1

Presentation to

Parliament’s Select Committee on Finance

14 August 2012

2

PRESENTATION OUTLAY

• 2011/12 Pre - Audit Budget Outcome • Snapshot of Key Provincial Economic

Indicators• 2012/13 1st Quarter Budget Outcome• Fraud & Corruption

3

2011/12 PRE-AUDITED BUDGET, EXPENDITURE AND REVENUE

OUTCOME

4

2011/12 PROVINCIAL BUDGET SUMMARY

• 2011/12 adjusted budget amounts to R24.203 billion:

– Equitable Share = R18.154 billion (75%)– Conditional Grants = R5.277 billion (22%)– Own Revenue = R771.6 million (3%)

• Economic Classification– Current payments = R18.0 billion (74.6%)

• Of which Compensation = R14.1 billion (78.1%)– Payments cap assets = R2.6 billion (10.9%)– Transfer payments = R3.5 billion (14.5%)

• Social vs other departments– SHE departments = R17.5 billion (72.4%)– Other departments = R6.7 billion (27.6%)

5

DEPARTMENTAL PERFORMANCE –PRE-AUDIT MARCH 2012

Dept

Adjusted

Budget Spent Deviation

R'm R'm % R'm %(1) (2) (3) (4) (5) (6)

Education 9 777.8 9 717.8 99.4% 60.0 0.6%Health 6 930.3 6 812.5 98.3% 117.8 1.7%Social dev 812.9 803.7 98.9% 9.2 1.1%Premier 224.3 214.7 95.7% 9.6 4.3%Legislature 203.4 195.6 96.2% 7.8 3.8%EDTEA 398.5 389.9 97.8% 8.7 2.2%Treasury 200.7 185.0 92.2% 15.7 7.8%CoGTA 389.0 379.2 97.5% 9.7 2.5%PW 1 273.7 1 254.5 98.5% 19.1 1.5%PRT 1 841.6 1 716.9 93.2% 124.7 6.8%Agric & RD 557.3 556.2 99.8% 1.1 0.2%SACR 500.4 479.7 95.9% 20.7 4.1%Human Set 1 093.4 1 061.3 97.1% 32.1 2.9%TOTAL 24 203.2 23 767.0 98.2% 436.3 1.8%

Audited = R23.761 billion

6

ECONOMIC CLASSIFICATION – PRE-AUDIT MARCH 2012

Economic Classification 2011/12 Expenditure Over/under exp

R'mAdjusted

BudgetActual as at end March R'm

As % of

budget(1) (2) (3) (4) (5) (6)

CURRENT PAYMENTS 18 067.7 18 181.7 100.6 -114.0 (0.6)Compensation of employees 14 111.0 14 037.1 99.5 73.9 0.5Goods and services 3 953.0 4 143.0 104.8 -190.0 (4.8)Interest and rent on land 3.7 1.6 44.2 2.1 55.8TRANSFERS AND SUBSIDIES 3 493.3 3 466.8 99.2 26.5 0.8Provinces and municipalities 306.2 311.0 101.6 -4.8 (1.6)Dept agencies and accounts 139.6 152.6 109.3 -13.0 (9.3)Universities and Technicons 7.3 7.3 100.0 0.0 0.0Public corporations and private enterprises 226.1 240.5 106.3 -14.3 (6.3)Non-profit institutions 1 503.6 1 468.8 97.7 34.8 2.3Households 1 310.4 1 286.5 98.2 23.9 1.8PAYMENTS FOR CAPITAL ASSETS 2 642.2 2 078.6 78.7 563.6 21.3Buildings and other fixed structures 2 338.7 1 819.2 77.8 519.5 22.2Machinery and equipment 286.9 243.2 84.8 43.7 15.2Heritage assets 0.2 0.3 218.1 -0.2 (118.1)Biological assets 12.9 12.1 93.8 0.8 6.2Land and sub-soil assets 0.7 0.9 129.5 -0.2 (29.5)Software and other intangible assets 2.8 2.8 98.4 0.0 1.6Payments for financial assets 0.1 39.9 60 490.9 -39.9 (60 390.9)TOTAL 24 203.2 23 767.0 98.2 436.3 1.8

7

EXPENDITURE ON COMPENSATION – PRE-AUDIT MARCH 2012

Department Budget 2011/12 Actual as at end March Deviation

R'm

Comp of employees

(CoE)

