DEPARTMENT OF HUMAN SETTLEMENTS FREE STATE PROVINCE … · 2015-03-30 · DEPARTMENT OF HUMAN SETTLEMENTS FREE STATE PROVINCE VOTE NO. 13 ANNUAL REPORT 2013/2014 FINANCIAL YEAR. Annual

DEPARTMENT OF HUMAN SETTLEMENTS 1

DEPARTMENT OF HUMAN SETTLEMENTS

FREE STATE PROVINCE

VOTE NO. 13

ANNUAL REPORT

2013/2014 FINANCIAL YEAR

Annual Report2013-2014

2

CONTENTS

PART A: GENERAL INFORMATION

1. GENERAL INFORMATION 6

2. LIST OF ABBREVIATIONS / ACRONYMS 7

3. FOREWORD BY THE EXECUTIVE AUTHORITY 8

4. REPORT OF THE ACCOUNTING OFFICER 9

5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT 17

6. STRATEGIC OVERVIEW 18

7. LEGISLATIVE AND OTHER MANDATES 18

7.1 Constitutional Mandate 18

7.2 Legislative and other Mandates 18

7.3 Policy Mandates 22

8. ORGANIZATIONAL STRUCTURE AS AT 31 MARCH 2014 23

9. ENTITIES REPORTING TO THE EXECUTIVE AUTHORITY 23

PART B: PERFORMANCE INFORMATION 24

1 AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES 25

2. OVERVIEW OF DEPARTMENTAL PERFORMANCE 25

2.1 Service Delivery Environment 25

2.2 Service Delivery Improvement Plan 26

2.3 Organizational Environment 27

2.4 Key Policy Developments and Legislative Changes 27

3. STRATEGIC OUTCOME-ORIENTED GOALS 28

3.1 Goal 1: Creation of a Department geared towards service excellence 28

3.2 Goal 2: Improved housing delivery planning 28

3.3 Goal 3: Management of housing interventions 28

3.4 Goal 4: Management of housing assets and Extended Enhanced Discount Benefit Scheme (EEDBS) 28

4. PERFORMANCE INFORMATION BY PROGRAMME 29

4.1 Programme 1: Administration 29

4.2 Programme 2: Housing needs, research and planning 45


4.3 Programme 3: Housing development 46

4.4 Programme 4: Housing assets management and property management 54

5. TRANSFER PAYMENTS 56

5.1 Transfer Payments to Public Entities 56

5.2 Transfer Payments to all Organizations other than Public Entities 56

6. CONDITIONAL GRANTS 57

7. DONOR FUNDS 58

7.1 Donor Funds Received 58

8. CAPITAL INVESTMENT 58

8.1 Capital Investment, Maintenance and Asset Management Plan 58

PART C: GOVERNANCE 60

1. INTRODUCTION 60

2. RISK MANAGEMENT 64

3. FRAUD AND CORRUPTION 64

4. MINIMISING CONFLICT OF INTEREST 65

5. CODE OF CONDUCT 65

6. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES 65

7. PORTFOLIO COMMITTEES 66

8. PROPAC RESOLUTIONS 67

9. PRIOR MODIFICATIONS TO AUDIT REPORTS 67

10. INTERNAL CONTROL UNIT 68

11. INTERNAL AUDIT AND AUDIT COMMITTEES 68

12. REPORT OF THE AUDIT COMMITTEE 69

PART D: HUMAN RESOURCES MANAGEMENT 74

1. OVERVIEW OF HUMAN RESOURCES 75

2. POLICY DEVELOPMENT 75

3. HUMAN RESOURCES OVERSIGHT STATISTICS 75

3.1 Personnel related expenditure 75


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3.2 Employment and Vacancies 77

3.3 Filling of SMS Posts 79

3.4 Job Evaluation 80

3.5 Employment Changes 81

3.6 Employment Equity 84

3.7 Signing of Performance Agreements by SMS Members 87

3.8 Performance Rewards 88

3.9 Leave Utilization 89

3.10 HIV/AIDS and Health Promotion Programmes 90

3.11 Labour Relations 91

3.12 Skills Development 93

3.13 Injury on Duty 98

3.14 Utilization of Consultants 98

3.15 Severance Packages 98

3.16 Foreign Workers 99

PART E: FINANCIAL INFORMATION 100

1. REPORT OF THE AUDITOR-GENERAL 102

2. ANNUAL FINANCIAL STATEMENTS 109

• APPROPRIATION STATEMENT 109

• NOTES TO THE APPROPRIATION STATEMENT 119

• STATEMENT OF FINANCIAL PERFORMANCE 121

• STATEMENT OF FINANCIAL POSITION 122

• STATEMENT OF CHANGES IN NET ASSETS 123

• CASH FLOW STATEMENT 124

• ACCOUNTING POLICIES 125

• NOTES TO THE ANNUAL FINANCIAL STATEMENTS 131

• ANNEXURES 160


PART A: GENERAL INFORMATION


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1. GENERAL INFORMATION

Name of the Department

Human Settlements

Physical Address

Lebohang Building

7th Floor

Cnr St. Andrews and Markgraaff Streets

Bloemfontein

Free State

9301

Postal Address

P.O. Box 211

Bloemfontein

9300

Contact Telephone Numbers

Head of Department: 051 403 3883

Chief Financial Officer: 051 405 5391

Chief Director: Corporate Services: 051 403 3655

E-Mail Address

Head of Department: [email protected]

Chief Financial Officer: [email protected]

Chief Director: Corporate Services: [email protected]

Website Address

www.freestateonline.fs.gov.za

http://www.humansettlements.fs.gov.za


2. LIST OF ABBREVIATIONS/ACRONYMS

AG Auditor-General

AO Accounting Officer

BBBEE Broad Based Black Economic Empowerment

CFO Chief Financial Officer

MEC Member of Executive Council

HOD Head of Department

PFMA Public Finance Management Act

TR Treasury Regulations

MTEF Medium Term Expenditure Framework

SMME Small Medium and Micro Enterprises

SCM Supply Chain Management

EU European Union

SITA State Information Technology Agency

SDIP Service Delivery Improvement Plan

FMPPI Framework for Managing Programme Performance Information

MTEF Medium Term Expenditure Framework

MTSF Medium Terms Strategic Framework

SITA State Information Technology Agency

SMME Small Medium and Micro Enterprises

M&E Monitoring and Evaluation

MPAT Management Performance Assessment Tool

GSRB Gender Sensitive Rights Based

SCM Supply Chain Management

FPP Fraud Prevention Plan

SMAC Security Management and Anti-Corruption

EEDBS Enhanced Extended Discount Benefit Scheme


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3. FOREWORD BY THE EXECUTIVE AUTHORITY

One of the basic elements of a stable and progressive society is steady homes and communities, which in return nurture well-adjusted and productive people who contribute to the well being and progression of their society. These ideal homes, in a democratic society, are established in human settlements that conform to basic human rights. The standard that was set by the Freedom Charter that ‘All people shall have the right to live where they choose, be decently housed, and bring up their families in comfort and security,’ is relevant in this context. The corner stone of our responsibility is to provide integrated and sustainable human settlements in the province, towards ensuring a better life for all as stipulated in Outcome 8: Sustainable human settlements and improved quality of household life.

We have in the past 20 years evolved in our provision of human settlements; from providing housing as a unit to building human settlements that include infrastructure and basic services. Working in an integrated manner together with other government sectors, we included other amenities that make up complete human settlements – clinics, schools, roads, multi purpose community halls etc. Our houses have also changed from smaller units to the current 50m² as a standard basic size with various designs that express individuality. In our quest to provide our people with homes, we have also acquired land for human settlement in which our people have been decently housed and many settlements today bear a testimony that we have not diverged from our vision and have indeed restored the dignity of many of our people who today live in their own homes with pride.

The Free State government remains committed to the provision of decent shelter and settlements wherein people have access to clean water and proper sanitation. As a collective, we remain committed to accelerating the delivery of housing as a key strategy for poverty alleviation and utilizing the provision of housing as one of the major job creation strategies and economic development. We have also successfully used human settlements development to address other socio economic and sustainability issues such as skills development, economic development, women and youth empowerment as well as overall redressing of the imbalances of the past.

Despite numerous challenges, the department continued to work steadily on its quest to provide decent housing to deserving Free State citizens. To mention some of our successes:

• Low-income affordable housing units were constructed.• Deeds of transfer were registered in favour of the qualifying beneficiaries.• Erven were planned and surveyed for human settlements development purposes.• Municipalities were supported for level 1 accreditation, while the Mangaung Metro was supported for level 3 accreditation.• Households in newly formalized areas were provided with access to basic water and sanitation.• Former mining hostels that that served the migrant labour system and deprived our people of dignity, resulting

in segregated familes, were reconstructed into family units of up to three bedrooms. • We have also successfully built Social Housing and Rental Units, as well as Community Residential Units that offer

affordable alternative accommodation for low-income earners who would rather rent than buy houses or cannot afford to buy. These are well located within reach of places of employment, schools and hospitals and other services.

Our journey has been long and challenging, but with each year our vision, shaped by the needs of our people and the country’s National Development Plan Vision 2030 for providing decent human settlements has grown sharper and more focused resulting in improved homes each time. Our people are happy and proud owners of decent homes, and we have indeed ensured that these live in comfort and security.

Our commitment: we will continue to work hard to improve our performance for the benefit of our people for together we can do more, and, together we move South Africa forward!

MEC SM MLAMLELIMEMBER OF THE EXECUTIVE COUNCIL

MEC S.M. MLAMLELI


4. REPORT OF THE ACCOUNTING OFFICER

1. OVERVIEW BY THE ACCOUNTING OFFICER

In the 20 years of democracy in South Africa, we have moved significantly from previous limited and stereotyped approaches to the provision of housing to the holistic development of integrated human settlements in alignment with the Millennium Development Goals and the overall developmental objectives of the country. This approach has been holistic, ensuring that we undo the apartheid legacy of distorted spatial planning which disadvantaged our people economically, and implement strategic underdevelopment of human settlements that is meant to address overall needs of our people.

With the integrated approach to human settlements development, much has been achieved in providing infrastructure for basic services to address the provision of water, roads, sanitation and electricity supply.

In an effort to stimulate the entire residential property market, the Human Settlements MINMEC as well as the Cabinet approved the Comprehensive Plan for the development of Sustainable Humans Settlements popularly known as the Breaking New Ground (BNG) plan on 2 September 2004. This plan was underpinned by the following objectives:

· Stimulation of residential property market

· Spatial restructuring and integration

· Social (medium density) housing

· Informal Settlements Upgrading

· Institutional Reform and Capacity Building

· Housing Subsidy Funding System Reforms

· Job creation and poverty alleviation

· Exploration of alternative building technologies (ABT)

Several pilot projects were implemented under each of these objectives following the four main interventions as enshrined in the 2009 National Housing Code. Within this broader vision, the department is committed to meeting the following specific objectives.

· Accelerating the provision of housing as a key strategy for poverty alleviation· Utilizing provision of housing as a major job creation strategy· Ensuring that property can be accessed by all as an asset for wealth creation and empowerment· Leveraging growth in the economy· Combating crime, promoting social cohesion and improving quality of life for the poor· Supporting the functionality of the entire single residential property market to reduce duality within the sector

by breaking the barriers between the first economy residential property boom and the second economy slump.· Utilizing housing as an instrument for the development of sustainable human settlements, in support of spatial

restructuring. In 2009, the Presidency introduced the Outcome Based approach to the implementation of the Medium Term Strategic Framework that embodied the five priorities of the ruling party for the 2009 – 2014 elective cycle. The Human Settlements sector was assigned the role and responsibility of implementing and championing Outcome 8: Sustainable Human Settlements and Improved Quality of Household Life.

Consequently, the National Minister and the MECs signed a delivery agreement in 2009 in which the province through the MEC committed itself for the 2009-2014 to:

HOD: MR NTHIMOTSE ‘TIM’ MOKHESI


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· Upgrade 26 400 households in well-located informal settlements with access to basic services and security tenure.

· Develop 5 280 well-located and affordably priced rental accommodation · Accredit 1 Metropolitan Municipality · Expand the National Upgrading Support Programme to six municipalities.

The above commitments are an integral part of the four Outputs that characterise Outcome 8 namely:

· Output 1: Accelerated Delivery of Housing Opportunities· Output 2:Improve access to sanitation in newly-formalized areas· Output 3: Mobilization of well-located public land for low-income and affordable housing· Output 4: Improved Property Market

The extent to which Outcome 8 has been achieved to date is reflected in the attached reporting template (per target per output). Overall progress against each of the Outputs is hence provided below:

Output 1: Accelerated Delivery of Housing Opportunities

Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

Construction of 26,400 (target set for FS) affordable housing units in prioritized areas :

7064 9655

Military Veterans 0 10

Teachers in farm areas 6 19

Dilapidated houses 722 586

BNG (106 projects) 4948 7730

16 days of activism, women’s build, youth build 306 0

Emergency housing 534 209

PHP houses 0 0

Incomplete houses 338 700

Land restitution houses 201 121

Rural and Farm Worker houses (Teachers in farm) 6 0

Enhanced Extended Discount Benefit Scheme(EEDBS) 9 600

Act 81 of 1988 673 1200

Act 107 of 1997 486 5635

No. of erven planned and surveyed 1671 10000

No. of municipalities targeted for the expansion of the National Upgrading Support Programme

6 6


Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

No. of municipalities accredited:

Level 1

Level 2

Level 3

1(Metro)

1

No. of CRU units approved and upgraded

· Matjhabeng

· Metsimaholo

· Mangaung

0

0

0

350

No. of new affordable rental units delivered through Social Hous-ing : (Brandwag)

· Phase 1

· Phase 2

· Phase 3 516 400

Output 2: Improve access to sanitation in newly-formalized areas

Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

No. of Households provided with access to a basic level of sanitation 5588 8000

Km of streets constructed in newly-formalized areas 5km 1 Km

No. and type of social amenities constructed 1 2

Output 3: Mobilization of well-located public land for low-income and affordable housing

Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

No. of parcels of land identified and transferred to municipalities for development purposes

5 11

Output 4: Improved Property Market

Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

Finance Linked Individual Subsidy Programme (FLISP) 9 250

Information on Predetermined Objectives

The department’s Monitoring and Evaluation continues to interrogate the performance information. Information submitted has to be supported by credible evidence. The targets can either be achieved or not achieved. Directorates are required to put in place remedial action to ensure that the targets are met. During the year under review, the directorates worked closely with the Monitoring and Evaluation unit assisted by the appointed consultants to interrogate evidence on performance for validity, accuracy and completeness in order to be satisfied that the evidence is a true reflection of the performance recorded. This process has yielded a notable improvement in the monitoring of the departments performance.


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Financial Management

The department saw an increase of 36% on the Annual Appropriation for the financial year 2013/2014 compared to 2012/2013. The allocation of the appropriated funds was informed by the priorities of the strategic objectives in each of the four programmes.

Overall financial performance achieved by the department stand at 99.8% of the annual budget. This reflects an improvement 1.7% as compared to the previous year. The individual performance per programme is highlighted below.

The department met its financial statutory reporting requirements, including the submission of Procurement Plan, In Year Monitoring Schedules, Key Control Matrix and other reporting requirements by the Provincial Treasury. The implementation of the cost containment measures contributed in the department realising a saving and achieving 0.2% variance on its appropriated budget.

The department has prepared the Annual Financial Statements in accordance with Modified Cash Standard. There were no exceptions noted. The department has summarised the critical aspects on the financial performance of the department for the year ended 31 March 2014. The aim is to bring to attention those matters that the department believes are critical in the assessment and the reading of the department’s Annual Financial Statements.

Overview of 2013/2014 Appropriation

PrgrammeFinal

AppropriationActual

ExpendiutreVariance

Expenditure as % of final

Appropriation

R'000 R'000 R'000 %1. Administration 68 672 68 257 415 99.4%

2. Housing Needs, Research and Planning 13 194 12 829 365 97.2%

3. Housing Development 1 401 294 1 400 500 794 99.9%

4. Housing Assets Management 1 007 175 832 17.4%

Total 1 484 167 1 481 761 2 406 99.8%


PrgrammeFinal

AppropriationActual

ExpendiutreVariance

Expenditure as % of

final AppropriatiR'000 R'000 R'000 %

Current Payments 130 241 128 380 1 861 99%Compensation of employees 92 624 92 442 182 100%

Goods and Services 37 511 35 832 1 679 96%Interest & Rent on Land 106 106 - 100% 0%Transfer and Subsidies 1 351 801 1 351 801 - 100%Higher Education Institutions -Household 1 350 993 1 350 993 - 100%Gifts & Equipment 808 808 - 100% 0%Payments for Capital Assets 2 125 1 379 746 65%Machinery and Equipment 2 125 1 379 746 65% 0%Payments for Financial Assets - 201 -201 0% 0%TOTAL 1 484 167 1 481 761 2 406 100%

Departmental Receipts

Departmental receipts

2013/2014 2012/2013

Estimate Actual

Amount Col-lected

(Over)/Under Collection

Estimate Actual

Amount Col-lected

(Over)/Under Collection

R’000 R’000 R’000 R’000 R’000 R’000

Sale of goods and services other than capital assets

60 284 (224) 50 55 (5)

Interest, dividends and rent on land

10 14 (4) 200 11 189

Financial transactions in assets and liabilities

150 357 (207) 20 127 (107)

Total 220 655 (435) 270 193 77


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Programme Expenditure

Programme Name

2013/2014 2012/2013

Final Appropria-tion

Actual

Expenditure

(Over)/ Under Expenditure

Final Appropriation

Actual

Expenditure

(Over)/Under Expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Administration 68 672 68 257 415 32 232 32 086 146

Housing needs, research and plan

13 194 12 829 365 8 936 8 098 838

Housing develop-ment

1 401 294 1 400 500 794 1 046 969 1 027 040 19 929

Housing assets , prop management

1 007 175 832 936 828 108

Total 1 484 167 1 481 761 2 406 1 089 073 1 068 052 21 021

Virements/rollovers

Programme Adjusted Appropriation

2013/2014 Virement Shift Rollover

Final Appropriation 2013/2014

R'000 R'000 R'000 R'000 R'000

ADMINISTRATION 65,789 2,883 - - 68,672

HOD 5,672 581 - 6,253

FINANCIAL MANAGEMENT 26,042 2,883 1,164 - 30,089

INTERNAL AUDIT 4,189 -1,454 - 2,735

ANTI-CORRUPTION & SECURITY 411 870 1,281

PROGRAMME MANAGEMENT(DDG) 2,614 -2,176 438

HUMAN RESOURCE MANAGEMENT 4,631 -3,731 900

PROGRAMME MANAGEMENT(CS) 7,562 6,214 13,776

PROGRAMME MANAGEMENT(FM) 1,918 -723 1,195

INFORMATION MANAGEMENT & AUS 2,838 -960 1,878

LEGAL & CONTRACT SERVICES 4,025 1,698 5,723

SUPPLY CHAIN MANAGEMENT 5,887 -1,483 4,404

HOUSING ASSETS MANG,PROP MNG 13,439 -245 - - 13,194

PROGRAMME MANAGEMENT (HDPM) 2,357 1 -133 - 2,225

HOUSING DEV PLAN & PERF MONI 2,986 168 -468 2,686

INFORMAL SETTLEMENTS & LAND T 2,199 -337 218 2,080

STAKEHOLDERS & PARTNERSHIP 5,897 -77 383 6,203

HOUSING DEVELOPMENT 1,403,845 -2,551 - - 1,401,294

PROGRAMME MANAGEMENT(HPERFM) 1,472 -60 -596 - 816

TECHNICAL SERVICES 7,356 -326 -5,228 - 1,802

HOUSING PROJECT PLAN & MANAGEMENT 3,656 -1,782 -981 - 893

PROGRAMME MANAGEMENT (HPROGM) 1,804 -19 -255 - 1,530

PROGRAM DESIGN & ALLOCATION 11,725 -246 7,206 - 18,685

PRIORITY & INTERVENTION 5,177 -108 -2 - 5,067

AFFORDABLE HOUSING PROGRA 1,432 263 321 - 2,016

INFORMATION MANAGEMENT & AUS 378 - - 378

DISTRICTS OFFICES 19,909 -273 -465 - 19,171

HUMEN SETTLEMENTS DEV GRANT(HSDG) 1,350,936 - - 1,350,936

HOUSING ASSETS MANG,PROP MNG 1,094 -87 - - 1,007

ADMINISTRATION 1,094 -87 - 1,007

Grand Total 1,484,167 - - - 1,484,167


The department underwent a process of re-prioritisation of its budget. The department therefore performed the budget virements, which were all within the prescribed 8%, as per the PFMA and Treasury Regulations. The details of the virements are as follows:

· Programme 1 (Administration) received an amount of R2.883 million to relieve pressure on compensation of employees and goods and services.

· Programme 2 (Housing Needs, Research & Planning) identified a saving on the compensation of employees and goods & services amounting to R 0.245 million to avoid excess over expenditure in programme 1 (Administration).

· Programme 3 (Housing Development ) effected an amount of R 2.551 million as a virement to defray excess expenditure on compensation of employees and goods and service on programme 1 (Administration) .

· The amount of R0.87 million was affected as a virement from programme 4 (Housing Asset Management) to defray excess expenditure on programme 1 (Administration).

Fruitless and wasteful expenditure

R 258 334 was incurred by the department during the year under review as Fruitless and Wasteful expenditure bringing the total to R 2 226 334. This expenditure resulted from interest that was charged on overdue accounts by suppliers and a payment of value added tax to a non-value added tax vendor. These cases identified were reported to Provincial Treasury during the year and are currently under further investigation

There has been irregular expenditure identified in the financial year to the amount of R 857 716 200. The majority of this was due to the correct process not being followed for the procurement and allocation of the housing grant. According to the Housing code, the various programmes give guidance on formulating the housing chapters of the Integrated Development Plan and this relates to the local housing policy formulation and development goals as set out by the Housing act. As the procurement is carried out by the department, each element of the department’s applicable legislation needs to be adhered to ensure the procurement is regular and this has not been the case.

Public Private Partnerships

The department did not pursue any public/private partnership during the financial year ended 31 March 2014.

Supply Chain Management (SCM)

A system has been put in place to prevent fruitless and wasteful expenditure and encompasses the following:

· A contractors’ database to ensure that housing contracts fully complies with due SCM processes.

· A register of transactions is kept where SCM processes are not followed.

· A register to ensure that all irregular expenditures are duly recorded and disclosed accordingly in the Annual Financial Statements (AFS)

· A checklist has been developed to ensure that irregular expenditures are identified and detected.

Challenges experienced by SCM and remedial strategy

Upon separation of the two departments, Cooperative Governance and Traditional Affairs (COGTA) and Human Settlements, some posts remained vacant and unfunded. As a result, proper segregation of duties was compromised and the major SCM competencies were not performed optimally such as contract management, acquisition and logistics. However, the latter is waiting funding for filling of identified critical posts to ensure that the unit is fully functional.

Gifts and Donations received in kind from non-related parties

· E’tsho Civils: Donated R10 000.00 for the Govan Mbeki Awards


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· NHBRC: sponsored vouchers at Lillies Sales & Service to the tune of R100 000.00.

· Housing Development Agency (HDA): sponsored three Mini Ipads worth R15000.00.

· NURCHA: sponsored 2 Laptops and 300 Laptop bags for R10 000.00.

Exemptions and deviations received from the National Treasury

The department did not apply for or receive any exemptions from the PFMA, or TR, or deviation from the reporting requirements for the current and previous financial years.

Events after the reporting date

No significant events occurred after the reporting date and before the date of approval of these Annual Financial Statements that require adjustment of, or disclosure in the Financial Statements.

