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Briefing to Public Works Portfolio Committee Remedial Action Auditor-General NDPW Findings. Presented by Finance Stabilization Team – Cox Mokgoro 28 November 2012. CONTENTS. Audit Findings - Historical Perspective Context resulting in negative audit outcomes
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Briefing to Public Works Portfolio Committee Remedial Action Auditor-General NDPW Findings Presented by Finance Stabilization Team – Cox Mokgoro 28 November 2012
CONTENTS • Audit Findings - Historical Perspective • Context resulting in negative audit outcomes • Departmental response to context of negative audit outcomes • Key stabilisation Projects • Key audit findings of disclaimed audit opinion & high-level remedial action
AUDIT FINDINGS HISTORICAL PERSPECTIVE
Audit Findings- Historical Perspective Downward Spiral 1 Situation calls for decisive action – hence TURNAROUND!!!!
Overall Context of NEGATIVE AUDIT OUTCOMES
Overall Context of Negative Outcomes • Instability of leadership in Department • HR matters • Inadequate or lack of properly competent staff at all levels • High level of vacancies • Lack of due diligence to controls & compliance • Led to widespread mal-administration & fraudulent activities • No enforcement of accountability & discipline • Poor Monitoring & evaluation • Inadequacy of IT systems (controls, not integrated) • PMTE business case not finalised • Lack of proper planning (strategic & operational)
Department’s Response to Context of Negative Audit Outcome
Department’s response to context of negative audit outcomes • Leadership • Minister has met with all staff at Head Office (HO) & all 11 Regional offices to instil new ethos, ethics, practices and cultures. • Minister also met with all Unions in Bargaining Council to solicit buy-in for change. • Implementation of all MinTop & EXCO decisions closely monitored & Senior Management to be held accountable. • Vacancies & capacitation of department • DG position advertised and will hopefully be filled prior to end of current financial year. • Head-hunting for CFO underway as previous interview did not yield desired outcome. • Process to fill critical professional vacancies underway with assistance of CBE (40% of the 220 identified vacancies to be filled in current year) • In-sourcing in the interim. • Establishment of joint teams with client Departments.
Department’s response to context of negative audit outcomes • Other initiatives • Joint Auditor-General & NDPW two-day workshop held with all Chief Directors & Directors to unpack audit report and agree on corrective measures. • Corrective action plans for audit findings developed with clear timelines of execution, bi-weekly meetings held to monitor progress. • Dedicated focussed teams under leadership of subject-specialists driving the action plans established. • Acting DG issued instructions to subject-specialists for timeous execution of above plans (2 months period allowed for achievement of positive outcomes). • Plan for Increased capacity of internal audit unit underway & will be finalised by end January 2013, intended to speed up investigations of alleged mal-administration cases for further corrective action.
Key Stabilisation Projects Acknowledging internal capacity challenges within Department, time constraints to effect basic fundamental changes in light of scale of what needs to be achieved, external intervention has been sought for the following key projects in order to stabilise the Department: • Compilation of Immovable Asset Register • Lease review and audit • Finance, SCM & review of construction and infrastructure projects • Intention is a BIG BANG approach for quick stabilisation of Department
Compilation of Immovable Asset Register • Programme fully underway expected to be substantially completed 31 March 2014. • Extensive reconciliation of National & Provincial current IARs completed against Deeds Registry. • Outstanding land parcels meant for vesting in Provinces have been identified. • Framework for vesting of all land parcels is being developed. • Majority of land parcels to be vested expected to be completed by 31 March 2014. • National Treasury has been requested to enhance the Sector Specific Guide to allow for interim disclosure arrangements which can be applied uniformly across government. These arrangements deal with unvested properties as a fair value model to be applied. • Physical verification of immovable assets is due to start in January 2013.
Leases review and audit • SIU investigations intensified and reports issued to Department • Auditor-General performed special audit on leases & provided useful recommendations. • Service provider appointed (start duty 3rd Dec 2012) to audit all leases (lease files & physical verification of buildings occupied or so deemed) with a follow-up on Lease environment Business Process Re-engineering (BPR). Service provider to recommend improvements on BPR. • Audit and review of all leases to be completed by 28 February 2013.
Finance, SCM & Construction Projects Assessment • Service provider award expected to be made prior to December 2012 recess. • Successful bidder to start 2nd week of January 2013. • Terms of Reference include proposals for the following: • Enhancement of finance & Supply Chain Management (SCM) functions with specific objective to clear all negative audit findings; • Conduct a comprehensive analysis of a sizeable sample of infrastructure projects to identify potential risk areas for monitoring and for further corrective action by Department; • Conceptualise and implement a change management strategy for Department; • Implement a formalised skills transfer programme for existing NDPW & PMTE staff; and • Engage interns from unemployed graduates for the project with clear and formalised Skills Development Plan. • Deliverables • Non-negotiable deliverables aligned to financial year-ends (2012/13 & 2013/14) as minimum requirements to achieve improved audit outcomes.
RECAPING 2011/2012 Key audit findings of disclaimed audit opinion & High-level remedial action