Total dept budget

CoE as % of total budget

CoE: dept budget as %

of prov budget

CoE Total dept expenditure

CoE exp as % of CoE

budget

CoE as % of total

expenditure

R'm As % of budget

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Education 7 520.2 9 777.8 76.9% 53.3% 7 528.7 9 717.8 100.1% 77.5% -8.5 -0.1%Health 4 337.4 6 930.3 62.6% 30.7% 4 372.3 6 812.5 100.8% 64.2% -34.9 -0.8%Soc Dev 358.9 812.9 44.2% 2.5% 364.1 803.7 101.4% 45.3% -5.2 -1.4%Premier 122.3 224.3 54.5% 0.9% 116.7 214.7 95.4% 54.3% 5.7 4.6%Legislature 65.5 203.4 32.2% 0.5% 64.3 195.6 98.1% 32.9% 1.2 1.9%EDTEA 163.8 398.5 41.1% 1.2% 146.9 389.9 89.7% 37.7% 16.9 10.3%Treasury 131.6 200.7 65.5% 0.9% 123.8 185.0 94.1% 66.9% 7.7 5.9%CoGTA 205.8 389.0 52.9% 1.5% 185.2 379.2 90.0% 48.8% 20.6 10.0%PW 320.3 1 273.7 25.1% 2.3% 298.9 1 254.5 93.3% 23.8% 21.4 6.7%PRT 422.9 1 841.6 23.0% 3.0% 402.4 1 716.9 95.2% 23.4% 20.5 4.8%Agriculture & RD 261.7 557.3 47.0% 1.9% 250.5 556.2 95.7% 45.0% 11.2 0.04SACR 154.9 500.4 30.9% 1.1% 144.0 479.7 93.0% 30.0% 10.9 7.0%HS 45.6 1 093.4 4.2% 0.3% 39.3 1 061.3 86.1% 3.7% 6.4 13.9%

Total 14 111.0 24 203.2 58.3% 100.0% 14 037.1 23 767.0 99.5% 59.1% 73.9 0.5%

8

EXPENDITURE ON GOODS & SERVICES – MARCH 2012

Department Budget 2011/12 Actual as at end March Deviation

R'mG&S

Total dept budget

G&S as % of total budget

G&S: dept budget as % of

prov budget

G&STotal dept

expenditure

G&S exp as % of

G&S

G&S as % of total

expenditure

R'mAs % of budget

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Premier 97.1 224.3 43.3% 2.5% 93.5 214.7 96.3% 43.5% 3.6 3.7%Legislature 45.2 203.4 22.2% 1.1% 50.9 195.6 112.6% 26.0% -5.7 -12.6%EDTEA 76.8 398.5 19.3% 1.9% 72.9 389.9 94.9% 18.7% 3.9 5.1%Treasury 61.0 200.7 30.4% 1.5% 54.0 185.0 88.5% 29.2% 7.0 11.5%Health 1 783.5 6 930.3 25.7% 45.1% 1 732.4 6 812.5 97.1% 25.4% 51.1 2.9%Education 565.3 9 777.8 5.8% 14.3% 496.2 9 717.8 87.8% 5.1% 69.1 12.2%Soc Dev 82.1 812.9 10.1% 2.1% 87.1 803.7 106.1% 10.8% -5.0 -6.1%CoGTA 128.7 389.0 33.1% 3.3% 135.7 379.2 105.4% 35.8% -7.0 -5.4%PW 482.2 1 273.7 37.9% 12.2% 477.8 1 254.5 99.1% 38.1% 4.4 0.9%PRT 259.9 1 841.6 14.1% 6.6% 590.2 1 716.9 227.1% 34.4% -330.3 -127.1%Agriculture & RD 162.0 557.3 29.1% 4.1% 141.6 556.2 87.4% 25.5% 20.4 12.6%SACR 183.8 500.4 36.7% 4.6% 180.8 479.7 98.4% 37.7% 3.0 1.6%HS 25.4 1 093.4 2.3% 0.6% 29.8 1 061.3 117.4% 2.8% -4.4 -17.4%Total 3 953.0 24 203.2 16.3% 100.0% 4 143.0 23 767.0 104.8% 17.4% -190.0 -4.8%

9

CAPITAL EXPENDITURE – PRE-AUDIT MARCH 2012

bn Department Capital Transfers Capital Assets Total Capital (Over)/Under Exp

Adjusted Budget

Exp Adjusted Budget

Exp Adjusted Budget

Exp

R’m R’m R’m R’m R’m R’m R’m(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Education 137.5 138.5 421.3 411.8 558.7 550.3 98.5% 8.5 1.5%Health 0 0 705.6 581.2 705.6 581.2 82.4% 124.4 17.6%Soc Dev 0 7.5 29.6 14.9 29.6 22.4 75.5% 7.3 24.5%Premier 0 0 3.8 3.8 3.8 3.8 101.2% -0.0 -1.2%Legislature 0 0 44.8 39.6 44.8 39.6 88.5% 5.2 11.5%EDTEA 0 0 57.1 52.6 57.1 52.6 92.1% 4.5 7.9%Treasury 0.0 0 6.7 5.9 6.7 5.9 88.5% 0.8 11.5%CoGTA 15.1 14.7 4.5 4.9 19.5 19.6 100.4% -0.1 -0.4%PW 0 0 228.1 232.6 228.1 232.6 102.0% -4.5 -2.0%PRT 30.0 30 917.7 499.5 947.7 529.5 55.9% 418.2 44.1%Agriculture & RD 14.5 17.8 111.8 136.0 126.3 153.8 121.8% -27.5 -21.8%SACR 10.0 10 110.2 94.6 120.2 104.6 87.0% 15.6 13.0%TOTAL 207.0 218.5 2 641.1 2 077.4 2 848.1 2 295.9 80.6% 552.2 19.4%