Policy and Procedure on Incapacity Leave and Ill-health Retirement (PILIR)

The implementation of the Policy and Procedure on Incapacity Leave and ill health Retirement (PILIR) was suspended for part PILIR provides for the appointment of a Panel of Accredited Health Risk Managers, by the Department of Public Service and service providers available to a department to investigate and assess the applications made by employees. The appointment of providers was delayed due to a legal Challenge brought to the High Court against the appointment process. Therefore, for the financial year no timely decision could be made on the validity of the incapacity and/or ill health retirement applications received from employees. Although the Panel was formally established on 1 November 2013, there is a possibility that amounts paid to employees on incapacity and/or ill-health retirement may be recoverable if the applications, made in the first part of the financial year, are not subsequently recommended by the service providers.

New or proposed activities

No new or proposed activities were acquired by the department during the year under review.

Acknowledgement

I would like to express my sincere appreciation to all employees and other stakeholders of the department for their co-operation and hard work during the period under review. The successes achieved by the department during the period under review would not have been possible without their dedication and commitment.

Conclusion

Moving towards 2015, all outstanding and/or incomplete human settlement projects will be consolidated and completed, thereby ensuring that we provide adequate shelter to beneficiaries who have been waiting for their houses for a considerable time now. The department will also pilot alternative building Technologies and improve its Project Monitoring capacity.

Approval and sign-off

I hereby submit the 2013/2014 Annual Report of the Department of Human Settlements in terms of the Public Finance Management Act, 1999.

………………………………………………NTHIMOTSE ‘TIM’ MOKHESIHEAD OF DEPARTMENT30 AUGUST 2014


5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT

To the best of my knowledge and belief, I confirm the following:

a) All information and amounts disclosed throughout the annual report are consistent.

b) The annual report is complete, accurate and is free from any omissions.

c) The annual report has been prepared in accordance with the guidelines on the annual report as issued by National Treasury.

d) The Annual Financial Statements (Part E) have been prepared in accordance with the modified cash standard and the relevant frameworks and guidelines issued by the National Treasury.

In my opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the department for the financial year ended 31 March 2014.

Yours faithfully

………………………………………………NTHIMOTSE ‘TIM’ MOKHESIACCOUNTING OFFICER30 AUGUST 2014


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6. STRATEGIC OVERVIEW

Vision Integrated and sustainable human settlements plan.

MissionThe department will develop cohesive, sustainable and integrated human settlements in the Free State values

Values: The department’s inherent values as informed by, amongst others, Batho Pele Principles are:

· Professionalism, Integrity and Leadership

· Value for money and Accountability

· Partnership

· Compassion and Empathy

· Restoration of Dignity and Resilience

· Environment Friendly

7. LEGISLATIVE AND OTHER MANDATES

7.1 Constitutional MandateSection 26(1) of the Constitution of the Republic of South Africa (Act No 108 of 1996) provides that everyone has the right to have access to adequate housing and subsection (2) obligates and enjoins the state through the Department of Human Settlements to use legislative and other measures to ensure the progressive realisation of this right.

The department has taken a strategic direction through this strategic plan to ensure that every Free State citizen does enjoy this constitutionally entrenched right.

7.2 Legislative and other mandatesi. Public Finance Management Act No. 1 of 1999 (as amended by the Public Finance Management Amendment

Act No. 29 of 1999)

To regulate financial management in the national and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibility of persons entrusted with financial management in those governments; and provide for matters connected therewith.

ii. Public Service Act, 1994

To provide for the organisation and administration of the public service of the Republic, the regulation of the conditions of employment, terms of office, discipline, retirement and discharge of members of the public service, and matters connected therewith.

To amend the Public Service Act, 1994, so as to further define, to substitute or to delete certain expressions; to further regulate the application of the said Act; to provide for the readjustment of the functions of the Public Service Commission and the circumscription of the functions of the Minister for the Public Service and Administration and an executing authority; to make other provision in connection with the management, administration and functions of the South African Management and Development Institute and the administration of the Training Fund; to make further provision in connection with the implementation or limitation of actions affecting the public service or its members; to enable the said Minister to have access to certain documents and information; to make further provision in connection with the power of the President to


amend Schedules 1 and 2 to the said Act; to make other provision in connection with the inclusion of posts in, or the exclusion of posts from, the A or B division; to make further provision in connection with appointments, promotions and transfers; to make further provision in connection with the discharge of officers; to further regulate inefficiency and misconduct; to further regulate the receipt of unauthorised remuneration; to make other provision in connection with the reduction of salaries of officers; to make further provision in connection with grievances of officers and employees; to empower the said Minister to make regulations; and to empower the said Minister to assign certain functions to officers or employees of his or her Department; and to repeal or to amend other laws relating to the public service so as to remove obsolete provisions or to effect certain consequential amendments arising from the readjustment of the functions of the said Commission; and to provide for incidental matters.

iii. Skills Development Act, No. 97, 1998

To provide an institutional framework to devise and implement national, sector and workplace strategies to develop and improve the skills of the South African work force; to integrate those strategies within the National Qualifications Framework contemplated in the South African Qualifications Authority Act, 1995; to provide for Iearnerships that lead torecognised occupational qualifications; to provide for the ‘financing of skills development by means of a levy-grant scheme and ‘a National Skills Fund; to provide for and regulate employment services; and to provide for matters connected therewith.

iv. Labour Relations Act and Collective Agreement

The Labour Relations Act and collective agreements shall regulate matters of mutual interest between employees and State as employer.

v. Preferential Procurement Policy Framework Act No Act 5 of 2000

To regulate procurement of goods and services for the Department in compliance with section 217 of the Constitution by ensuring that all procurement processes are fair, transparent, equitable, competitive and cost effective

vi. Division of Revenue Act

To provide for the equitable division of revenue raised nationally among the national, provincial and local spheres of government for the 2010/2014 financial year; to provide for reporting requirements for allocations pursuant to such divisions; to provide for the withholding and the delaying of payments; to provide for liability for cost incurred in litigation in violation of the principles of co-operative governance and intergovernmental relations; and to provide for matters connected therewith.

vii. Conversion of Certain Rights into Leaseholds or Ownership Act No. 81 of 1988

This Act provides for the conversion of certain rights of occupation issued to a holder of a site situated in a township whether such township has been formalized or not- established under the now revoked Black Communities Act 4 of 1984, into leasehold or ownership. The Act therefore makes provision for the determination of affected sites or persons; an inquiry into affected sites; grievance (appeal) procedures; and the issuing of leaseholds or transfer of ownership.

viii. Black Communities Development Act No. 4 of 1984

The Act was repealed save for Chapter 6 and the Regulations thereto. As will appear from the above paragraph, this Act is the principal Act 81 of 1988 and makes provision for the designation of certain areas as development areas and makes provision for township establishment.

ix. Upgrading of Land Tenure Rights Act No. 112 of 1991

This Act makes provision for the upgrading of informal rights, viz., and the deeds of grant, leaseholds and quitrent title permission to occupy.


20

x. Interim Protection of Informal Land Rights Act:

This Act recognizes certain informal rights to land. One of the functions of the section is to resettle people who are unlawfully occupying land. In the process, it is incumbent on the section to ensure that the informal rights to land are recognized in the process of such resettlement.

xi. The Housing Act No. 107 of 1997

Through this legislation, existing and future, and the Housing Code, the Department of Housing is carrying out its legislative imperative as set out in the Housing Act, 1997. Section 2 of the Housing Act, 1997 (Act No. 107 of 1997) compels all three spheres of government to give priority to the needs of the poor in respect of housing development (section 2(1)(a)). In addition all 3 spheres of government must ensure that housing development provides as wide a choice of housing and tenure options as is reasonably possible

(ii) is economically, fiscally, socially and financially affordable and sustainable

(iii) is based on integrated development planning

(iv) is administered in a transparent, accountable and equitable manner, and upholds the practice of good governance (Section 2(1)(c)).

xii. Prevention of Illegal Eviction from and Unlawful Occupation of Land Act of 1998

The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act was promulgated in 1998. The Act repeals the Prevention of Illegal Squatting Act No. 52 of 1951 and makes provision for a fair and equitable process to be followed when evicting people who have unlawfully invaded land, from their homes. The Act also makes it an offence to evict legally without due process of law.

xiii. The Housing Consumers Protection Measures Act of 1998

The Act provides for the establishment of a statutory regulating body for homebuilders. The National Home Builders Registration Council will register every builder and regulate the home building industry by formulating and enforcing a code of conduct. The implementation of the Act is monitored continuously.

xiv. The Rental Housing Act 50 of 1999

This Act repeals the Rent Control Act of 1976 and defines Government’s responsibility for rental housing property. It creates mechanisms to promote the provision of rental housing and the proper functioning of the rental housing market.

To facilitate sound relations between tenants and landlords, it lays down general requirements for leases and principles for conflict resolution in the rental-housing sector. It also makes provision for the establishment of Rental Housing Tribunals and defines the functions, powers and duties of such Tribunals. Provincial housing departments are establishing Rental Housing Tribunals.

xv. Home Loan and Mortgage Disclosure Act of 2000

The Act provides for the establishment of the Office of Disclosure and the monitoring of financial institutions serving the housing credit needs of communities. It requires financial institutions to disclose information and identities discriminatory lending patterns. The act will come into operation during 2003.

xvi. Subdivision of Agricultural Land Act No. 70 of 1970

This Act is used for Town Planning advice to the Department of Land Affairs on the subdivision of agricultural land.

xvii. The Development Facilitation Act No. 67 of 1995

This Act provides directive principles to guide the drafting, adoption and implementation of all policies and legislation for all spheres of government regulating spatial planning, land use management and land development.


xviii. The Townships Ordinance No. 9 of 1969

This Ordinance is used for the establishment of towns, subdivision and consolidation, amendment of the general plan and the amendment of town-planning schemes. The townships board is also instituted in terms of this ordinance.

xix. Disestablishment of South African Trust Limited Act No. 26 of 2002

The winding down of the South African Housing Trust and the transfer of functions relating to financial obligations were completed during the end of 2002 and the beginning of 2003 in terms of Act 2002: Disestablishment of SA trust Limited Act, 2002.

xx. The Removal of Restrictions Act No. 84 of 1967

To empower the Administrator of a province to alter, suspend or remove certain restrictions and obligations in respect of land in the province; to repeal the Removal of Restrictions in Townships Act, 1946; to validate certain proclamations of Administrators; and to provide for incidental matters.

xxi. The Less Formal Township Establishment Act No. 113 of 1991

To provide for shortened procedures for the designation, provision and development of land, and the establishment of townships, for less formal forms of residential settlement; to regulate the use of land by tribal communities for communal forms of residential settlement; and to provide for matters connected therewith.

xxii. The Physical Planning Act No. 125 of 1991

This Act governs secondarily deals with land uses on farmland that is not agriculture related by way of permits and it also enables the amendment of guide plans and the evaluation of consistency regarding land development.

xxiii. Public Audit Act 25 of 2004

Regulates the audit of Government Departments and State Owned Enterprises.

xxiv. Social Housing Act 13 of 2008

Regulates the social housing market.

xxv. National Spatial Development Perspective (NSDP)

The NSDP also included a mechanism aimed at aligning spatial choices around government investment and development spending across all sphere of government. This approach seeks to focus the bulk of fixed investments of government on those areas with the potential for sustainable economic development. In these areas Government’s objectives of both promoting economic growth and alleviating poverty will best be achieved. In areas of limited potential it is recommended that beyond a level of basic services which all citizens are entitled government should concentrate primarily on social investment such as human resource development, labour market intelligence and social transfers so as to give people in these areas better information and opportunities to gravitate toward areas with economic potential.

xxvi. Spatial Planning and Land Use Management Act 16 of 2013

This Act provides a framework for the monitoring, coordination and review of the spatial planning and land use management system. It also provides for the establishment, functions and operation of Municipal Planning Tribunals.

xxvii. The Draft Public Administration Management Bill by the (National) Department of Public Service and Administration

It proposes to regulate, amongst others, the organization, management, functioning and staffing matters concerning departments in the national and provincial spheres of government, municipalities and governments components within the three spheres will, once promulgated, also have a significant impact on


22

the manner in which national and provincial departments as well as municipalities govern themselves.

xxviii. The Housing Consumers Protection Measures Act of 1998

The Act provides for the establishment of a statutory regulating body for home builders. The National Home Builders Registration Council will register every builder and regulate the home building industry by formulating and enforcing a code of conduct. The implementation of the Act is monitored continuously

7.3 Policy Mandates

a) National Development Plan

b) 2014-2019 Medium Term Strategic Framework

c) Free State Growth and Development Strategy

d) Provincial Spatial Development Framework

e) State of the Nation Address

f) Budget Vote Speech of the (National) Minister of Human Settlements

g) Premier’s State of the Province Address

h) Budget Speech of the MEC

i) The Comprehensive Housing Plan

j) President’s Coordinating Council

k) Premier’s Coordinating Forum

l) Government’s Delivery Agreement on Outcome 8

m) Operation Hlasela

n) National Spatial Development Perspective (NSDP)


8. ORGANISATIONAL STRUCTURE AS AT 31 MARCH 2014

SEC M AN & ANTI-CORRUPTION

Director

OFFICE OF THE HoDOffice M anager

INTERNAL AUDIT

Chief Internal Auditor

HS DEVELOPM ENT PLANNING

Chief D irector

HS PROGRAM M E IM PLEM ENTATION

Chief D irector

LEGAL AND CONTRACT SERVICES3. Housing and Departm ental Contracts1 D irector L13 JE done (Adv. J. Phaladi)

HS PROJECT M ANAGEM ENT

Chief D irector

HUM AN SETTLEM ENT PLANNINGAND - DELIVERY

Deputy D irector-General L15

FINANCIAL AND -SUPPLY CHAIN M ANAGEM ENT

Chief Financial O fficer

CORPORATE SERVICES

Chief D irector

DEPARTM ENT OF HUM AN SETTLEM ENTS

Head of Departm ent N M okhesi

MEMBER OF THE EXECUTIVE COUNCIL:COOPERATIVE GOVERNANCE, TRADITIONAL

AFFAIRS AND HUM AN SETTLEM ENTS

9. ENTITIES REPORTING TO THE MEC

Name of Entity Legislative Mandate Financial Relationship Nature of Operations

0 0 0 0


24

PART B: PERFORMANCE INFORMATION

PART B: PERFORMANCE INFORMATION


1. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES

Reliability of reported performance information

The Framework for Managing Programme Performance Information (FMPPI) requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Adequate and reliable corroborating evidence could not be provided for 40% of the targets to assess the reliability of the reported performance information. The auditee’s records did not permit the application of alternative audit procedures. This was due to limitations placed on the scope of my work by the auditee as a result of failure to maintain appropriate records of reported performance information.

Achievement of planned targets

Refer to the annual performance report on page(s) 29 to 54 for information on the achievement of the planned targets for the year. This information should be consistent in the context of the material finding on the reliability of the reported performance information for the selected programme reported in paragraph 21 this report.

Adjustment of material misstatements

I identified material misstatements in the annual performance report submitted for auditing on the reported performance information of Programme 3: Housing development, implementation, planning and targets. As management subsequently corrected only some of the misstatements, I raised material findings on the reliability of the reported performance information.

2. OVERVIEW OF DEPARTMENTAL PERFORMANCE

2.1 Service Delivery Environment

· 6758 new housing units were completed in the province across all housing programmes being utilised

by the province

· 1273 new sites were connected to basic water and sanitation services as part of the Integrated

Residential Development Programme

· 4315 households were connected to basic services as part of the Informal Settlements Upgrading

Programme.

The following low-income / affordable housing units were constructed in prioritized areas:

· 9- FLISP

· 6- Teachers cottages (Rural Rarm Worker Housing Units:Teachers

· 722- Rectification Programme (dilapilated)

· 338- Incomplete houses

· 4648- Breaking New Grounds

· 534- Emergency/Disaster.

· 0 -PHP


26

· 201-Land Restitution

· With regard to Military Veterans, the target was not achieved due to ongoing verification process for

qualifying beneficiaries with the Department of Defence Force and Military Veterans

· 1383 new applications were captured correctly on HSS; priority was given to the capturing of housing projects related to the houses improved from two roomed to 4 roomed and the rebuilding of 1 door houses.

· Deeds of registered in favour of qualifying beneficiaries.

o 8: Enhanced Extended Discount Benefit Scheme (EEDBS).

o 486: Deeds were registered: Act 107 of 1997.

o 673: Deeds were registered: Act 81 of 1988.

· Municipalities were supported towards accreditation for Level 1 and were Metsimaholo, Dihlabeng,

Matjhabeng, Moqhaka and level 3 for Mangaung Metro.

· 3638: houses were handed over to beneficiaries together with title deeds

· 2840: job opportunities were created through resettlement and housing construction projects.

· 5 Km of streets were constructed in the newly-formalized areas of Schoonplaatz in Harrismith.

· The Mangaung Metro Municipality, Thabo Mofutsanyana District Municipality and 18 local municipalities

were mentored on consumer education, training for building inspectors and Public Housing for Planning

and Engineering.

· Two partnerships: A partnership was established with SHISAKA and the University of Johannesburg, which

focuses on conducting training for municipal officials on Housing Policy and E’tsho Engineering for Project

Management.

· 516 new affordable rental units were delivered through Social Housing.

· Despite these achievements, there were challenges that resulted in having some targets not been fully achieved and the Department also took some measures in addressing such challenges.

2.2 Service Delivery Improvement Plan

Implementation of Service Delivery Improvement Plan of the department has been a challenge in that it was still in a draft form not yet approved. In addition, the plan has to be reviewed to meet the requirements of credible SDIP as per the guidelines. This review process has to be completed by end of June 2014. Once the draft plan has been approved, it is then that it can be implemented. The process of ensuring that the department develops a credible SDIP was stalled by lack of human resource. The department has appointed Service Delivery Specialist on the 1st of June 2014.


Main services and standards

Main services Beneficiaries Current/actual stan-dard of service

Desired standard of service

Actual achievement

N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A

Batho Pele arrangements with beneficiaries (Consultation access etc.)

Current/actual arrangements Desired arrangements Actual achievements

N/A N/A N/A

N/A N/A N/A

Service delivery information tool

Current/actual information tools Desired information tools Actual achievements

N/A N/A N/A

N/A N/A N/A

Complaints mechanism

Current/actual complaints mechanism Desired complaints mechanism Actual achievements

N/A N/A N/A

N/A N/A N/A

2.3 Organisational environment

· In the financial year, 2013/2014 there was no strikes experienced by the department. In relation to corruption, the term corruption refers to conduct by any person who, directly or indirectly accepts or agrees or offers to accept any gratification from any other person whether for the benefit of himself or herself or for the benefit of another person, it also refers to conduct where a person agrees or offer to give any person gratification as mentioned earlier.

· The conduct as previously mentioned is deemed as corruption if it amounts to action that is illegal, dishonest, unauthorized, incomplete or biased as well as misuse or selling of information.

· The Department of Human Settlements has been inundated for the past twenty-four months and as such has redoubled its efforts in dealing with the scourge of corruption wherefore at least 15 officials were put on suspension as a precautionary measure such that orderly administration is maintained. To date about seven of the mentioned cases were successfully concluded (which constitute about 46.66%) in favour of the Department and the remaining ones are still ongoing.

· Any corruption related cases have a negative impact on the functioning of the department because it deprives the intended beneficiaries an opportunity to benefit from government programmes and the time it takes to finalize the said cases is costly to the department e.g. the payment of suspend officials whilst the case is going on.

· Corruption by both public and private entities remains one of the top tier priorities at the behest of the department and all such related conduct will be dealt within the confines of the legislation.

2.4 Key policy developments and legislative changes NONE


28

3. STRATEGIC OUTCOME ORIENTED GOALS

Strategic orientated goals of the Department of Human Settlements

3.1. Goal 1: Creation of the department geared towards service excellence

3.2. Goal 2: Improved housing delivery planning

3.3. Goal 3: Management of housing interventions

3.4. Goal 4: Management of housing assets and Extended Enhanced Discount Benefit Scheme (EEDBS)

The department directly contributes to outcomes 8 and 12, table below shows how the goals were realized.

OUTCOME 8

a) Output 1: Accelerated Delivery of Housing Opportunities

Metric 01/04/2013-31.03.2014

Target

2013/2014

Achievement

Construction of 26,400 (target set for FS) affordable housing units in prioritized areas : 9655 6758

Enhanced Extended Discount Benefit Scheme(EEDBS) 600 8

Act 81 of 1988 1200 673

Act 107 of 1997 5635 486

No. of erven planned and surveyed 2786 1671

No. of municipalities targeted for the expansion of the National Upgrading Support Programme 6 6

No. of municipalities accredited:

Level 1

Level 2

Level 3

1(Metro)

4 LM

5

No of parcels of land transferred to municipalities 11 4

No. of CRU units approved and upgraded

Matjhabeng

Metsimaholo

Mangaung

350 0

No. of new affordable rental units delivered through Social Housing: (Brandwag)

Phase 1

Phase 2

Phase 3

400

0

0

516


b) Output 2: Improve access to sanitation in newly-formalized areas

Metric 01/04/2013-31.03.2014

Target

2013/2014

Achievement

No. of Households provided with access to a basic level of sanitation 4630 (IRDP)

5761 (Informal Settlements)

1273 (IRDP)

4315 (Informal Settle-ments)

Km of streets constructed in newly-formalized areas 1km 5 Km

No. and type of social amenities constructed 2 1

c) Output 3: Mobilization of well-located public land for low-income and affordable housing

Metric 01/04/2013-31.03.2014

Target

2013/2014

Achievement

No. of parcels of land identified and transferred to municipalities for develop-ment purposes

11 5

d) Output 4: Improved Property Market

Metric 31.03.2014

Actual Performance

2013/2014

Planned Target

Finance Linked Individual Subsidy Programme (FLISP) 9 250

4. PERFORMANCE INFORMATION BY PROGRAMME

4.1. Programme 1: AdministrationPurpose: This programmes aims to provide strategic direction, leadership and support to the department

Sub-programmes

· Corporate Services

Strategic objective

· Improved capability of the department to meet its obligation


30

Sub-programme: Corporate Services

Strategic objectives: Improved capability of the Department to meet it’s objectives

Indica-tor No.

Indicator Actual Achievement 2011/12

Planned Target

2012/13

Actual Achievement

2012/13

Deviation from the planned target

Comment on devia-tions

(MPAT Moderating Committee determina-tion)

1. Strategic Plans - Level 4

(Strategic Plan linked with Outcome 9, MTSF / PSGD and Treasury Regulations)

(Strategic Plan revised and updated)

Moderated score Level 4

(Strategic Plan linked with Outcome 9, MTSF / PSGD and Treasury Regulations)

(Strategic Plan revised and updated)

4 -

2 Annual Perfor-mance Plans

- Level 4

(APP revised, updated and submitted within due time-frames, linked with strategic plan, Outcome 9, MTSF / PSGD and Treasury Regula-tions)

(Quarterly Performance Reports submitted to EA and Treasury on time)

(Management engages with quarterly progress reports towards informing improve-ments)

(Information in perfor-mance management reports corresponds with targets expressed in APP and Annual Report)

Moderated score (Level 2)

2 Although the department achieved some standards, the following evidence could not be accessed:

2012/13 Annual Per-formance Plans

APP did not comply with the criteria set in the Treasury Regula-tions.


Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




3 Integration of monitoring and evaluation in performance and strategic manage-ment

- Level 3

(M&E Policy Framework ap-proved and implemented)

(Standardized mechanisms in place to collect, manage and store data)


2 Insufficient was evidence submitted. The mecha-nisms set by the depart-ment to collect, manage and store data was not sufficient.

4 Service Delivery Improvement Mechanisms

- Level 2

(Service Charter and service standards approved, submit-ted in time and displayed)


1 The service charter de-veloped did not meet the required criteria.

5 Functionality of Management Structures

- Level 3

(Management structures with formal terms of refer-ence, meetings take place in accordance with pre-deter-mined meeting schedules)

(Management decisions are documented, clear, responsi-bility allocated and followed-up)


1 The committee could not access the information. The department beefed up its MPAT structures to address this challenge.


