CGE Report to PC for Women in the Presidency for the 1 st financial quarter of 2015/16 period...

CGE Report to PC for Women in the PresidencyCGE Report to PC for Women in the Presidency

for the 1for the 1stst financial quarter of 2015/16 period financial quarter of 2015/16 period

Financial management

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Purpose of the presentation In accordance with provisions of the Constitution of South

Africa, Act 108 of 1996 (chapter 13), The Public Finance Management Act of 1999 (as amended) – The Commission seeks to report to Parliament its financial affairs and activities for the financial year to 30 June 2015

And account for spending of the funds appropriated by parliament in terms of the Appropriation Act of 2015 as well as report on other financial management responsibilities provided for in terms of related prescripts

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Contents•Financial performance for period to 30 June 2015

–Budget overview–Analysis of income and expenditure

•Financial Position as at 30 June 2015–Liquidity and solvency–Going concern implications

•Other Financial Management matters–Risk management–Supply Chain management–Corporate Services–Audit and internal control systems

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Subprograms annual budget – Subprograms annual budget – 2015/20162015/2016 Strategic Objective 1 – R8.6m

Strategic Objective 2 – R20.7m


Strategic Objective 4 – R26m

Approved Budget =R67.7mFinal Budget = R69.7m

Adjustment budget – not transferred from fiscus Adjustment budget – not transferred from fiscus – R2m (retained from accumulated surplus)– R2m (retained from accumulated surplus)




Strategic Objective 4 – R26m

Approved Budget =R67.7mFinal Budget = R69.7m

Adjustment budget – not transferred from fiscus Adjustment budget – not transferred from fiscus – R2m (retained from accumulated surplus)– R2m (retained from accumulated surplus)

Core activities costing – approved budget

SO Travel & Accomodation

Catering and Venues

Report writing, editing and layouts

Printing Radio Slots Consulting services

Total direct APP expenses

SO1 680 000 100 000 200 000 430 000 1 410 000

SO2 1 561 000 1 988 500 40 000 700 000 4 289 500

SO3 1 180 000 70 000 100 000 450 000 150 000 1 950 000

SO4 100 000 200 000 1 730 000 2 030 000 Grand Total 3 521 000 2 158 500 300 000 1 120 000 700 000 1 880 000 9 679 500

Total budget

Direct APP goods & Services

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Medium term allocations – 2015/16 Budget figures per line itemCls Total

Bank Charges 46 800 Compensation of Employees 46 734 700 Computer Servicing, Internet & Website 531 780 Courier Services 161 300 Depreciation & Amortisation 2 281 600 Employee Assistance Program 130 000 Media Outreach 700 000 Office Cleaning, Maintenance, Plants & Security 1 036 310 Office Consumables 132 400 Printing & Stationery 377 200 Professional Services 4 805 400 Report writing,Printing & Publishing 1 120 000 Subscriptions 235 400 Telecommunication Expenses 1 594 800 Training and Development 800 000 Travel, Accommodation and Related Expenditure 5 766 200 Vehicle expenses, maint, fuel and other 1 075 310 Venues, Catering & Event Management 2 158 800 Grand Total 69 688 000 Adjusted for conditional grant allocation B -2 000 000 B grant income will set off the depreciation charge on vehicles and IT equipment purchased during the year Allocation from National Treasury 67 688 000

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Distribution of allocation

• Salaries make up two thirds of allocation – R46.7 m

• 57% (R26,.7 m) of COE attributable to core service delivery –SO1 to SO3

• Operating overheads at 19% of full budget

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Income and Expenses – Q1 ResultsStatement of Financial Performance for the quarter ended 30 June 2015 2 015 2014

R R

Revenue Revenue from non-exchange transactions 16 923 000 16 809 000 Other income 166 412 1 374 376 Total revenue 17 089 412 18 183 376

Expenses Operating expenses 4 019 451 5 910 929

Personnel Costs 12 344 530 11 150 763 Other administrative expenses 211 917 211 300 Finance costs - 9 Depreciation and amortisation expense 242 952 71 864 Total expenses 16 818 850 17 344 865

