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Portfolio Committee Presentation DEPARTMENT OF PUBLIC WORKS Report on the performance of the entities and the actions from the Auditor’s General report 12 March 2013 By the Director General. Outline. Purpose 2. Background

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  1. Portfolio Committee PresentationDEPARTMENT OF PUBLIC WORKSReport on the performance of the entities and the actions from the Auditor’s General report12 March 2013By the Director General DPW presentation to PC, 12 March 2013

  2. Outline • Purpose 2. Background 3. 2012-13 entities Performance review/report as at 31 December 2012 and progress on 2011-12 audit outcomes 3.1. Council for Built Environment (CBE) 3.2. Agrement South Africa (ASA) 3.3. Independent Development Trust (IDT) 3.4. Construction Industry Development Board (CIDB) 4. Way forward DPW presentation to PC, 12 March 2013

  3. 1. Purpose of the Presentation Present the department’s perspectives pertaining the entities performance as at third quarter of 2012-13 financial year and their progress in dealing with auditing findings. DPW presentation to PC, 12 March 2013

  4. 2. Background • Public Entities were established to deliver government functions to the members of public in line with department’s mandate and as defined by their respective act/governing legislation. • The department as the shareholder should monitor and evaluate the performance of the public entities to ensure that pre-determined objectives are attained. • The department is empowered by PFMA to create a culture of accountability, openness and transparency in public administration and also to advocate for value for money in the procurement of goods and services by public entities. To this end, the Minister has extended the requirement to the six (6) professional councils to comply to PFMA. • The department has three (3) entities that are listed in terms of the PFMA, namely: (i) The Independent Development Trust (IDT) listed as a Schedule 2 Major Public Entity (ii) The Construction Industry Development Board (CIDB) listed as Schedule 3A National Public Entity (iii)The Council for Built Environment (CBE) listed as Schedule 3A National Public Entity and its six (6) professional councils(not yet compliant with the PFMA). • However, the fourth Public Entity which is governed by the Ministerial delegation is known as Agrėment South Africa. • The oversight tool employed by the department entails scheduling of quarterly meetings between the Executive Authority and entities to review performance in the governance, financial management and performance management areas thereby providing focused intervention when required. DPW presentation to PC, 12 March 2013

  5. 3.1.CBE Performance Review/Report • The CBE and professional councils have 13 concurrent mandates for which the CBE must develop policy guidelines/frameworks to ensure consistent application across the built environment professions. • The CBE has so far developed the following Eleven (11) policy frameworks for implementation and alignment by professional councils • IDoW policy-2009/10,Continuous Professional Development (CPD) • Recognition of Prior Learning [RPL] , Code of Conduct for professions , Determination of professional fees, • Competency standards for registration; Registration of built environment professionals; Recognition of voluntary associations; • Appeals and tribunals; International Agreements and Accreditation of built environment programmes • The outstanding policy frameworks on Standard Generation Body and Recognition of New Professions and Categories, are under review • The Green House Gas mitigation study, which is anchored on the Long Term Mitigation Strategy (LTMS) 2008 Cabinet decision and Kyoto Protocol obligations, is with the department and to be used in compiling a comprehensive review of our green agenda, including enhancement and consideration on appropriate time to report to cabinet in implementing the LTMS decisions. • On international accords and agreements, an agreement with the Republic of Ugandan have been concluded to operationalise the Bilateral Agreement between RSA and Uganda. We’re also engaging our Zambian counter parts, initiating processes towards mutual recognition of Professions and Qualifications. These agreements will be used to crystallize a firm process in reinforcing national interests onwards and congruence with the Republic’s Foreign Policy doctrine, in particular the African Agenda. DPW presentation to PC, 12 March 2013

  6. 3.1.CBE Performance Review/Report • Partnership - Dept of Labour in the development of Health and Safety in Construction Accord; signed by both Ministers of Labour and Public Works with COSATU+FEDUSA+NACTU. In the context of the turnaround, the health and safety report of CBE will be used in strengthening our contracting arrangements. • The research products on Skills Audit (2008) responses and the State of the Built Environment Professions Industry (2010), were used in the Inaugural Built Environment Professions Indaba of the Industry. The Policy position recommendations were developed with Transformation being the permeating backbone and various skills development initiatives were formulated. These will guide our PICC inputs. • The CBE Bursary Scheme has produced its first 8 graduates in different built environment. • Work on establishment of a structured, quality assured and transparent candidacy program & workplace training for candidates that will ultimately lead to acceleration professional registration . Co-operation discussions with CETA for quality assurance of programmes, mentors &workplace training. • Interventions in UKZN; re-opening of QS and Construction Management academic programmes & Landscape Architecture at Durban University of Technology. • Partnership with MISA (Municipal Infrastructure Support Agency), for technical skills development initiatives in municipalities. • Progress made on Skills Plan inputs for the Presidential Infrastructure Projects – contract conditions to support skills development. DPW presentation to PC, 12 March 2013

  7. Some key challenges DPW presentation to PC, 12 March 2013

  8. Issues as highlighted by the Auditors DPW presentation to PC, 12 March 2013

  9. Governance and Financial review • All members of council appointed accordingly • Dealing with Challenges within governance matters within the board of council is underway through the ministers intervention. DPW presentation to PC, 12 March 2013