32

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




6 Assessment of accountability mechanisms (Au-dit Committee)

- Level 3

(Audit Committee estab-lished and meets quarterly as scheduled)

(Audit Charter with clearly defined objectives and key performance indicators ad-opted by Audit Committee)

(3-Yer Internal Audit Plan ap-proved by Audit Committee)

(Quarterly reports produced by the Chairperson of the Audit Committee)

(Decisions of the Audit Com-mittee are documented)

(Audit Committee conducted a performance self-assess-ment)

(Stakeholder performance assessment conducted iro Audit Committee)


3 Although the Department met with the majority of criteria for level 4, the Audit Committee did not review management responses to audit issues, and subsequently did not report thereon during the year under review. This has been brought to the attention of the Audit Committee towards en-suring that it will be dealt with adequately in the 2014/2015 financial year.


Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




7 Assessment of policies and sys-tems to ensure professional ethics

- Level 3

(Code of Conduct is commu-nicated to employees)

(All new employees are trained on Code of Conduct)

(All senior managers dis-closed financial interests)

(Disciplinary action taken against non-compliant senior managers)


2 The evidence provided was insufficient and that will be addressed in the 2014/2015 reporting period.

8 Fraud Prevention - Level 3

(Fraud Prevention Plan with policy statement and imple-mentation plan approved)

(Whistle-blowing policy and implementation plan ap-proved)

(Feedback provided on anti-corruption hotline cases within 40 days to PSC)




34

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




9 Assessment of internal audit arrangements

- Level 3

(Internal Audit Charter, 3-Year and Annual Internal Audit Plan signed by HoD, Chief Audit Executive and the Audit Committee Chair-person)

(Quarterly performance re-ports iro progress on Internal Audit Charter submitted to Audit Committee)

(Functionality of the Internal Audit reviewed by AG SA)

(Institute of Internal Auditors conducted quality review on functionality of Internal Audit)

Moderated score (Level 2


10 Assessment of risk management arrangements

- Level 3

(Risk Management Commit-tee established)

(Risk Assessment Profile conducted)

(Annual Risk Management Plan developed and ap-proved, signed by HoD and Chairperson of RMC)

(Decisions of the RMC recorded)

(Quarterly reports on imple-mentation of Risk Manage-ment Plan submitted to RMC and Audit Committee)




Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




11 Approved EA and HoD Delega-tions for public administration in terms of the PSA and PSR

- Level 3

(Delegations in place in com-pliance with PSA and PSR as per MPSA directive)

(Conditions of delegations specified and monitored)


- None, the department achieved the set target

12 Approved HoD Delegations for financial admin-istration in terms of the PFMA

-

Level 3

(Two sets of delegations in place, e.g. for PFMA and Treasury Regulations, in accordance with Treasury guidelines and the structure of the Department)

(Conditions of delegations specified for risk manage-ment)

Moderated score (Level 3

- None, the department achieved the set target

13 Corporate Gover-nance of ICT

- Level 2

(ICT related policies and strategies drafted:

Corporate Governance of ICT Policy

Corporate Governance of ICT Charter

ICT Plan

ICT Implementation Plan

ICT Opera-tonal Plan)




36

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




14 Human Resource Planning

- Level 3

(Annual HR Plan signed-off in line with DPSA format and standards and submitted to DPSA by due date)

(Plan in place to ensure the continuous supply of critical skills)


2 The plan was still in the process of being drafted.

15 Organizational Design and Implementation

- Level 3

(Organogramme updated and approved by MEC)

(Only filled and funded va-cancies reflected on PERSAL)

(MPSA consulted on pro-posed changes to macro structure)



16 Human Resourc-es Development Planning

- Level 2+

(HRD Plan with equity tar-gets incorporated approved and submitted to DPSA within due date)



17 Pay sheet certifi-cation

- Level 3

(Pay sheet certification pro-cesses in place and partially implemented)

(Discrepancies are corrected on the system)


1 The pay sheet certifica-tion process was partially implemented, and the department was urged to return the payroll with 10 days.


Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




18 Applications of recruitment and retention strate-gies

- Level 3

(Recruitment policy ap-proved and implemented)

(90% of positions filled in the previous 12 months were filled within 4 months)

Exit interviews conducted with all employees leaving the Department)



19 Management of Diversity

- Level 2

(Job Access Strategy ap-proved and submitted to DPSA)

(Job access report produced to DPSA)

(Gender Equality Strategic Framework approved and submitted to DPSA)




38

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




20 Implementa-tion of Level 1 - 12 Performance Management System

- Level 4

(Approved PDM System in place)

(Annual performance assessments conducted, moderated and approved for implementation)

(Status of signed PDPs moni-tored and reported)

(Disciplinary actions taken to address poor performance)

(Performance duly recog-nized within the Depart-ment)


3 The evidence provided was insufficient and that will be addressed in the 2014/2015 reporting period. The department utilizes the provincial PDMS policy.


Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




21 Implementation of SMS Perfor-mance Manage-ment System

- Level 2+

(All senior managers signed and submitted their Perfor-mance Agreements within the due date)

(Status of signed PAs moni-tored and reported to HoD)

(Status of signed PAs submit-ted to DPSA electronically within due date)

(Disciplinary actions taken against non-compliant senior managers)

(Annual Performance assess-ments of senior managers finalized through moderation processes, but not within due date)

(Performance duly recog-nized within the Depart-ment)

Level 2 - None, the department achieved the set target


40

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




22 Implementation of HoD Perfor-mance Manage-ment System

- Level 4

(HoD’s signed Performance Agreement submitted to MEC within due date and filed)

(Changes made by PSC incor-porated in PA)

(HoD’s Verification State-ment submitted to EA within due date)

(HoD’s assessment shows a high level of correlation with AG outcomes and MPAT scores)


2 The evidence provided was insufficient and that will be addressed in the 2014/2015 reporting period. The verification statement is in the pro-cess of being finalized.

23 Management of disciplinary cases

- Level 2+

(Disciplinary cases are not finalized 90 days)

(Not all suspensions are shorter than 60 days)

(The outcome of disciplinary cases are capture on PERSAL)


2 None, the department achieved the set target.

24 Demand Manage-ment

- Level 3

(Procurement Plan in place that meets Treasury require-ments, submitted on time)


2 Some evidence submit-ted did not comply with the format re-quirements; however, the quality checking mechanisms have been put in place.


Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




25 Acquisition Man-agement

- Level 3

(Supplier database in place in line with NT requirements)

(Bid Committees in place and functional)

(Code of Conduct signed by Bid Committee Members and SCM Practitioners)


1 Some evidence submit-ted did not comply with the format requirements; however, the quality checking mechanisms have been put in place.

26 Logistics Manage-ment

Level 3+

(Processes for setting inven-tory levels, placing orders, receiving, inspection and issues goods documented, implemented and reported)

(Internal customer satisfac-tion survey conducted and actions taken on findings)


- None, the department achieved the set target.

27 Disposal Manage-ment

- Level 3

(Disposal strategy in place)

(Disposal Committee estab-lished and functional)

(Database of redundant as-sets maintained)


1 The evidence provided was insufficient and that will be addressed in the 2014/2015 reporting period. The verification statement is in the pro-cess of being finalized.

28 Management of cash flow and ex-penditure versus budget

- Level 3

(Cash flow projections are done and submitted to Trea-sury in time with reasons for deviations iro expenditure)


1 The evidence provided was insufficient and that will be addressed in the 2014/2015 reporting period. The verification statement is in the process of be-ing finalized.


42

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




28 Payment of Sup-pliers

- Level 3+

(Monthly exception reports on payment of suppliers submitted to Treasury)

(Invoice tracking system in place)

(Investigation report dealing with reasons for non-payments within 30 days produced and controls implemented to prevent recurrence of late payments)


2 The department did have invoice tracking in place and not all suppliers were paid within 30 days.

29 Management of unauthorized, irregular, fruitless and wasteful expenditure

- Level 2

(Process in place to prevent and detect unauthorized, irregular, fruitless and waste-ful expenditure)




Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




30 Improved com-munication planning, strategy development and implementation

- Departmental communi-cation planning, strategy development and implemen-tation:

Communication Strategy and implementation plan devel-oped and approved

Effective involvement in the development and implemen-tation of the LGCS, Provincial communication strategy

All key milestones in the approved Departmental Communication Strategy implemented

Implementation and man-agement of campaigns

Effective management and use of appropriate communi-cation channels

Building and sustaining a positive reputation of the Department

Effective management of unplanned and urgent com-munication

Strategy De-veloped


31 Suitable office accommodation secured for the Department, accommodating filled and critical funded posts

- 1

(Agreement reached with Public Works, Roads and Transport on desired accom-modation)

(All officials in the employ-ment of the Department are accommodated, though not in line with OHS require-ments)

0 1 A proposal has been submitted to the custo-dian department, the Department of Public Works.


44

Indica-tor No.


Planned Target

2012/13

Actual Achievement

2012/13




32 No. of Monthly Key Control Matrix Reports submitted to Pro-vincial Treasury

- 12 9 3 The Key Control Matrix submission dates from Provincial Treasury are not financial year based, thus some reports are reported after the end of the financial year and that has impact on the numbers reported.

33 No. of Quar-terly Key Control Matrix Reports submitted to Provincial Trea-sury

- 4 3 1 The Key Control Matrix submission dates from Provincial Treasury are not financial year based, thus some reports are reported after the end of the financial year and the y have impact on the numbers reported.

Strategy to overcome areas of under performance

This programme also experienced capacity constraints. Although the Executive Authority approved the ‘split’ of Programme 1 personnel between the two Departments towards the end of the 2012/2013 financial year, effective from the 1st of April 2013, budget and capacity constraints resulted in some services still being rendered to both Departments on a ‘shared services’ basis during the year under review. In addition, the funds allocated to both Departments to fill critical vacancies (by Provincial Treasury) were insufficient to address all areas where capacity constraints are experienced. In addressing the areas where the Department did not achieve its planned targets, a (MPAT) Performance Improvement Plan will be developed early in 2014/2015 towards ensuring that all planned performance targets for 2014/2015 are successfully achieved.

Changes to planned targets

NONE

Linking performance with budgets

2013/2014 2012/2013

Programme Final Appropriation

Actual

Expenditure


Final Appropriation

Actual

Expenditure

(Over)/

Under Expen-diture

R’000 R’000 R’000 R’000 R’000 R’000

Administration 68 672 68 257 415 32 232 32 086 146

Total 68 672 68 257 415 32 232 32 086 146


4.2. Programme 2: Housing needs, research and planning

Purpose: To facilitate and undertake housing delivery planning, Implementation, monitoring and evaluation

Sub-programmes

· Administration

· Policy

· Planning

· Research

Strategic objective

To provide regulatory framework for Human Settlements

Sub-programme: Policy

Strategic objective: Housing regulatory framework

Indicator No.

Indicator Actual Achieve-ment 2012/013

Planned Target

2013/14

Actual Achieve-ment

2013/14

Deviation from planned target to Actual Achievement for 2013/14

Comment on deviations

1. No. of Acts passed and/or policy guidelines approved

0 0 0 0 0

Sub-programme: Planning

Strategic objectives: Improved human settlements planning, implementation, monitoring and evaluation

1 Provincial Hous-ing Demand Database developed and updated

0 1 0 1 -

2 No. of houses enrolled with NHBRC

7468 9,000 3299 5601 The underachievement is as a result of the inadequate Geo Techs and non-availability of service plans from some municipalities.

3 Integrated Multi-Year Hous-ing Delivery Plan

0 1 0 0 The BID to appoint service providers to assist munici-palities to draft municipal housing sector plans/housing chapters was not approved by the HOD but the HOD directed that HDA be requested to assist the department in this regard.

4 Provincial Hu-man Settle-ments Infra-structure Plan

0 0 - - -

Sub-programme: Research


46

Strategic objectives: Housing delivery research

1 No. of projects approved

- 0 - - -

2 No. of research papers com-pleted

1 1 0 1 There is a National Research Task Team comprising of 9 Provincial Departments’ and the National Departments’ research components, this team set the research agenda and will ensure the appointment of the service provider who will conduct cross cutting and transver-sal to the sector.


NONE

Linking performance with budgets

2013/2014 2012/2013


Actual

Expenditure


Final Appropriation

Actual

Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

Housing Needs, Research & Planning

13 194 12 829 365 8 936 8 098 838

Total 13 194 12 829 365 8 936 8 098 838

4.3. Programme 3: Housing Development, implementation, planning and targetsPurpose: To provide individual subsidies and housing opportunities to beneficiaries in accordance with housing policies.

Sub-programmes

· Administration

· Financial interventions

· Incremental interventions

· Social and Rental interventions

· Rural interventions


Strategic objective: To provide regulatory framework for Human Settlements

Performance indicators

Sub-programme: Financial interventions

Strategic objective: Enabling environment for improved housing delivery

Indicator No.

Indicator Actual Achievement

2012/013

Planned Target

2013/14

Actual Achievement

2013/14

Deviation from planned target

to


1 Number of new hous-ing units completed in the province across all housingprogrammes being utilised by the prov-ince

3706 9655 6758 2897 The contractors were ap-pointed after the assess-ment of all housing proj-ects. Huge prices increases on materials caused a financial strain on con-tracts and as a results they vacate site due to financial problems

2 Number of new sites connected to basic water and sanitation services as part of the Integrated Residen-tial Development Programme

8846 4630 1273 3357 This is a multi-year project.

3 Number of house-holds connected to basic services as part of the Informal Settle-ments Upgrading Programme

8846 5761 4315 1446 These types of project are

multi-year projects.


48

Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


4 No. of low-income / affordable housing units constructed in prioritized areas:

(i) FLISP 0 250 9 241 Most applicants disquali-

fied, as they do not meet

the criteria set by the

banks.

(ii) Military Veterans 2 10 0 10 Non-achievement during

the 1st, 2nd and 3rd Quar-

ters there was verification

process for qualifying ben-

eficiaries with the Depart-

ment of Defence Force and

Military Veterans as per the

correct definition.

(iii) Teachers cot-tages

0 19 6 13 It is covered under the Sub-

Programme Rural Interven-

tion

(iv) Rectification Programme (dilapilated)

115 1395 722 673 Overachievement is due to less number of houses de-molished but the construc-tion of those houses that were demolished in the previous quarters.

(v) Incomplete houses

205 700 338 362 Underachievement – the assessments were done in 2nd Quarter and contractors were all appointed in 2nd Quarter

(vi) BNG 3252 7730 4648 3082 Huge price increases on

materials caused a financial

strain on contractors. Small

contractors vacate site due

to financial problems.

(vii) Emergency/Di-saster

63 209 534 330 Overachievement is as a

result of unplanned cir-

cumstances that had to be

responded to.

(viii) PHP 14 30 0 30 Huge price increases on

materials caused a financial

strain on contractors. Small

contractors vacate site due

to financial problems.

(ix) Land Restitution 0 259 201 58 There was over-achieve-

ment because most of the

houses were at the comple-

tion stage in the last quar-

ter of the financial year.


Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


5 No. of (new) ap-plications captured correctly on HSS

1091 15000 1383 13617 Not achieved because the

department is focusing on

eradicating the backlogs of

the previous financial years

and priority was given to

the capturing of housing

projects related to the

houses improved from 2

roomed to 4 roomed and

the rebuilding of 1-door

houses.

In relation to other

programmes, most of the

beneficiaries are on the

system.

6 No. of deeds of transfer registered in favour of qualifying beneficiaries:

EEDBS 129 600 8 592 Formalisation of the Service

Level Agreement with the

conveyances and the com-

pletion of the necessary

EEDBS application forms by

different municipalities

Act 81 of 1988 1025 1200 673 527 Follow-up with the director-

ates Legal Services and Sup-

ply Chain Management to

speed up the appointment

of the conveyances

Act 107 of 1997 921 5635 486 5149 Follow-up with the director-

ates Legal Services and Sup-

ply Chain Management to

speed up the appointment

of the conveyances.

7 No. of township regis-ters opened

10 10 5 5 Reasons for under achieve-

ment

8 No. of parcels of land identified and trans-ferred to municipali-ties for development purposes

9 11 4 6 The department under achieved because the negotiations process takes long and the achievement depends on the settlement between the department/HDA and the landowners.

9 No. of erven planned and surveyed

11961 12786 1671 11115 Progress is at different phases of township applica-tion processes, which are outside the department’s competency.


50

Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


10 No. of municipalities supported towards accreditation

4 4 at level 1MetsimaholoDihlabengMatjhabengMoqhaka

Level 3 readi-ness – Man-gaung Metro

5 0 Achieved

Non-cumulative target

11 No. of programmes approved and funded under the accredita-tion of municipalities

4 4 4 - -

12 No. of houses handed over to beneficiaries together with title deeds

304 10 000 3638 6362 The underachievement was

as result of the department

engaging in consulting and

finalizing the strategy of

handing title deeds over to

municipalities, towards as-

sisting with the distribution

process and the distribution

process started in the 3rd

Quarter. .

13 No. of municipali-ties targeted for the expansion of the National Upgrading Support Programme

3 MetsimaholoDihlabengMatjhabengMoqhakaMangaungMaluti –a -pho-fung

6 0 Achieved

Non cumulative target

14 No. of job opportuni-ties created through resettlement and housing construction projects

0 7755 2840 4915 The contractors do not specify the number of job created through housing projects, thereby making it difficult for the Department to monitor and report the actual number.

Sub-programme: Incremental interventions

Strategic objectives: Creation of housing opportunities

1 Km of streets con-structed in newly-formalized areas

3 1 Km 5KM 4KM The overachievement is be-

cause these are multi-year

projects.


Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


2 No. and type of social amenities constructed: - Multi-Purpose Com-

munity Halls

0 2 1 1 The remaining project has

been included in the Busi-

ness Plan and plans are

underway for the construc-

tion during the 2014/15

financial year.

3 No. of municipalities mentored on consumer education:

· Metro

· Local Municipaliaties

1

11

1

19

1

19

-

-

-

-

4 No. municipalities ca-pacitated on the following housing programmes:

· Training for Building Inspectors

· Public Housing for Plan-ning and Engineering

24 • 1 Metro

• 4 DM

• 19 LM

1

-

5

-

4

14

Training for Public Housing for Planning and Engineer-ing

was not conducted.

Instead, the Department

conducted the following

short skills programmes.

- Induction Training for

Councillors

- Introduction to Housing

Policy for Housing Admin-

istrators

- - Managing Low Cost

Housing projects

(Training for Builders

inspectors)

5 No. of partnerships es-tablished and maintained towards improving human settlement delivery:

· Capacity Building

· Research

· Funding

· Internships – experien-tial training

· Housing institutions

0 5 2 3 The department is currently

engaging accredited service

providers for placements of

technical bursary students.

To complete their experien-

tial training.


52

Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


6 No. of emerging youth – and women contractors mentored and supported

0 10 0 10 The proposal was revisited to improve its technical outcomes, a structured implementation plan is in the process of being devel-oped

7 No. of municipalities sup-ported and capacitated on the Housing Subsidy System

10 20

(review done and technical support pro-vided)

0 20 Not achievement due to the work commitment, priority was given to the quality of Data with regard to both financial and non financial information in the HSS

8 No. of municipalities capacitated on the suc-cessful roll-out and main-tenance of the Housing Demand Database (metro and local municipalities)

0 4:- Metsimaholo

- Dihlabeng

- Matjhabeng

- Moqhaka

0 4:- Metsimaholo

- Dihlabeng

- Matjhabeng

- Moqhaka

Underachievement due to capacity constraint

Sub-programme: Social and rental intervention

Strategic objectives: Creation of social and rental housing opportunities

1 No of CRU units approved and upgraded

461 350 0 350 Mangaung CRU

There has been a delay in

the evaluative and adjudica-

tion of the Dark & Silver City

Hostels Bids thus Contrac-

tors could not be appointed

in time.

Matjhabeng CRU

· Merriespruit Hostel was

delayed by labour unrests

from the moment it com-

menced and this delayed

the completion of units.

· In relation to G Hostel,

there has been a delay in

the evaluation and adjudi-

cation of the G Hostel Bids

thus a Contractor could not

be appointed in time.

Metsimaholo CRU

Zamdela Hostel was delayed

by community unrests from

the moment it commenced

and this delayed the

completion of units.


Indicator No.


2012/013

Planned Target

2013/14

Actual Achievement

2013/14


to


2 No of new affordable rental units delivered through Social Housing

346 400 516 116 Mangaung Social Housing

Hillside View Social Housing

Project commenced with

Site establishment and

earthworks which have now

been completed and the

appointment of a contractor

is awaited.

Brandwag Social Housing:

Phase 1 yielding 402 units

has been completed and

allocated to tenants.

Sub-programme: Rural intervention

Strategic objectives: Access to housing opportunities in rural and farm areas

1 No. of rural and farm worker housing units approved and completed towards contributing to the construction of low-income / affordable housing units:

· Rural · Farm Worker· Teachers Cottages on

Farms

395--

--

19

--6

--13

Due to budgetary con-straints, the department was able to build and complete only 6 housing units.

Changes to planned targets (changed in line AG’s recommendations)

NONE


2013/2014 2012/2013


Actual

Expenditure


Final Appropriation

Actual

Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

Housing Development 1 401 294 1 400 500 794 1 046 969 1 027 040 19 929

Total 1 401 294 1 400 500 794 1 046 969 1 027 040 19 929


54

4.4 Programme 4: Housing Assets Management and Property ManagementPurpose: To provide individual subsidies and housing opportunities to beneficiaries in accordance with housing policies

Sub-programmes

· Administration

· Housing Properties

Strategic objective: Management and maintenance of housing assets/properties

Sub-programme: Housing Assets Management and Property Management

Strategic objectives: Management and maintenance of housing assets/properties

Indi-cator No.


Planned Target

2013/14

Actual Achieve-ment

2013/14

Devia-tion from planned target to


1 No. of units sold to beneficia-ries

Rental units

Sites

0 0 0 0 No target was set.

2 No. of (existing) rental units transferred (to beneficiaries):

Rental units

Sites0

0

4

0

0

0

4

0

The underachievement is as a result of applications is with the State Attorneys for further handling.

3 No. of units devolved to mu-nicipalities in terms of section 15 of the Housing Act, 1997.

Rental units

Sites

-

0 0 0 0 No target was set.

4 No. of debtors reduced per financial year

0 4 0 4 The underachievement as a result of the delay in the transfer of rental units to beneficiaries.

Housing assets are being transferred to their legitimate occupants.


Sub-programme: Housing Assets Management and Property Management

Strategic objectives: Management and maintenance of housing assets/properties

Indi-cator No.


Planned Target

2013/14

Actual Achieve-ment

2013/14

Devia-tion from planned target to


5 No. of Housing assts main-tained

0 4 0 4 The underachievement: no request for maintenance received in this quarter.

Housing assets are being transferred to their legitimate occupants

· NB! The total number of housing units completed does not make include the Community Residential and Social Housing units constructed.

Strategy to overcome areas of under performance

· The following strategies will be employed to address the challenges experienced in programmes 2-4:

o Capacitate the department by appointing technically qualified personnel to ensure effective project management at the district level.

o Creation of a departmental database for consulting engineers.

o Performance of contractors monitored on a weekly basis

o Poor performing contractors’ contracts will be terminated. All projects to be given to good performing contractors.

o Capacitation of the infrastructure project unit to expedite project progress.


NONE


2013/2014 2012/2013


Actual

Expenditure


Final Appropriation

Actual

Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

Housing Assets, Man-agement & Property Management

1 007 175 832 936 828 108

Total 1 007 175 832 936 828 108


56

5. TRANSFER PAYMENTS

5.1. Transfer payments to public entities NONE

5.2. Transfer payments to all organisations other than public entities NONE

The table below reflects the transfer payments, which were budgeted for in the period 1 April 2013 to 31 March 2014, but no transfer payments were made.