Human Settlement 1 019.5 986.0 1.1 1.2 1 020.6 987.1 96.7% 33.4 3.3%TOTAL 1 226.5 1 204.5 2 642.2 2 078.6 3 868.7 3 283.1 84.9% 585.6 15.1%

Exp as % of budget

As % of budget

10

2011/12 - INFRASTRUCTURE PRE-AUDIT MARCH 2012

2011/12

R'm Budget R'm As % of budget

(1) (2) (3) (4) (5) (6)

DETEA 57 237 42 833 74.8% 14 404 25%Health 581 414 484 119 83.3% 97 295 16.7%Education 501 505 500 775 99.9% 730 0.1%Social Development 8 700 8 700 100.0% - - Public Works 238 850 227 379 95.2% 11 471 4.8%PRT 942 976 911 827 96.7% 31 149 3.3%Agriculture 139 935 139 922 100.0% 13 0.0%SACR 113 874 100 319 88.1% 13 555 11.9%

TOTAL 2 584 491 2 415 874 93.5% 168 617 6.5%

Expenditure Over/under exp

Actual to end Mar 12

11

CONDITIONAL GRANTS – PRE-AUDIT MARCH 2012

Conditional GrantAdjusted budget

Expenditure Under/ Over

ExpDeviation as %

of budget

R'm R'm % of budget R'm %

Agriculture & RD 167.7 167.6 99.9 0.2 0.1CASP 106.4 106.4 100.0 0.0 0.0llima/Letsema projects 52.0 51.8 99.7 0.2 0.3LandCare 4.6 4.6 100.0 0.0 0.0Agriculture Disaster Management Grant 4.7 4.7 100.0 0.0 0.0

Human Settlement 958.0 927.8 96.8 30.2 3.2Housing Disaster Relief Grant 44.1 16.6 37.7 27.5 62.3Human Settlements Development 913.9 911.2 99.7 2.7 0.3

Education 1,109.7 1,095.0 98.7 14.7 1.3Education Infrastructure Grant 425.3 424.2 99.7 1.1 0.3Infrastrucure Grant to Provinces 65.7 65.5 99.7 0.2 0.3Dinaledi School Grant 5.0 4.8 95.6 0.2 4.4Technical Secondary Schools Recapitalisation 14.4 14.4 100.0 0.0 0.0HIV and Aids (Life Skills Education) 11.8 10.4 88.6 1.3 11.4National School Nutrition Programme 254.4 248.2 97.6 6.2 2.4Further Education & Training Colleges 333.2 327.5 98.3 5.7 1.7

Health 2,009.4 1,818.8 90.5 190.7 9.5Health Professions Training & Development 124.4 124.4 100.0 0.0 0.0Comprehensive HIV and Aids 533.3 456.5 85.6 76.8 14.4Hospital Revitalisation 445.5 405.5 91.0 39.9 9.0National Tertiary Services 715.2 715.2 100.0 0.0 0.0Forensic Pathology Services 39.5 38.5 97.5 1.0 2.5Health Infrasructure Grant 131.7 75.1 57.0 56.7 43.0Infrastructure Grant to Province 4.2 3.5 83.6 0.7 16.4EPWP Grant to Province for Social 15.6 0.0 0.0 15.6 100.0

SACR 81.0 78.5 96.9 2.5 3.1Community library services grant 47.9 45.4 94.8 2.5 5.2Mass Sport & Recreation Participation Programme 33.1 33.1 100.0 0.0 0.0

PW 250.8 240.2 95.8 10.6 4.2EPWP Incentive Grant for Provinces 10.6 0.0 0.0 10.6 100.0Devolution of Property Rate Funds to Provinces 240.2 240.2 100.0 0.0 0.0

PRT 700.7 572.7 81.7 128.0 18.3Provincial Roads Maintanance Grant 447.2 321.9 72.0 125.3 28.0Infrastructure Grant to Provinces 47.2 47.1 99.7 0.1 0.3Transport Disaster Management 21.8 21.8 100.0 0.0 0.0Public Transport Operations grant 184.6 181.9 98.6 2.6 1.4

Total IYM Conditional Grants 5,277.4 4,900.5 92.9 376.9 7.1

12

PROVINCIAL UNDER EXPENDITURE TRENDS

DEPARTMENTS 2008/09 2009/10 2010/11 2011/12

R'm

Under

expenditure

Under

expenditure

Under

expenditure

Under

expenditure

(1) (2) (3) (4) (5)Education 8 130 159 222 270 457 59 955Health 15 809 304 504 288 134 117 805Social Development 15 523 4 158 2 291 9 213Premier 1 958 4 437 9 109 9 578Legislature -613 13 209 3 504 7 818DETEA 17 522 25 298 42 717 8 659Treasury 3 084 10 002 10 120 15 733COGTA 11 191 802 12 093 9 741Public Works 72 351 10 839 35 644 19 130PRT 12 012 17 723 127 724 124 709ARD 10 785 8 778 15 307 1 121SACR 4 944 6 200 5 915 20 709HS 11 783 3 549 32 101TOTAL 172 696 576 955 826 564 436 272

