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This briefing provides an overview of the National Consumer Commission's 3rd Quarter Report, including achievements, financial management, progress against AGSA findings, and key challenges.
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BRIEFING TO THE PARLIAMENTARY PORTFOLIO COMMITTEE: TRADE AND INDUSTRY On the 3rd QUARTER REPORT (2013-14) of the NATIONAL CONSUMER COMMISSION 12 March 2014 By Mr EBRAHIM MOHAMED COMMISSIONER
OUTLINE OF PRESENTATION • Overview of 3rd Quarter Report • Achievements against Planned Targets • Financial Management • Progress against AGSA findings • Key Challenges
OVERVIEW OF 3rd QUARTER REPORT..(1) • The Deputy Commissioner, Ms Thezi Mabuza commenced duties in February 2014. • The NCC is extremely grateful for the additional funds it has been allocated as from 2014/15 onwards. • Disciplinary proceedings have commenced against the Chief Financial Officer of the NCC and one other senior employee. • Progress in the management of risks and the vast majority of findings by the Auditor General of South Africa (AGSA) has continued. • Applications for condonation of certain irregular transactions that took place in previous financial years are underway. • The finances of the NCC have been properly accounted for. • The financial records of the NCC have improved dramatically and are reliable; • The cost containment measures introduced by Treasury has been implemented in its entirety.
OVERVIEW OF 3rd QUARTER REPORT..(2) • The contact centre, email and telephone system has been functioning without any disruption, albeit minor sporadic hiccups. • Complaints backlog no longer a challenge with the vast majority (73%) dealt with. (This would not have been possible without the assistance rendered by Alternate Dispute Resolution Agents within key industries who are committed to working closely with the NCC). • Attorneys have been engaged to recover fruitless and wasteful expenditure incurred in previous years. • Finance service providers have been engaged for a period of 6 months to assist with processes, asset management and supply chain processes. • Internal Audit and the Audit Committee has been functional.
Achievement against Targets- Summary • In terms of Annual Performance Plan there were 12 targets to be achieved. • Meat Investigation report was used to inform labelling requirements published by the dti • 2 out of 12 targets not met: • 44% of Complaints resolved in 80 days as opposed to 60%. Due to lack of drafting skills within Enforcement Division. Legal Division is assisting with drafting of Non Referral letters. • Three(3) investigations were finalised and approved by Commissioner as per the quarterly milestone instead of six (6). In addition, thirteen(13) Investigations and Inspections were finalised and reports drafted. Only approval outstanding- to be secured in next quarter.
Financial Management Summary • Applications for condonation of certain irregular transactions that took place in the previous financial years are underway. • The finances of the NCC have been properly accounted for. • Fruitless and Wasteful expenditure in the sum of R26 418 was incurred in the previous financial year. The case was closed this year. This related to SARS penalty and interest and is deemed recoverable. • Non recurring Irregular Expenditure amounted to R 795 337.00 (Call Centre & Insurance) • Recurring Irregular Expenditure amounted to R 4 132 333.00 (Lease & Telecommunication
Notes to Statement of Financial Performance Revenue – Transfer and Grants • Grant received from the DTI amounted to R44 516 000.00 as approved by National Treasury. • Additional R961 824.27 was received from SWEEEP Fund for IT infrastructure. • Transfers of assets received from the DTI amount to R20 270 • Interest Income - interest received on current account based on the available balance from the bank amounted to R270 168 • Employee related costs- R20 412 929 This is comprised of salary and social contributions which include medical aid, pension fund, PAYE and housing allowance. • Operating Expenditure R11 453 579 –constitutes fixed cost (office rental, printer, security & cleaning expense) and other administrative expense (audit committee, internal & external audit, publication, stationery, postage & courier, consultant cost, legal cost etc.) • Depreciation – The National Consumer Commission purchased assets, software and licenses which previously did not exist from SWEEP funds. Assets were purchased based on priority needs linked to available budget.
Notes to Statement of Financial Position • Cash and Cash Equivalent – The balance in the bank comprises of the surplus for 2012/2013 (Application for retention is still pending), interest earned and balance of grant income. • Trade and other receivable – Exchange transaction: relates to debtors to 2011/12 and 2012/13 which was raised in 2012/13. These matters have been handed to attorneys for collections. • Trade and receivable – Non Exchange transaction: relates to staff debtors. Recovery is done on monthly basis. • Property, Plant & Equipment – Relate to assets purchased from SWEEEP Funds and NCC Budget amounting to R1 108 134.00 • Intangible assets - The entity purchased necessary software and licenses which previously did not exist amounting to R933 181.00 • Trade and other payables - Exchange transactions: Increase is due to increases in accruals • Provision for Leave pay – relates to leave taken by National Consumer Commission’s employees. • Deferred Operating lease liability - During the previous financial period, Depreciation on operating lease expense on the building had been straight lined. Based on the previous contract, straight lining should never have taken place (no escalation, straight amount).
Progress on AGSA Findings Summary • There has been full, open and transparent cooperation with the Auditor General of South Africa; • All previous findings of the Auditor General have been tracked and genuine progress has been made against all findings; • These findings related to the absence of policies, revision of internal processes in supply chain management, finance, asset management, recruitment of personnel, leave management, travel; etc. • Action Plans have been drafted and the vast majority have been implemented.
Progress against AGSA’s findings • The external audit conducted for the financial year 2012/2013 by the Office of the Auditor General raised 96 findings and recommendations. • This necessitated 96 action plans. • Progress against the findings are depicted as follows: • From the analysis performed on the outstanding matters which constitute 18% of the total action plans, it is evident that there has been some delays in implementation. • However there has been a genuine improvement in implementation of the outstanding matters in Q4. • A few matters require more time than was initially envisaged, for examples: • Neotel (contractual dispute), negotiations are currently on course • Recovery of funds, matters are with lawyers • Aligning of budget and performance, this can only be resolved fully and correctly in the next financial year
Key Challenges • 182 Positions are approved • 71 Positions are filled • 111 Positions are vacant in the overall establishment. • 28 Positions have been advertised. • Several positions would be abandoned shortly. • Skills are lacking at the NCC- internal training has been made compulsory on a weekly basis. • The complaints backlog has almost been resolved.
Delegation Details Mr Ebrahim Mohamed- Commissioner- E.Mohamed@thencc.org.za - 0837865239 Ms Thezi Mabuza- Deputy Commissioner- T.Mabuza@thencc.org.za - 0836532391 Mr Babs Kuljeeth- Company Secretary- N.Kuljeeth@thencc.org.za - 0832739647