Name of transferee Purpose for which the funds were to be used

Amount budgeted for

(R’000)

Amount transferred

(R’000)

Reasons why funds were not transferred


6. CONDITIONAL GRANTS

Spending Trends of the Human Settlements Development Grant

HUMAN SETTLEMENT DEVELOPMENT GRANT Current Appropriation Expenditure YTD BalancePercentage of Budget Spent

ytd

R R R %

FINANCIAL INTERVENTIONS

1.1a Individual housing subsidies (R0 - R3 500) credit linked 504 000.00 504 000.00 - 100.00%1.1b Individual housing subsidies (R0 - R3 500) Non - Credit Linked 8 195 000.00 8 194 793.26 206.74 100.00%1.2 Housing finance linked Individual subsidies (FLISP)-(R3 501 - R7 000) - - - -1.3 Enhanced Extended Discount Benefit Scheme (EEDBS) - - - -1.5a Rectified RDP stck 1994-2002 9 461 000.00 9 461 218.17 -218.17 100.00%1.5b Rectification of Housing Stock(pre 1994) 32 313 000.00 32 313 486.97 -486.97 100.00%1.6 Social and Economic Facilities 2 090 000.00 2 090 442.81 -442.81 100.02%1.7 Accredited Municipalities (level 1 & 2): 5 000 000.00 5 000 000.00 - 100.00%1.8 Operational Capital Budget 60 475 000.00 60 474 000.39 999.61 100.00%1.9 Blocked projects 52 985 000.00 52 984 825.38 174.62 100.00%1.10 NHBRC enrolment (related to grant) 6 987 000.00 6 986 820.00 180.00 100.00%1.11a Land parcels procured(IHAHSD) 70 000 000.00 70 000 000.00 - 100.00%1.12 Housing chapters of IDP's - - - -

TOTAL 248 010 000.00 248 009 586.98 413.02 100.00%

INCREMENTAL HOUSING PROGRAMMES

2.2a Integrated Residential Development Programme :Phase 1:Planning and Services 191 017 000.00 191 016 736.50 263.50 100.00%

2.2b Integrated Residential Development Programme :Phase 1:Planning and Services INFORMAL SETTLEMENTS 244 517 000.00 244 517 256.76 -256.76 100.00%2.2e Integrated Residential development Programme :Phase 4:Top Structure Construction (INFORMAL SETTLEMENTS) 247 703 000.00 247 702 799.23 200.77 100.00%2.3a People's Housing process 51 474 000.00 51 473 508.24 491.76 100.00%2.6 Emergency Housing Assistance 28 584 000.00 28 584 073.91 -73.91 100.00%

TOTAL 763 295 000.00 763 294 374.64 625.36 100.00%

SOCIAL AND RENTAL HOUSING3.1 Institutional Subsidies 95 199 000.00 95 200 246.00 -1 246.00 100.00%3.2b Social Housing:Capital Grants for rental housing (Funded by NDoH) - - 3.3a Community residential units (CRU) Converted/Upgraded 177 912 000.00 177 911 578.53 421.47 100.00%3.3b Community residential units (CRU) Constructed - - TOTAL 273 111 000.00 273 111 824.53 -824.53 100.00%

RURAL HOUSING -4.1 Farm Worker Housing Assistance - - - -4.2 Rural Housing: Communal land rights - - -TOTAL - - - -

-PROVINCIAL SPECIFIC PROGRAMMES -Land Resitution 66 520 000.00 66 520 213.85 -213.85 100.00%TOTAL 66 520 000.00 66 520 213.85 -213.85 100.00%

GRANT TOTAL 1 350 936 000.00 1 350 936 000.00 - 100.00%GRAND TOTAL 1 350 993 000.00 1 350 993 000.00 - 100.00%

247 760 000.00


58

department who transferred the grant

NATIONAL DEPARTMENT OF HUMAN SETTLEMENTS

PURPOSE OF THE GRANT To provide funding for the creation of sustainable human settlements

EXPECTED OUTPUTS OF THE GRANT

Number of residential units delivered in each housing programme

Number of serviced sites delivered in each housing programme

Number of finance linked subsidies approved and disbursed

Number of households in informal settlements provided with household access to services/upgraded services

Number of hectares of well located land acquired and/or released for residential development

Number of work opportunities created through related programmes

AMOUNT RECEIVED (R’000) R 1350 936 000

AMOUNT SPENT BY THE DE-PARTMENT (R’000)

R 1 350 936 000

MONITORING MECHANISMS BY THE RECEIVING DEPARTMENT

Expenditure is monitored monthly and quarterly, reports are submitted to provincial treasury and na-tional department of Human Settlement monthly and quarterly.

7. DONOR FUNDS

7.1. Donor Funds Received

The department does not receive any Donor Fund.

8. CAPITAL INVESTMENT

8.1 Capital investment, maintenance and asset management plan The department had not spent any funds with regard to capital investment


PART C: GOVERNANCE

PART C: GOVERNANCE


60

1. INTRODUCTION

The following governance structures were operational within the department during the year under review towards ensuring that the department maintains the highest standards of governance, thereby effectively, efficiently and economically utilizing the department’s resources:

NAME OF COMMITTEE PURPOSE / OBJECTIVE OF COMMITTEE

Executive Management Committee a) To coordinate and integrate transverse matters impacting on the functioning of the depart-ment

b) To agree on ways of working towards improving the effective and efficient functioning of the department

c) To review and discuss the financial and/or non-financial performance of the department

d) To monitor the extent to which the department succeed to identify and/or mitigate risks impacting negatively on the effective and efficient functioning of the department

e) To review, consider and take decisions towards improving the effective and efficient func-tioning of the department, especially matters of a transverse nature

f) To discuss IGR / Inter-departmental Reports and Resolutions emanating from MINMEC, Technical MINMEC and FoHoD

Senior Management Committee g) To consider and/or propose transverse policies and/or strategies affecting the functioning of the department

h) To share information and/or decisions related to the work of the department

i) To coordinate and integrate matters impacting on the functioning of the department

j) To agree on ways of working towards improving the effective and efficient functioning of the department

k) To report on and/or monitor the financial and/or non-financial performance of the depart-ment

l) To identify and mitigate risks impacting negatively on the effective and efficient functioning of the department

m) To make proposals to and/or render advice on matters related to the effective and efficient functioning of the department

PDMS Moderating Committee: Levels 1 - 12

a) To assess the collective outcome of performance assessment results of departmental

employees.

b) To make recommendations to the relevant approval authority (Executive Authority / Head of Department) on the granting of performance awards and pay progression, taking into account the availability of funds

c) To make recommendations on disciplinary actions to be taken against supervisors who do not take responsibility for the correct implementation of the PDM system in their units (to the Head of Department).

PDMS Dispute Body: Levels 1 - 12 a) To address disagreements between jobholders and their supervisors on ratings (towards reaching agreement).

b) To make recommendations to the departmental Moderating Committee on the rating of employees where there is disagreement

c) To make recommendations regarding actions to be taken where supervisors did not ex-ecute their responsibilities with regard to the PDM System (to the Head of Department)



PDMS Moderating Committees: Senior Managers

a) To assess the outcome of performance assessment results of senior managers.

b) To make recommendations to the relevant approval authority (Executive Authority / Head of Department) on the granting of performance awards and pay progression, taking into account the availability of funds

PDMS Quality Assurance Committees a) To evaluate the overall outcome of performance reviews of components in line with the normal distribution curve.

b) To evaluate the standards and norms for similar jobs, thereby ensuring consistency across similar occupational jobs within the department.

c) To refer assessments back to supervisors where motivations do not substantiate points allocated.

d) To make recommendations to the departmental Moderating Committee on the granting of performance awards and pay progression, taking into account the availability of funds

d) To make recommendations on financial implications and any other matters toward improv-ing the successful implementation of the PDMS.

Job Evaluation Quality Assurance Committee

a) To quality assure job evaluations conducted within the department

b) To ensure that all dynamics related to a specific job within the Department was taken into consid-eration during the job evaluation process.

c) To oversee and enhance job evaluation processes within the department

d) To enhance the application and understanding of the job evaluation system within the depart-ment

Departmental Task Team (previously called the Departmental Coordinating Council)

a) To promote labour peace.

b) To promote and maintain sound relationships between the employer and its employees.

c) To consult, share information and bargain collectively to reach conclusion on matters of mutual interest between parties to the task team.

d) To consider and deal with such matters as may affect the interest of parties to the task team.

e) To promote effective communication between the employer, its employees and trade unions in the task team.

f) To identify areas of possible dispute prevention and decide on possible interventions.

IT Steering Committee a) To review, monitor, prioritize and make recommendations to the HODs on major IT projects, investments.

b) To ensure alignment with governance compliance, risk management and support to the strategic and operational objectives of both departments.

Departmental Information Technology Committee (DITC)

a) To provide guidelines to all DITC members and their alternative representatives in the application and management of committee procedures, when requests for procurement of IT equipment are received and presented to the committee.

b) To promote departmental efficiency and effectiveness through the application of information technology towards improved service delivery.


62


Employee Health and Wellness Com-mittee

a) To review the effectiveness of health and safety measures

b) To identify potential hazards

c) To examine and investigate complaints by employees relating to health and safety

d) To report on general matters affecting the health and safety of employees

e) To discuss proposed action and policies

f) To advise the department on matters related to employee health and wellness

g) To identify demarcated smoking areas

Skills Development Committee a) To provide guidelines with regard to the training, education and development of all depart-mental employees

b) To provide a clear vision and framework to guide skills development within the depart-ment.

c) To link human resource development initiatives to broader processes of organizational development in the department.

d) To promote access by all employees to meaningful training and education opportunities.

e) To promote the empowerment of previously disadvantaged groups.

f) To facilitate the development of effective career paths for all employees in the department.

g) To promote life-long learning in the department.

h) To ensure that training and development in the department is need- and competency-based.

i) To transform the department into a learning organization.

j) To advise the HOD on the implementation of training, education and development pro-grammes and the implementation of the Human Resources Development Policy.

k) To oversee the development and implementation of the WSP

l) To monitor and evaluate skills development in the Department

m) To handle all matters related to bursaries within the Department

n) To make recommendations on the implementation of internships and learnerships in the department.



Audit committee a) To approve the Internal Audit risk based strategic and operational plans, charter and review the performance relative to the plan.

b) To review the impact of the organizations Risk Management Framework on the control environment.

c) To review the external auditors’ proposed audit scope and approach including coordination of audit effort with the Internal Audit Activity.

d) To consider the effectiveness of the organisation’s system of internal control, including information technology security and control.

e) Review the Annual Financial Statements and consider whether they are fairly presented, complete and reflect appropriate accounting principles.

f) Review the Annual Report (including non-financial performance information) to verify ac-curacy and completeness of information.

g) Review the effectiveness of the system for monitoring compliance with laws and regula-tions and the results of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance;

h) Regularly report to the Accounting Officer and Executing Authority about committee activi-ties, issues and related recommendations.

Risk Management Committee a) Review the risk management implementation plan, policy, strategy and recommend for approval by the Accounting Officer.

b) Review the risk appetite and tolerance developed by management and recommend for approval by the Accounting Officer.

c) Develop the Charter for the Committee for approval by the Accounting Officer and oversee the performance of the risk management function.

d) Review the Department’s risk identification and assessment methodologies to obtain rea-sonable assurance of the completeness and accuracy of the risk register.

e) Evaluate the effectiveness of mitigating strategies to address the material risks of the department.

f) Report to the Accounting Officer any material changes to the risk profile of the depart-ment.

g) Review the fraud prevention policy and recommend for approval by the Accounting Officer.

h) Evaluate the effectiveness of the implementation of the fraud prevention policy.

i) Review any material findings and recommendations by assurance providers on the system of risk management and monitor that audit action plans is implemented to address the identified weaknesses.

j) Develop key performance indicators to measure the effectiveness of the risk management performance.

k) Interact with the Audit Committee to share information relating to material risks of the institution.

l) Provide timely and useful reports to the Accounting Officer on the state of Risk manage-ment.

m) Dictate the need for the Risk Management Committee to work through sub-committees.


64

2. RISK MANAGEMENT The approved risk management policy has been communicated to all officials together with the strategy and the implementation plan, which support the department in achieving its objectives.

The department has conducted a risk assessment workshop, wherein the risk register was updated based on new and emerging risks and subsequently approved by the Accounting Officer and the Chairperson of the Risk Management (RM) Committee.

The RM Committee has been established in line with accordance of chapter 13 of the risk management framework and meets quarterly. It reports regularly to the Audit Committee on the implementation of the Risk Management Plan and its decisions are recorded.

The department is progressing in the management of risk , based on the Provincial Treasury’s evaluation of the Key Performance Indicators (KPI’S), the overall performance of the Risk Management in the department has increased to 65 % as compared to the previous financial year which was 32%.

3. FRAUD AND CORRUPTION

The Fraud Prevention Plan (FPP) of the department has been approved by the Accounting Officer after a consultation process with the Risk Management and Shared Audit Committees. An awareness programme will be conducted by the Security Management and Anti-Corruption Directorate (SMAC) throughout the whole department during the financial year 2014/2015.

The department is well on course in implementing the Public Service Anti-Corruption Strategy and the development of a fraud prevention capacity that complies with the Minimum Anti-Corruption Capacity (MACC) guidelines. The guidelines focus on the following:

· Analysing corruption risk as per FMA’s risk assessment. This is done in partnership with Risk Management, Internal Audit and all Senior Managers.

· Implement fraud plans that address corruption risk, as required by the PFMA, FPP approved, now in implementation stage.

· Verify the previous employment, qualifications, citizenship and criminal record of all persons before they are employed, SMAC is already assisting HR with this function. Consultation with SSA is ongoing to speed up the process.

· Establish systems that encourage everyone to report corruption; Implementation of FPP will assist.

· Establish the capacity to investigate allegations and institute disciplinary action for cases of corruption and detect corruption and refer allegations of corruption to law enforcement agency. Vacant posts in order to improve capacity had been identified to SMS.

· Information system that records all allegations and provides minimum information to designated national departments is in place but needs to be reviewed for the financial year 2014/2015.

· Establish a programme that informs employees on an ongoing basis of what constitutes corruption, and promotes policies that must be adhered to; awareness sessions had been ongoing in the financial year 2014/2015 with 80 % of all officials being reached.

· The SMAC do have a case management system in place and the handling of cases

is monitored by the Internal Audit unit. It reports about the statistics on case

management to the Shared Audit Committee. This case management system

will be reviewed during the financial year 2014/2015.


4. MINIMISING CONFLICT OF INTEREST

As prescribed by chapter three of the Public Service Act, 1994 (Act No. 103 of 1994), read with related regulations regarding financial disclosures, all Senior Management Members (SMS) except six (6) SMS who are on suspension have completed the disclosure forms and these were signed off by the Executive Authority. However, the Department have consulted the State Law Advisors in order to ensure that these officials comply with the prescripts.

These disclosures formed the basis to minimize conflict of interest. These reports were presented to the office of Public Service Commission as required by the Act.

5. CODE OF CONDUCT

In order to give practical effect to the relevant constitutional provisions relating to the public service, all employees are expected to comply with the Code of Conduct provided for in Chapter two (2) of the Public Service Regulations.

The Code act as a guideline to employees as to what is expected of them from an ethical point of view, both in their individual conduct and in their relationship with others. Compliance with the Code can be expected to enhance professionalism and help to ensure confidence in the public service.

The need exists to provide direction to employees with regard to their relationship with the legislature, political and executive office-bearers, other employees and the public and to indicate the spirit in which employees should perform their duties, what should be done to avoid conflicts of interests and what is expected of them in terms of their personal conduct in public and private life.

Although the Code of Conduct was drafted to be as comprehensive as possible, it is not an exhaustive set of rules regulating standards of conduct in the department. However, our Head of Department Mr. N Mokhesi, by virtue of his responsibility in terms of section 7(3) (b) of the Public Service Act which deals with efficient management and administration and the maintenance of discipline, is, inter alia, under a duty to ensure that the conduct of all employees conform to the basic values and principles governing public administration and the norms and standards prescribed by the Act.

The HOD also has a duty to ensure that all employees are acquainted with these measures, and that they accept and abide by them. In order to achieve this, our Human Resources Management and Development Directorate is tasks trough the APP of the Department to arrange Information Sessions where the Code of Conduct is unpacked or presented to officials.

The primary purpose of the Code is a positive one, viz. to promote exemplary conduct. Notwithstanding this, an employee shall be guilty of misconduct, and may be dealt with in accordance with the relevant collective agreement if she or he contravenes any provision of the Code of Conduct or fails to comply with any provision thereof.

6. HEALTH SAFETY AND ENVIRONMENTAL ISSUES

The department is at the moment at head office situated in two buildings, i.e. Lebohang building (Provincial Building in Corner St Andrews and Markrgraaff streets) and the old Sanlam Building in Charlotte Maxeke Street. Office space, which is not enough for current employees, remains a serious challenge for the department resulting in four to six officials occupying space initially meant for one or two individuals) and this has had a negative impact in the filling of critical vacancies as well as the safety of the officials occupying the offices. There has already been a request of relocation of an official from the old Sanlam Building due to deteriorating health. The Department of Public Works has been engaged by the department in an effort to secure adequate accommodation for current staff and to make provision for future needs.

The old Sanlam Building presents challenges with water and this affects the sanitation services and impacts on the cleanliness of the building as a whole.

In the districts office accommodation is also a challenge and this has serious implication as the districts are


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supposed to serve the communities, access and the general condition of the buildings being the biggest challenge. The morale of the staff is at its lowest level as reflected in the Risk Management report and this will be addressed before 30 September 2014 through a proposed Team Building Session, departmental awareness programmes on Health Related Topics, Morale and Employee Satisfaction Survey.

The EHWP Management Policy is a draft and will assist employees in realization of the vision of the programme.

7. PORTFOLIO COMMITTEES The meeting was held on the 23 October 2012 and the 2014 and the following issues were raised:

· A list and a break down all in complete houses, be availed to the portfolio committee for purposes of proper oversight and

· That the department speed up significantly the process of title deeds to rightful beneficiaries in the whole province and the report to be provided with 30 days after the adoption of the Report in the House.

· The department responded to the letter dated on the 16the of May 2013 to the letter dated also the 16th of May 2014 and gave the break down of the incomplete houses and the plan on how the title deeds will be distributed to the beneficiaries.

The Portfolio Committee had a sitting on the 5th of March 2014 and expected briefing on the following issues:

· Petition of Mr. Ngake David Motloung from Clarens.

· Mr. MacDonald Malema in Kroonstad.

· Housing delivery backlog in the Free State Province:

(i) How many units were planned and budgeted for in 2009.

(ii) How many units were planned and budgeted for from 2009 to date.

(iii) How many units have been delivered to date, 2009 till 2012 and

(iv) Challenges and reasons for the delay in delivery, therefore, a presentation was made in this regard.

The department made a presentation to the portfolio committee responding to all the issues raised, furthermore, Mr Motloung’s house was reconstructed to be accessible taking into account his disability.


8. PROPAC RESOLUTIONS

Resolution No. Subject Details Response by the de-partment

Resolved (Yes/No)

2/2010 Capacity In terms of the support function related to the department, no additional funds were received from Provincial Treasury until the end of the 2012/13 financial year. Funds were only made available from 1 April 2013 to start the process although the additional allocation is in the case of both departments not enough for the most critical functions in the Support Service Directorates. Provincial Treasury also only made Compensation of Employee funds available, but no funds for operation matters, resulting the pos-sible filling of some of the critical posts, but not having tools of the trade for those officials to function effectively.

Levels 13 and up were already split and the department is in the process to split levels 1 to 12 after which the most critical posts will be advertised for filling as from April 2013.

CFO Vacancies filled to date. (46%) No

four posts

Still vacant and adver-tised;

- Director: Finance

- Deputy Director: Finance

- Personal Assistant to the Director: Finance

- Chief Financial Officer

Short listing for the above post and the in-terview were held before 30/05/2014. (Yes)

Declaration of interest:

Implement control measures to ensure that all employees declare their own spouses’ and other close relatives’ inter-ests in companies or closed corporations tendering, providing quotation or doing business with departments.

Director: Internal Audit Systems were imple-mented. All Senior Man-agers submitted, (100%) (Yes)

2/2012 Advance Pay-ments to contrac-tors

.

Reconcile amounts and claims unspent funds back

Director: Legal Services and CFO

Summonses have been is-sued against all suppliers, they have filed notices of intention to defend and the department is responding accordingly, (70%) (No)

9. PRIOR MODIFICATIONS TO AUDIT REPORTS The department had appointed the consultants Ernest and Young in order to enhance the capacity challenges within Budget and Financial Management Directorate and part of their extended mandate included the following:

· the development of the Action Plans based on the AGSA Audit Reports and Management Letter, population thereof and periodically reporting on the progress to Internal Audit directorate for evaluation purposes,

· Monthly reporting progress to Provincial Treasury on behalf of the department. These reports were signed off by the Accounting Officer.

The department further continued with the Audit Steering Committee meetings, which were held weekly in order to assess progress on the implementation of AGSA’s recommendation. The minutes of these meetings are maintained and the feedback reports presented to the Accounting Officer.


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10. INTERNAL CONTROL UNITThe department appointed consultants to assist with the functions of the Internal Control Unit during the year under reporting due to human and skills capacity constraints. The functions the department were assisted with were:

· Checking and verifying documents

· Safeguarding of all system documents

· Evaluating payments to update and maintain registers for irregular, fruitless and wasteful expenditure.

Currently officials within the unit and officials of the consulting firm work together to ensure that skills are transferred.

11. INTERNAL AUDIT AND AUDIT COMMITTEES

The objective of Human Settlement’s Internal Audit Activity (Activity) is encapsulated in the definition of Internal Auditing, which is to provide an independent, objective assurance and consulting service designed to add value and improve the departments’ operations. It helps the department to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal control and governance.

In terms of the scope of work of this Activity, a duly appointed Shared Audit Committee approved the Annual and Three Year Risk Based Internal Audit Coverage Plan. The plan focused primarily on statutory audits, audits related to EXCO Resolutions, Audit Reports and Management Letter received from Auditor-General South Africa for 2012/13 financial year, Ad-hoc Assignments, follow-up audits as well as financial audits, in particular interim financial statements.

The Activity reported progress against the approved Plan on quarterly basis to the Shared Audit Committee.

The Shared Audit Committee was established and functions in terms of Treasury Regulations, 2005(TR) 3.1.1 to 3.1.16 which came into effect as a result of section 76 as well as section 77 of the Public Finance Management Act, 1999 (Act No. 1 of 1999).

The Shared Audit Committee was appointed by the Member of Executive Council: Free State Provincial Treasury in consultation with Member of Executive Council: Cooperative Governance, Traditional Affairs and Human Settlements, for a period of three years, with effect from 01 January 2011. The term of office was subsequently extended until end of July 2014. Thus, the members are currently serving the fourth year of their term.

Two new additional members were appointed with effect from 01 August 2013 until 31 July 2014, in order to strengthen the available capacity.

During the period under review, the Shared Audit Committee fulfilled its mandate, roles and responsibility as elaborated under paragraph 12 below.

