2015/10/15 1

Economic Development Department2014/15 Annual Report

Finance & Human Resources

Presentation to the Select Committee on Economic and Business Development

27 October 2015

HR Overview

2

Key to success in delivering on the Department’s objectives has been ensuring appropriate human resources.

The Department implemented a new staffing model that permitted mobilisation of resources as required using permanent appointments, contracts and part-time appointments, secondments of staff and using staff employed by other agencies.

These measures have enabled the Department to deliver on its Strategic Objectives through responsive and appropriately resourced project teams.

Key to success in delivering on the Department’s objectives has been ensuring appropriate human resources.

The Department implemented a new staffing model that permitted mobilisation of resources as required using permanent appointments, contracts and part-time appointments, secondments of staff and using staff employed by other agencies.

These measures have enabled the Department to deliver on its Strategic Objectives through responsive and appropriately resourced project teams.

Performance Overview

3

The Department met all its targets and exceeded its targets for 50% of

the indicators included in its Annual Performance Plan.

Financial Performance Overview

4

For the year under review the

department spent 99.72% (ie. under

spending of 0.28%) and obtained an

unqualified audit opinion

Financial Performance Overview

5

In their report The Financial and Fiscal

Commission stated the following:-“Spending performance across major programmes has improved

-In 2014/15, all programmes achieved almost 100% expenditure

against budget

-Review to organizational structure has seen significant drop in

underspending – in 2014/15, this amounted to 0.3% of the total

budget

-No roll-overs requested in 2014/15, signaling improved efficiency

in planning, budgeting and implementing budget programs.”

Financial Performance per Programme

6

Programmes

2014/15 2013/14

Annual Budget Expenditure Variance

Annual Budget Expenditure Variance

R'000 R'000 R'000 % R'000 R'000 R'000 %

Administration 88 076 87 419 657 0.75% 91 342 91 301 41 0.04%

Economic Policy Development 12 834 12 775 59 0.46% 23 891 23 886 5 0.02%Economic Planning and Coordination 586 500 585 452 1 048 0.18% 644 515 644 511 4 0%Economic Development and Dialogue 9 450 9 267 183 1.94% 11 718 11 697 21 0.18%

Total 696 860 694 912 1 948 0.28% 771 466 771 395 71 0.01%

Year on Year Performance per Programme

7

Programmes 2014/15 2013/14 Variance

Administration 99.25% 99.96% -0.71%

Economic Policy Development 99.54% 99.98% -0.44%

Economic Planning and Coordination 99.82% 100.0% -0.18%

Economic Development and Dialogue 98.06% 99.82% -1.76%

Total 99.72% 99.99% -0.27%

Total (R’000) 694 912 771 395 -76 483

Financial Performance per Economic Classification

8

Programmes

2014/15 2013/14Annual Budget Expenditure Variance

Annual Budget Expenditure Variance

R'000 R'000 R'000 % R'000 R'000 R'000 % Compensation of employees 76 561 75 688 872 0.04% 70 948 70 922 26 0.04%

Goods & services 41 590 40 567 1 024 0.06% 66 276 65 872 404 0.61% Departmental agencies 306 820 306 820 0 0% 273 603 273 603 0 0%

Public corporations 268 845 268 845 0 0% 353 979 353 979 0 0%

Non-profit institutions 60 60 0 0% 0 0 0 0%

Households 220 219 0 0.8% 499 495 4 0.8% Payments for capital assets 2 764 2 712 52 0.05% 6 134 6 497 -363 -5.60%

Payments for financial assets 0 0 0 0% 27 27 0 0%

Totals 696 860 694 912 1 948 0.28% 771 466 771 395 71 0.01%

Financial Performance per Economic Classification

9

Programmes 2014/15 2013/14 Variance

Compensation of Employees 98.86% 99.96% -1.1%

Goods & services 97.54% 99.94% -2.4%

Departmental Agencies 100 .0% 100 .0% 0%

Public Corporations 100.0% 100.0% 0%

Non-profit institutions 100.0% 0% -100%

Households 100.0% 99.20% 0.8%

Payment for capital assets 98.12% 99.95% -1.83%

Totals 99.72% 99.99% -0.27%

Year on year decrease in expenditure was mainly due to:Decrease in the annual appropriation of the vote by R75m which was made up of reductions:•Goods and Services of R25m•Transfers to agencies of R52mReduction in the advertisement, legal costs and travel and mainly implementing the cost containment measures Fewer assets purchased and there were no software purchases.