14

REVENUE PERFORMANCE – 2011/12

PREMIER 5 662 6 361 699 112.3% 6 361

DETEA 65 471 65 348 -123 99.8% 65 348

TREASURY 96 552 91 974 -4 578 95.3% 91 078

HEALTH 132 908 177 714 44 806 133.7% 177 714

EDUCATION 16 052 15 778 -274 98.3% 15 778

SOCIAL DEV 1 101 882 -219 80.1% 882

COGTA 1 932 2 010 78 104.0% 2 010

HUMAN SETTL 270 805 535 298.1% 805

PUBLIC WORKS 18 441 28 076 9 635 152.2% 28 076

POLICE, R & T 422 858 464 719 41 861 109.9% 464 719

AGRICULTURE 2 487 2 695 208 108.4% 2 695

SPORT, A, C & R 7 885 7 660 -225 97.1% 7 660

TOTALS 771 619 864 022 92 403 112.0% 863 126

PRE - AUDITED (AFS COLLECTION)

ACTUAL COLLECTION

OVER/ (-)UNDER COLLECTION

DEPARTMENTSADJ USTED

APPROPRIATION

% COLLECTION VS. ADJ USTED

APPROPRIATION

16

KEY PROVINCIAL ECONOMIC INDICATORS

17

ECONOMIC STRUCTURE

18

FREE STATE AND SOUTH AFRICA’S GDP REAL GROWTH (2005 prices)

• Average provincial growth between 2001 and 2011 = 2.7%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011SA 2.7% 3.7% 2.9% 4.6% 5.3% 5.6% 5.5% 3.6% -1.5% 2.9% 3.1%FS -1.1% 4.1% 2.2% 4.0% 4.2% 4.5% 4.5% 3.1% -2.1% 2.3% 3.6%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

19

UNEMPLOYMENT RATE BY PROVINCE

31 1

20

2012/13 1st QUARTER EXPENDITURE AND REVENUE OUTCOME

21

2012/13 PROVINCIAL BUDGET

• 2012/13 allocated budget amounts to R24.870 billion:

– Equitable Share = R18.531 billion (75%)– Conditional Grants = R5.520 billion (22%)– Own Revenue = R819.3 million (3%)

• Economic Classification– Current payments = R18.913 billion (76.0%)

• Of which Compensation = R15.1 billion (60.7%)– Payments cap assets = R2.4 billion (9.8%)– Transfer payments = R3.5 billion (14.2%)

• Social vs other departments– SHE departments = R18.3 billion (73.6%)– Other departments = R6.5 billion (26.4%)

22

DEPARTMENTAL PERFORMANCE –JUNE 2012

Department

Main

Budget Spent Proj Total

R'm R'm % R'm % R'm % R'm %(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Social services spendingEducation 10,044.7 2,671.1 26.6% 7,836.2 78.0% 10,507.3 104.6% (462.6) -4.6%Health 7,383.3 1,939.9 26.3% 5,736.9 77.7% 7,676.8 104.0% (293.6) -4.0%Social Development 865.5 199.2 23.0% 666.3 77.0% 865.5 100.0% 0.0 0.0%Sub-total 18,293.4 4,810.2 26.3% 14,239.4 77.8% 19,049.6 104.1% (756.2) -4.1%Non-social services spendingPremier 253.1 75.9 30.0% 177.2 70.0% 253.1 100.0% 0.0 0.0%Free State Legislature 212.4 46.7 22.0% 165.8 78.1% 212.5 100.0% (0.1) 0.0%Economic Development, Tourism & Environmental Affairs 436.9 95.1 21.8% 341.7 78.2% 436.9 100.0% 0.0 0.0%Provincial T reasury 212.1 40.3 19.0% 171.1 80.7% 211.3 99.6% 0.8 0.4%Cooperative Governance & Traditional Affairs 323.0 68.2 21.1% 254.9 78.9% 323.0 100.0% 0.0 0.0%Public Works 1,269.7 297.8 23.5% 971.9 76.5% 1,269.7 100.0% 0.0 0.0%Police, Roads & Transport 1,755.5 325.6 18.5% 1,429.9 81.5% 1,755.5 100.0% 0.0 0.0%Agriculture 579.5 131.0 22.6% 438.3 75.6% 569.3 98.2% 10.2 1.8%Sport, Arts, Culture & Recreation 435.6 72.7 16.7% 362.9 83.3% 435.6 100.0% 0.0 0.0%Human Settlement 1,058.2 194.2 18.3% 864.1 81.7% 1,058.2 100.0% 0.0 0.0%Rural Development 40.6 22.1 54.5% 34.0 83.7% 56.1 138.1% (15.5) -38.1%Sub-total 6,576.7 1,369.7 20.8% 5,211.6 79.2% 6,581.3 100.1% (4.6) -0.1%TOTAL 24,870.1 6,179.8 24.8% 19,451.1 78.2% 25,630.9 103.1% (760.8) -3.1%