Name QualificationsInternal or external

If internal, position in the department

Date appointed Date ResignedNo. of Meetings attended

Ms. Maleho Nkomo

B. Com

B. Com

Honours

Senior Executive Pro-gram

External N/A 01 January 2011 N/ARef to paragraph 12 below


Name QualificationsInternal or external

If internal, position in the department

Date appointed Date ResignedNo. of Meetings attended

Mr. Sibusiso Majola

B.com

Certificate in Accoun-tancy

B.Com (Hons) Account-ing

Certified Internal Audi-tor

External N/A 01 January 2011 N/A

Dr C Olivier N. Dip in Public Admin-istration

B. Luris Public Service

Masters in Public Ad-ministration

Ph. D in Public Manage-ment


Mr. I Mokoena Diploma Industrial Engineering

Project Management

Management Advance-ment Programme

MBA


Dr. K Laubscher B. Com

B. Com (Hons)

Masters of Science

Ph. D Agricultural Eco-nomics

External N/A 01 August 2013 N/A

Adv. J Block Baccalaureus Legum

Baccalaureus Lurispru-dentiae

Diploma in Tax Law

Certificate Public Fi-nance Management

Certificate Procurement Management

External N/A 01 August 2013 N/A

12. REPORT OF THE AUDIT COMMITTEE

The Shared Audit Committee of the Department of Human Settlements is pleased to present its report for the financial year ended 31 March 2014.

Background Information

The Shared Audit Committee has non-executive status in an advisory capacity to the Accounting Officer, to assist the


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Accounting Officer in fulfilling its oversight responsibility relating to:

(i) The integrity of the department’s financial statements and financial reporting process

(ii) System of internal control

(iii) The audit process, and

(iv) The department’s process for monitoring compliance with laws, regulations and the code of conduct.

In discharging its responsibilities, the Shared Audit Committee is not itself responsible for the planning or conducting of audits or for any determination that the financial statements of the department are complete and accurate or in accordance with generally recognised accounting procedures. This is the responsibility of management and the independent auditors. The committee’s role is that of an independent monitoring and evaluation of activities within the department.

The Shared Audit Committee was appointed by the Free State Provincial Treasury in consultation with the Member of the Executive Council: for Cooperative Governance, Traditional Affairs and Human Settlements, for a period of three years, with effect from 01 January 2011. The term of office was subsequently extended until end of July 2014. Thus, the members are currently serving the fourth year of their term.

Two new additional members, Advocate D. Block and Dr K. Laubscher, were appointed with effect from 01 August 2013 until 31 July 2014, in order to strengthen the available capacity.

Audit Committee Members and Attendance

The Shared Audit Committee consists of the members listed hereunder and should meet at least four (4) times per annum as per its approved Audit Committee Charter.

During the year under review, four (4) meetings were held as reflected in the table below.

Name Capacity Special Meeting

24 May 2013

Special Meeting

30 July 2013

Normal Meeting

25 October 2013

Normal Meeting

14 March 2014

Ms M M Nkomo Chairperson * * * *

Mr G S Majola Member * * * *

Mr R I Mokoena Member * * * *

Dr C D Olivier Member * * * *

Adv D Block Member The members were appointed with effect from 1 August 2013 – 31 July 2014.

#

* #

Dr K Laubscher Member *

Legend: * - Attended the meeting

# - Apology tendered

Audit Committee Responsibility

The Shared Audit Committee reports that it has complied with its roles and responsibilities arising from Section 38(1) (a) of the Public Finance Management Act and Treasury Regulation 3.1.1 to 3.1.16 about its establishment and Terms of Reference.

S38(1)(a) S38(1)(a)(ii) of the PFMA state the following:

(PFMA) (1) “The accounting officer for a department,

(a) Must ensure that department,…. has and maintains-

(ii) a system of internal audit under the control and direction of an audit committee complying with and operating in accordance with regulations and instructions prescribed in terms of sections 76 and 77”


The Shared Audit Committee also reports that during the financial year under review it has reviewed and adopted appropriately:

· The Revised Audit Committee Charter,

· Revised Internal Audit Charter,

· Revised Internal Audit Coverage Plan for the period,

· Revised Internal Audit Manual,

· A report on the Performance against the approved Internal Audit Coverage Plan,

· A report on the progress on the implementation of recommendation by the Auditor-General South Africa,

· Key Control Matrix and Dash Board Reports and

· Risk Management and Risk Management Committee Reports.

The effectiveness of internal control

The system of internal control applied by the department over financial risk and risk management was not consistently effective, efficient and transparent. In line with the requirements of the PFMA, internal audit provides the Shared Audit Committee and management with assurance that the internal controls are appropriate and effective.

This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested improvements to the controls and process. From the various Internal Audit reports issued on the interim and annual financial statements during the year under review, it was noted that matters were reported indicating material deficiencies in the system of internal control. Accordingly, we can report that the system of internal control was not entirely effective for the year under review.

The Internal Audit Directorate presented the Activity Reports during the above-mentioned sittings of the Shared Audit Committee, the reports of which included performance against the approved internal Audit coverage plan with all supporting documents, which highlighted the shortcomings as outlined in the above-mentioned paragraph.

The Shared Audit Committee is pleased to report that, whilst the objectives of the Internal Audit Directorate and the Auditor-General South Africa (AGSA) are different, the AGSA, determined that, based on their assessment of the scope of specific work performed, the objectivity and technical competence of the Internal Audit Directorate, and whether the work is carried out with due care, the procedures performed on Housing Allocations and the Comparative Figures on the Draft 2013/14 Annual Financial Statement prior to submission to AGSA will be taken into consideration in the performance of the external audit work.

Further, other work performed by the Internal Audit Directorate will be used to assess risk and internal control deficiencies that may affect the audit of the annual financial statements for the year-end 31 March 2014.

All the reports issued had thus been distributed to Auditor-General South Africa for that purpose.

The quality of in - year management and monthly/quarterly reports submitted in terms of the PFMA and the Division of Revenue Act.

The Shared Audit Committee noted the in year management and monthly/quarterly reports submitted in terms of the PFMA and the Division of Revenue Act to Provincial Treasury. However, the Committee noted with concern that not in all instances were reports submitted timeously. In addition, the Committee noted with concern the discrepancies between the Accounting Officer’s reports and the Key Control Matrix reports compiled by the Provincial Treasury. Management, at the request of the Committee, addressed such discrepancies.


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Predetermined Objectives

The Shared Audit Committee noted the presentations done on Predetermined Objectives and the progress on the achievement thereof by the Departmental Planning and Performance Monitoring Directorate during the course of the financial year.

The Shared Audit Committee noted with concern that adequate and reliable corroborating evidence could not be provided for forty percent (40%) of the targets, for Program Three (3) – Housing Development, Implementation, Planning and Targets, to assess the reliability of the reported performance information.

The Committee thus request management to develop realistic and achievable targets and monitor on regular basis the performance against these targets.

Review and Evaluation of Interim Financial Statements

The Shared Audit Committee noted the quarterly reviews performed by the Internal Audit Directorate on the Interim Financial Statements. These reports were included in the Internal Audit Activity Reports, which were presented at each sitting of the Shared Audit Committee.

Review and Evaluation of Annual Financial Statements

The Shared Audit Committee has:

· Reviewed and discussed the unaudited as well as audited annual financial statements to be included in the annual report with the Accounting Officer’s Report,

· Reviewed progress on Auditor-General South Africa’s management report and management responses thereto for the 2012/2013 financial year and the effect of which to the current audit,

· Reviewed changes in accounting policies and practices,

· Reviewed the department’s compliance with legal and regulatory provisions,

· Reviewed the information on predetermined objectives to be included in the annual report,

· Reviewed the Auditor-General’s management letter and responses thereof for the 2013/2014 financial year

· Reviewed significant adjustments resulting from the audit,

· Reviewed quarterly interim financial statements submitted for oversight purposes.

The Shared Audit Committee concurs and accepts the conclusions of the Auditor-General South Africa on the annual financial statements, which resulted in a qualified audit opinion, and is of the view that the audited annual financial statements be accepted and read together with the report of the Auditor-General South Africa. The acceptance also applies to the audit of the Housing Fund. However, the Committee is concerned with the reoccurrence of the same issues reported in the 2012/2013 Auditor General South Africa report, which again contributed to the Department receiving a qualified audit opinion.

Notwithstanding the above-mentioned, despite an assurance that the appointed consultants will assist in addressing prior years issues, the Shared Audit Committee is concerned that the Department has regressed in light of the number of qualification paragraphs as well as a number of internal control weaknesses raised in the management letter.

The committee had requested management to develop action plans to address all those identified deficiencies and in particular recurring findings.

The Internal Audit Directorate will have to monitor the implementation status quo and report periodically to the Shared Audit Committee.


Internal Audit Directorate

The Shared Audit Committee is satisfied that the Internal Audit Directorate is operating effectively and that in all the reports perused and approved it has addressed the risks pertinent to the department in its audits.

The Shared Audit Committee expressed its appreciation on the compilation of the three year and annual internal audit coverage plans because it is based on the outcome of the risk assessment thus making it a risk based Internal Audit Coverage Plan, which is in compliance with the Standards of Professional Practice of Internal Auditing.

The Shared Audit Committee is also pleased that Auditor-General South Africa will use some of the work performed by the Internal Audit in expressing an audit opinion thereby alleviating duplication of efforts.

The Shared Audit Committee concerns were reported and escalated to the accounting officer in their quarterly reports during the financial year.

The Shared Audit Committee is also concerned with the capacity in the Directorate, in particular filling of those vacant positions, which were identified as critical positions on the staff establishment.

Risk Management

The Department’s risk maturity is at a basic level. However, there is a Risk Management Committee that meets on a regular basis and periodically reports to the Audit committee.

The Shared Audit Committee had on numerous occasions raised concerns regarding the non completion/finalization of the risk assessment process within the department and how it negatively affects the Internal Audit activities, in particular the compilation of the risk based Internal Audit Coverage Plan.

Further, the Committee is concerned regarding challenges experienced by the Risk Management Sub-Directorate, which amongst others includes capacity constraints experienced within the Sub-Directorate and non-availability of key officials during the risk assessment process.

The Committee requested management to develop mechanism to address these challenges and ensure that the risk management sub-Directorate performs efficiently.

Notwithstanding the above-mentioned, the Shared Audit Committee is pleased with the progress made to this end in the Directorate.

Auditor-General South Africa

The Shared Audit Committee is satisfied that there is a cordial relationship between the Auditor- General South Africa and the Department due to the following:

· The Shared Audit Committee met with the Auditor-General South Africa to ensure that there is no unresolved issues,

· The Auditor-General South Africa met periodically with management to discuss the progress on the implementation of the recommendations in the management reports,

· The Auditor-General South Africa attendance of the Shared Audit Committee meetings as well as their participation in the shared audit committee meetings during the audit of the annual financial statements,

· The Internal Audit Directorate’s Three Year and Annual Internal Audit Coverage Plan, Performance against the approved Plan as well as all audit reports, which are issued and distributed to Auditor-General South Africa.


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PART D: HUMAN RESOURCE MANAGEMENT

PART D: HUMAN RESOURCES MANAGEMENT


1. OVERVIEW OF HUMAN RESOURCES

The department’s Human Resources Management unit delivers services in the field of human resources provisioning, human resources utilization as well as policy development.

The main focus from a human resources perspective is the filling of critical vacancies with skilled individuals that will be in a position to enhance the capacity of the department towards improved service delivery.

Workforce planning is a systematic process for identifying the human resources required to meet departmental goals and developing the strategies to meet these requirements. The department has a Scarce Skills policy to try to attract scarce skills in the department and retain it.

In promoting the wellbeing of all employees in the department, the department has Employee Health and Wellness practices that adheres to regulatory requirements in Part VI of the Public Service Regulations as amended, and are in line with the Employee Health and Wellness Strategic Framework for the Public Service.

The fundamental objective of the Strategic Framework is to facilitate the development of strategies, mechanisms and interventions by government departments and provincial administrations for the implementation of the following four functional pillars:

· HIV& AIDS, TB AND STI management;

· Health and Productivity management;

· Safety, health, environment, risk and quality (SHERQ) management; and

· Wellness (EAP) management.

2. POLICY DEVELOPMENT

The department’s HR Plan was developed based on the strategic objectives of the department, thereby giving effect to the people aspect of the strategy. The White Paper on Human Resources Management in the Public Service (Section 4.2) notes, “Human Resources planning is essential in order to ensure that an organisation’s human resources are capable of meeting its operational objectives.”

The development of human capital also stands in direct relationship with economic growth and development in the country. A clear acknowledgement within the Free State Growth and Development Strategy is the importance of the management and development of human capital. In this regard, a provincial Human Resource Management and Development Strategy were approved by the Executive Council that will enable the province to ensure that its human capital is aligned so as to realise its economic growth and development expectations.

3. HUMAN RESOURCES OVERSIGHT STATISTICS 3.1. Personnel related expenditure

The following tables summarises the final audited personnel related expenditure by programme and by salary bands. In particular, it provides an indication of the following:

· amount spent on personnel

· amount spent on salaries, overtime, homeowner’s allowances and medical aid.


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Table 3.1.1 Personnel expenditure by programme for the period 1 April 2013 and 31 March 2014

Programme Total expendi-ture (R’000)

Personnel expenditure (R’000)

Training expen-diture

(R’000)

Professional and special services expen-diture (R’000)

Personnel expenditure as a % of total expenditure

Average person-nel cost per em-ployee (R’000)

Administration 68 257 41 184 0 0 60.4 144

Housing assets, prop management

12 829 8 741 0 0 23.4 0


1400 500 42 476 0 0 2811.4 4855

Housing needs, re-search and planning

175 41 0 0 87.5 35

Total 1 481 761 92 442 0 0 2982.7 5034

Table 3.1.2 Personnel costs by salary band for the period 1 April 2013 and 31 March 2014

Salary band Personnel expenditure (R’000)

% of total person-nel cost

No. of employees Average personnel cost per employee (R’000)

Lower skilled (Levels 1-2) - - - -

Skilled (level 3-5) 6731 7.7 131980 87676

Highly skilled production (levels 6-8)

28 537 32.5 222 945 87 676

Highly skilled supervision (levels 9-12)

22 823 26 345 803 87 676

Senior and Top management (levels 13-16)

19 629 22.4 981 450 87 676

Contract (Level 3-5) 118 0.1 59 000 87 676

Contract (Level 6-8) 389 0.4 97 250 87 676

Contract (Level 9-12) 4 698 5.4 293 625 87 676

Contract (Level 13-16 466 0.5 0 87 676

Total 83391 95.1 2132053 701408


Table 3.1.3 Salaries, Overtime, Home Owners Allowance and Medical Aid by programme for the period 1 April 2013 and 31 March 2014

Programme

Salaries Overtime Home Owners Allowance Medical Aid

Amount (R’000

Salaries as a % of person-nel costs

Amount (R’000)

Overtime as a % of personnel costs

Amount (R’000)

HOA as a % of personnel costs

Amount (R’000)

Medical aid as a % of personnel costs

Administration 24423 73.5 171 0.5 875 2.6 1207 3.6

Housing assets, prop management

471 71.6 0 0 3.3 3.3 26 4


31795 71.6 296 0.7 2.8 2.8 1916 4.3

Housing needs research and plan

6684 71.3 52 0.6 1.8 1.8 279 3

Total 63373 288 519 1.8 2288 10.5 3428 14.9

Table 3.1.4 Salaries, Overtime, Home Owners Allowance and Medical Aid by salary band for the period 1 April 2013 and 31 March 2014

Salary band

Salaries Overtime Home Owners Allow-ance

Medical Aid

Amount (R’000

Salaries as a % of personnel costs

Amount (R’000)

Overtime as a % of personnel costs

Amount (R’000)

HOA as a % of personnel costs

Amount (R’000)

Medical aid as a % of per-sonnel costs

Skilled (level 1-2) - - - - - - - -

Skilled (level 3-5) 4547 64.4 - 1 - 5.6 - 9.6


20113 66.9 - 1 - 3.7 - 6.1

Highly skilled supervision (levels 9-12

17451 72.8 - 0.5 - 1.7 - 2.6

Senior manage-ment (level 13-16)

15733 76.5 - 0 - 1.8 - 1.3

Total 57844 280.6 2.5 - 12.8 - 19.6

3.2. Employment and Vacancies

The below tables indicate the number of posts on the establishment, the number of employees, the vacancy rate, additional staff to the establishment.

This information is presented in terms of three key variables:

· programme

· salary band critical occupations (see definition in notes below).


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Table 3.2.1 Employment and vacancies by programme as at 31 March 2014

Programme Number of posts on approved establish-ment

Number of posts filled Vacancy Rate Number of employ-ees additional to the establishment

Administration 159 135 15.1 2

Housing assets management and property management

2 2 0 0

Housing Development 137 132 3.6 13

Housing needs Research and Plan 19 18 5.3 0

Total 317 287 5.3 15

Table 3.2.2 Employment and vacancies by salary band as on 31 March 2014

Salary band Number of posts on approved establish-ment

Number of posts filled Vacancy Rate Number of employees additional to the estab-lishment

Lower skilled ( 1-2) - - - -

Skilled(3-5) 62 51 17.7 0

Highly skilled production (6-8) 141 128 9.2 0

Highly skilled supervision (9-12) 70 66 5.7 1

Senior management (13-16) 22 20 9.1 0

Contract (Level3-5) Permanent 2 2 0 1

Contract (Level 6-8) Permanent 4 4 0 2


Total 317 287 41.7 15

Table 3.2.3 Employment and vacancies by critical occupations as on 31 March 2014

Critical occupation Number of posts on approved establishment

Number of posts filled

Vacancy Rate Number of employees addition-al to the establishment

Administrative related, Permanent 66 62 6.1 4

Bus and heavy vehicle drives, Per-manent

2 2 0 0

Engineers and related professionals, Permanent

17 17 0 8

Financial and related professionals, Permanent

3 3 0 0

Financial clerk and credit control-lers, Permanent

19 13 31.6 0

General legal administration and rel, professionals P

4 3 25 0

Human resources and organisation-al develop and relate p

1 1 0 0

Human resources clerk, Permanent 2 2 0 0

Human resources related, Perma-nent

1 1 0 0


Critical occupation Number of posts on approved establishment

Number of posts filled

Vacancy Rate Number of employees addition-al to the establishment

Library mail and related clerk, Permanent

21 12 42.9 0

Light vehicle drivers, Permanent 1 1 0 0

Material- recording and transport clerk, Permanent

2 2 0 0

Messengers porters and deliverers, Permanent

4 4 0 0

Other administration and related clerks and organisers

55 52 5.5 3

Other administrative policy and related officers, Permanent

72 69 4.2 0

Other information technology per-sonnel, Permanent

6 6 0 0

Other occupations , Permanent 2 2 0 0

Secretaries and other keyboard operating clerk, Permanent

20 17 15 0

Security officers, Permanent 3 3 0 0

Senior managers, Permanent 16 15 6.3 0

total 317 287 136.6 15

3.3. Filling of senior management (SMS) posts

Table 3.3.1 SMS post information as on 31 March 2014

SMS Level Total number of funded SMS posts

Total number of SMS posts filled

% of SMS posts filled

Total number of SMS posts vacant

% of SMS posts vacant

Director-General/ Head of Department

Salary Level 16 1 1 100% 00 00

Salary Level 15 5 4 100% 00 00

Salary Level 14 5 4 100% 1 20%

Salary Level 13 16 14 87,5% 2 12,5%

Total 23 20 86,96% 3 8,7%

Table 3.3.2 SMS post information as on 30 September 2013


Total number of SMS posts filled

% of SMS posts filled

Total number of SMS posts vacant

% of SMS posts vacant

Director-General/ Head of Department 0 0 0 0 0

Salary Level 16 (HoD) 1 1 100% 00 00

Salary Level 15 1 1 100% 00 00

Salary Level 14 5 5 100% 00 00

Salary Level 13 16 14 87,5% 2 12,5%

Total 23 20 86,96 2 13,04%


80

Table 3.3.3 Advertising and filling of SMS posts for the period 1 April 2013 and 31 March 2014

SMS Level Advertising

Number of vacancies per level advertised in 6 months of becom-ing vacant

Filling of posts

Number of vacancies per level filled in 6 months of becoming vacant

Number of vacancies per level not filled in 6 months but filled in 12 months


0 0 0

Salary Level 16 0 0 0




Total 4 1 0

Table 3.3.4 Reasons for not having complied with the filling of funded vacant SMS - Advertised within 6 months and filled within 12 months after becoming vacant for the period 1 April 2013 and 31 March 2014

Reasons for vacancies not advertised within six months

The split of the two departments was not finalised on the system, and officials were finally placed in Human Settlements in November 2013, but without the budget.

Lack of office accommodation contributed to the delay as new appointees cannot be accommodated in the current space.

Scarcity of funds to establish a fully functional Programme 1 hampered the progress, as posts had to be reprioritised.

Reasons for vacancies not filled within twelve months

Chronic shortage of funds to fill the critical vacancies as well as to provide working tools.

Shortage of accommodation to house the new appointees

Table 3.3.5 Disciplinary steps taken for not complying with the prescribed timeframes for filling SMS posts within 12 months for the period 1 April 2013 and 31 March 2014

NONE

3.4 Job Evaluation

Table 3.4.1 Job Evaluation by Salary band for the period 1 April 2013 and 31 March 2014

Salary band Number of posts on approved

establishment

Number of Jobs Evalu-

ated

% of posts evaluated by salary bands

Posts Upgraded Posts downgraded

Number % of posts evaluated


Lower Skilled (Levels1-2) - - - - - - -

Contract (Level 3-5) 2 0 0 0 0 0 0

Contract (Level 6-8) 4 0 0 0 0 0 0

Contract (Level 9-12) 16 0 0 0 0 0 0

Skilled (Levels 3-5) 62 0 0 14 0 0 0

Highly skilled production (Levels 6-8)

141 0 0 0 0 0 0


Salary band Number of posts on approved

establishment

Number of Jobs Evalu-

ated

% of posts evaluated by salary bands

Posts Upgraded Posts downgraded



Highly skilled supervi-sion

(Levels 9-12)

70 0 0 0 0 0 0

Senior Management Service Band A

15 0 0 0 0 0 0

Senior Management Service Band B

5 0 0 0 0 0 0

Senior Management Service Band C

1 0 0 0 0 0 0

Senior Management Service Band D

1 0 0 0 0 0 0

Total 317 0 0 14 0 0 0

Table 3.4.2 Profile of employees whose positions were upgraded due to their posts being upgraded for the period 1 April 2013 and 31 March 2014.

NONE

Table 3.4.3 Employees with salary levels higher than those determined by job evaluation by occupation for the period 1 April 2013 and 31 March 2014.

NONE

Table 3.4.4 Profile of employees who have salary levels higher than those determined by job evaluation for the period 1 April 2013 and 31 March 2014-05-30

NONE

3.5 Employment Changes

Changes in employment over the financial year. Trends in the employment profile of the department.

