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DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1 PowerPoint Presentation
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DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1

DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1

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DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1

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  1. DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1 Presentation to the Portfolio Committee Date 20 August 2014

  2. Table of contents • DIRCO report • 2013/14 expenditure • Audit outcome • 2014/15 Quarter 1 Expenditure • African Renaissance fund (ARF) • Budget allocation • List of Committed projects • Progress report

  3. EXPENDITURE OUTCOME 2013/14

  4. Vote Expenditure as at 31 March 2014

  5. 2013/14 Expenditure Outcome • Programme 1: Administration –The increase in expenditure is due to the inflationary adjustments mainly on office accommodation related to unitary fees for the Head Office Campus. • Programme 2: International Relations – This is mainly attributable to the depreciation of the Rand against other major currency. • Programme 3: International Cooperation –. The increase in expenditure is as a result of the higher operational cost as a result of the Rand depreciation. • Programme 4: Public Diplomacy and Protocol –The overspending is attributed to the facilitation and provision of protocol services to the Heads of State/Government attended the State funeral of the former President Nelson Mandela. • Programme 5: International Transfers –The overspending is as a results of foreign exchange rates losses in relations to the payment of membership fees and assessed contributions to United Nations, African Union and South African development Community.

  6. 2013/14AUDIT OUTCOME

  7. Analysis of Audit opinion over 5 yrs.

  8. AREAS OF IMPROVEMENT Recurring findings: • Asset Management • Irregular expenditure • Non compliance – 30 days payment

  9. The Asset portfolio of the Department consists of the following: • Immovable assets: Consist of Chanceries (Offices), Official Residences and staff accommodation • Movable assets – Major (economic value over R5000): Consist of motor vehicle, office and domestic furniture, office and domestic equipment • Movable assets – Minor (economic value less than R5000): Consist of office and domestic furniture, office and domestic equipment, audio visual and gardening equipment. • Intangible Assets – Consist of software applications and patent.

  10. The Asset portfolio of the Department consists of the following:

  11. Categories - Movable minor assets

  12. 1. MANAGEMENT OF ASSETS Recurring Findings: • Existence: Assets not physically verifiable. • Completeness: Assets not recorded in the fixed asset register. • Reconciliations of: • Physical fixed assets on hand with assets recorded on the fixed assets register • Additions and disposals of fixed assets on the statement of financial performance versus the detail on Basic Accounting of System and HardCat • Complete reconciliation between the Asset management system and Basic Accounting of System.

  13. 1. MANAGEMENT OF ASSETS Measure implemented: • Updating of Assets Register – the measures as per the assets procedure have been updated to deal with timeous updating of the asset register. • A directive has been issued to missions that all forms in relations to updating of the assets register must be included in the mission accounts pack as from July 2014. • Decentralised the use of asset management system to missions. • Verification of assets performed through the use of scanning devices.

  14. 1. ASSETS MANAGEMENT Measures implemented in first quarter • Implement Assets Management turnaround strategy which includes: • Missions will send the data files to Head Office through the HUBS and get interfaced to HARDCAT to prevent human intervention. • Asset catalogue is being developed with a full implementation 01 October 2014 • Corrective action is being implemented against officials who fails to implement the directives/procedure on assets procedures. • CSM to functionally report to the CFO through the Foreign Service Administration office.

  15. 2. IRREGULAR EXPENDITURE Findings: • Goods and services procured without following supply chain management practice notes, policies and procedures as required by Treasury Regulation 16A6.1. • Contracts and quotations awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed in order to comply with Treasury regulation 16A8.3.

  16. 2. IRREGULAR EXPENDITURE Measure implemented: • Established (centralised approach) bid committees • - Specification • - Evaluation • - Adjudication • Updated Financial Delegation of Authority. • Reviewed Supply Chain Management and Financial Management policies & Standard Operating Procedure’s • Procurement being done in accordance with Demand Management Plan • Implemented tracking system to identify deviations from 01 July 2014 • Implemented a quality assurance unit to perform pre and post checking of expenditure vouchers.

  17. 3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD Findings: • Payments to suppliers not made within 30 days of receipt of invoice. • This may also lead to the department being charged interest and penalties for late payment. It may also lead to fruitless and wasteful expenditure.

