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Briefing to the Parliamentary Portfolio Committee on Communications
“2016 – 17 FY Annual Report”
Contents
Organisational Mandate
Strategic Fit - Government’s Priority Outcomes
Strategic Outcome Oriented Goals: 2015/16 – 2019/20
Performance Summary 2016/17FY
Key Achievements by Programme
Key Non-Achievements by Programme
Human Resources
Governance
Complaints and Compliance Committee
AG Audit Outcome 2016/17 Financial Year
End
2
Organisational Mandate
3
ICASA is established pursuant to section 192 of the Constitution and in terms of the ICASA Act of 2000, as amended
Regulate electronic communications, broadcasting and postal sectors in the public interest
Ensure affordable services of high quality for all South Africans
ICASA is mandated to -
ICASA’s mandate is derived from:
The Constitution, 1996
ICASA Act, 2000
EC Act, 2005
Broadcasting Act, 1998
Postal Services Act, 1998
ECT Act, 2002
Strategic Fit - Government’s Priority Outcomes
4
Outcome 6:
An efficient, competitive and responsive
economic infrastructure network
Outcome 12:
An efficient, effective and development–
oriented public service
Outcome 14:
A diverse, socially cohesive society with a
common national identity
Government Long-Term Plans and Priority Outcomes
Promote competition and networkdeployment for universal broadbandprovision
Ensure that the regulatory frameworkfacilitates the use of ICTs as a platform toprovide increased access to governmentservices
Facilitate the 3-tiers of broadcasting andspecifically focus on a regulatoryagenda that:
• Promotes local content• Dissemination of information
in the public interest• Public broadcasting content
across all platforms
NDP 2030
(Strategic Outcome Oriented Goals)
Strategic Goals: 2015/16-2019/20
6
1. Universal Access to Broadband
2. Access to Communication
Services at Affordable Prices
3. Improve Organisational Service Delivery
4. Common National
Identity and Social Cohesion
ICASA Services to the Sector
ICASA
Services to licenseesSpectrum
AssignmentInterconnection / Facilities Leasing
Type Approval& Allocation of
numbers
Issue registration certificates
Licences & Channel
Authorisations
Universal service obligations
Diversity of local Content
Quality of
Service
Speedy resolutions of
Complaints
Competitive pricing
Services to end-users & audiences
Performance Summary
Performance Summary by ProgrammeProgramme Outputs Achieved Outputs Not Achieved Total Outputs Planned
Licensing 10 2 12Policy Research & Analysis
1 3 4Engineering & Technology
5 3 8Regions 5 0 5Compliance and Consumer Affairs 7 2 9Corporate Services 5 0 5Finance 3 2 5Human Resources 2 2 4Internal Audit 3 1 4Legal Risk Complaints & Compliance Committee 3 0 3TOTAL 44 15 59PERCENTAGES 74. 5% 25.5% 100%
Expenditure Summary by Programme
10
Chief Operations Officer (Regulatory Projects Office)
Programmes Summary Report - March 2017
Programme
2016/17 2015/16
Budget Actual
(Over)/Under
Expenditure Budget Actual
(Over)/Under
Expenditure
Programme 1:
Administration 243 856 565 253 923 169 (10 066 604) 298 564 781 283 849 569 14 715 212
Programme 2:
Licensing 45 838 825 47 383 950 (1 545 126) 48 060 711 59 507 485 (11 446 774)
Programme 3:
Engineering &
Technology 16 646 472 16 169 488 476 985 31 749 824 12 053 979 19 695 845
Programme 4: Policy
Research & Analysis 23 505 032 20 703 133 2 801 899 33 808 918 18 738 856 15 070 062
Programme 5:
Compliance &
Consumer Affairs 28 432 858 29 657 835 (1 224 977) 9 728 783 11 682 321 (1 953 538)
Programme 6: Regions 70 011 109 61 490 254 8 520 855 0 0 0
TOTAL 428 290 860 429 327 829 (1 036 969) 421 913 017 385 832 210 36 080 807
Reasons for Over Expenditure
11
Chief Operations Officer (Regulatory Projects Office)
Actual operational expenditure (OPEX) was R406 108 867 (2.4%) less as compared to the budget amount of R416 248 585.
Normal projects actual spending of R 20 561 605 was R8 556 152 (70.7%) more to the budget of R 12 042 276, the below were mainlythe cause for the over spending: -
1. The project – ‘Local Elections Monitoring’ head count costs for the officers who were temporarily employed initially budgetedwith lower scale packages and were actually salaried with higher scales going over by R 5 369 839.