  10. 3.2. AgrémentSouth Africa (ASA) performance review • The Board's Technical sub-committee focused on key objectives & ensured Agrément South Africa was well governed. • Agrément finances statements are audited and received a clean audit report: There were no matters of emphasis. • The Agency’s transactions are subject to the policies, procedures and governance processes of the CSIR. • The CSIR has received an unqualified audit report from the office of the Auditor General for the last few years and has been hailed as an example of good financial management. • Draft Agrement South Africa Bill is being developed for tabling to Parliament in 2013. DPW presentation to PC, 12 March 2013

  11. 3.3. Independent Development Trust (IDT) Performance Highlights and Concerns • Generated turnover of R6.9bn (141%) against a target of R4.7bn, i.e turn over refers to the value of programmes managed on behalf of government departments • Delivered programmes to the value of R4.06bn (106%) against a target of R3.8bn. Delivered programmes refers to value of programmes spend on behalf of government departments • R2.265bn (56%) of total expenditure spent was on BBBEE against a target of 60%. This improvement since the 2nd Quarter (43.3%) is significant and largely attributed to the support given to service providers with obtaining their BBBEE certificates. • 24 567 (102%) work opportunities created in IDT’s programmes against the target of 24 000. • 39 839 (112%) EPWP: NSS work opportunities created against the target of 35 000 • Concern area: • The targets pertain to generating additional funds or resources, namely, value of resources mobilised, management fees and establishing a resource mobilisation unit. • Value of Resources Mobilised: R26.3m achieved against a target of R190m. The IDT reported that it focused its human resources on delivering client contractual commitments. Further the IDT reported that it had resource challenges for establishing resource mobilisation capacity as no funding was availed by National Treasury in the 2012/13 financial year. DPW presentation to PC, 12 March 2013

  12. IDT PERFORMANCE CONCERNS (CONT.) • % Management Fees invoiced: About 3% was achieved against a target of 4.5% based on programme expenditure. IDT reported that clients are reluctant to agree to pay the projected management fees. While the IDT does not have a legislated mandate or authority to insist on these fees, the challenge of managing the gap between the IDT’s projections and the actual revenue generated from programme delivery is likely to persist DPW presentation to PC, 12 March 2013

  13. STATUS OF AUDIT ACTION: 2011/12 AUDITS • The IDT had an unqualified audit report in the 2011/12 financial year. The other audit queries whose status is summarised in the graph below are of housekeeping nature. • However the AGSA report cited the main contributor to the concerns observed under the topic for Internal Control and Leadership to be performance information, Compliance with laws and regulations and financial reporting. DPW presentation to PC, 12 March 2013

  14. STATUS OF AUDIT ACTION PLAN • A total of 51 audit queries were raised during 2011/12 financial year, • Majority of which related to Programme expenditure, management, Non-Compliance with laws and regulations and Governance issues, • 100% of audit queries raised in 6 of the 11 categories are complete • As at 31 December 2012 an average of 83% of the audit queries were addressed • During quarter 4, emphasis will be placed on addressing the outstanding and enhancing controls especially on Programme management and Non-Compliance issues DPW presentation to PC, 12 March 2013

  15. LONG TERM SUSTAINABILITY OF THE IDT • Department is conversant with the background and problem statement relating to the IDT’s Long-Term Sustainability. • Hence the Minister has undertaken to resolve the short term problem through a reallocation of DPW funds to the IDT. For 2013/14 R50m has been allocated with a further R50m provided per year for 2014/15 and 2015/16. • National Treasury is supporting NDPW in the review of the IDT’s business case. This process is expected to be completed by end of June 2013. • The business case will be the basis for the IDT’s new / revised mandate and funding. • The country cannot afford to loose the capacity that the IDT provides to government hence the matter of the IDT’s long term sustainability has been entrusted by the Minister to the Deputy Minister to manage. DPW presentation to PC, 12 March 2013

  16. 3.4. Construction Industry Development Board (CIDB) Key achievements • Amendments to the CIDB Regulations dealing with registers of contractors were published for public comments. • The cidb, together with other DPW entities facilitated, the Construction Industry Transformation Summit, which was held on 23 November 2012. • The cidb Standard for Indirect Targeting for Enterprise Development has been endorsed through a public comment process, and will be submitted to the cidb Board in January 2013 for final approval. • The cidb Requirements for Contractor Performance Reports (for Grades 2 to 9) has been endorsed by Stakeholders for gazetting for public comment. • National Contractor Development Programme and CDP Guidelines launched by Minister at KZN 5 Dec 2012 MINMEC • Compliance with the legislated turnaround time on processing compliant Grade 2-9 is envisaged to be cleared in the end of fourth quarter. DPW presentation to PC, 12 March 2013

  17. Audit Findings by Auditor General: 2011/12 Audit Report on CIDB DPW presentation to PC, 12 March 2013

  18. Way forward Within the broader context of turnaround strategy as well as strengthening internal mechanisms for oversight role over entities, the department will ensure that: • Interventions on governance arrangements of CBE and their management of professional councils is intensified; • Sustainability of IDT as a going concern through the development of business case and relevant legislation is receiving urgent attention under the guidance of two Deputy Ministers of Public Works and Finance respectively; • A special attention is also paid to an international agreements under the auspices of CBE to strengthen government foreign policy outlook and attraction of skills; • Policy question on the activation of cidb second register of built environment service providers need to be revisited. • Business case and legislation to establish Agrement South Africa as a juristic person is being finalised. DPW presentation to PC, 12 March 2013

  19. Thank you DPW presentation to PC, 12 March 2013

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