  18. 3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD Measure implemented: • Implemented a central point of receiving of all invoices at Head Office. • Implemented an electronic invoice tracking system for Head Office. • Developed the Service Delivery Improvement Plan.

  19. QUARTER 1: EXPENDITURE OUTCOME

  20. Vote Expenditure per programme (R’000)

  21. Vote Expenditure continued… • Total expenditure for the Department as at the end of the first quarter amounts to R1.335 billion or 23.2% of the appropriation. • This expenditure is 10.4% lower than the projected expenditure for the period. • The low expenditure trend is mainly under Programmes 1 and 4. In terms of economic classification, the slow spending is visible mainly under goods and services as well as Payments for capital assets. • The details of the variances are discussed under each Programme.

  22. Programme 1 – Econ Classification (R’000)

  23. Programme 1 continued…. • Total expenditure for the Programme as at the end of the first quarter amounts to R253.7 million or 18.2% of the programme’s total appropriation. This expenditure is 27.8% lower than what had been projected for the period. • Reasons for the low spending: • ICT projects– payments relating to ICT contracts that were not processed in the first quarteras it was planned. • Foreign fixed assets management – low expenditure trend is due to slow progress in the construction of Dar es Salaam and renovations projects in The Hague. This is a result of adverse site conditions.

  24. Programme 2: International Relations (R’000)

  25. Programme 2 – Econ Classification (R’000)

  26. Programme 2 continued…. • Total expenditure for the Programme as at the end of the first quarter amounts to R809.4 million or 28.4% of the programme’s total appropriation. • The expenditure is 1.4% higher than what had been projected due to foreign exchange losses.

  27. Programme 3: International Cooperation (R’000)

  28. Programme 3 – Econ Classification (R’000)

  29. Programme 3 continued…. • Total expenditure for the Programme as at the end of the first quarter amounts to R111.2 million or 22.9% of the programme’s total appropriation. • This expenditure is 11.5% lower than projected expenditure for the period.

  30. Programme 4: State Protocol and Public Diplomatic

  31. Programme 4 continued…. • Total expenditure for the Programme as at the end of the first quarter amounts to R68.5 million or 21.6% of the programme’s total appropriation. • Expenditure for this programme is 55.0% lower than what had been projected for the period. • Slow spending is attributable to the expenditure relating to 2014 Presidential Inauguration due to non submission of claims by other departments:

  32. Programme 5: International Transfers

  33. Programme 5 continued…. • Total expenditure for the Programme as at the end of the first quarter amounts to R92.4 million or 9.7% of the Programme’s total appropriation. • This expenditure is 47.2% higher than what had been projected for the periodmainly due to due to foreign exchange losses. • In total the projected foreign exchange losses in the first quarter is estimated at R121 million.

  34. PROPERTIES MANAGEMENT

  35. Property Acquisitions • Property Portfolio Abroad: • Consist of Chanceries, Official Residences and staff accommodation • Present ownership status: 135 State Owned and approximately 700 rented properties • DIRCO rental budget in excess of R 500 million per annum • Property Acquisition Strategy: • Aims to increase state owned property portfolio and reduce • operational lease budget via strategic acquisitions of properties • abroad • Strategy focuses on whole life cycle of property - acquisitions, long • term maintenance, renovations/refurbishment and disposals • Consideration will be given to grouping projects to achieve economies of scale and render projects more attractive for investment purposes

  36. Property Acquisition Strategy • Acquisition mechanisms: • Development of state owned land and purchasing of properties • Funding mechanism: • In principle approval has been received from National Treasury to enter into finance leases

  37. Property Acquisition Strategy • Work done to date: • Draft acquisition strategy submitted to National Treasury and comments received; • Motivation for priority projects submitted as part of MTEF submission; • Way forward: • Finalise high level strategy by end of the third quarter. • Engaging professionals for the preparation of costed feasibility studies – including legal, financial and technical due diligence as well as the development of a standard design for all facilities, taking into account issues of maintenance and sustainability.

  38. African Renaissance Fund (ARF)Quarter 1: 2014/15

  39. African Renaissance Fund

  40. ARF Financials

  41. Thank you