2. The projects – ‘Quality of Service(QoS) Monitored’ and ‘ Frequency Migration strategy/plan and updated National Band Planand reviewed broadcasting plan’ both were under budgeted for resulting in in over spending of R1 663 826.
3. The number of small projects under support division make up balance of the remaining amount of R1m.
4. The actual amount incurred during the current financial is inclusive of the prior year accruals paid during the current financialyear.
The over expenditure on repairs and maintenance was mainly due to the following:
1. Additional expenditure of R 221 782 incurred for repairs on old motor vehicles2. Additional expenditure of R 901 256 incurred for maintenance of monitory equipment..
Achievement by
Programme
Programmes for 2015/16-2019/20FY
1.Administration
Purpose:
To provide
coordinated
strategic
leadership,
management and
support to the
organisation to
deliver on its
mandate
2.Licensing
Purpose
To authorize,
issue, renew,
transfer and
revoke all types
of licence within
its jurisdiction for
the purpose of
socio-economic
development
and promotion
of competition
4. Engineering & Technology
Purpose
To research on
radio frequency
spectrum, type
approval and
technical
standards to
provide support
to ICASA
Programmes as
needed
3. Policy Research & Analysis
Purpose
To conduct
research and
policy analysis
into all the
regulatory
sectors in line
with ICASA
mandate
5. Regions
Purpose
To enable
unimpeded
national provision
of electronic
communications,
broadcasting and
postal services
through compliance
and enforcement
6. Compliance & Consumer Affairs
Purpose
To ensure licences
compliance with
terms and
conditions of their
licences, regulations
and requirements
and protect interest
of consumers
Programme 1: Administration - Achievements
14
Chief Operations Officer (Regulatory Projects Office)
• Systems and processes integration from 30% to 50%
• Increased ICASA communication reach from 10% to 40% on availablecommunication platforms
• Increased safety and OHS from 50% to 60%
Corporate Services
• Revenue collected R98 4921 674.00 on all invoices (99%)
• Support to Programmes increased from 88% to 95%Finance
• Increase in talent sourcing from 20% to 50%
• Increase in employee interventions from 20% to 50%Human Resources
Internal Audit
Legal, Risk & CCC
• Audit plan completed from 84% to 85% • 12 Issues tracking reports produced • Assurance reports increased from 1 to 4
• Repository for analysed legal opinions and case law complet from 0 to 50%
• Increase in risk maturity level from 1 to 2 beyond planned target • SLA agreement completion increased from 20% to 50%
Programme 2: Licensing - Achievements
15
Chief Operations Officer (Regulatory Projects Office)
• IMT Spectrum ITA published
• Regulation on exempted devices completed
• Regulation on Premium Rated Services completed
Universal Access to Broadband
• Public hearings and deliberations on number portability regulation completed
• Licensing process for commercial sound broadcasting in the Northern Cape completed
• Increase in type approval applications processed within 30 days from 18% to 65%
• Increase in numbering applications from 94% to 96%
• Increase in individual service licences amendments, transfers & control processed from 88.9% to 100%
• Increase in new, amendments, transfer & control of spectrum licensing applications from 81% to 97.7%
• ITA for Free To Air Commercial Television Broadcasting published
Access to Communication
Services at Affordable Prices
Programme 3: Policy Research & Analysis - Achievements
16
Chief Operations Officer (Regulatory Projects Office)
• Draft community broadcasting regulatory framework published
Access to Communication Services at Affordable
Prices
Programme 4: Engineering & Technology - Achievements
17
Chief Operations Officer (Regulatory Projects Office) • Updated National Radio Frequency Plan approved
• Final regulations on E-band and V-band publishedon 22 November 2016
Universal Access to Broadband
• Updated and redefined broadband maps andinfrastructure maps published on ICASA website
• Quality of Service measured distance increasedfrom 5600km by 15%
• 100% of spillover cases resolved within 60days
Improve OrganisationalService Delivery
Programme 5: Regions - Achievements
18
Chief Operations Officer (Regulatory Projects Office)
• An additional ICASA regional office opened inLimpopo
• Additional ECS/ECNS class licence processed inregional offices
• Increase in resolution of interference cases from90% to 92.5%
Improve OrganisationalDelivery
• Increase in consumer awareness from 0 to 5%
• All NATJOINTS instructions received executedCommon National Identity
and Social Cohesion
Programme 6: Compliance & Consumer Affairs - Achievements
19
Chief Operations Officer (Regulatory Projects Office)