Surplus for the year 270 562 838 511

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Income• Transfers of R16, 9 million in 2015 compared to R16, 8 million

in 2014. Because of budget reduction effected by NT in 2014, there is no effective upward adjustment to baseline

• Interest income (R154k compared to R179k in 2014). Due to reducing cash balances in the bank

• Discretionary grant ex- SETA R12k in the first Quarter. Arose from compliance with SDA and related regulations

• Total Income was therefore R17, 1 million in 2015 (Q1) compared to R18, 2 million in 2014 (Q1). Gender summit donations accounted for the difference in the main

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Expenditure over view• Total expenditure was R16, 8 m in 2015 v R17, 3 m in 2014.

Discounting for the Gender summit effect, the 7% salary increase accounts for the movement/change between the two periods; by and large

• Spending pressures imminent and is being curtailed as a matter of survival. COE turns in the upper of 70% (Q1 at 75% of spending), eroding planning/control space

• Apart from noted COE induced pressures, there was a general lag in spending for activities linked to the core programme viz. Travel and venues, event management respectively at 10% and 3% of quarterly spending

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Analysis of expenditure – Q1/2015Total spending

Table 1 Economic Classification Budget

figures Prior Period Q1

Current Period actuals Q1

as% of Annual budget

Compensation of Employees 46 714 500 11 150 958 12 562 165 27%

Depreciation & Amortisation 2 281 600 71 864 242 952 11%

Goods & Services 20 691 900 6 122 043 4 013 732 19%

Grand Total 69 688 000 17 344 865 16 818 850 24%

COE % 67% 64% 75%

Notes

• COE spend at 75% of total. Salary increases at 7% for staff to level 12. A provision was made for a 6% increase for SMS and Commissioners – a conservative estimate. The risk of budget structure (COE intensive should be noted

• Overall spending is within the norm ( 3/12 months = 25%)

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Expenditure analysis – Q1Expenditure analysis – Q1Notes

Table 4 Programme Economic

ClassificationAnnual Budget figures

Actuals Prior Period Q1

Actuals Current Period Q1

% Actuals to Annual Budget

COMMISSIONERS: GOVERNANCE & SUPPORT


Goods & Services 1 777 300 2 028 489 358 028 20%COMMISSIONERS: GOVERNANCE & SUPPORT Total 10 161 400 4 042 309 2 623 773 26%CORPORATE SUPPORT SERVICES

Compensation of Employees 9 311 500 2 391 579 2 625 048 28%Depreciation & Amortisation 2 281 600 71 864 242 952 11%

Goods & Services 7 495 326 2 441 904 2 623 573 35%CORPORATE SUPPORT SERVICES Total 19 088 426 4 905 348 5 491 574 29%SERVICE DELIVERY PROGRAM

Compensation of Employees 29 018 900 6 745 558 7 671 372 26%Goods & Services 11 419 274 1 651 650 1 032 131 9%

SERVICE DELIVERY PROGRAM Total 40 438 174 8 397 208 8 703 503 22%Grand Total

69 688 000 17 344 865 16 818 850 24% Relative contributions COMMISSIONERS: GOVERNANCE & SUPPORT Total 15% 23% 16% CORPORATE SUPPORT SERVICES Total 27% 28% 33% SERVICE DELIVERY PROGRAM Total 58% 48% 52%

• Core service delivery programme accounts for 52% of total for Q1

• COE dominant at an average of 27% of the annual budget – a 2% runaway rate

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Expenditure analysis – Q1/2015Expenditure analysis – Q1/2015 Table 2

Cls Actula - Prior Period Q1

Annual Budget figures

Actual - Current Period Q1

as % of Annual Budget

Bank Charges 14 340 40 000 17 148 43%


Computer Servicing, Internet & Website 34 086 531 780 61 974 12%

Courier Services 30 346 161 460 97 960 61%

Depreciation & Amortisation 71 864 2 281 600 242 952 11%

Interest Paid on Bank overdraft 9 - 0%

Media Outreach 250 412 700 000 20 549 3%

Office Cleaning, Maintenance, Plants & Security 310 269 1 036 430 291 090 28%

Office Consumables 46 369 132 300 49 596 37%

Printing & Stationery 337 394 377 300 116 876 31%Professional Services 1 677 656 5 735 570 1 675 842 29%