Deviation

(Over)/Under

23

ECONOMIC CLASSIFICATION – JUNE 2012Item 2012/13 Expenditure (Over)/Under exp

R'mMain

BudgetActual as at end June

Proj to end of

Mar 13Total R'm

As % of

budget(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

CURRENT PAYMENTS 18,913.4 4,624.0 24.4 14,819.9 78.4 19,443.9 102.8 (530.5) (2.8)Compensation of employees 15,096.4 3,610.5 23.9 11,528.8 76.4 15,139.3 100.3 (42.9) (0.3)Goods and services 3,816.0 1,012.8 26.5 3,289.7 86.2 4,302.6 112.8 (486.6) (12.8)Interest and rent on land 1.0 0.7 70.4 1.4 135.9 2.1 206.3 (1.1) (106.3)TRANSFERS AND SUBSIDIES 3,521.6 982.7 27.9 2,517.7 71.5 3,500.5 99.4 21.1 0.6Provinces and municipalities 297.4 103.4 34.8 199.7 67.2 303.1 101.9 (5.7) (1.9)Dept agencies and accounts 172.6 70.8 41.0 101.8 59.0 172.6 100.0 (0.1) (0.0)Higher education institutions 1.1 0.0 0.0 1.1 100.0 1.1 100.0 0.0 0.0Foreign governments and international organisations 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 0.0Public corporations and private enterprises 226.1 34.8 15.4 191.4 84.6 226.2 100.0 (0.1) (0.0)Non-profit institutions 1,499.5 481.1 32.1 1,021.1 68.1 1,502.1 100.2 (2.7) (0.2)Households 1,325.0 292.7 22.1 1,002.6 75.7 1,295.3 97.8 29.7 2.2PAYMENTS FOR CAPITAL ASSETS 2,435.2 572.1 23.5 2,113.5 86.8 2,685.5 110.3 (250.4) (10.3)Buildings and other fixed structures 2,232.6 543.9 24.4 1,911.7 85.6 2,455.7 110.0 (223.1) (10.0)Machinery and equipment 196.6 26.7 13.6 194.7 99.0 221.4 112.6 (24.8) (12.6)Heritage assets 0.1 0.0 0.0 0.1 100.0 0.1 100.0 0.0 0.0Specialised military assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Biological assets 1.4 0.5 33.9 1.1 75.0 1.6 108.9 (0.1) (8.9)Land and sub-soil assets 3.0 0.9 29.5 2.8 92.4 3.7 121.9 (0.7) (21.9)Software and other intangible assets 1.4 0.1 4.3 3.1 214.6 3.2 218.9 (1.7) (118.9)Payments for financial assets 0.0 1.0 0.0 0.0 0.0 1.0 0.0 (1.0) 0.0

TOTAL 24,870.1 6,179.8 24.8 19,451.1 78.2 25,630.9 103.1 (760.8) (3.1)

24

EXPENDITURE ON COMPENSATION – JUNE 2012Department Budget 2012/13 Actual as at end June Deviation

R'm

Comp of employees

(CoE)

Total dept budget

CoE as % of total budget

CoE: dept budget as % of

prov budget

CoE Total dept expenditure

CoE exp as % of CoE

budget

CoE as % of total

expenditure

R'm As % of budget

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Education 8,054.4 10,044.7 80.2% 53.4% 1,904.7 2,671.1 23.6% 71.3% 52.6 0.7%Health 4,596.3 7,383.3 62.3% 30.4% 1,157.2 1,939.9 25.2% 59.7% (92.8) -2.0%Social Development 393.6 865.5 45.5% 2.6% 94.4 199.2 24.0% 47.4% 0.0 0.0%Premier 168.0 253.1 66.4% 1.1% 41.7 75.9 24.8% 55.0% (6.3) -3.7%Free State Legislature 69.3 212.4 32.6% 0.5% 15.8 46.7 22.8% 33.8% 0.0 0.0%Economic Development, Tourism & Environmental Affairs 169.9 436.9 38.9% 1.1% 39.0 95.1 22.9% 41.0% 0.0 0.0%Treasury 150.3 212.1 70.9% 1.0% 32.3 40.3 21.5% 80.1% 2.5 1.7%Cooperative Governance & Traditional Affairs 150.5 323.0 46.6% 1.0% 33.8 68.2 22.5% 49.6% 0.4 0.2%Public Works 344.1 1,269.7 27.1% 2.3% 76.1 297.8 22.1% 25.6% 0.0 0.0%Police, Roads & Transport 477.3 1,755.5 27.2% 3.2% 102.9 325.6 21.5% 31.6% 0.4 0.1%Agriculture 271.5 579.5 46.9% 1.8% 62.9 131.0 23.2% 48.0% 4.7 1.7%Sport, Arts, Culture & Recreation 172.0 435.6 39.5% 1.1% 36.7 72.7 21.3% 50.5% (3.6) -2.1%Human Settlement 64.6 1,058.2 6.1% 0.4% 9.9 194.2 15.3% 5.1% 0.0 0.0%Rural Development 14.6 40.6 36.0% 0.1% 3.2 22.1 21.8% 14.4% (0.8) -5.8%

Total 15,096.4 24,870.1 60.7% 99.9% 3,610.5 6,179.8 23.9% 58.4% (42.9) -0.3%

25

EXPENDITURE ON GOODS & SERVICES – JUNE 2012Department Budget 2012/13 Actual as at end June Deviation