Comparison of spending Year on Year

10

KPIs

Total Number of KPIs 22

KPI’s with targets exceeded 11

KPI’s with targets met 11

Overall Performance for 2014/15

11

R’000

Budget 696 860

Expenditure 694 912

Under spending 1 948

Performance for the 2014/15 - Programme 1

12

R’000

Budget 88 076

Expenditure 87 419

Under spending 657

KPIs

Total Number of KPIs 4

KPIs with targets Exceeded 2

KPI’s with targets met 2

Performance for the 2014/15 - Programme 2

13

R’000

Budget 12 834

Expenditure 12 775

Under spending 59

KPIs

Total Number of KPIs 13

KPIs with targets Exceeded 8

KPI’s with targets met 5

Performance for the 2014/15 – Programme 3

14

R’000

Budget 586 500

Expenditure 585 452

Under spending 1 048

KPIs

Total Number of KPIs 5

KPIs with targets Exceeded 1

KPI’s with targets met 4

Performance for the 2014/15 – Programme 4

15

R’000

Budget 9 450

Expenditure 9 267

Under spending 183

Transfers to Entities

16

Description

2014/15 2013/14

R'000 R'000

Industrial Development Corporation 0 108 000

Industrial Development Corporation: Sefa 268 845 245 979

Competition Commission 198 212 176 888

Competition Tribunal 19 911 16 945

International Trade Administration Commission 88 374 79 770

Total 575 342 627 582

For the financial year under review 83% of the budget was transferred to the department’s entities.

Revenue Performance

17

Description

2014/15 2013/14

R'000 R'000

Sales of goods and services other than capital assets 85 23

Fines, penalties and forfeits 0 0

Interest, dividends and rent on land 50 237 50 229

Transactions in financial assets and liabilities 45 9 836 Total 50 367 60 088

EDD no longer reports on penalties collected by the Competition Commission in line with reporting requirements reflected in the Accounting Manual issued by OAG.

1. In 2014/15 R880 million was received from Competition Commission for fines and penalties imposed by the Competition Tribunal which is no longer recognised as Departmental Revenue. This was paid to the National Revenue Fund.

2. In 2013/14 R1,098 billion was received and paid over to National Revenue Fund.3. Dividends are received from Industrial Development Corporation

Number of posts on approved establishment 164

Number of funded posts 149

Number of posts filled (incl. additional to the establishment) 124

HR Information

18

As a result of the October 2014 Medium Term Budget Policy Statement (MTBPS), which gave effect to the Cabinet decision to reduce allocations for compensation of employees across government, the EDD’s funded posts were reduced to 149.

The EDD had the ratio of employing women in senior management positions at 54% for the 2014/15 financial year.

19 interns were in the employ of the EDD during the 2014/15 financial year The Department employs staff on a permanent basis, as well as through fixed term

contracts for specific projects and secondments to access specific scarce skills and knowledge in relation to, for example, the PICC technical unit,. wherein an additional 79 staff from various government entities were utilised at no cost to the Department.

Staff utilised not on EDD establishment 79

Auditor–General Report

19

Audit Outcome The department obtained an unqualified audit opinion. One non-compliance matter regarding verification of employees

was reported as this was not finalised prior to employees taking office. These were however completed prior to the audit.

Improved management report - less findings compared to the last financial years.

No material misstatements Positive conclusion on performance information The management report issued by the Auditor-General for the 2014/15

financial year reflected 25 findings compared to 41 findings in the 2013/14 financial year.

Outcomes of Auditor–General Report

20

Area of responsibilityNo. of

Findings%

Matters Affecting the Audit

%

Human Resources Management 11 44% 1 100%

Financial Accounting 8 32%   0%

Supply Chain Management 3 12%   0%

Information Technology 3 12%

Totals 25 100% 1 100%

A consolidated ‘heatmap’ to rectify the audit findings has been compiled, which reflects responsible persons and timeframes to rectify each finding

In the Heatmap process, specific attention is given to the priority areas of the AG findings but most importantly repeat findings around human resource management matters

‘Heatmap’ mitigation plans are being monitored every second Friday at the progress meetings, attended by the process owners & chaired by the CFO. Internal Audit attends these meetings and will audit the corrective measures that have been implemented as part of the audit coverage plan

Progress reports on the implementation of corrective measures are presented to the Audit Committee, DG and Manco.

Commitments on addressing Audit Issues

21

During the past administration, the EDD developed the administrative structures and reviewed policies required to live up to its responsibilities in terms of government policy while complying with governance requirements.

The Department has consistently achieved unqualified audit opinions, achieved most of its annual targets and spent almost all of its annual allocated budget.

The EDD will also commission work to be done through public institutions and universities, where appropriate, based on Memoranda of Understanding ( MOUs).

These projects will source additional intellectual expertise to supplement the role of the EDD staff.

Conclusion

22

23

THANK YOU

SIYABONGA