Report writing,Printing & Publishing 69 231 1 140 000 36 472 3%

Subscriptions 1 487 235 400 233 566 99%

Telecommunication Expenses 669 213 1 594 850 692 632 43%

Training and Development 35 901 - - 0%

Travel, Accomodation and Related Expenditure 1 184 445 5 946 200 615 294 10%

Vehicle expenses, maint, fuel and other 217 415 1 075 310 266 346 25%

Venues, Catering & Event Management 1 243 472 2 208 300 55 942 3%

Grand Total 17 344 865 69 688 000 16 818 850 24% 13

Notes

Table 3 Department Annual Budget figures Current Period

actuals Q1 as % of Annual Budget

relative to total spending

ALL 2 281 600 242 952 11% 1%CAPEX 0%

CHIEF EXECUTIVE OFFICER 3 714 450 909 653 24% 5%

COMMISSIONERS 10 161 400 2 623 773 26% 16%

COMMUNICATIONS 2 995 400 668 171 22% 4%

EASTERN CAPE 2 729 610 619 440 23% 4%

FINANCE & ADMINISTRATION 7 805 750 2 723 900 35% 16%

FREE STATE 2 614 630 476 203 18% 3%

GAUTENG 2 889 120 633 520 22% 4%

HUMAN RESOURCES 2 744 846 710 859 26% 4%

INFORMATION TECHNOLOGY 2 541 780 904 210 36% 5%

KWAZULU NATAL 2 646 810 627 828 24% 4%

LEGAL 4 377 000 691 450 16% 4%

LIMPOPO 2 004 420 558 907 28% 3%

MPUMALANGA 2 715 164 489 527 18% 3%

NORTH WEST 2 478 250 601 286 24% 4%

NORTHERN CAPE 2 537 600 613 309 24% 4%

Parliamentary Unit 2 516 100 0% 0%

PUBLIC EDUCATION & INFORMATION 1 608 950 447 839 28% 3%

RESEARCH 4 957 570 1 240 598 25% 7%

WESTERN CAPE 3 069 350 949 601 31% 6%

COO Office 298 200 85 823 29% 1%

Grand Total 69 688 000 16 818 850 24% 100%

• Provincial offices spent at 4% of the total each, averaging R610 k per province per quarter

•Finance at 35% of total annual budget and 16% of spending for Q1 – mainly due to audit fees (R1,1 m in Q1)

•IT department ‘s main driver of increased spending is the professional services for the ICT infrastructure project at R205k for the quarter

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Q1 spending analysis by officeQ1 spending analysis by office

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Statement of Financial Position as at 30 June 2015

2015 2014

R R

ASSETS

Current assets

Cash and cash equivalents 11 490 634 21 137 861

Receivables from non-exchange transactions 26 078 77 124

11 516 713 21 214 985

Non-current assets

Property, plant and equipment 5 322 509 1 494 065

Intangible assets 63 807 -

5 386 316 1 494 065

Total Assets 16 903 028 22 709 050

LIABILITIES

Current liabilities

Payables from exchange transactions 1 423 640 1 519 062

Payables from non-exchange transactions 6 895 364 12 174 204

Provisions 3 468 486 2 606 965

11 787 489 16 300 232

Total liabilities 11 787 489 16 300 232

Net assets 5 115 539 6 408 818

NET ASSETS

Accumulated surplus 5 115 539 6 408 818

Total Net Assets 5 115 539 6 408 818

Financial Position• Solvency ratio at the end of June in 2014 was 139% compared to the current

level of 143%. The cushion is mainly represented by net assets of R5, 1 million being surplus funds accumulated from the previous years

• liquidity as represented by the current ratio is moving into un-favourable levels. As at 30 June 2015, current ratio was 98% (cash ratio was 97%) compared to 1: 1. 3 in the previous year.

• Non-current assets increased by investment in fleet (R4 in the latter part of 2014/15) . ICT equipment CAPEX will be disbursed in Q2 of 2015/2016 pending final SCM delivery

• Liabilities are made of R6,6 million (payroll & staff), Conditional grant of R3, 7 m and R1, 4 m for exchange/suppliers payables.