R'mG&S

Total dept budget

G&S as % of total budget

G&S: dept budget as % of

prov budget

G&STotal dept

expenditure

G&S exp as % of

G&S

G&S as % of total

expenditure

R'mAs % of budget

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Premier 81.1 253.1 32.1% 2.1% 33.4 75.9 41.1% 44.0% 6.8 8.3%Free State Legislature 46.0 212.4 21.6% 1.2% 12.2 46.7 26.5% 26.1% (0.1) -0.1%Economic Development, Tourism & Environmental Affairs 57.9 436.9 13.3% 1.5% 14.5 95.1 24.9% 15.2% 0.1 0.1%Treasury 75.0 212.1 35.3% 2.0% 7.2 40.3 9.6% 17.8% (0.4) -0.6%Health 1,907.4 7,383.3 25.8% 50.0% 492.5 1,939.9 25.8% 25.4% (13.8) -0.7%Education 368.8 10,044.7 3.7% 9.7% 132.6 2,671.1 36.0% 5.0% (489.1) -132.6%Social Development 75.1 865.5 8.7% 2.0% 18.5 199.2 24.6% 9.3% 2.3 3.0%Cooperative Governance & Traditional Affairs 110.4 323.0 34.2% 2.9% 19.2 68.2 17.4% 28.1% 2.1 1.9%Public Works 505.4 1,269.7 39.8% 13.2% 132.7 297.8 26.3% 44.6% 2.1 0.4%Police, Roads & Transport 108.3 1,755.5 6.2% 2.8% 76.0 325.6 70.1% 23.3% 5.8 5.4%Agriculture 300.5 579.5 51.9% 7.9% 21.8 131.0 7.3% 16.6% 4.6 1.5%Sport, Arts, Culture & Recreation 125.1 435.6 28.7% 3.3% 29.6 72.7 23.7% 40.8% 7.7 6.1%Human Settlement 28.9 1,058.2 2.7% 0.8% 3.8 194.2 13.3% 2.0% 0.0 0.0%Rural Development 26.0 40.6 64.0% 0.7% 18.9 22.1 72.9% 85.6% (14.6) -56.4%Total 3,816.0 24,870.1 15.3% 99.3% 1,012.8 6,179.8 26.5% 16.4% (486.6) -12.8%

26

CAPITAL EXPENDITURE – JUNE 2012Department Capital Transfers Capital Assets Total Capital (Over)/Under Exp

Main Budget

Exp Main Budget

Exp Main Budget

Exp

R’m R’m R’m R’m R’m R’m R’m(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Education 48.3 91.2 425.4 140.9 473.7 232.1 49.0% (70.9) -15.0%Health 0.0 0.0 759.2 258.8 759.2 258.8 34.1% (176.5) -23.3%Social Development 0.0 0.0 32.9 7.0 32.9 7.0 21.1% (2.3) -6.9%Premier 0.0 0.0 3.2 0.5 3.2 0.5 16.5% (0.3) -8.0%Free State Legislature 0.0 0.0 47.4 9.5 47.4 9.5 20.1% 0.0 0.0%Economic Development, Tourism & Environmental Affairs 0.0 0.0 71.7 11.6 71.7 11.6 16.2% 0.0 0.0%Treasury 0.0 0.0 2.8 0.6 2.8 0.6 21.4% (1.5) -54.1%Cooperative Governance & Traditional Affairs 15.0 0.0 2.6 0.3 17.6 0.3 1.7% (2.4) -13.9%Public Works 0.0 0.0 186.1 5.5 186.1 5.5 3.0% (2.1) -1.1%Police, Roads & Transport 20.0 20.0 746.4 86.4 766.4 106.4 13.9% (5.2) -0.7%Agriculture 147.2 0.0 50.2 45.5 197.3 45.5 23.1% 1.1 0.6%Sport, Arts, Culture & Recreation 10.0 0.0 105.6 5.2 115.6 5.2 4.5% (5.3) -4.5%Human Settlement 961.6 180.3 1.7 0.1 963.3 180.4 18.7% 0.0 0.0%Rural Development 0.0 0.0 0.0 0.0 0.0 0.0 0.0% 0.0 0.0%TOTAL 1,202.1 291.5 2,435.2 572.1 3,637.3 863.6 23.7% (265.4) -7.3%

Exp as % of budget

As % of budget

27

INFRASTRUCTURE EXPENDITURE – JUNE 2012

Department

Main

BudgetExpenditure Projections Total projected exp (Over)/Under exp

R'm R'm % R'm % R'm % R'm %(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Rural Development 22.7 13.9 61.4% 21.1 93.1% 35.1 154.5% (12.4) -54.5%Economic Development, Tourism & Environmental Affairs 67.8 11.4 16.8% 56.4 83.2% 67.8 100.0% 0.0 0.0%Health 617.1 189.1 30.6% 615.6 99.7% 804.7 130.4% (187.5) -30.4%Education 472.6 173.8 36.8% 298.8 63.2% 472.6 100.0% 0.0 0.0%Social Development 35.0 6.0 17.2% 30.1 86.0% 36.1 103.1% (1.1) -3.1%Public Works 193.3 4.7 2.5% 188.5 97.5% 193.3 100.0% 0.0 0.0%Police, Roads & Transport 698.9 85.3 12.2% 613.5 87.8% 698.9 100.0% 0.0 0.0%Agriculture 172.7 17.6 10.2% 155.1 89.8% 172.7 100.0% 0.0 0.0%Sport, Arts, Culture & Recreation 119.7 3.1 2.6% 116.7 97.4% 119.7 100.0% 0.0 0.0%TOTAL 2,399.8 505.1 21.0% 2,095.7 87.3% 2,600.8 108.4% (201.0) -8.4%

