Honourable Speaker, the department is growing in response to the demand for its services and the service delivery challenges that we are faced with, office space has become and remains one of our biggest challenge hence we are opting to renovate and relocate to Ridirile Primary School or any other alternative that can offer the department an alternative accommodation at the least cost.
We will further enhance the implementation of In Year Monitoring (IYM) reports as these are important early warning systems that inform departments and users of possible over or under spending by departments through the financial year.
We will further ensure that the impact of the budget baseline cuts do not negatively affect core service delivery programmes of departments. The departments were trained and guided in how these cuts should be dealt with, that is cutting back on noncore items such as telephones, catering and travelling etc. where possible, and to shift the composition of expenditure towards investment programmes such as job creation programmes and infrastructure.
Honorable Speaker, in an effort to keep the EXCO informed about the state of expenditure in the province, quarterly expenditure reports are presented at EXCO including any risks of over or under spending. It is through these reports that remedial measures and where necessary interventions are proposed and implemented to mitigate any risks that may lead fiscal or cash flow problems in the province.
Another area of growing importance is the monitoring of non-financial targets through the Quarterly Performance Report (QPR) which provide useful platform for government to evaluate the services for which it has allocated funds.
Municipal Finance Directorate gives effect to the duties and functions assigned to Provincial Treasury in the Municipal Finance Management Act (MFMA). The directorate will continue to focus on improving the technical support it provides to the thirty one delegated municipalities in preparing their multi-year budgets thereby enhancing their ability to meet their obligations to provide basic services to the communities.
The government’s thrust to improve the quality of the lives of our people is better felt at local government level. The government continues to fund a number of programmes at that level to improve access of services to the community, especially the poorer of the poorest. The local government equitable share formula has been revised, to benefit most of the municipalities in the province.
One of the challenges that municipalities in the province must address, is their planning capacity. Most of the municipalities are unable to spend the conditional grants they receive from central government, resulting in them having to surrender the unspent amounts to the national revenue fund. What is of great concern is that these unspent grants are not cash backed. This implies that the municipalities concerned are not able refund the unspent grants due to the fact that the funds have been used for operational costs such as payment of salaries and wages.
Honourable Speaker, many institutions in the province have been and continue to struggle to comply with the requirements of the PFMA and MFMA due to the lack of capacity (skills and resources) in financial management. This has led to either the late/non submission of annual financial statements, poor reporting and negative audit outcomes.
The negative audit outcomes are mostly due to poor record keeping (unavailability of documentation for audit purposes), inadequate understanding of the financial systems, poor internal controls and poor understanding by preparers of the requirements of Generally Recognised Accounting Practice and above all lack of consequences for non- compliance.
Furthermore the Auditor General reported that due care was not taken when financial statements were prepared and these statements were also not properly reviewed by management before they were submitted for auditing resulting in various adjustments. This poses a challenge as the responsibility for the production of accurate financial statements are the mandated functions of an accounting officer.
For the year under review our focus remained on the improvement of reporting related to accounting matters by way of monitoring, supporting and guiding departments, public entities and municipalities. Institutions were assisted and the necessary guidance provided during the preparation of the annual and quarterly interim financial statements. Furthermore, good financial practices were encouraged through letters, instruction notes, communiqué on new developments and recommendations contained in the monthly reports on the compliance certificates received during the financial year.
As part of strengthening intergovernmental relation with local government in our quest to promote credible reporting, consultants were appointed under the auspices of operation clean audit to assist four municipalities that were not in a position to adhere to accounting matters to compile Generally Recognized Accounting Practice compliant asset registers and annual financial statements. The quality of information availed for reporting purposes remained a challenge due to daily reporting disciplines that have not been adhered to by municipalities.
Therefore in the coming financial year, our focus will be predominantly on strengthening our interventions to ensure improvement of financial accounting and reporting by way of intensified monitoring and support to departments and municipalities. We will continue with sharing of accounting best practices in order to improve the credibility of information.
Compliance remains to be a challenge in both the provincial and local government sphere hence continuous guidance on application of the financial acts and support is provided by the Norms and Standard Directorate.
We have set ourselves a target to promote a culture of embedding risk management in day-to-day activities of line management to ensure that risks identified are addressed. More emphasis will be to intensify support and continuous monitoring of the implementation of risk management best practices and advocate for establishment of risk management structures in the departments that are still not having such and provide continuous assistance to them.
The Department of Trade and Industry embarked on a programme to designate certain industries, sectors and sub-sectors for local production opportunities with minimum threshold levels for local content. The above links with government new growth path (NGP) and Industrial Policy Action Plan (IPAP) that has identified the need to leverage public procurement. Many of the sectors targeted for designation are aimed at leveraging public expenditure for industrial development. As part of the implementation process, we are rolling out local content as part of procurement policy and have already conducted workshops for departments and municipalities as well as suppliers in Upington and Kimberley in conjunction with Department of Trade and Industry.
We will continue to support and monitor the PERSAL system and to give guidance on matters relating to human resources and payroll. A quarterly report that provides management information relating to human resources and salary administration will be issued to departments on a monthly basis as has been the case in the past. Quarterly reviews on user activities will be performed at departments to ensure that access to functions is not violated and within the prescriptions of the user account management policy.
We have re-arranged and regrouped the information technology support function of the department that previously resided under Corporate Services with Supporting & InterLinked Financial System responsible for BAS, PERSAL and LOGIS. Matters relating to ICT governance and network security policies and procedures highlighted by the office of the AG will be attended to in the coming year. Support on the transversal systems will continue to ensure continuity of operations on systems.
The LOGIS enhancement implementation project will enable facilities to record all supply chain management and asset management transactions electronically. The enhancement implementation of the system will provide for an improved inventory, procurement and asset management system that complies with the legislative framework of government. The implementation is a very resource driven process due to the fact that all implementations are taking place outside of Kimberley which entails a huge amount of time in terms of support and travelling. To many users it is their first exposure to electronic systems and even computers as a tool of trade. It is in this regard that the system is also seen as an educational process.
The Basic Accounting System division is currently performing the system controller function on behalf of departments and are instrumental in maintaining user access control on the systems in a secure manner.