• The investment would move assets from cash to PPE (long term).

• Current spending pressure + decline in liquidity = Risk[CF &GC]16

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Cash Flow Statement for the quarter ended 30 June 2015

2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from stakeholders R 17 089 412 R 18 183 376

Grants 16 923 000 16 809 000

Interest received 154 539 179 458

Donor Income 1 194 919

Sundry income 11 873 -

Cash paid to stakeholders 22 665 244 16 300 534

Personnel & Suppliers 22 665 235 16 300 534

Interest paid 9

Net cash flows from operating activities (5 575 832) 1 882 842

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (4 071 395) (109 978)

Purchase of intangible asset - -

Proceeds from sale of property, plant equipment - -

Net cash flows from investing activities (4 071 395) (109 978)

Net increase in net cash and cash

equivalents (9 647 227) 1 772 864

Net cash and cash equivalents at the beginning

of year 21 137 861 19 364 997

Net cash and cash equivalents at end of year 11 490 634 21 137 861

Risk managementRisk Status as at 30 June 2015 - Summary from the Risk register

RiskAssociated Strategic Objective Category Count

of Risk Average of IR

Average of RR

All All 1 12 9

Strategic 1,2 and 3

Research

PEI

Legal 1 16 8 Strategic 2 Sub strategic 1 PEI 1 16 16 Strategic 2 Sub strategic 4 PEI 1 8 6 Strategic 2 Sub strategic 5 Communications 3 18 16

Communications/PEI 1 25 16 Strategic 4 Finance - SCM 2 18 8

Finance, IT 1 15 8 HR (Payroll) 1 16 9

Strategic 4 Sub strategic 5 Communications 1 16 12 Strategic objective 2 Legal 2 21 15

Research 1 16 12 Strategic objective 3 Research 1 16 12 Strategic objective 4 Finance 6 21 9

HR 3 20 16 Strategic objective 4, Sub strategic 3 IT 5 20 14

Grand Total 31 19 12 18

Risk managementAssociated Strategic Objective

Communications

Communications/PEI

Finance HR IT Legal PEI Grand Total

Strategic 2 Sub strategic 1

16 16 Strategic 2 Sub strategic 5

25 16 21 Strategic objective 2

20 20 Strategic objective 4 16 25 21 Strategic objective 4, Sub strategic 3 16 16 Grand Total 25 16 16 25 16 20 16 18

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High Risk areas• Funding and spending pressures•Physical security especially on perils related to items of IT and vehicles. Controls and Risk transfer will mitigate - insurance•IT network efficacy & performance until the project is complete•Electricity supply - BCP•Accommodation leases•Massaging/content – reports and dissemination/communications •Compliance and internal controls•Case management system for complaints - effectiveness

Supply chain management• High value procurement transactions (Acquisition management)

– Desktops (73) and laptops (32). Bids received and evaluated. Estimated cost (combined R1, 3 m)

– Accounting System improvements – winning bid was for R374, 130– Travel and conferencing (2014 spend was R8 million). Tender was issued

on 28 June 2015. The existing contract expires on 31 December 2015.

• Performance Management– Defective performance by a service provider for the supply of servers.

Payments (R771, 000) withheld . Remedial action effected for a full performance by 28 July 2015.

• Logistics Management– Fleet management : fuel use and running costs within acceptable norm

therefore no indications of misuse.• Office Accommodation

– New interventions from national treasury for mass renewal of leases. • Exceptions are PTA office, Head Office, Free State office and Eastern cape office

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Year end and Audit updates• The regularity audit by AGSA concluded and audit report

considered by the Audit Committee on 28 July 2015. Outcomes reportable with Annual report (prohibition by PFMA)

• AR on AoPO (Audit of Performance Outcome) and AFS to be tabled in Parliament by the latest 30 September2015 as is required by the PFMA

• The Commission continues to implement Action Plans agreed to from all previous audits.

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Thank You

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CGE Report to PC for Women in the Presidency for the 1 st financial quarter of 2015/16 period...

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