education for National Skills Fund. R50 million was received in March 2015 from the Department of Higher Education for the new training projects. EXPLANATORY NOTES TO EXPENDITURE VARIANCE 51 52 PMTE Financial Statements (Chapter 5 Part B) Purpose of the Presentation 53 PMTE PROGRESS ON AUDIT OUTCOMES 2013/14 - Qualified 2012/13 - Disclaimer 2014/15 - Qualified 2011/12 - Disclaimer 1. Irregular Expenditure 2. Fruitless Expenditure 3. Related party 4. Trade and Other Receivables 5. Revenue 6. Prepayments 7. Contingent Assets 8. Accruals (All expense categories) 9. Operating leases (Assets & Liabilities) 10. Lease Commitments 11. Lease Revenue and Expenditure 12. Capital Commitments 13. Property Maintenance 14. Municipal rates & taxes 1. Irregular Expenditure 2. Fruitless Expenditure 3. Trade and Other Receivables 4. Operating lease (Assets & Liabilities) 5. Lease Commitments 6. Lease Revenue, Expenditure, Payables and Receivables 7. Retention Liabilities 8. Accruals (All expense categories) 1. Irregular Expenditure 2. Operating Leases (Assets & Liabilities) 3. Lease Commitments 4. Lease revenue, Expenditure, Payables and Receivables 5. Accruals (All expense categories) 1. Accruals (I/S and Balance Sheet impact) 2. Property rates (Not linkable to IAR) PMTE FINANCIAL POSITION (Page 447) Note2014/152013/14Comments R000 Assets Current Assets Receivables from exchange transactions Increase receivable from clients departments, R14 bil of client funds recoverable within a financial year Receivables from non-exchange transactions Relates to the future benefit for employee benefits receivable from DPW as a result of transfer of functions Operating lease assets Lease renewals as well as impact of straight line Cash and cash equivalents Rejected payments reclassified back to bank and cash Non-Current Assets Property, plant and equipment Impact of transfer of functions, IAR captured in PMTE. Directive 2: Allowed to use transitional values on take-on. Values if transitional must be restated as at date of take-on, hence PY restated Investment property Heritage assets Intangible assets Total Assets PMTE FINANCIAL POSITION (Page 447) Note2014/152013/14Comments R000 Liabilities Current Liabilities Operating Lease Liabilities Impact of lease review undertaken Cash and cash equivalents (Bank Overdraft) Payables from exchange transactions Deferred revenue until projects completed (increased by R 2.5 bil) as a result of new projects in the current FY. Alignment of revenue and expenditure Retention liabilities Total retentions increase of R18m. Retentions based on project status and type of project. New projects increase long term retentions Employee Benefit Obligations Transfer of functions, linked to Receivable from non- exchange (Service-in-kind) Provisions Legal claims of R 28 mil reversed during 2014/15, due to cases withdrawn or no longer probable Finance lease obligation Transfer of functions, finance lease obligations on printers and Cell phones moved to PMTE Non-Current Liabilities Retention liabilities Long-term portion of the retention calculation as above Finance lease obligation Finance lease obligations on printers and Cell phones moved to PMTE Total Liabilities Accumulated Surplus Revaluation of investment property & PPE 55 PMTE FINANCIAL PERFORMANCE (Page 448) Note2014/152013/14Comments R000 Revenue Revenue from exchange transactions R400m increase on private leases due to renewals and R1bn reduction in state owned as a result of projects not completed in Deferred revenue Revenue from non-exchange transactions Services in kind from DPW= revenue (R2 bil) as a result of additional functions and employees transferred to PMTE Expenses Operating expenses Transfer of functions, increased expenditure as more staff related expenditure now in PMTE. As well as inflationary increases in leases and maintenance expenses. Interest expense No finance lease interest in 2014/15, review of the lease expenditure Employee costs Transfer of functions, increased expenditure as more staff now in PMTE Surplus 57 DPW Main Account and PMTE UNAUTHORISED, FRUITLESS & WASTEFUL AND IRREGULAR EXPENDITURE Purpose of the Presentation DPW UNAUTHORISED EXPENDITURE (Note 9, Page 304 to 306) 2014/15 R000 Prior years R000 Overspending on compensation of employees Overspending on goods and services Unauthorised expenditure as a result of capital expenditure on schools Overspending on capital assets Overspending on transfer and subsidies Closing balance The R5.5 million in current year relates to Contractual Commitments of the schools built. Compensation of employeesTotal R million 2008/09R48.84 million (Programme 1) 2011/12R million (Programme 1 and 2) Goods and servicesTotal R13.62 million 2007/08R9.653 million (Programme 3 EPWP) 2011/12R3.966 million (Programme 2 - Energy Efficiency Project) Transfers and subsidiesTotal R2.327 million 2011/12R (Programme 2 Household) 2011/12R2.245 million (Programme 4 Agrement SA) Payments for capital assets Total R million* 2012/13 R3.985 million (Furniture for constructed schools in EC & NW) 2012/13 R million (Construction of schools in EC & NW) 2013/14R6.215 million (Construction of schools in EC & NW) 2014/15R5.501 million (Construction of schools in EC & NW) Unauthorised expenditure per financial year and economic classifications 59 *Amounts spent in response to the call for the eradication of mud schools DPW & PMTE F&WE ( DPW Note 26 on page 320 to 321 & PMTE Note 23 on page 489) 60 Year-on-year decrease in DPW Main Account is due to resolved amount of R50 million for SAS system; Year-on-year decrease in PMTE is due to cases investigated by the SIU and concluded on amounting to R 73 million; Year-on-year decrease in DPW Main Account is due to resolved amount of R50 million for SAS system; Year-on-year decrease in PMTE is due to cases investigated by the SIU and concluded on amounting to R 73 million; 2014/152013/2014% change R'000 DPW Main Account % PMTE % PMTE FRUITLESS AND WASTEFUL EXPENDITURE (note 23, Page 489) 61 Note to AFS: (note xxx) 31-Mar-1531-Mar-14 R000 Opening balance Prior period error (2013/14)- (11 051) Add: IE relating to the current year Less: Amounts resolved(73 955)- Fruitless and wasteful expenditure transferred to receivable for recovery -(24 985) Fruitless & wasteful expenditure awaiting resolution R 11 million relates to transactions that were reported as fruitless & wasteful expenditure in the prior financial years and subsequent investigation confirmed them not to be. R 74 million relates to transaction that were investigated by the SIU. R 11 million relates to transactions that were reported as fruitless & wasteful expenditure in the prior financial years and subsequent investigation confirmed them not to be. R 74 million relates to transaction that were investigated by the SIU. DPW & PMTE IE (DPW Note 25 (page 316) & PMTE Note 24 (page 490)) 62 Year-on-year decrease due preventative controls put in place; Year-on-year decrease in DPW Main Account is due to condonation of R168 million; Year-on-year decrease in PMTE is due to condonation of R3.2 billion; Year-on-year decrease due preventative controls put in place; Year-on-year decrease in DPW Main Account is due to condonation of R168 million; Year-on-year decrease in PMTE is due to condonation of R3.2 billion; 2014/152013/2014% change R'000 DPW Main Account % PMTE % Department of Public Works (National ) Head Office: Public Works CGO Building Cnr Bosman and Madiba Pretoria Central Private Bag X65 Pretoria 0001 Website:Thank You 63