Table 3.5.1 Annual turnover rates by salary band for the period 1 April 2013 and 31 March 2014

Salary band Number of employees at beginning of period-1 April

2013

Appointments and transfers into the

department

Terminations and transfers out of the department

Turnover rate

Lower skilled ( Levels 1-2) - - - -

Skilled (Levels3-5) 35 6 1 2.9

Highly skilled production (Levels 6-8) 104 4 7 6.7

Highly skilled supervision (Levels 9-12) 41 2 0 0

Senior Management Service Bands A 12 2 0 0

Senior Management Service Bands B 5 0 0 0

Senior Management Service Bands C 1 0 0 0

Senior Management Service Bands D 1 0 0 0

Contract (Level 3-5), Permanent 0 2 0 0


82

Salary band Number of employees at beginning of period-1 April

2013


department


Turnover rate

Contract (Level 6-8), Permanent 0 4 0 0


Contract (Band B), Permanent 1 0 1 100

Total 205 31 9 109.6

Table 3.5.2 Annual turnover rates by critical occupation for the period 1 April 2013 and 31 March 2014

Critical occupation Number of employees at beginning of period-April

2013


department


Turnover rate

Administrative related, Permanent 44 3 2 4.5

Bus and heavy vehicle drivers, Permanent 0 2 0 0

Engineers and related professionals, Permanent

8 9 0 0

Financial and related professionals, Per-manent

1 0 0 0

Financial clerk and credit controllers, Permanent

7 0 1 14.3

Human resources and organisational de-velopment and related Permanent

1 0 0 0

Library mail and related clerks, Permanent 11 0 0 0

Light vehicle drivers, Permanent 0 1 0 0

Messengers porters and deliverers, Perma-nent

4 0 0 0


36 13 1 2.8

Other administrative policy and related officers, Permanent

57 2 3 5.3

Other occupations, Permanent 2 0 0 0

Secretaries and other keyboard operating clerks, Permanent

18 0 2 11.1

Senior managers, Permanent 16 1 0 0

TOTAL 205 31 9 38

Table 3.5.3 Reasons why staff left the department for the period 1 April 2013 and 31 March 2014

Termination Type Number % of Total Resignations

Death - -

Resignation 4 44.4

Expiry of contract 1 11.1

Dismissal – operational changes - -

Dismissal – misconduct 3 33.3

Dismissal – inefficiency - -

Discharged due to ill-health - -


Termination Type Number % of Total Resignations

Retirement 1 11.1

Transfer to other Public Service Departments 3

Other -

Total 12 100

Total number of employees who left as a % of total em-ployment

4,20%

Table 3.5.4 Promotions by critical occupation for the period 1 April 2013 and 31 March 2014

Occupation Employees 1 April 2013

Promotions to another salary

level

Salary level pro-motions as a % of employees by oc-

cupation

Progressions to an-other notch within

a salary level

Notch progression as a % of employees by

occupation

Administrative related 44 6 13.6 24 54.5

Engineers and related profes-sionals

8 0 0 3 37.5

Financial and related profes-sionals

1 0 0 1 100

Financial clerks and credit controllers

7 0 0 3 42.9

Human resources and or-ganisation development and related

1 0 0 2 200

Library mail and related clerks

11 11 100 0 0

Messengers porters and deliverers

4 0 0 3 75


36 2 5.6 18 50

Other administrative policy and related officers

57 4 7 45 78.9

Other occupations 2 1 50 2 100

Secretaries and other key-board operating clerks

18 0 0 6 33.3

Security officers 0 1 0 1 0

Senior managers 16 0 0 15 93.8

TOTAL 205 25 176.20 123 865.90

Table 3.5.5 Promotions by salary band for the period 1 April 2013 and 31 March 2014

Salary Band Employees 1 April 2013


level

Salary bands promotions as a % of employees by salary level

Progressions to another notch within a salary

level

Notch progression as a % of employees

by salary bands

Lower skilled ( Levels 1-2) - - - -

Skilled (Levels3-5) 35 15 42.9 9 25.7

Highly skilled production (Levels 6-8) 104 3 2.9 70 67.3


84

Salary Band Employees 1 April 2013


level

Salary bands promotions as a % of employees by salary level

Progressions to another notch within a salary

level

Notch progression as a % of employees

by salary bands

Highly skilled supervision (Levels 9-12)

41 7 17.1 23 56.1

Senior Management (Level 13-16) 19 0 0 21 110.5

Contract (Level 9-12), Permanent 5 0 0 0 0

Contract (Level 13-16), Permanent 1 0 0 0 0

Total 205 25 62.9 123 259.6

3.6 Employment Equity

Table 3.6.1 Total number of employees (including employees with disabilities) in each of the following occupational categories as on 31 March 2014

Occupational cat-egory

Male Female Total

African Coloured Indian White African Coloured Indian White

Legislators, senior of-ficials and managers

9 0 0 0 5 1 0 0 15

Professionals 9 6 0 3 8 4 0 1 31

Technicians and asso-ciate professionals

50 0 0 5 67 2 0 7 131

Clerks 37 0 0 3 43 2 0 13 98

Service and sales workers

2 0 0 0 1 0 0 0 3

Skilled agriculture and fishery workers

- - - - - - - - -

Craft and related trades workers

- - - - - - - - -

Plant and machine operators and as-semblers

3 0 0 0 1 0 0 0 4

Elementary occupa-tions

5 0 0 0 1 0 0 0 6

Total 115 6 0 11 126 9 0 21 288

Employees with dis-abilities

6 0 11

Table 3.6.2 Total number of employees (including employees with disabilities) in each of the following occupational bands as on 31 March 2014

Occupational band Male Female Total


Top Management 2 0 0 0 0 0 0 0 2

Senior Management 9 0 0 0 8 1 0 0 18

Professionally quali-fied and experienced specialists and mid-management

29 0 0 8 26 1 0 2 66




Skilled technical and academically qualified workers, junior man-agement, supervisors, foreman and superin-tendents

35 0 0 3 68 3 0 19 128

Semi-skilled and discretionary decision making

30 0 0 0 20 1 0 0 51

Unskilled and defined decision making

- - - - - - - - -

Contract (Profes-sionally qualified) Permanent

7 6 0 0 0 3 0 0 16

Contract (skilled tech-nical) Permanent

3 0 0 0 1 0 0 0 4

Contract (semi-skilled) Permanent

0 0 0 0 2 0 0 0 2

Total 115 6 0 11 125 9 0 21 287

Table 3.6.3 Recruitment for the period 1 April 2013 to 31 March 2014



Top Management - - - - - - - - -


Professionally quali-fied and experienced specialists and mid-management

0 0 0 0 2 0 0 0 2

Skilled technical and academically quali-fied workers, junior management, super-visors, foreman and superintendents

1 0 0 0 3 0 0 0 4

Semi-skilled and discretionary decision making

5 0 0 0 1 0 0 0 6

Unskilled and defined decision making

- - - - - - - - -

Contract ( Profes-sionally qualified), Permanent

2 6 0 0 0 3 0 0 11

Contract (Skilled technical), Permanent

3 0 0 0 1 0 0 0 4

Contract (Semi-skilled), Permanent

0 0 0 0 2 0 0 0 2

Total 13 6 0 0 9 3 0 0 31

Employees with dis-abilities


86

Table 3.6.4 Promotions for the period 1 April 2013 to 31 March 2014





Professionally qualified and experienced specialists and mid-management

13 0 0 2 14 0 0 1 30

Skilled technical and aca-demically qualified work-ers, junior management, supervisors, foreman and superintendents

24 0 0 2 35 1 0 11 73

Semi-skilled and discretion-ary decision making

21 0 0 0 3 0 0 0 24

Unskilled and defined deci-sion making

- - - - - - - - -

Total 64 0 0 4 63 3 0 14 148

Employees with disabilities - - - - - - - - -

Table 3.6.5 Terminations for the period 1 April 2013 to 31 March 2014




Senior Management - - - - - - - - -

Professionally qualified and experienced specialists and mid-management

- - - - - - - - -

Skilled technical and aca-demically qualified work-ers, junior management, supervisors, foreman and superintendents

1 0 0 4 0 0 0 2 7

Semi-skilled and discretion-ary decision making

0 0 0 1 0 0 0 0 1

Unskilled and defined deci-sion making

- - - - - - - - -

Contract (Senior Manage-ment), Permanent

1 0 0 0 0 0 0 0 1

Total 2 0 0 5 0 0 0 2 8

Employees with Disabilities - - - - - - - --

Table 3.6.6 Disciplinary action for the period 1 April 2013 to 31 March 2014

Disciplinary action Male Female Total


Dismissals 1 0 0 2 2 0 0 0 5

3 months suspension without pay, final warning and counselling

0 0 0 0 1 0 0 0 1


Table 3.6.7 Skills development for the period 1 April 2013 to 31 March 2014

Occupational category Male Female Total


Legislators, senior officials and managers

42 0 0 0 27 4 0 0 73

Professionals 4 0 6 3 13

Technicians and associate professionals

0 0 0 0 0 0 0 0 0

Clerks 65 0 0 21 68 9 0 29 192

Service and sales workers 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0

Plant and machine operators and assemblers

0 0 0 0 0 0 0 0 0

Elementary occupations 0 0 0 0 0 0 0 0 0

Total 278

Employees with disabilities 0 0 0 0 0 0 0 0 0

3.7 Signing of Performance Agreements by SMS Members

No disciplinary action has been taken against SMS members

Table 3.7.1 Signing of Performance Agreements by SMS members as on 31 May 2013


Total number of SMS members

Total number of signed performance agree-

ments

Signed performance agreements as % of total number of SMS members


Salary Level 16 1 1 1 100%




Total 21 21 13 61%

Table 3.7.2 Reasons for not having concluded Performance agreements for all SMS members as on 31 March 2014

Reasons

Two SMS members were appointed late in 2013/2014

Four SMS (Directors) and two Chief Directors were suspended during the year 2013/2014


88

Table 3.7.3 Disciplinary steps taken against SMS members for not having concluded Performance agreements as on 31 May 2013

Reasons

Two SMS members were appointed late in 2013/2014

Four SMS (Directors) and two Chief Directors were suspended during the year 2013/2014

3.8 Performance Rewards

Table 3.8.1 Performance Rewards by race, gender and disability for the period 1 April 2013 to 31 March 2014

Race and Gender

Beneficiary Profile Cost

Number of ben-eficiaries

Number of em-ployees

% of total within group

Cost (R’000) Average cost per employee

African

Male 29 76 41 5%

Female 40 77 42 5%

Asian

Male 0 0 0 5%

Female 1 1 0,5 5%

Coloured

Male 0 0 0

Female 1 2 0,5 5%

White

Male 5 8 4,3 5%

Female 12 18 9 5%

Total 88 181 100% R1 280 301.37 5%

Table 3.8.2 Performance Rewards by salary band for personnel below Senior Management Service for the period 1 April 2013 to 31 March 2014

Salary band

Beneficiary Profile Cost Total cost as a % of the total person-nel expenditureNumber of ben-

eficiariesNumber of employees

% of total within salary bands

Total Cost (R’000) Average cost per employee

Lower Skilled (Levels 1-2)

0 0 0 0 0 0

Skilled (level 3-5)

16 36 19% R65 243.59 5% 5%

Highly skilled production (level 6-8)

77 97 53% R745 568.74 5% 58%

Highly skilled supervision (level 9-12)

20 48 26% R469 489.04 5% 37%

Total 113 181 100% R1 280 301.37 5% 100%


Table 3.8.3 Performance Rewards by critical occupation for the period 1 April 2013 to 31 March 2014

NONE

Table 3.8.4 Performance related rewards (cash bonus), by salary band for Senior Management Service for the period 1 April 2013 to 31 March 2014

Note should be taken that the performance rewards made were for the assessment period of 2012/2013 and were only implemented in the 2013/2014 financial year.

Salary band

Beneficiary Profile Cost Total cost as a % of the total person-nel expendi-ture

Number of beneficiaries

Number of em-

ployees

% of total within sal-ary bands

Total Cost (R’000)

Average cost per employee

Band A HOD 1 0 0 0 0

Band B DDG 0 1 0

Band C (Chief Directors)

2 4 50% R156 459.81 5% and 10% of the salaries of the employees

Band D (Direc-tors)

7 15 53% R397 249.26 3 employees are at 5% of their salaries and other 3 employees received 10% of their salaries and one employee received only notch.

Total 11 21 100% R553 709.07 9% 0

3.9 Leave Utilisation

Table 3.9.1 Sick leave for the period 1 January 2013 to 31 December 2013

Salary band Total days % Days with Medical certifi-

cation

Number of Employees us-ing sick leave

% of total em-ployees using

sick leave

Average days per em-ployee

Estimated Cost (R’000)

Lower Skills (Level 1-2)

Skilled (levels 3-5) 337.5 91 36 22.4 9 134


615 82.9 85 52.8 7 402

Highly skilled supervision (levels 9 -12)

250 89.2 29 18 9 370

Top and Senior management (levels 13-16)

59 79.7 10 6.2 6 192

Total 12615 342.8 160 99.4 31 1098

Table 3.9.2 Disability leave (temporary and permanent) for the period 1 January 2013 to 31 December 2013


cation

Number of Employees us-ing disability

leave

% of total employees us-ing disability

leave



Lower skilled (Levels 1-2) - - - - - -

Skilled (Levels 3-5) - - - - - -


- - - - - -

Highly skilled supervision (Levels 9-12)

25 100 1 100 25 33


90


cation

Number of Employees us-ing disability

leave

% of total employees us-ing disability

leave



Senior management (Levels 13-16) - - - - - -

Total 25 100 1 100 25 33

Table 3.9.3 Annual Leave for the period 1 January 2013 to 31 December 2013

Salary band Total days taken Number of Employees using annual leave

Average per employee

Lower skilled (Levels 1-2) - - -

Skilled Levels 3-5) 615.92 14 45

Highly skilled production (Levels 6-8) 2271 19 122

Highly skilled supervision(Levels 9-12) 849 15 56

Senior management (Levels 13-16) 283 22 13

Total 4018.92 70 236

Table 3.9.4 Capped leave for the period 1 January 2013 to 31 December 2013

Salary band Total days of capped leave taken

Number of Employees using capped leave

Average number of days taken per employee

Average capped leave per employee as on 31

March 20ZZ

Lower skilled (Levels 1-2) - - - -

Skilled Levels 3-5) - - - -


1 1 1 32

Highly skilled supervision(Levels 9-12)

- - - -

Senior management (Levels 13-16)

- - - -

Total 1 1 1 32

Table 3.9.5 Leave payouts for the period 1 April 2013 and 31 March 2014

Reason Total amount (R’000)

Number of employees Average per employ-ee (R’000)

Leave payout for 2013/14 due to non-utilisation of leave for the previous cycle

69 5 13800

Capped leave payouts on termination of service for 2013/14 237 13 18231

Current leave payout on termination of service for 2013/14 108 7 15429

Total 414 25 47460

3.10 HIV/AIDS & Health Promotion Programmes

Table 3.10.1 Steps taken to reduce the risk of occupational exposure

Units/categories of employees identified to be at high risk of contracting HIV & related diseases (if any)

Key steps taken to reduce the risk

- The department will continue with awareness campaigns targeting all employees.


Table 3.10.2 Details of Health Promotion and HIV/AIDS Programmes

Question Yes No Details, if yes

1. Has the department designated a member of the SMS to implement the provisions contained in Part VI E of Chapter 1 of the Public Service Regulations, 2001? If so, provide her/his name and position.

x Mr Gift Silingile: Deputy Director Employee Health and Wellness

2. Does the department have a dedicated unit or has it desig-nated specific staff members to promote the health and well-being of your employees? If so, indicate the number of employ-ees who are involved in this task and the annual budget that is available for this purpose.

x The department has the employee health and wellness unit in which there are only two employees. the unit does not have a dedicated budget to implement the four EHW pillars

3. Has the department introduced an Employee Assistance or Health Promotion Programme for your employees? If so, indi-cate the key elements/services of this Programme.

x Programs were introduced while the department was one (COGTA and HS), but with the split and budget shortage none of the programmes have been implemented in the Human Settlements department.

4. Has the department established (a) committee(s) as contem-plated in Part VI E.5 (e) of Chapter 1 of the Public Service Regu-lations, 2001? If so, please provide the names of the members of the committee and the stakeholder(s) that they represent.

x Joint committees were in existence, but recommendations have been made for the establishment and appointment of the committees. submission

5. Has the department reviewed its employment policies and practices to ensure that these do not unfairly discriminate against employees based on their HIV status? If so, list the em-ployment policies/practices so reviewed.

x The department incorporates in its recruit-ment and employment policies the non-discrimination clause based on the HIV status of an individual.

6. Has the department introduced measures to protect HIV-positive employees or those perceived to be HIV-positive from discrimination? If so, list the key elements of these measures.

x A draft HIV and AIDS policy is drafted and sent to the Director HRM for scrutinising and to the deputy director of wellness Hu-man Settlement, for new amendments.

7. Does the department encourage its employees to undergo Voluntary Counselling and Testing? If so, list the results that you have you achieved.

x The unit made proposals for voluntary counselling and testing, but Programmes could not take place due to budget. The department has participated in the HCT sessions coordinated by the office of the premier.

8. Has the department developed measures/indicators to moni-tor & evaluate the impact of its health promotion programme? If so, list these measures/indicators.

x Not yet, but DPSA has provide some na-tional guidelines in terms of monitoring.

3.11 Labour Relations

Table 3.11.1 Collective agreements for the period 1 April 2013 and 31 March 2014

Subject matter Date

PSCBC Resolution 2 of 2013: Agreement of increase of levies 02 September 2013

PSCBC Resolution 1 of 2013: Service Charter 08 June 2013

Total number of Collective agreements None


92

Table 3.11.2 Misconduct and disciplinary hearings finalised for the period 1 April 2013 and 31 March 2014

Outcomes of disciplinary hearings Number % of total

Correctional counselling 1 11.11%

Verbal warning 0 0%

Written warning 0 0%

Final written warning 1 11.11%

Suspended without pay 1 11.11%

Fine 0 0%

Demotion 0 0%

Dismissal 6 66.66%

Not guilty 0 0%

Case withdrawn 1 11.11%

Total 10 100%

Total number of Disciplinary Hearings finalised 6

Table 3.11.3 Types of misconduct addressed at disciplinary hearings for the period 1 April 2013 and 31 March 2014

Type of misconduct Number % of total

Fraud and gross dishonesty 1 14.28%

Financial irregularities 6 85.71%

Total 7 100%

Table 3.11.4 Grievances logged for the period 1 April 2013 and 31 March 2014

Grievances Number % of Total

Number of grievances resolved 5 62.5%

Number of grievances not resolved 3 37.5%

Total number of grievances lodged 8 100%

Table 3.11.5 Disputes logged with Councils for the period 1 April 2013 and 31 March 2014

Disputes Number % of Total

Number of disputes upheld 11 100%

Number of disputes dismissed 0 0

Total number of disputes lodged 11 100%

Table 3.11.6 Strike actions for the period 1 April 2013 and 31 March 2014

NONE


Table 3.11.7 Precautionary suspensions for the period 1 April 2013 and 31 March 2014

Number of people suspended 14

Number of people who’s suspension exceeded 30 days 14

Average number of days suspended 368,28

Cost of suspension(R’000) R 23 988 015

3.12 Skills development

This section highlights the efforts of the department with regard to skills development.

Table 3.11.1 Training needs identified for the period 1 April 2013 and 31 March 2014


94

Occupational category Gender Number of employees as at

1 April 20YY

Training needs identified at start of the reporting period

Learnerships Skills Pro-grammes & other short

courses

Other forms of training Total


Female 31 0 Executive and Leader-ship

· Corporate Gover-nance

· Monitoring and Evaluation

· Strategic Planning

· Risk Management

· Service Delivery Improvement

· Fraud Prevention and Anti-Corruption

· Financial Manage-ment

· Budgeting

· Project Khaedu

· Labour Relations

31

Male 42 0 Manage-ment and Leadership

· Corporate Gover-nance



· Performance Man-agement

· Risk Management

· Service Delivery Improvement


· Financial Manage-ment

· Budgeting

· Mentoring and coaching

· Project Khaedu

· Dialogic Facilitation

· Labour Relations

· Conflict resolution

· Knowledge manage-ment

· Report writing

42


Professionals Female 3 0 None None 3

Male 10 0 None None 10

Technicians and associate profes-sionals

Female 0 0 None None

Male 0 0 · Report Writing

· Project Management

· Presentation Skills

Clerks Female 113 0 Junior Man-agement

· Report Writing

· Communication

· Supervisory skills

· Computer skills

· Facilitation skills

· Batho Pele Principles

· Customer Care

· Secretarial Develop-ment



113

Male 90 0 Junior Man-agement

· Report Writing

· Communication


· Computer skills



· Customer Care

· Secretarial Develop-ment



90

Service and sales workers Female 0 0 - - 0

Male 0 0 - - 0


Female 0 0 - - 0

Male 0 0 - - 0

Craft and related trades workers Female 0 0 - - 0

Male 0 0 - - 0

Plant and machine operators and assemblers

Female 0 0 - - 0

Male 0 0 - - 0

Elementary occupations Female 0 0 - - 0

Male 0 0 - - 0

Sub Total Female 0 0 - - 0

Male 0 0 - - 0

Total 289 0 - - 289


96Table 3.11.2 Training provided for the period 1 April 2013 and 31 March 2014

Occupational category Gender Number of em-ployees as at 1

April 20YY

Training provided within the reporting periodLearnerships Skills Pro-

grammes & other

short courses



Female Female 31 0 · Corporate Governance



· Performance Manage-ment

· Risk Management

· Service Delivery Improve-ment

· Fraud Prevention and An-ti-Corruption

· Financial Management

· Budgeting


· Project Khaedu


· Labour Relations


· Knowledge management

· Report writingMale Male 42 0 · Corporate Governance



· Performance Management

· Risk Management

· Service Delivery Improve-ment


· Financial Management

· Budgeting


· Project Khaedu


· Labour Relations


· Knowledge management

· Report writing



April 20YY


grammes & other

short courses


Professionals Female Female 3 0 None

Male Male 10 0 None

Technicians and associate professionals

Female Female 0 0 None

Male Male · Report Writing



Clerks Female Female 106 0 · Report Writing

· Communication


· Computer skills



· Customer Care

· Secretarial Development



Bursaries

Male Male 86 0 · Report Writing

· Communication


· Computer skills



· Customer Care

· Secretarial Development



Bursaries

Service and sales workers Female Female 0 0 0 0

Male Male 0 0 0 0

Skilled agriculture and fish-ery workers

Female Female 0 0 0 0

Male Male 0 0 0 0



Male Male 0 0 0 0


98


April 20YY


grammes & other

short courses


Plant and machine opera-tors and assemblers


Male Male 0 0 0 0

Elementary occupations Female Female 0 0 0 0

Male Male 0 0 0 0

Sub Total Female Female

Male Male

Total 278

3.13 Injury on duty

Table 3.13.1 Injury on duty for the period 1 April 2013 and 31 March 2014

NONE

3.14 Utilisation of Consultants

Table 3.14.1 Report on consultant appointments using appropriated funds for the period 1 April 2013 and 31 March 2014

Total number of projects Total individual consultants Total Duration (work days)

Total Contract value in Rand

6 6 12 Months R6, 504 000. 00

NB the appointment of consultants was a deviation from SCM procedures

Table 3.14.2 Analysis of consultant appointments using appropriated funds, in terms of Historically Disadvantaged Individuals (HDIs) for the period 1 April 2013 and 31 March 2014

NONE

Table 3.14.3 Report on consultant appointments using donor funds for the period 1 April 2013 and 31 March 2014

NONE

Table 3.14.4 Analysis of consultant appointments using donor funds, in terms of Historically Disadvantaged Individuals (HDIs) for the period 1 April 2013 and 31 March 2014

NONE

3.15 Severance Packages

Table 3.15.1 Granting of employee initiated severance packages for the period 1 April 2013 and 31 March 2014

NONE


3.16 Foreign Workers

Table 3.16.1 Foreign workers by salary band for the period 1 April 2013 and 31 March 2014

Salary band 01 April 2013 31 March 2014 Change

Number % of total Number % of total Number % Change

Lower skilled - - - - - -

Highly skilled production (Lev. 6-8) 0 0 1 8.3 1 8.3

Highly skilled supervision (Lev. 9-12) - - - - - -

Contract (level 9-12) 0 0 11 91.7 11 91.7

Contract (level 13-16) - - - - - -

Total 0 0 12 100 12 100

Table 3.16.2 Foreign workers by major occupation for the period 1 April 2013 and 31 March 2014

Major occupation 01 April 2013 31 March 2014 Change

Number % of total Number % of total Number % Change

Professionals and managers

0 0 12 100 12 100

Total 0 0 12 100 12 100


100

PART E: FINANCIAL INFORMATION

PART E: FINANCIAL INFORMATION


Report of the Auditor General 102

Annual Financial Statements 109

Appropriation Statement 109

Notes to the Appropriation Statement 119

Statement of Financial Performance 121

Statement of Financial Position 122

Statement of Changes in Net Assets 123

Cash Flow Statement 124

Accounting Policies 125

Notes to the Annual Financial Statements 131

Annexures 160


102

109 to 159



104

46 to 54).