Access to communication services at affordable
services
• RIA recommendations implemented
• Consumer Advisory Panel published
• 3 ECS/ECNS compliance reports published
• Consumer protection strategy and implementation plancompleted
• Increase in consumer complaints resolution from 75% to80%
Improve OrganisationalService Delivery
Common National Identity and Social Cohesion
• A compliance reported published on Municipal elections
• A discussion document produced on ownership and control regulations on equity ownership and BBEEE
Non-Achievement by Programme
Programme 1: Administration - Non- Achievements
21
Chief Operations Officer (Regulatory Projects Office)
• 87% against 95% target ( 1 447 suppliers paid out of 1 646suppliers’ invoices received)
• 71% against 100% target (197 SMMEs paid out of 277 SMMEinvoices received within 15 days
Finance
• 25% of Performance Management & OrganisationalDevelopment strategy implemented against a target of 50%.Consultation process took longer than expected
• 33% of HRD initiatives implemented against a target of 50%.Consultation process took longer than expected
Human Resources
Internal Audit• Compliance monitoring not completed. Data Analytics
position took longer than expected to fill due to the poorlevel of candidates interviewed
Programme 2: Licensing – Non-Achievements
22
Chief Operations Officer (Regulatory Projects Office)
• Licensing of 45% of MUX not completed. ICASA decided to extend the submission deadline on the request by the qualifying applicant
Universal Access to Broadband
Programme 3: Policy Research & Analysis – Non-Achievements
23
Chief Operations Officer (Regulatory Projects Office)
• Study on definition of priority markets that are susceptible toex-ante regulation. Council approved the publication of thenotice to conduct market inquiry. There was a delay inprocurement of the service provider.
Access to Broadband Spectrum
Access to Communication
Services at Affordable Prices
• Discussion Document on subscription broadcasting marketwill be published in May 2017. The project experiencedunexpected delays at the information gathering stage.
• Draft regulations on call termination. Published a noticeand a questionnaire to conduct the review of 2014procompetitive remedies
Programme 4: Engineering & Technology – Non- Achievements
24
Chief Operations Officer (Regulatory Projects Office)
• 5G forum establishment. On 6 September 2016 Councilapproved the terms of reference for the establishment ofthe 5G Forum. Invitation letters were sent to potentialparticipants. Only 25% responded
• Research report on TV White Spaces regulations. Tworesearch reports have been produced by CSIR for ICASA. Thisrepresents 75% achievement of the target.
Universal Access to Broadband
• Decrease turnaround time on type approval andspectrum licensing. 35% progress has beenachieved. The target was unrealistic in terms ofthe project plan
Improve OrganisationalService Delivery
Programme 6: Compliance & Consumer Affairs – Non -Achievements
25
Chief Operations Officer (Regulatory Projects Office)
• Obligations imposed for broadcasting ECS/ECNSand postal services from 4 licenses to 7. Draft USOamendments published, comments received.
Access to Broadband Spectrum
Improve organizational Service Delivery
• Final code for persons with disabilities regulations.Decision to publish a further draft Code for Personswith Disabilities for public comments extended theproject beyond the 2016-17FY
Human Resources
Personnel by Population Group
27
Chief Operations Officer (Regulatory Projects Office)
Personnel Cost by Division
28
Chief Operations Officer (Regulatory Projects Office)
Headcount and Vacancies per Occupational Level
29
Chief Operations Officer (Regulatory Projects Office)
Employment Changes and Attrition Reasons
Governance
Council Members during the Year under review
• Mr Rubben Mohlaloga• Ms Katharina Pillay (term of office ended on 11 February 2017)
• Mrs Nomvuyiso Batyi (term of office ended on 11 February 2017)
• Ms Botlenyana Mokhele• Dr Keabetswe Modimoeng• Mr Paris Mashile• Mr Peter Zimri
Council Committees Members’ Meetings Attendance
Complaints and Compliance Committee
Number of Complaints Adjudicated And Attendance
AUDIT OUTCOME2016-2017
PRESENTED BY CFO: TEBOGO MATABANE
STATEMENT OF FINANCIAL POSITION
37
R thousand '000 2016/2017 2015/2016
Assets
Current Assets 1 577 824 332 1 467 764 143
Non Current Assets 141 387 075 120 917 867
Total Assets 1 719 211 407 1 588 682 010
Liabilities
Current Liabilities 1 416 210 251 1 306 163 718
Non Current Liabilities 1 326 074 2 435 036
Total Liabilities 1 417 536 325 1 306 163 718
Accumulated surplus 301 675 082 282 518 292
The Authorities assets exceeded it liabilities by R 301 675 082, the request to retain the surplus was approved by National Treasury.