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CONDITIONAL GRANTS – JUNE 2012Conditional Grant Main budget Expenditure Projections

Total

Expenditure

(Over)/ Under

Expenditure

Deviation as %

of budget

R'm R'm % of budget R'm % of budget R'm R'm %

Agriculture 190.4 14.1 7.4 140.1 73.6 154.2 36.2 19.0CASP 126.8 12.2 9.6 89.1 70.3 101.4 25.5 20.1llima/Letsema projects 54.6 1.4 2.6 43.7 80.0 45.1 9.5 17.4LandCare 9.0 0.4 4.8 7.3 81.8 7.8 1.2 13.4

Human Settlement 961.6 180.3 18.7 781.3 81.3 961.6 0.0 0.0Human Settlements Development 961.6 180.3 18.7 781.3 81.3 961.6 0.0 0.0

Education 1,078.5 388.0 36.0 690.5 64.0 1,078.5 0.0 0.0Education Infrastructure Grant 459.6 169.8 36.9 289.9 63.1 459.6 0.0 0.0Dinaledi School Grant 7.2 0.0 0.1 7.2 99.9 7.2 0.0 0.0Technical Secondary Schools Recapitalisation 19.9 4.8 24.2 15.1 75.8 19.9 0.0 0.0HIV and Aids (Life Skills Education) 12.5 1.3 10.6 11.2 89.4 12.5 0.0 0.0National School Nutrition Programme 261.4 67.5 25.8 193.9 74.2 261.4 0.0 0.0Further Education & Training Colleges 318.0 144.7 45.5 173.3 54.5 318.0 0.0 0.0

Health 2,169.9 769.2 35.4 1,588.2 73.2 2,357.4 (187.5) -8.6Health Professions Training & Development 130.9 39.4 30.1 91.5 69.9 130.9 0.0 0.0Comprehensive HIV and Aids 615.2 193.6 31.5 421.5 68.5 615.2 0.0 0.0Hospital Revitalisation 472.4 353.0 74.7 286.1 60.6 639.1 (166.7) -35.3National Tertiary Services 786.7 173.7 22.1 613.0 77.9 786.7 0.0 0.0Nursing Colleges and Schools Grant 9.2 0.0 0.0 9.2 100.0 9.2 0.0 0.0Health Infrasructure Grant 139.1 9.4 6.8 150.4 108.2 159.9 (20.8) -14.9National Health Insurance Grant 16.5 0.0 0.0 16.5 100.0 16.5 0.0 0.0

SACR 84.7 7.9 9.4 76.7 90.6 84.7 0.0 0.0

Community library services grant 50.3 6.4 12.6 43.9 87.4 50.3 0.0 0.0Mass Sport & Recreation Participation Programme 34.4 1.6 4.6 32.8 95.4 34.4 0.0 0.0

PW 276.7 84.7 30.6 174.4 63.0 259.0 17.7 6.4EPWP Incentive Grant for Provinces 23.9 1.1 4.7 12.7 53.1 13.8 10.1 42.2EPWP Integrated Grant for Provinces 21.4 0.6 2.7 13.2 61.9 13.8 7.6 35.4Devolution of Property Rate Funds to Provinces 231.4 83.0 35.9 148.4 64.1 231.4 0.0 0.0

PRT 757.8 116.8 15.4 641.0 84.6 757.8 0.0 0.0Provincial Roads Maintanance Grant 564.9 82.0 14.5 482.9 85.5 564.9 0.0 0.0Public T ransport Operations grant 192.9 34.7 18.0 158.2 82.0 192.9 0.0 0.0

Total IYM Conditional Grants 5,519.6 1,560.9 28.3 4,092.4 74.1 5,653.3 -133.7 -2.4

29

REVENUE PERFORMANCE – JUNE 2012

PREMIER 4 033 913 1 008 -95 22.6% 3 336 4 249 87%

DETEA 69 268 20 761 17 317 3 444 30.0% 48 507 69 268 96%

TREASURY 102 152 13 284 25 538 -12 254 13.0% 88 868 102 152 100%

HEALTH 140 702 29 106 35 176 -6 070 20.7% 111 596 140 702 88%

EDUCATION 16 919 5 158 4 230 928 30.5% 12 165 17 323 79%

SOCIAL DEV 1 161 225 290 -65 19.4% 936 1 161 78%

COGTA 2 214 358 554 -196 16.2% 1 594 1 952 90%

HUMAN SETTL 550 40 138 -98 7.3% 510 550 90%

PUBLIC WORKS 18 538 6 108 4 635 1 474 32.9% 12 430 18 538 92%

POLICE, R & T 452 812 96 158 113 203 -17 045 21.2% 356 655 452 812 88%

AGRIC 2 345 750 586 164 32.0% 1 850 2 600 56%

S, A, C & R 8 666 877 2 167 -1 290 10.1% 7 840 8 717 95%

TOTALS 819 360 173 738 204 840 -31 102 21.2% 646 286 820 024 89%

DEPARTMENTSMAIN

APPROPRIATIONACTUAL

COLLECTION

% PAYMENTS - REVENUE

TO PRF

IDEAL COLLECTION

(25%)