160 to 173


29 to 56


106



108

Dep

artm

ent o

f Hum

an S

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Department of Human Settlements VOTE 13

NOTES TO THE APPROPRIATION STATEMENT

for the year ended 31 March 2014

13

1. Detail of transfers and subsidies as per Appropriation Act (after Virement): Detail of these transactions can be viewed in the note on Transfers and subsidies, disclosure notes and Annexure 1 (A-E) to the Annual Financial Statements.

2. Detail of specifically and exclusively appropriated amounts voted (after Virement): Detail of these transactions can be viewed in note 1 (Annual Appropriation) to the Annual Financial Statements.

3. Detail on payments for financial assets Detail of these transactions per programme can be viewed in the note on Payments for financial assets to the Annual Financial Statements.

4. Explanations of material variances from Amounts Voted (after Virement): 4.1 Per programme Final

Appropriation R’000

Actual Expenditure

R’000

Variance

R’000

Variance as a % of Final

Appropriation

Programme 1: Administration 68 672 68 257 415 1%

The reasons for underspending in this programme was caused by:

- Payment on Capital Assets: Late quotations received by the department from suppliers mainly on capital assets and assets below R 5 000.

- Goods and Services: Differences in the bank account details as per the invoices and those per the account on the system caused delays in payments as well as cost containment measures were implemented during the year.

Compensation of employees: Special adjustments to appropriation by Provincial Treasury to assist the Department of Education with bursaries.

Programme 2: Housing Needs, Research and Planning

13 194 12 829 365 3%


- Compensation of Employees: Less overtime was paid during the year.

- Goods and Services: Cost containment measures were implemented during the year.

- Capital Assets: Procurement plans were not submitted by the relevant officials requiring acquisitions of office equipment.

Programme 3: Housing Development

1 401 294 1 400 500 794 0%


- Compensation of Employees: Funded posts were not filled during the year.

- Goods and Services: Cost containment measures were implemented during the year. (Continued…)


120


NOTES TO THE APPROPRIATION STATEMENT


14

Capital Assets: Procurement plans were not submitted by the relevant officials requiring acquisitions of office equipment.

Programme 4: Housing Assets Management and Property Management

1 007 175 832 83%

The main areas of underspending on this programme were in compensation of employees, goods and services and capital assets. The main reason is due to the dormant state of the Free State Housing Fund, which was established to provide low cost housing in the Free State in terms of the Free State Housing Act of 1999, and therefore activities within this programme were scaled down.

4.2 Per economic classification Final

Appropriation Actual

Expenditure Variance Variance as a

% of Final Appropriation

R’000 R’000 R’0f00 R’000 Current payments Compensation of employees 92 624 92 442 182 0% Goods and services 37 511 35 832 1 679 4% Interest and rent on land 106 106 - 0% Transfers and subsidies Households 1 350 993 1 350 993 - 0% Gifts and donations 808 808 - 0%

Payments for capital assets Buildings and other fixed structures 2 125 1 379 746 35% Payments for financial assets - 201 (201) 100%

The main reasons for the variances are:

- Compensation of employees: Special adjustments to appropriation by Provincial Treasury to assist the Department of Education with bursaries and funded posts not filled.

- Goods and Services: Cost containment measures implemented during the year.

- Capital Assets: Procurement plans were not submitted by the relevant officials requiring acquisitions of office equipment as well as late quotations received by the department from suppliers mainly on capital assets and assets below R 5 000.

4.3 Per conditional grant Final

Appropriation Actual

Expenditure Variance Variance as a

% of Final Appropriation

R’000 R’000 R’000 R’000

Human Settlements Human Settlements Development Grant

1 350 936 1 350 936 - 0%



STATEMENT OF FINANCIAL PERFORMANCE


15

Note 2013/14 2012/13 R'000 R'000 REVENUE

Annual appropriation 1 1 484 167 1 089 073 TOTAL REVENUE 1 484 167 1 089 073 EXPENDITURE

Current expenditure Compensation of employees 3 92 442 64 901 Goods and services 4 35 832 25 641 Interest and rent on land 5 106 114 Total current expenditure 128 380 90 656 Transfers and subsidies Transfers and subsidies 7 1 351 801 976 387 Total transfers and subsidies 1 351 801 976 387 Expenditure for capital assets Tangible assets 8 1 379 1 009 Total expenditure for capital assets 1 379 1 009 Payments for financial assets 6 201 - TOTAL EXPENDITURE 1 481 761 1 068 052 SURPLUS/(DEFICIT) FOR THE YEAR 2 406 21 021

Reconciliation of Net Surplus/(Deficit) for the year

Voted funds 2 406 21 021 Annual appropriation 2 406 4 825 Conditional grants - 16 196

SURPLUS/(DEFICIT) FOR THE YEAR 2 406 21 021


122


STATEMENT OF FINANCIAL POSITION

as at 31 March 2014

16

Note 2013/14 2012/13 R'000 R'000 ASSETS Current assets 8 081 25 636

Unauthorised expenditure 9 29 29 Cash and cash equivalents 10 20 17 446 Prepayments and advances 11 238 175 Receivables 12 7 794 7 986

Non-current assets - - TOTAL ASSETS 8 081 25 636 LIABILITIES Current liabilities 5 374 22 743

Voted funds to be surrendered to the Revenue Fund 13 2 406 21 050 Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund

14 -

37

Bank overdraft 15 1 140 - Payables 16 1 828 1 656

Non-current liabilities - - TOTAL LIABILITIES 5 374 22 743 NET ASSETS 2 707 2 893

Represented by:

Recoverable revenue 2 707 2 893 TOTAL 2 707 2 893



STATEMENT OF CHANGES IN NET ASSETS


17

2013/14 2012/13 R'000 R'000 Recoverable revenue Opening balance 2 893 - Transfers: (186) 2 893

Debts recovered (included in departmental receipts) (207) (51) Debts raised 21 2 944

Closing balance 2 707 2 893 TOTAL 2 707 2 893


124


CASH FLOW STATEMENT


18

Note 2013/14 2012/13 R'000 R’000 CASH FLOWS FROM OPERATING ACTIVITIES

Receipts 1 484 822 1 089 266 Annual appropriated funds received 1.1 1 484 167 1 089 073 Departmental revenue received 2 641 182 Interest received 2.2 14 11

Net (increase)/decrease in working capital 301 (6 842) Surrendered to Revenue Fund (21 742) (32 260) Current payments (128 274) (90 513) Interest paid 5 (106) (114) Payments for financial assets (201) - Transfers and subsidies paid (1 351 801) (976 387) Net cash flow available from operating activities 17 (17 001) (16 850) CASH FLOWS FROM INVESTING ACTIVITIES

Payments for capital assets 8 (1 379) (1 009) Net cash flows from investing activities (1 379) (1 009) CASH FLOWS FROM FINANCING ACTIVITIES

Increase/(decrease) in net assets 1 238 2 893 Net cash flows from financing activities 1 238 2 893 Net increase/(decrease) in cash and cash equivalents (18 566) (14 966)

Cash and cash equivalents at beginning of period 17 446 32 412 Cash and cash equivalents at end of period 18 (1 120) 17 446



ACCOUNTING POLICIES


19

Summary of significant accounting policies The financial statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated. The historical cost convention has been used, except where otherwise indicated. Management has used assessments and estimates in preparing the annual financial statements. These are based on the best information available at the time of preparation. Where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial statements and to comply with the statutory requirements of the Public Finance Management Act (PFMA), Act 1 of 1999 (as amended by Act 29 of 1999), and the Treasury Regulations issued in terms of the PFMA and the annual Division of Revenue Act.

1 Basis of preparation The financial statements have been prepared in accordance with the Modified Cash Standard.

2 Going concern The financial statements have been prepared on a going concern basis.

3 Presentation currency Amounts have been presented in the currency of the South African Rand (R), which is also the functional currency of the department.

4 Rounding Unless otherwise stated financial figures have been rounded to the nearest one thousand Rand (R’000).

5 Foreign currency translation Cash flows arising from foreign currency transactions are translated into South African Rands using the exchange rates prevailing at the date of payment / receipt.

6 Current year comparison with budget A comparison between the approved, final budget and actual amounts for each programme and economic classification is included in the appropriation statement.

7 Revenue

7.1 Appropriated funds Appropriated funds comprises of departmental allocations as well as direct charges against the revenue fund (i.e. statutory appropriation). Appropriated funds are recognised in the statement of financial performance on the date the appropriation becomes effective. Adjustments made in terms of the adjustments budget process are recognised in the statement of financial performance on the date the adjustments become effective. The net amount of any appropriated funds due to / from the relevant revenue fund at the reporting date is recognised as a payable / receivable in the statement of financial position.


126


ACCOUNTING POLICIES


20

7.2 Departmental revenue Departmental revenue is recognised in the statement of financial performance when received and is subsequently paid into the relevant revenue fund, unless stated otherwise. Any amount owing to the relevant revenue fund at the reporting date is recognised as a payable in the statement of financial position.

7.3 Accrued departmental revenue Accruals in respect of departmental revenue (excluding tax revenue) are recorded in the notes to the financial statements when: • it is probable that the economic benefits or service potential associated with the

transaction will flow to the department; and • the amount of revenue can be measured reliably. The accrued revenue is measured at the fair value of the consideration receivable. Accrued tax revenue (and related interest and / penalties) is measured at amounts receivable from collecting agents.

8 Expenditure

8.1 Compensation of employees

8.1.1 Salaries and wages Salaries and wages are recognised in the statement of financial performance on the date of payment.

8.1.2 Social contributions Social contributions made by the department in respect of current employees are recognised in the statement of financial performance on the date of payment. Social contributions made by the department in respect of ex-employees are classified as transfers to households in the statement of financial performance on the date of payment.

8.2 Other expenditure Other expenditure (such as goods and services, transfers and subsidies and payments for capital assets) is recognised in the statement of financial performance on the date of payment. The expense is classified as a capital expense if the total consideration paid is more than the capitalisation threshold.

8.3 Accrued expenditure payable Accrued expenditure payable is recorded in the notes to the financial statements when the goods are received or, in the case of services, when they are rendered to the department. Accrued expenditure payable is measured at cost.

8.4 Leases

8.4.1 Operating leases Operating lease payments made during the reporting period are recognised as current expenditure in the statement of financial performance on the date of payment. The operating lease commitments are recorded in the notes to the financial statements.



ACCOUNTING POLICIES


21

8.4.2 Finance leases Finance lease payments made during the reporting period are recognised as capital expenditure in the statement of financial performance on the date of payment. The finance lease commitments are recorded in the notes to the financial statements and are not apportioned between the capital and interest portions. Finance lease assets acquired at the end of the lease term are recorded and measured at the lower of: • cost, being the fair value of the asset; or • the sum of the minimum lease payments made, including any payments made to

acquire ownership at the end of the lease term, excluding interest.

9 Aid Assistance

9.1 Aid assistance received Aid assistance received in cash is recognised in the statement of financial performance when received. In-kind aid assistance is recorded in the notes to the financial statements on the date of receipt and is measured at fair value. Aid assistance not spent for the intended purpose and any unutilised funds from aid assistance that are required to be refunded to the donor are recognised as a payable in the statement of financial position.

9.2 Aid assistance paid Aid assistance paid is recognised in the statement of financial performance on the date of payment. Aid assistance payments made prior to the receipt of funds are recognised as a receivable in the statement of financial position.

10 Cash and cash equivalents Cash and cash equivalents are stated at cost in the statement of financial position. Bank overdrafts are shown separately on the face of the statement of financial position. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held, other short-term highly liquid investments and bank overdrafts.

11 Prepayments and advances Prepayments and advances are recognised in the statement of financial position when the department receives or disburses the cash. Prepayments and advances are initially and subsequently measured at cost.

12 Loans and receivables Loans and receivables are recognised in the statement of financial position at cost plus accrued interest, where interest is charged, less amounts already settled or written-off.

13 Investments Investments are recognised in the statement of financial position at cost.

14 Impairment of financial assets Where there is an indication of impairment of a financial asset, an estimation of the reduction in the recorded carrying value, to reflect the best estimate of the amount of the


128


ACCOUNTING POLICIES


22

future economic benefits expected to be received from that asset, is recorded in the notes to the financial statements.

15 Payables Loans and receivables are recognised in the statement of financial position at cost.

16 Capital Assets

16.1 Immovable capital assets Immovable capital assets are initially recorded in the notes to the financial statements at cost. Immovable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of immovable capital assets cannot be determined accurately, the immovable capital assets are measured at R1 unless the fair value of the asset has been reliably estimated, in which case the fair value is used. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1. Immovable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the immovable asset is recorded by another department in which case the completed project costs are transferred to that department.

16.2 Movable capital assets Movable capital assets are initially recorded in the notes to the financial statements at cost. Movable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of movable capital assets cannot be determined accurately, the movable capital assets are measured at fair value and where fair value cannot be determined; the movable assets are measured at R1. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1. Movable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the movable asset is recorded by another department/entity in which case the completed project costs are transferred to that department.

16.3 Intangible assets Intangible assets are initially recorded in the notes to the financial statements at cost. Intangible assets acquired through a non-exchange transaction are measured at fair value as at the date of acquisition. Internally generated intangible assets are recorded in the notes to the financial statements when the department commences the development phase of the project. Where the cost of intangible assets cannot be determined accurately, the intangible capital assets are measured at fair value and where fair value cannot be determined; the intangible assets are measured at R1. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are



ACCOUNTING POLICIES


23

recorded at R1. Intangible assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the intangible asset is recorded by another department/entity in which case the completed project costs are transferred to that department.

17 Provisions and Contingents

17.1 Provisions Provisions are recorded in the notes to the financial statements when there is a present legal or constructive obligation to forfeit economic benefits as a result of events in the past and it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate of the obligation can be made. The provision is measured as the best estimate of the funds required to settle the present obligation at the reporting date.

17.2 Contingent liabilities Contingent liabilities are recorded in the notes to the financial statements when there is a possible obligation that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the department or when there is a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured reliably

17.3 Contingent assets Contingent assets are recorded in the notes to the financial statements when a possible asset arises from past events, and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not within the control of the department

17.4 Commitments Commitments are recorded at cost in the notes to the financial statements when there is a contractual arrangement or an approval by management in a manner that raises a valid expectation that the department will discharge its responsibilities thereby incurring future expenditure that will result in the outflow of cash

18 Unauthorised expenditure Unauthorised expenditure is recognised in the statement of financial position until such time as the expenditure is either: • approved by Parliament or the Provincial Legislature with funding and the related

funds are received; or • approved by Parliament or the Provincial Legislature without funding and is written off

against the appropriation in the statement of financial performance; or • transferred to receivables for recovery. Unauthorised expenditure is measured at the amount of the confirmed unauthorised expenditure.


130


ACCOUNTING POLICIES


24

19 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the total value of the fruitless and / or wasteful expenditure incurred. Fruitless and wasteful expenditure is removed from the notes to the financial statements when it is resolved or transferred to receivables for recovery. Fruitless and wasteful expenditure receivables are measured at the amount that is expected to be recoverable and are de-recognised when settled or subsequently written-off as irrecoverable.

20 Irregular expenditure Irregular expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the total value of the irregularity unless it is impracticable to determine, in which case reasons therefor are provided in the note. Irregular expenditure is removed from the note when it is either condoned by the relevant authority or transferred to receivables for recovery. Irregular expenditure receivables are measured at the amount that is expected to be recoverable and are de-recognised when settled or subsequently written-off as irrecoverable.

21 Changes in accounting estimates Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly.

22 Prior period errors Where material accounting errors, which relate to prior periods, have been identified in the current year, the correction is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly.

23 Non-adjusting events after the reporting date The Department will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken based on the financial statements.



NOTES TO THE ANNUAL FINANCIAL STATEMENTS


25

1. Annual Appropriation

1.1 Annual Appropriation Included are funds appropriated in terms of the Appropriation Act (and the Adjustments Appropriation Act) for National Departments (Voted funds) and Provincial Departments:

2013/14 2012/13

Final Appropriation

Actual Funds

Received

Funds not requested/

not received

Appropriation received

R’000 R’000 R’000 R’000 Administration 68 672 68 672 - 32 232 Housing Needs, research & planning 13 194 13 194 - 8 936 Housing Development 1 401 294 1 401 294 - 1 046 969 Housing Assets Management & Property Management

1 007

1 007

-

936

Total 1 484 167 1 484 167 - 1 089 073

1.2 Conditional grants Note 2013/14 2012/13 R’000 R’000 Total grants received 32 1 350 936 991 804 Provincial grants included in Total Grants received - -

2. Departmental revenue Note 2013/14 2012/13 R’000 R’000 Sales of goods and services other than capital assets

2.1

284

55

Interest, dividends and rent on land 2.2 14 11 Transactions in financial assets and liabilities 2.3 357 127 Total revenue collected 655 193 Less: Own revenue included in appropriation 14 655 193 Departmental revenue collected - -


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26

2.1 Sales of goods and services other than capital assets Note 2013/14 2012/13 R’000 R’000 Sales of goods and services produced by the department

2 284

55

Administrative fees 284 55 Total 284 55 2.2 Interest, dividends and rent on land Note 2013/14 2012/13 2 R’000 R’000 Interest 14 11 Total 14 11 2.3 Transactions in financial assets and liabilities Note 2013/14 2012/13 2 R’000 R’000 Other Receipts including Recoverable Revenue 357 127 Total 357 127

3. Compensation of employees

3.1 Salaries and Wages Note 2013/14 2012/13 R’000 R’000 Basic salary 63 015 44 044 Performance award 2 314 1 275 Service Based 247 441 Compensative/circumstantial 1 060 561 Other non-pensionable allowances 14 167 10 568 Total 80 803 56 889





27

3.2 Social contributions

Note 2013/14 R’000

2012/13 R’000

Employer contributions Pension 7 690 5 269 Medical 3 933 2 732 Bargaining council 16 11 Total 11 639 8 012

Total compensation of employees 92 422 64 901 Average number of employees

249 169

The Department of Human Settlements and the Department of Co-Operative Governance and Traditional Affairs split during the 2011/2012 financial year, which resulted in a significant increase of average employees during the prior year as employees were transferred from the Department of Cooperative Governance and Traditional Affairs to the Department of Human Settlements. The revised organisational structure resulting from the split was also approved during the prior financial year, which resulted in new appointments, over and above those mentioned above.

4. Goods and services

Note 2013/14 2012/13

R’000 R’000 Administrative fees 193 299 Advertising 457 423 Capital assets less than R5 000 (Minor assets) 4.1 50 206 Catering 1 510 559 Communication 1 241 1 089 Consultants, contractors and agency/outsourced services

4.2 6 504

2 333

Entertainment 14 14 Audit cost – external 4.3 10 724 8 900 Fleet services Inventory

4.4

2 382 -

- -

Consumables 4.5 568 579 Operating leases 2 973 3 170 Property payments 4.6 368 93 Transport provided as part of the departmental activities

1

-

Travel and subsistence 4.7 7 203 6 439 Venues and facilities 545 632 Training and development 242 76 Other operating expenditure 4.8 857 829 Total 35 832 25 641


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28

RECLASSIFICATION OF PRIOR YEAR FIGURE DUE TO CHANGES IN SCOA: Inventory from R572 000 TO R0 (R572 000 reclassified as consumables). Other operating expenditure from R836 000 to R829 000 (R7 000 operating gifts now consumable) Consumables from R0 to R579 000 (R572 000 plus R 7 000) 4.1 Capital assets less than R5 000 (Minor

assets)

Note

4

2013/14 R’000

2012/13 R’000

Tangible assets Machinery and equipment 50 206

Intangible assets - - Total 50 206 4.2 Consultants, contractors and

agency/outsourced services Note

4

2013/14 R’000

2012/13 R’000

Legal costs 3 252 1 607 Contractors 21 726 Agency and support/outsourced services 3 231 - Total 6 504 2 333

4.3 Audit cost – External

Note 4

2013/14 R’000

2012/13 R’000

Regularity audits 8 605 3 736 Investigations 2 119 5 164 Total 10 724 8 900 4.4 Inventory

Note 2013/14 2012/13 4 R’000 R’000 Other - - Total - -

RECLASSIFICATION OF PRIOR YEAR FIGURE DUE TO CHANGES IN SCOA: Inventory from R572 000 TO R0. (R572 000 reclassified as consumables)





29

4.5 Consumables

Note 4

2013/14 R’000

2012/13 R’000

Consumable supplies 47 134

Uniform and clothing 15 - Household supplies 31 110 Other consumables 1 24

Stationery, printing and office supplies 521 445 Total 568 579 RECLASSIFICATION OF PRIOR YEAR FIGURE DUE TO CHANGES IN SCOA: Inventory from R572 000 TO R0. (R572 000 re-classified as consumables) Consumables from R0 to R579 000 (R572 000 plus R7 000) 4.6 Property payments

Note 4

2013/14 R’000

2012/13 R’000

Municipal services 69 93 Other 299 - Total 368 93

4.7 Travel and subsistence

Note

4

2013/14 R’000

2012/13 R’000

Local 6 571 6 211 Foreign 632 228 Total 7 203 6 439

4.8 Other operating expenditure

Note 4

2013/14 R’000

2012/13 R’000

Professional bodies, membership and subscription fees

-

7

Resettlement costs 42 - Other 815 822 Total 857 829

RECLASSIFICATION OF PRIOR YEAR FIGURE DUE TO CHANGES IN SCOA:

Other operating expenditure from R836 000 to R829 000 (R7 000 operating gifts now consumables)


136




30

5. Interest and rent on land

Note 2013/14 2012/13 R’000 R’000

Interest paid Rent on land

106 -

114 -

Total 106 114

6. Payments for financial assets Note 2013/14 2012/13 R’000 R’000 Debts written off Other material losses written off

6.1 6.2

97 104

- -

Total 201 - 6.1 Debts written off

Note 6

2013/14 R’000

2012/13 R’000

Nature of debts written off Staff debt 97 - Total debt written off 97 - The debt written off, relates to officials that passed away, the relevant officials did not contribute to the Pension Fund, therefore, no claim could be submitted against the fund. Debts written off also relates to officials no longer in service of the Department, e.g. the Cuban official, whose employment expired during April 2013. 6.2 Other material losses written off

Note 6

2013/14 R’000

2012/13 R’000

Nature of losses Settlement of motor vehicle accident 104 - Total loss written off 104 -

7. Transfers and subsidies 2013/14 2012/13 R’000 R’000 Note Higher education institutions Annex 1A - 500 Households Annex 1B 1 350 993 975 830 Gifts, donations and sponsorships made Annex 1D 808 57 Total 1 351 801 976 387 Unspent funds transferred to the above beneficiaries 619 752 204 695





31

2013/2014

Unspent amount included in transfers to households is R 230 000 000 which was transferred to Bloem Water to provide support and expedite the delivery of water and sanitation services to beneficiaries within Free State Province

Unspent amount included in transfers to households is R 101 639 940 which was transferred to the Housing Development Agency for the procurement of land

Unspent amount included in transfers to households is R 51 473 508 which was transferred to the Free State Development Corporation for the procurement of land.

Unspent amount included in transfers to households is R 71 872 610 which was transferred to the Mangaung Metropolitan Municipality for the support of housing fund allocation.

Unspent amount included in transfers to households is R 57 014 030 which was transferred to Stefanutti Stocks for the implementation of a social housing project.

Unspent amount included in transfers to households is R 1 000 which was transferred to Social Housing Regulatory Authority for the implementation of social housing projects.

Unspent amount included in transfers to households is R 176 998 which was transferred to Utshani Fund for the implementation of a social housing project.