STATEMENT OF FINANCIAL PERFORMANCE
38
R thousand '000 2016/2017 2015/2016
Revenue
Revenue from non exchange transactions 431 817 003 418 830 737
Revenue from exchange transactions 23 941 973 22 068 699
Total revenue 455 758 976 440 899 436
Expenditure
Employee-related costs 254 667 868 220 962 647
General expenses 174 691 365 164 044 161
Total expenditure 429 327 827 384 864 811
Surplus for the year 26 431 149 56 034 625
AG’s Assessment of 2016/17FY Performance
39
UN
QU
ALI
FIED
AU
DIT
Internal Control Deficiencies
[74.5 %] Organisational Performance
Achievements for 2016-17 Financial Year
40
Unqualified with findings
2014-15 2015-16 2016-17
Types of audit outcomes
Unqualified with no findings
Unqualified with findings
Qualified with findings
Adverse with findings
Disclaimed with findings
Achievements for 2016-17 Financial Year
41
Risk areas
Quality of submitted financial statements
Quality of submitted
performance information
Supply chain management
Financial health
Human resource
management
Information technology
Good Concerning Intervention required
Audit Report Issues
42
Audit Report Audit Report matter: Non compliance on;
2015-2016
Unqualified
1.Usefulness of reported performance information - Programme 1: Policy Research and Analysis, Programme 2:Regions, Programme 3: Licensing, Programme 4: Compliance and Consumer Affairs & Programme 9: Legal, Riskand CCC;
2.The constitutional institution did not have a proper record management system to maintain information thatsupported the reported performance in the annual performance report; and
3. Irregular and fruitless and wasteful expenditure.
Audit Report Issues
43
Audit Report Audit Report matter: Non compliance on;
2016-2017
Unqualified
1.The financial statements submitted for auditing were not prepared in accordance with the prescribed financialreporting framework as required by section 40(1) (b) of the PFMA Material misstatements of non-current assets,current assets and disclosure items identified by the auditors in the submitted financial statement were corrected,resulting in the financial statements receiving an unqualified audit opinion.
2.Contractual obligations and/or money owed by the entity were not met and/or settled within 30 days, as requiredby section 38(1)(f) of the PFMA and treasury regulation 8.2.3.
3.Effective steps were not taken to prevent irregular expenditure amounting to R 27 485 420 as disclosed in note 34to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1.
4.Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R12 268 248 asdisclosed in note 33 to the annual financial statements, in contravention of section 38(1)(c)(ii) of the PFMA andtreasury regulation 9.1.1.
5.Quotations were accepted from prospective suppliers who did not submit a declaration on whether they areemployed by the state or connected to any person employed by the state, which is prescribed in order to complywith Treasury Regulation 16A8.3.
Audit Report Issues
44
Audit Report Audit Report matter: Non compliance on;
2016-2017
Unqualified
6.Contracts and quotations were awarded to suppliers whose tax matters had not been declared by the SouthAfrican Revenue Services to be in order as required by Treasury Regulations 16A9.1(d) and the PreferentialProcurement Regulations.
7.Goods and services of a transaction value above R500 000 were procured without inviting competitive bids, asrequired by Treasury Regulations 16A6.1. Deviations were approved by the accounting officer even though it wasnot impractical to invite competitive bids, in contravention of Treasury regulation 16A6.4.
8.Bid documentation for procurement of commodities designated for local content and production, did notstipulate the minimum threshold for local production and content as required by Preferential ProcurementRegulation 9(1)
9.Commodities designated for local content and production, were procured from suppliers who did not submit adeclaration on local production and content as required by Preferential Procurement Regulation 9(1)
FRUITLESS AND WASTEFUL EXPENDITURE
45
R thousand '000 2016/2017 2015/2016
Fruitless and Wasteful expenditure 12 146 726 2 878 428
Fruitless and Wasteful expenditure increase from R 2 878 428 reported in 2016 to R 12 146 726 in the current year. A total amount of R 3
000 000 was condoned by Council during the financial year.
The fruitless and wasteful expenditure identified during the current year is under investigation in terms of Section 38 and 51 of the PFMA
and disciplinary steps against relevant officials will be taken where it is proven the relevant officials committed the fruitless and wasteful
expenditure as disclosed.
IRREGULAR EXPENDITURE
46
R thousand '000 2016/2017 2015/2016
Irregular expenditure 27 287 048 1 179 691
Irregular expenditure increase from R 1 179 691 reported in 2016 to R 27 287 048 in the current year. A total amount of R 1 378 063 was
condoned by Council during the current financial year.
The irregular expenditure identified during the current year is under investigation in terms of Section 38 and 51 of the PFMA and
disciplinary steps against relevant officials will be taken where it is proven the relevant officials who committed the irregular expenditure
as disclosed.
Thank You