PRESENTATION TO THE LABOUR PORTFOLIO COMMITTEE

1. Labour PRESENTATION TO THE LABOUR PORTFOLIO COMMITTEE 20 June 2007

2. Labour SECTOR PROFILE (& Applicable Sic Codes) • Generation of energy • Generation of renewable energy • Transmission of energy • Distribution of purchased electric energy • Manufacture of Gas, distribution of gaseous fuels through mains • Project management, maintenance and operations of electrical generation, transmission and distribution plants, networks and systems • Construction of pylons for electric transmission lines • Electrical contracting • Marketing of energy • Industrial research for electrical energy ESETA - LABOUR PORTFOLIO COMMITTEE

3. Labour SECTOR PROFILE (& Applicable Sic Codes) • Steam and hot Water Supply • Collection, Purification and Distribution of Water • Public Water Enterprises: Collection; Purification and Distribution of Water, • including Portable Water Supply, domestic waste and sewage services, refuse and • sanitation services • Private water companies: collection ; Purification and Distribution of Water, • including Portable Water Supply, domestic waste and sewage services, refuse and sanitation • services • Irrigation boards: Collection; Purification and Distribution of Water, • including Portable Water Supply, domestic waste and sewage services, refuse and sanitation • services • Water and Sanitation Services (portable water supply, domestic waste water and sewage systems) ESETA - LABOUR PORTFOLIO COMMITTEE

4. Labour SECTOR PROFILE • 864 Employers • ± 30 Large employers • ± 60 Medium employers • Balance represents SMMEs (774) • 50 employers contributes 90% of income • Eskom contributes >70% of total levy ESETA - LABOUR PORTFOLIO COMMITTEE

5. Labour ESETA AUTHORITY SETA Profile ESETA Organogram 2006/7 EXCO CEO Executive Assistant Human Resources & Marketing (vacant) Chief Financial Officer Chamber Manager (vacant) Sector Skills Plan & Development Manager Learnerships Manager ETQA Manager Finance Assistant Accountant Sector Skills Officer Learnership Officer ETQA Officer (Vacant) Admin Support X 2 Admin Support X 1 Regional Admin Support x 3 Admin Support X 1 Admin Support X 1 Admin Support x 3 • Staff compliment = 22 and 3 vacancies • Explanation about the vacancies: • 2 of the 3 positions have been advertised • - for the 1 interviews have been conducted, • - the other 1 interviews are scheduled and • - the last vacancy has recently become vacant) General Worker ESETA - LABOUR PORTFOLIO COMMITTEE

6. Labour ANNUAL FINANCIALS & AUDIT RESULTS (R000’s) • SDL Income = R92 208 • Total Investment Income = R6 908 • Total revenue = R100 600 • Total expenses = R107 900 • Net deficit = R7 300 • Total Cash & Cash equivalents = R97 530 ESETA - LABOUR PORTFOLIO COMMITTEE

7. Labour ANNUAL FINANCIALS & AUDIT RESULTS Qualification Mandatory grant accrual Due to inadequate monitoring, management did not implement adequate controls for the effective logging of the date of receipt of the WSPs and ATRs to ensure no payments were made to employers that did not submit their documents prior to the cut-off date of 30 September 2005. The mandatory grant accrual of R8.5 million was not supported by adequate documentation. Corrective Action The above finding has been addressed by the SETA. The WSP/ATRs received by 30 June 2006 have been logged correctly. A new MIS system has also been implemented where all the WSP/ATRs are being captured for 2006/7 financial year. ESETA - LABOUR PORTFOLIO COMMITTEE

8. Labour ANNUAL FINANCIALS & AUDIT RESULTS Emphasis of matter • Inadequate monitoring • Due to inadequate monitoring and the lack of a dedicated compliance officer the following laws and regulations were not complied with: • Section 55(1) of the PFMA and Treasury Regulation 28.1.6 - the financial statements submitted on 31 May 2006 for audit purposes did not comply with Statements of GAAP and approved GRAP Standards. Corrective Action:AFS were adjusted to comply • Treasury Regulation 27.2 - no internal audit was functioning during the 2005-06 financial year. Corrective Action: Internal Audit appointed and functioning. • The Promotion of Access to Information Act, Act No. 2 of 2002 - the ESETA did not comply with sections 14, 15 and 32, which require a manual in three languages, written verification of the responsibilities of the information officer and the annual submission of amendments made to the manual to the Human Rights Commissioner. Corrective Action: • The manual has been translated to three languages and has been submitted to the Human Rights Commission. The responsibilities of the information officer are clearly stipulated on the manual and the CEO of ESETA serves as the Information Officer at the moment. ESETA - LABOUR PORTFOLIO COMMITTEE

9. Labour ANNUAL FINANCIALS & AUDIT RESULTS Emphasis of matter cont… 2 Supply Chain Management Treasury Regulations 16A4(1) and 16A5(1) - existing staff and accounting authority members were not trained in supply chain management and no supply chain management unit was implemented under the chief financial officer. Corrective Action The Staff and Accounting Authority has been trained on Supply Chain Management Process in January 2007. The ESETA has appointed a Supply Chain Administrator under the office of the Chief Finance Officer. ESETA - LABOUR PORTFOLIO COMMITTEE

10. Labour ANNUAL FINANCIALS & AUDIT RESULTS Emphasis of matter cont… 3 Performance Information • In terms of Section 20(2)(c) of the PAA, the information relating to performance against predetermined objectives is subject to auditing by the Auditor-General. The performance information submitted could not be verified with sufficient supporting documentation. • Corrective Action The ESETA has implementing an Management Information System to ensure that accurate information is captured and verified on a monthly basis. The challenge for the SETA ( due lo lack of human resources) is to capture the data as far back as the year 2000 to get accurate information on theESETA performance. ESETA - LABOUR PORTFOLIO COMMITTEE

11. Labour ANNUAL FINANCIALS & AUDIT RESULTS Emphasis of matter cont… Lack of policy frameworks The lack of policy frameworks resulted in the following: • The ESETA has no Human Resource and Succession plan in place. Corrective Action HR function has been under the office of the CEO and the administration of payroll under the CFO. Numerous attempts from the Office have been made towards employment of the HR Manager/Practitioner as HR issues seem to be rising up. The ESETA board recently asked the CEO to hold the process after the recruitment process went through, therefore the process is on hold. A new HR policy has also been developed by management and is being implemented. ESETA - LABOUR PORTFOLIO COMMITTEE

12. Labour ANNUAL FINANCIALS & AUDIT RESULTS Emphasis of matter cont… The succession plan policy has been developed and implemented within the organisation. • The discretionary grant was disbursed without adequate controls to monitor the funds spent that support the National Skills Development Strategy targets. Corrective Action The Learnership manager has been appointed effective 01 February 2007. This has since ensured proper segregation of duties within the department and funds spent to support NSDS targets are being monitored. Lack of Policy Framework… ESETA - LABOUR PORTFOLIO COMMITTEE

13. Labour KEY CHALLENGES • Inadequate 10% Administration Funds to do all operational necessities (e.g. Marketing, regional presence, etc) • Completeness of revenue • Human resource constraints • Provincial outreach constraints (related to bullet 1 above) • Governance structures – capacity constraints ESETA - LABOUR PORTFOLIO COMMITTEE

14. Labour ESETA INVESTMENTS AS AT 31 MARCH 2007 • NSF funding since inception - R13 m (Only Feb 2007) • SETA Funds Invested with Private/Public Institutions 2006/7 - N/A • Cash at bank as at 31 March 2007 - R97 m (RMB & STD Bank) ESETA - LABOUR PORTFOLIO COMMITTEE

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