Unspent amount included in transfers to households is R 43 548 884 which was transferred to Rossouw and Conradie / Kentha Developers for the implementation of a social housing project.

Unspent amount included in transfers to households is R 93 975 which was transferred to Maluti Batlokoa Project Trust Fund for the implementation of a social housing project.

'Unspent amount included in transfers to households is R 63 930 670 which was transferred to Coreland Property Development Company for the implementation of a social housing project.

2012/2013

Unspent amount included in transfers to households is R 104 579 609 which was transferred to the Housing Development Agency for the procurement of land

Unspent amount included in transfers to households is R 99 507 957 which was transferred to the Social Housing Regulatory Authority for the implementation of the Social and Rental Housing projects in the Free State Province.

Unspent amount included in transfers to households is R 446 057 which was transferred to The Utshani Fund for beneficiary subsidies.

Unspent amount included in transfers to households is R 161 484 which was transferred to the Maluti Batlokoa Project Trust Fund for a housing project


138




32

8. Expenditure for capital assets Note 2013/14 2012/13 R’000 R’000 Tangible assets 1 379 1 009

Machinery and equipment 29 1 379 1 009 Intangible assets - -

Total 1 379 1 009 8.1 Analysis of funds utilised to acquire capital assets – 2013/14 Voted funds Aid

assistance Total

R’000 R’000 R’000 Tangible assets 1 379 - 1 379

Machinery and equipment 1 379 - 1 379 Intangible assets

- - -

Total 1 379 - 1 379 8.2 Analysis of funds utilised to acquire capital assets – 2012/13 Voted funds Aid

assistance Total

R’000 R’000 R’000 Tangible assets 1 009 - 1 009

Machinery and equipment 1 009 - 1 009 Intangible assets

- - -

Total 1 009 - 1 009





33

8.3 Finance lease expenditure included in Expenditure for capital assets Note 2013/14 R’000 Tangible assets 780

Machinery and equipment 780 Intangible assets - Total 780

9. Unauthorised expenditure

9.1 Reconciliation of unauthorised expenditure Note 2013/14 2012/13 R’000 R’000 Opening balance 29 - Prior year error - - As restated 29 - Unauthorised expenditure – discovered in current year (as restated)

-

29

Unauthorised expenditure awaiting authorisation / written off

29 29

9.2 Analysis of unauthorised expenditure awaiting authorisation per economic

classification

2013/14 2012/13 R’000 R’000 Current 29 29

Total 29 29

9.3 Analysis of unauthorised expenditure awaiting authorisation per type

2013/14 2012/13 R’000 R’000 Unauthorised expenditure incurred not in accordance with the purpose of the vote or main division

29

29

Total 29 29


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34

10. Cash and cash equivalents Note 2013/14 2012/13 R’000 R’000 Consolidated Paymaster General Account - 17 426 Cash on hand 20 20 Total 20 17 446

There are no significant cash and cash equivalent balances held by the department that are not available for use.

There are no undrawn borrowing facilities available for future operating activities or to settle capital commitments.

11. Prepayments and advances Note 2013/14 2012/13 R’000 R’000 Travel and subsistence 238 175 Total 238 175





35

12. Receivables 2013/14 2012/13

R’000 R’000 R’000 R’000 R’000

Note

Less than one

year

One to three years

Older than three years

Total

Total

Claims recoverable 12.1

Annex 3

1

14

495

510

717

Staff debt 12.2 320 34 3 357 91 Other debtors 12.3 6 444 483 6 927 7 178 Total 321 6 492 981 7 794 7 986 12.1 Claims recoverable Note 2013/14 2012/13

12 R’000 R’000 National departments 14 - Provincial departments - 222 Public entities 1 - Local governments 495 495 Total 510 717 12.2 Staff debt

Note 2013/14 2012/13 12 R’000 R’000

Salary Overpayment 87 9 Telephone 213 47 Tax 34 34 Entertainment - 1 Breach of Contract Leave without pay

15 8

- -

Total 357 91 During the year, it was determined that the impairment of receivables, as disclosed in note 12.4 was restated for in the prior year. The amount was increased with R487 000 from R5 000 to R492 000. The details are as follows: Staff debt R8 000 Other debt R483 000 Refer to note 12.4 and note 31.


142




36

12.3 Other debtors Note 2013/14 2012/13 12 R’000 R’000

Supplier Debt 6 972 7 127 EX Employee (Salary & Telephone) - 51 Total 6 972 7 178 12.4 Impairment of receivables Note 2013/14 2012/13 R’000 R’000 Estimate of impairment of receivables 1 202 492 Total 1 202 492

13. Voted funds to be surrendered to the Revenue Fund Note 2013/14 2012/13 R’000 R’000 Opening balance 21 050 32 101 Prior period error - - As restated 21 050 32 101 Transfer from statement of financial performance (as restated)

2 406 21 021

Add: Unauthorised expenditure for current year 9 - 29 Paid during the year (21 050) (32 101) Closing balance 2 406 21 050

14. Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund Note 2013/14 2012/13 R’000 R’000 Opening balance 37 3 Prior period error - - As restated 37 3 Own revenue included in appropriation 2 655 193 Paid during the year (692) (159) Closing balance - 37





37

15. Bank Overdraft Note 2013/14 2012/13 R’000 R’000 Consolidated Paymaster General Account 1 140 - Total 1 140 -

Bank balance did not yet reflect outstanding payments.

16. Payables – current Note 2013/14 2012/13 R’000 R’000

Advances received 16.1 - 100 Other payables 16.2 1 828 1 556 Total 1 828 1 656 16.1 Advances received

Note 2013/14 2012/13 R’000 R’000 National departments Annex 7 - 100 Total - 100 16.2 Other payables

Note 2013/14 2012/13 16 R’000 R’000 Housing Fund Salary Income tax Salary pension fund

1 581 233

14

1 556 - -

Total 1 828 1 556


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38

17. Net cash flow available from operating activities Note 2013/14 2012/13 R’000 R’000 Net surplus/(deficit) as per Statement of Financial Performance

2 406

21 021

Add back non cash/cash movements not deemed operating activities

(19 407)

(37 871)

(Increase)/decrease in receivables – current 192 (4 685) (Increase)/decrease in prepayments and advances (63) (92) Increase/(decrease) in payables – current 172 (2 036) Expenditure on capital assets 1 379 1 009 Surrenders to Revenue Fund (21 742) (32 260) Own revenue included in appropriation 655 193 Net cash flow generated by operating activities (17 001) (16 850)

18. Reconciliation of cash and cash equivalents for cash flow purposes Note 2013/14 2012/13 R’000 R’000 Consolidated Paymaster General account (1 140) 17 426 Cash on hand 20 20 Total (1 120) 17 446

19. Contingent liabilities and contingent assets 19.1 Contingent liabilities Note 2013/14 2012/13 R’000 R’000 Liable to Nature Claims against the department Annex 2 76 258 57 873 Total 76 258 57 873 The amount of contingent liabilities is dependent on the outcome of the court cases occurring in the future, which will only be finalised in the future. The possibility of reimbursement will only be certain upon the completion of the court cases.





39

19.2 Contingent assets Note 2013/14 2012/13 Value of asset

R’000 -

R’000 -

Nature of contingent asset At 31 March 2014, there were two outstanding applications for incapacity leave. Due to the fact that no verdict was presented for these two applications at year-end, it might result in a favourable outcome to the department.

Total - -

20. Commitments Note 2013/14 2012/13 R’000 R’000 Current expenditure Approved and contracted 3 864 44 087 Approved but not yet contracted - - 3 864 44 087 Capital expenditure Approved and contracted 549 601 844 145 Approved but not yet contracted 3 083 112 348 552 684 956 493 Total Commitments 556 548 1 000 580

Commitments to the value of R552 165 000 are in respect of a period longer than a year.

The prior year amount for commitments, capital expenditure, approved and contracted was restated. Capital Expenditure approved and contracted increased by R35 913 000 from R808 232 000 to R844 145 000.


146




40

21. Accruals and payables not recognised 2013/14 2012/13 R’000 R’000 Listed by economic classification

30 Days 30+ Days Total Total Goods and services 4 409 1 087 5 496 10 264 Transfers and subsidies 36 467 594 715 631 182 139 154 Capital assets 65 65 - Total 40 941 595 802 636 743 149 418

Note 2013/14 2012/13 R’000 R’000 Listed by programme level Administration 5 294 8 940 Housing Needs, Research & Planning 234 54 Housing Development Housing Asset Management & Property management

631 181

34

140 424

- Total 636 743 149 418 Material accruals are due to the final payment run, which was on 28 March 2014. No payments were made after this date as well as claims on outstanding invoices, which were not yet processed at year-end. The amount for prior year accruals was restated on the transfers and subsidies line item by R101 838 000 from R37 316 000 to R139 154 000. Refer to note 31.

Note 2013/14 2012/13 R’000 R’000 Confirmed balances with other departments Annex 4 965 1 089 Confirmed balances with other government entities - - Total 965 1 089





41

22. Employee benefits

Note 2013/14 2012/13 R’000 R’000 Leave entitlement 4 834 3 364 Service bonus (Thirteenth cheque) 2 523 1 730 Performance awards - - Capped leave commitments 2 635 2 032 Other 322 549 Total 10 314 7 675

23. Lease commitments 23.1 Operating leases expenditure

2013/14

Land

Buildings and other

fixed structures

Machinery

and equipment

Total Not later than 1 year - - 2 050 2 050 Later than 1 year and not later than 5 years

- - 5 570 5 570

Later than five years - - - - Total lease commitments - - 7 620 7 620

2012/13

Land

Buildings and other

fixed structures

Machinery

and equipment

Total Not later than 1 year - 25 2 020 2 045 Later than 1 year and not later than 5 years

- - 6 276 6 276

Later than five years - - 1 140 1 140 Total lease commitments - 25 9 436 9 461 The prior year balances were restated due to an error identified where the operating leases were incorrectly impaired to a net present value. The balance was restated by R1 813 000 from R7 648 000 to R9 461 000. No assets are sub-leased by the Department. There were no sale and lease back agreements entered into by the Department.


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42

23.2 Finance leases expenditure

2013/14

Land

Buildings and other

fixed structures

Machinery

and equipment

Total Not later than 1 year - - 651 651 Later than 1 year and not later than 5 years

- - 270 270

Later than five years - - - - Total lease commitments - - 921 921 2012/13

Land

Buildings and other

fixed structures

Machinery

and equipment


- - 374 374

Later than five years - - Total lease commitments - - 878 878 The department rents three photocopiers over a period of 36 months, which will only expire during 2015 and 2017 respectively. The department rents 105 cell phones from Nashua Mobile over a fixed term period of 24 months. The department rents 71 cell phones from Vodacom over a fixed term period of 24 months. No assets are sub-leased by the Department. The Department does not have any renewal or purchase options in any of its lease agreements. There are also no escalation clauses in the lease agreements and the fees are standard/fixed for the term of agreement. There are no restrictions imposed on the Department through any lease agreement. There were no sale and lease back agreements entered into by the Department.





42

23.2 Finance leases expenditure

2013/14

Land

Buildings and other

fixed structures

Machinery

and equipment


- - 270 270

Later than five years - - - - Total lease commitments - - 921 921 2012/13

Land

Buildings and other

fixed structures

Machinery

and equipment


- - 374 374

Later than five years - - Total lease commitments - - 878 878 The department rents three photocopiers over a period of 36 months, which will only expire during 2015 and 2017 respectively. The department rents 105 cell phones from Nashua Mobile over a fixed term period of 24 months. The department rents 71 cell phones from Vodacom over a fixed term period of 24 months. No assets are sub-leased by the Department. The Department does not have any renewal or purchase options in any of its lease agreements. There are also no escalation clauses in the lease agreements and the fees are standard/fixed for the term of agreement. There are no restrictions imposed on the Department through any lease agreement. There were no sale and lease back agreements entered into by the Department.




43

24. Accrued Departmental revenue 2013/14

R’000 2012/13

R’000 Transfers received (including conditional grants to be repaid by provincial departments)

589 365 101 838

Total 589 365 101 838 The amount for accrued departmental revenue for the prior year was restated from R0 to R101 838 000. Refer to note 31. The amount included as accrued departmental revenue is deemed recoverable by the Department based on the legal action taken Advanced payments made by the department are still under investigation by an independent body therefore completeness of advances cannot be determined by the department at this point in time 24.1 Analysis of accrued departmental revenue 2013/14

R’000 2012/13

R’000 Opening balance 101 838 - Add: Amounts recognised 487 527 101 838 Closing balance 589 365 101 838

25. Irregular expenditure

25.1 Reconciliation of irregular expenditure Note 2013/14 2012/13 R’000 R’000 Opening balance 2 737 511 2 110 379 Add: Irregular expenditure – relating to prior year - 4 098 Add: Irregular expenditure – relating to current year 857 716 630 155 Less: Current year amounts condoned - (7 121) Irregular expenditure awaiting condonation 3 595 227 2 737 511

Analysis of awaiting condonation per age classification

Current year 857 716 623 034 Prior years 2 737 511 2 114 477 Total 3 595 227 2 737 511 The prior year balance for 2012/2013 was restated with R138 601 000 from R2 598 913 000 to R2 737 511 000. Refer to note 31 for detail. During the financial period a submission for condonement to the amount of R 2 024 000 was made to Treasury. No feedback has been received from Treasury.


150




44

Included in the current period, there is an amount of R 106 415 000 which pertains to prior year contracts awaiting condonement for payments made in the prior year. 25.2 Details of irregular expenditure - current year Incident: Disciplinary steps taken/criminal proceedings Irregular expenditure incurred as a result of the Department procuring goods and/or services by means other than through competitive bids / quotations and reasons and reasons for deviating from inviting competitive bids/ quotations have not been recorded / adequately recorded:

2013/14 R’000

Sufficient number of quotations not obtained (R10 000 – R 30 000) None

157

Sufficient number of quotations not obtained and PFMA requirements not always fully met (R30 000 – R500 000) None Adequate tender procedures not followed (Above R500 000) None Housing Grant-Procurement processes not followed None Payment of acting allowances None

132

-

857 366

57 Overtime worked 4 Total 857 716 24.3 Details of irregular expenditures under investigation Incident: Irregular expenditure incurred as a result of the Department procuring goods and/or services by means other than through competitive bids / quotations and reasons and reasons for deviating from inviting competitive bids/ quotations have not been recorded / adequately recorded: Sufficient number of quotations not obtained (R2000 – R10 000)

2013/14 R’000

-

Sufficient number of quotations not obtained (R10 000 – R 30 000) Continued…

838





45

Sufficient number of quotations not obtained and PFMA requirements not always fully met (R30 000 – R500 000) Adequate tender procedures not followed (Above R500 000) Employees acted in higher vacant post for an uninterrupted period exceeding 12 Months without the necessary approval Housing grant procurement processes not followed Appointment of employees on Contract basis Contracts taken over

2 615 31 444 94 3 543 512 3 846 12 874

Overtime worked 4 Total 3 595 227

26. Fruitless and wasteful expenditure 26.1 Reconciliation of fruitless and wasteful expenditure Note 2013/14 2012/13 R’000 R’000 Opening balance 1 968 841 Fruitless and wasteful expenditure – relating to current year

258

1 127

Fruitless and wasteful expenditure awaiting resolution

2 226

1 968

26.2 Analysis of awaiting resolution per economic classification

26.3 Analysis of Current year’s fruitless and wasteful expenditure Incident Disciplinary steps taken/criminal

proceedings 2013/14 R’000

Interest paid overdue accounts None 106 Settlement on vehicle which were in an accident but not reported within timeframes

104 VAT paid to a Non VAT Vendor None 48 Total 258

2013/14 2012/13 R’000 R’000

Current 490 232 Transfers and subsidies 1 736 1 736

Total 2 226 1 968


152




46

27. Related party transactions Note 2013/14 2012/13 R’000 R’000 Loans to /from related parties Non-interest bearing loans to/(from) 11 456 10 868 Interest bearing loans to/(from) - - Total 11 456 10 868

The Housing Fund falls under the administration of the Department of Human Settlements and shares the same Accounting Officer. Once the fund ceases to operate, the bank balance will be surrendered to the Department. Management identified an error in the current financial year on the loan receivable from the Housing Fund relating to the prior financial year, Therefore the comparative amount was restated from R10 818 000 to R10 868 000.

The Department of Public Works and Rural Development provided office accommodation to the Department of Human Settlements in the Lebohang Building. No value for this service can be attributed to this transaction.

The Department of Cooperative Governance and Traditional Affairs rendered a shared service on the following directorates within Programme 1 to the Department of Human Settlements: Corporate services, Finance, Asset and supply chain management functions, Anti-corruption and security, Information technology, Internal Audit, Executive Support and Auxiliary Services.

Due to the complexity of the shared service between the departments, it is impracticable to include an exact amount of the shared service and therefore no value for this service can be attributed to these transactions.

The Department of Provincial Treasury paid for the use of the transversal operational services (BAS, PERSAL and LOGIS) on behalf of the Department of Human Settlements to SITA. No value for this service can be attributed to this transaction. All above mentioned related parties fall under the same MEC's portfolio.

28. Key management personnel No. of

Individuals 2013/14 2012/13

R’000 R’000 Political office bearers (detail below) Officials:

Level 15 to 16 2 (2012/13 -3) 2 978 2 385 Level 14 (incl. CFO if at a lower level) 6 (2012/13 -5) 5 507 4 146

Family members of key management personnel

1 (2012/13 -1) 235 163

Total 8 720 6 694





47

29. Movable Tangible Capital Assets

MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening

balance Current Year Adjustments to prior year

balances

Additions Disposals Closing Balance

R’000 R’000 R’000 R’000 R’000 HERITAGE ASSETS - - - - - MACHINERY AND EQUIPMENT

4 090

-

3 499

-

7 539

Computer equipment 2 256 4 1 441 - 3 701 Furniture and office equipment 1 318 492 1 768 - 3 578 Other machinery and equipment 516 (496) 240 - 260 BIOLOGICAL ASSETS - - - - - TOTAL MOVABLE TANGIBLE CAPITAL ASSETS

4 090

-

3 449

-

7 539

Assets under investigation: Included in the asset register are 14 assets, 2 Major, and 12 Minor. These assets are under investigation by the department, as they were not verified in the verification process, which was performed by the department. Major These assets amount to R18 000. Minor These assets amount to R25 492.


154




48

29.1 Additions

ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Cash Non-cash (Capital

Work in Progress current

costs and finance lease

payments)

Received current, not paid

(Paid current

year, received

prior year)

Total

R’000 R’000 R’000 R’000 R’000 HERITAGE ASSETS - - - - - MACHINERY AND EQUIPMENT 1 379 2 850 (780) - 3 449 Computer equipment 381 1 060 - - 1 441 Furniture and office equipment 218 1 550 - - 1 768 Other machinery and equipment 780 240 (780) - 240 BIOLOGICAL ASSETS - - - - - TOTAL ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS

1 379

2 850

(780)

-

3 449





49

29.2 Movement for 2012/13 MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2013 Opening


balances


R’000 R’000 R’000 R’000 R’000 HERITAGE ASSETS - - - - - MACHINERY AND EQUIPMENT

3 660

-

430

4 090

Computer equipment 1 905 - 351 - 2 256 Furniture and office equipment 1 239 - 79 - 1 318 Other machinery and equipment 516 - - - 516 BIOLOGICAL ASSETS - - - - - TOTAL MOVABLE TANGIBLE CAPITAL ASSETS

3 660

-

430

-

4 090

29.3 Minor assets MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014

Intangible assets

Heritage assets

Machinery and

equipment

Biological assets

Total

R’000 R’000 R’000 R’000 R’000 Opening balance 56 - 2 114 - 2 170 Current Year Adjustments to Prior Year balances

-

-

-

-

(27)

1 623

-

-

(27)

1 623

TOTAL MINOR ASSETS

56

-

3 710

-

3 767


156




50

Intangible assets

Heritage assets

Machinery and

equipment

Biological assets

Total

Number of R1 minor assets

- - 91 - 91

Number of minor assets at cost

20

-

2 454

-

2 474

TOTAL NUMBER OF MINOR ASSETS

20 - 2 545 - 2 565

MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2013

Intangible assets

Heritage assets

Machinery and

equipment

Biological assets

Total

R’000 R’000 R’000 R’000 R’000 Opening balance 56 - 1 907 - 1 963 Additions - - 207 - 207 Disposals - - - - - TOTAL MINOR ASSETS

56 - 2 114 - 2 170

Intangible assets

Heritage assets

Machinery and equipment

Biological assets

Total

Number of R1 minor assets

-

-

-

-

-

Number of minor assets at cost

20

-

1 323

-

1 343

TOTAL NUMBER OF MINOR ASSETS

20 - 1 323 - 1 343





51

30. Intangible Capital Assets 30.1 MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening


balances


R’000 R’000 R’000 R’000 R’000 SOFTWARE 629 - - - 629 TOTAL INTANGIBLE CAPITAL ASSETS

629 - - - 629

30.2 MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2013 Opening


balances


R’000 R’000 R’000 R’000 R’000 SOFTWARE 629 - - - 629 TOTAL INTANGIBLE CAPITAL ASSETS

629 - - - 629


158




52

31. Prior period errors 31.1 Correction of prior period error for secondary information Note 2012/13 R’000 The comparative amounts in Note 25 were restated as follows:

Irregular expenditure 138 601 Net effect on the note 138 601 The comparative amounts in Note 29 were restated as follows:

Computer equipment 4 Furniture and office equipment 492 Other machinery and equipment (496) Net effect on the note - The comparative amounts in Note 29 were restated as follows:

Machinery and equipment (27) Net effect on the note (27) The comparative amounts in Note 22 were restated as follows:

Leave entitlement 24 Net effect on the note 24 The comparative amounts in Note 20 were restated as follows:

Capital expenditure approved and contracted 35 913 Net effect on the note 35 913 The comparative amounts in Note 23 were restated as follows:

Lease commitments 1 813 Net effect on the note 1 813 The comparative amounts in Note 12.4 were restated as follows:

Impairment of receivables 486 Net effect on the note 486





53

The comparative amounts in Note 21 were restated as follows:

2012/13 R’000

Transfers and subsidies 101 838 Net effect on the note 101 838 The comparative amounts in Note 24 were restated as follows:

Transfers received 101 838 Net effect on the note 101 838


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172


VOTE 13

ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014

66

ANNEXURE 6 MOVEMENT IN CAPITAL WORK IN PROGRESS

MOVEMENT IN CAPITAL WORK IN PROGRESS FOR THE YEAR ENDED 31 MARCH 2014 Opening

balance Current

Year Capital

WIP

Completed Assets

Closing balance

R’000 R’000 R’000 R’000 BUILDINGS AND OTHER FIXED STRUCTURES

453 189

7

453 182

Dwellings - 453 189 7 453 182 Non-residential buildings - - - - Other fixed structures - - - - TOTAL - 453 189 7 453 182



VOTE 13

ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014

67

ANNEXURE 7 INTER-ENTITY ADVANCES RECEIVED

Confirmed balance

outstanding Unconfirmed balance

outstanding TOTAL 31/03/2014 31/03/2013 31/03/2014 31/03/2013 31/03/2014 31/03/2013 ENTITY

R’000 R’000 R’000 R’000 R’000 R’000 NATIONAL DEPARTMENTS

Current Govan Mbeki Prize Money

-

100

-

-

- 100

Subtotal - 100 - - - 100


174

NOTE


NOTE


176

NOTE

Documents

DEPARTMENT OF HUMAN SETTLEMENTS FREE STATE PROVINCE … · 2015-03-30 · DEPARTMENT OF HUMAN SETTLEMENTS FREE STATE PROVINCE VOTE NO. 13 ANNUAL REPORT 2013/2014 FINANCIAL YEAR. Annual