1 1

1. Report on PSETA Presentation to Portfolio Committee on Public Service and Administration 8 September 2010 1 11

2. Establishment PSETA established in March 2000 by Minister of Labour ito Skills Development Act, 1998 (SDA) 2001 Cabinet decision PSETA to be distinct unit within DPSA its administration to be funded from DPSA’s budget DPSA to provide secretariat services to PSETA 22 2

3. Corporate form PSETA listed as public entity under Public Finance Management Act in Feb 2001, delisted in Nov 2001 & listed again in April 2006 Skills Development Act & PSETA’s Constitution require that PSETA be constituted & function as separate legal entity Following listing of PSETA as public entity in 2006 DPSA staff worked at PSETA on secondment basis Current certificate of establishment lapses on 31 March 2011 33 3

4. Scope PSETA’s scope of coverage all government departments & provincial administrations for transverse skills most national departments for all areas of skills parastatals not falling under another SETA, for all areas of skills 44 4

5. Role clarification – PSETA, PALAMA & DPSA PSETA’s main functions Develop & implement sector skills plan by establishing learnerships within framework of National Skills Development Strategy & HRD Strategic Framework for Public Service Approve workplace skills plans (WSP) & monitor implementation Establish learnerships & skills programmes and register learnership agreements (if required) Accredit training providers & training for compliance with National Qualification Framework Allocate grants to employers, providers & employees (s10 of Skills Development Act) 55 5

6. Role clarification – PSETA, PALAMA & DPSA PALAMA Must provide training and conduct examinations/tests for public service as DG: PALAMA determines with approval of MPSA or as determined in regulations as requirement for appointment/transfer May issue diplomas/certificates to persons who pass examinations (Section 4 of Public Service Act) 66 6

7. Role clarification – PSETA, PALAMA & DPSA MPSA must set norms and standards for public service on training & development in form of regulations, determinations & directives DPSA to develop these norms & standards (Section 3(1)(c), read with def of “employment practice” in s1, of Public Service Act) 77 7

8. 88

9. 99

10. Transfer of administrationof Skills Development Act (1) President transferred administration of SETA related provisions of Skills Development Act (SDA) from Minister of Labour to Minister of Higher Education & Training Effective 1 November 2009 Minister & Department of Higher Education & Training now tasked with ensuring that all SETAs, including PSETA, complies with SDA 1010 10

11. Transfer of administrationof Skills Development Act (2) Transfer of SDA to MHET did not change relationship between PSETA & DPSA Operational budget for PSETA still included in DPSA budget as transfer payment MPSA in terms of PSETA Constitution appoints eight members on PSETA Board representing the State as employer and one expert 1111 11

12. PSETA’s financial report – background (1) Before 2009, PSETA did not have properly documented financial history No properly structured accounting & recording system to effectively give account of the PSETA’s history At end of 2008/09 year, environment was characterised by poor record keeping, absence of key documentation & practically no accounting & recording system Same conclusion was reached & reported by Auditor General (AG) in 2007/08 and 2008/09 report This situation resulted in AG giving blanket disclaimer on PSETA’s financial records 1212 12

13. PSETA’s financial report – background (2) Before 2007/08 financial year, PSETA had only been subjected to external audit in 2000/01 financial year Therefore no independent review of PSETA’s operations for 6 years, factor which contributed to deterioration in management, accounting, reporting, monitoring & review systems at PSETA 1313 13

14. PSETA’s financial report – remedial steps (1) From Nov 2009 concerted effort to reconstruct PSETA’s financial records – completed in March 2010 Involved tracing of all PSETA transactions, identifying purpose & source relevant supporting documentation from its inception in 2000 Resulted in financial statements containing balances with proper audit trail Financial statements for 2009/10 prepared based on reconstructed information Resulted in much improved audit report for 2009/10 1414 14

15. PSETA’s financial report – remedial steps (2) Further progress Auditors appointed in March 2010 & review of 2009/10 conducted Audit Committee appointed in January 2010 Financial policies & procedures developed & approved by PSETA Board Currently being reviewed with DPSA’s assistance Other operational policies developed for approval e.g. declaration of interest, discretionary grant policies 1515 15

16. PSETA’s financial report –remedial steps (3) Further progress (cont) Risk assessment exercise commenced in May 2010 and register & report developed for approval Recording & accounting system procured 1616 16

17. PSETA’s financial report – fraud PSETA was victim to fraud by one of its Finance Manager in 2005 Bulk of fraud occurred on NSF account SIU & SAPS investigation resulted in conviction of former Finance Manager Final PWC forensic report was issued on 1 July 2010 report confirmed that at least R1.4 million was defrauded by former Finance Manager In addition potential of R10.8 million unaccounted for and was reported & recommended for further investigation by SIU 1717 17

18. PSETA & DPSA Memorandum of Understanding Towards effective functioning of PSETA & facilitating PSETA’s independence, PSETA and DPSA concluded a MOU Effective 20 March 2010 Updated 19 August 2010 MOU deals with- Transfer of funds, staff & work tools of (e.g. furniture, laptops, etc) to PSETA DPSA staff seconded to PSETA choice whether to remain DPSA employees or to transfer to PSETA Corporate management & administrative support to PSETA by DPSA 1818 18

19. MOU (cont) &staff appointments Monitoring of implementation of MoU is taking place through regular standing meetings between PSETA & DPSA PSETA & DPSA having regular meetings with Accountant-General Office to assist PSETA to establish required financial management & internal control systems & deal with audit queries CEO & CFO positions filled in August 2010 Support staff is currently being recruited and staff compliment grown from 15 in 2009 to 26 New staff appointed by PSETA and not DPSA 1919 19

20. Placement of PSETA under administration In Aug 2010 MHET indicated that he intends to proceed with placing PSETA under administration & that DG: HET will shortly appoint administrator Administrator will take over functions of Board Administration (staff) of PSETA will continue 2020 20

21. DHET, DPSA & NT Task Team Task team regarding PSETA set up to deal with among others Role of PSETA vis-à-vis other role players Also collaboration between DHET & DPSA to strengthen skills development & HR development across public service Consisting of 4 officials each of DHET & DPSA and 2 NT officials Work of task team to feed into SETA re-accreditation process to be completed end Sept 2121 21

22. Training budget of national & provincial departments / public entities National & provincial departments must budget for at least 1% of its payroll for training & education of its employees may contribute funds to a SETA does not pay skills levy ito Skills Development Levy Act, 1999 Same applies to national & provincial public entities if 80% or more of their expenditure is defrayed directly/indirectly from funds voted by Parliament 2222 22

23. PSETA’s budget (1) Allocations from National Skills Fund not transferred via DPSA to PSETA but directly to PSETA’s bank account/s opened for this purpose Operational/administrative budget for PSETA provided for via transfer payment on DPSA’s budget vote Transfer payment from DPSA’s budget to PSETA is conditional on written assurance that it implements effective, efficient & transparent financial management & internal control systems (s38(1)(j) of PFMA) 2323 23

24. PSETA’s budget (2) 2009/10 No transfer payment to PSETA NT approved that transfer amount be reclassified to become part of DPSA budget However during financial year amount was ring-fenced & used for PSETA operational expenditure, including remuneration of DPSA staff seconded to PSETA Of transfer amount of R21,842, an amount of R21,001 was spent in 2009/10 (96,1%) 2424 24

25. PSETA’s budget (3) 2010/11 Transfer amount for PSETA = R19 993 When PSETA provides written assurance, DPSA will transfer funds on quarterly basis based on projections 2525 25

26. End 2626