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PORTFOLIO COMMITTEE FINANCE BRANCH

PORTFOLIO COMMITTEE FINANCE BRANCH. Deputy Chief Financial Officer Ms Olga Hattingh. Agenda. Background (Main Account & WTE) Management arrangements – progress to date Main Account – AFS for 2007/08 Main Account – progress with action plan Main Account – initiatives for 2008/09

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PORTFOLIO COMMITTEE FINANCE BRANCH

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  1. PORTFOLIO COMMITTEE FINANCE BRANCH Deputy Chief Financial Officer Ms Olga Hattingh

  2. Agenda • Background (Main Account & WTE) • Management arrangements – progress to date • Main Account – AFS for 2007/08 • Main Account – progress with action plan • Main Account – initiatives for 2008/09 • Trading Entity – AFS for 2007/08 • Trading Entity – progress with action plan • Trading Entity – initiatives for 2008/09 • PSP’s • Questions

  3. Background Self sufficient Tariffs (ROA, Depr & OM) GAAP DWAF Main Account Water Trading Administration Water Resource Management Water Services Forestry TA1 TA3 TA2 Integrated Systems Integrated Water Resource Management Bulk Water Supply Water Resource Management • Lesotho Highlands • Komati Basin Water • Berg River Water project • Olifants River Development • TCTA • Equipment Account Provision from Independent systems Service Delivery Exchequer Funds Modified Cash - Accrual

  4. Background

  5. Background (Future) DWAF Main Account Water Trading Entity Policy and Regulatory Function TA1 TA2 TA3 Integrated Systems Integrated Water Resource Management Bulk Water Supply Catchment Management Agencies + TCTA = SANWRIA

  6. Management Arrangements Proper segregation between Main Account and Water Trading Entity: • Reorganization of the finance branch at head office and regional level • Policy document to provide guidance on the linking of functions to either the Main Account or Water Trading Entity • Designated a staff member as the head of the Trading Entity • Appointment of a financial services firm to provide additional capacity to support regions

  7. MAIN ACCOUNT

  8. Annual Financial Statements 2007/08 • Statements were presented to the Audit Committee on 29 May 2008 • AFS was submitted to AG on 30 May 2008

  9. Annual Financial Statements Appropriation account

  10. Appropriation account Reasons for 8% under spending: • Augmentation (transfer payment) to Water Trading Entity amounting to R452,988m for the construction of the De Hoop Dam (heavy rainfall, environmental impact authorisation) • Request roll-over will however reduce in line with cash flow forecast • Delay in the approval of the BBBEE Forestry Charter – it delay the roll-out process (R15,205 m)

  11. Major Achievements Highlighted in AO report • Water & Sanitation to 91 clinics – access to basic supply • 110 clinics – sanitation • 254 clinics – upgraded infrastructure • 69 schools – access basic supply • 51 schools – sanitation • Develop and implemented an Electronic Water Quality Management system (94% of municipalities complied with standards) • R1.2 bn on new water resource infrastructure & R415 m on rehabilitation of existing infrastructure • Forestry Charter has been signed – 170 000 people employed

  12. Annual Financial Statements Financial Overview Revenue • Unauthorised expenditure of R14,889 m was approved • Decrease in departmental revenue due to a decrease in the selling of forestry products – specially in Mpumulanga and interest recovered • Local and foreign aid assistance – EU agreement was only signed in March – no time to request the funds from NT • Implementation effective and efficient Revenue, Expenditure, • Asset and Liability Management process • Interns/Contract workers

  13. Annual Financial Statements Financial Overview Current Expenditure • Compensation of employees – transfer of staff to municipalities and Water Trading Entity • Goods and services – 7% inflation, R100m increase in PSP, S&T problem with Phavis invoices • Decrease in debt write offs – included in 2006/07 was R10m for municipalities • Foreign aid – more on current expenditure

  14. Annual Financial Statements Financial Overview Capital Expenditure • Buildings and other fixed structures – more water services infrastructure (pump stations and water supply reticulation equipment) • Decrease in procurement of moveable assets • Increase in intangible assets – SAP licensing

  15. Annual Financial Statements Financial Overview Current Assets • Decrease in advance as a result of better financial controls • Berg Water was transferred to WTE (R7m) • Loans – more a due in the next year – increase in current • Staff debtors – an increase various initiatives to improve

  16. Progress in terms of action plan • Proper segregation between Main Account and WTE • Strategic planning alignment initiatives • Bank exception account cleared • Better disclosure (accruals, commitments & related parties) • Assets – Asset registers improved • Staff debtors – an increase various initiatives to improve

  17. Financial Improvement Projects for 2008/09 • Establishment of a risk management unit within the Office of the CFO • Reduction in staff debt • Maintenance of asset management register • Filling of vacancies • Update and development of financial policies and procedures

  18. WATER TRADING ENTITY

  19. Annual Financial Statements 2007/08 • Presented to Audit Committee on 29 May 2008 • Submitted to Auditor-general on 30 May 2008

  20. Annual Financial Statements Overview • Reduction in revenue (allocation of third party transactions • Increase in infrastructure assets (result of the re-evaluation of assets (R63bn) • Increase in depreciation

  21. Progress in terms of action plan • Project Sakhile (Infrastructure assets) – have been able to verify and value infrastructure assets. Captured on interim asset register. Account for land of R15m. The servitudes for Eskom, Sasol and Tugela Vaal schemes are accounted for. (was R39bn now R63bn) • Moveable assets – All asset register have been compiled and are being loaded on BAUD • Lease and intangible register has been compiled. • Accounting policies and processes have been developed and will be implemented during 2008/09.

  22. Progress in terms of action plan (continue) • Siyanqoba – Unallocated deposits have been reduced • SAP refinement – the process of refining the SAP system is an ongoing process within the department.

  23. Financial Improvement Projects for 2008/09 • Development of asset management plans (Sakhile) • Maintenance of asset management register • Filling of vacancies • Implementation of financial policies and process (Siyanqoba)

  24. Financial Improvement Projects for 2008/09 • Development of asset management plans (Sakhile) • Maintenance of asset management register • Filling of vacancies • Implementation of financial policies and process (Siyanqoba)

  25. Use of PSP’s

  26. Core functions of PSP’s

  27. Core functions of PSP’s

  28. Core functions of PSP’s

  29. Reason for increase in use of PSP’s • Lack of skills and capacity • Nature of assignments – complex and technical • Requires specialist and experts – high cost • Short term projects • Process to appoint a PSP is less complex than recruitment

  30. Steps to reduce usage of PSP’s • Finalisation of structures • Filling of vacancies with suitable candidates • Empowering and capacitating staff • Retention strategy • Implementation of computerised systems

  31. Questions ????

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