OVER/ UNDER COLLECTION -

(ACTUAL-IDEAL)

% COLLECTION VS. MAIN

APPROPRIATION

IYM PROJ ECTIONS

(01 MAR 2012 - 31 MAR 2012)

TOTAL (ACTUAL +PROJ ECTIONS)

2011/ 12

30

REMEDIES/ MEASURES IMPLEMENTED

• Preliminary provincial budget process forwarded to departments

• Instruction notes and circular issued to improve efficiency and compliance

• Provincial rollover meeting held with all affected departments – improve compliance

• Provincial CFO forum – discussion on financial management and sharing of best practices

• Refocusing the strategic intent of the Provincial Treasury Committee

• Provincial workshop on 2013 MTEF database – better understanding of the model

• Provincial Treasury implemented the section 18 of the PFMA in the Department of Police, Roads and Transport.

31

• Provincial Revenue Enhancement Strategy (PRES) & Revenue Enhancement Allocation

• Monthly revenue reports• Site visits• Quarterly meetings• Revenue Workshop• Revenue Bilateral• Weekly payments into Provincial Revenue Fund• Issue of Instruction Notes & Guidelines

REMEDIES/ MEASURES IMPLEMENTED

32

PLANNED REMEDIES/ MEASURES

• Introduction of Provincial Pre-benchmark Exercise to improve the level of readiness for the January Benchmark

• Impose budget cut to the departments that are not able to demonstrate on how they will deal with accruals in phases

• The province to undertake a process which will improve the quality and reliability of the projections

• Individual departmental visits to discuss spending trends, priorities and proposed measures to improve overall spending

• Provincial Budget Workshop on MTEF Databases, EPRE and APPs

• Review of Cost Containment Measures

33

PLANS /SYSTEMS TO DETER FRAUD AND CORRUPTION

CAPACITY BUILDING

• Training Chief Risk Officers(CRO): Managing Fraud in Work place

• Guideline issued on Fraud prevention and detection

• Concept Fraud prevention policy developed and provided to all departments and entities

• Key Performance Indicators on fraud management were also developed – assessments bi-annually from 2012/13.

• During 2011/2012, Provincial Treasury has partnered with JGL, UFS, ACFE and PWC during International Fraud Awareness Week. One day session for Executive Authorities, Executive Mayors, Mayors and Management of provincial departments, public entities and municipalities and a second day session for Businesses. This will be held annually.

GOVERNANCE

• Risk management committees appointed in all departments

• CRO’s appointed in all departments

• Composition of Audit Committees for departments reviewed in 2011/12. No government official serve on Committees. Improve effectiveness of Audit Committees.

• Finance and SCM Delegations reviewed to prescribed minimum level for delegations and ensure segregation of duties.

• Delegations also issued for all transactions on the Transversal systems namely BAS, PERSAL and Logis

• SCM forums held every quarter to highlight fraud issues that affects Departments

PROCUREMENT

• Hotline

• Central Supplier database

• Capacity building: urgent and emergency delegation

• Reporting of tenders allocated

• Departments report on expansion and variations of contracts Treasury

• Departments submit procurement plans in April each year and report monthly on deviations

• Certain goods a procured through a transversal contract arranged by Treasury

• Departments report monthly on payments made in 30 days

SYSTEM CONTROLS

• Budget blocking

• Sundry payments outside of LOGIS are limited to specific payments which are not provided for on LOGIS/PERSAL

• System Controllers for BAS is situated in the Provincial Treasury.

• Access control both functional and password

CASH MANAGEMENT AND PAYMENTS

• Provincial Treasury handle all registration of banking detail and second

verification is done by the bank before it is captured on systems. • Computer printed cheques are only printed by Provincial Treasury while

hand cheques are also only issued by Provincial Treasury

• All supplier payments above R1 m and PERSAL payments above R5m [BCT] are verified and approved by Treasury before implementation by the bank

• Provincial Treasury must approve all Business online and FOREX payments before it can be processed

• Use Aggregated limits [ total and item]

• Verify all signing authorities on quarterly basis

• Payment control checklists were implemented

OTHER

• Monthly reporting of unauthorised, irregular and fruitless expenditure. Including progress with investigations and indication if disciplinary actions

are taken. • Physical verification is done on all Provincial Assets

• Mandates are continuously confirmed with SARB.

• Only the HOD of Treasury can amend these mandates by a written instruction to the Bank, and specimens of all authorised signatories are at the Bank

• Officials are encouraged to maintain secrecy of passwords

• Resetting of passwords only done by SARB, by direct contact on e-mail with the affected user.

40

Thank you