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Q2 2014/15 Financial Year Finance Report

This report summarizes the financial management activities of the Commission for Women during the second quarter of the 2014/15 financial year. It includes financial performance, budget situation, risk management, and compliance with laws and regulations.

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Q2 2014/15 Financial Year Finance Report

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  1. Portfolio Committee for Women Second Quarter of 2014/2015 Financial Year Finance report – Q2 2014/15 year

  2. An inspiration Finance report – Q2 2014/15 year

  3. Introduction This presentation seeks to summarize financial management activities undertaken by the Commission during the second quarter of the financial year to 30 September 2014. The events and matters reported are in the main for accountability to Parliament on performance for the period against the Annual Performance Plan, Appropriation Act and other obligations advanced by the Committee from time to time. Additional information is provided in this presentation in the interest of openness, transparency and completeness in reporting. Finance report – Q2 2014/15 year

  4. Contents • Financial information...............................................5 – 20 • Financial performance (Income & expenditure) • Funding and Budget situation • Risk Management.........................................................21 • Supply Chain Management..............................................22 • TAS and plans for a clean administration.......................23 - 24 • Compliance with Laws and regulation • Action plans • Other PFMA matters and Projects undertaken................25 - 26 Finance report – Q2 2014/15 year

  5. Overview of Financial results • Quarterly deficit of R74, 767 was recorded • Cumulative surplus as of 30 September 2014 was R763, 595. Interest income of R412, 090 and grant income R2,3 million recognised ( Accounting convention to capitalize new vehicles) • Excluding the R2, 3 million entry, the actual deficit was R1,5 m. Overleaf, the analysis of key drivers of expenditure will be provided • There is spending pressure already, where R36, 8 million expenditure has been recorded against an original budget of R69,9 m (treasury allocated R67, 2 m as of 1 April 2014). Total expenditure therefore amounts to 53% instead of 50% of the allocation (linearly compared) suggesting higher rate of spending in the first six months Finance report – Q2 2014/15 year

  6. Income • Transfers from National Treasury – R16, 9 m for the quarter and R33,6 million cumulative to end of second quarter • Transfers recognised as per schedule of transfer, however cash/money was only transferred in the first week of October 2014 (Accruals basis of accounting) • Income from government therefore recorded within budget – 50% of the annual allocation recorded • Interest income of R232, 633 earned in the second quarter (YTD ; R412, 091). • Cumulative donor income arose from Gender summit activities during the first quarter – R1,2 m in Q1 and none in Q2 • To date, R19, 461 income from sundry sources was received • Total income R37, 6 million (due to other income) Finance report – Q2 2014/15 year

  7. Expenditure - general • The Commission performed virements /reprioritisation of budget in current financial year. This was made to accommodate spending pressures ensuring the efficient and effective delivery of services • Budget was revised, cross-compensating over-spending accounts with under-spending line items. • Defrayals left a net of R700, 000 that will be set off by anticipated interest income for the year. The Commission hold excess cash in the bank account and consistently earns interest on the account. • The virements therefore dealt with budget variances (no budget comparative analysis included in this report). • Forecasts with an adjusted annual budget for R70, 6 million is detailed in the report. The projected spending figures include spending for all the targeted activities in the Annual performance Plan (2014/2015) as well filling of critical positions (COE) Finance report – Q2 2014/15 year

  8. Virements for the 2014/2015 period Finance report – Q2 2014/15 year

  9. Budget risks • For the year under review, it is projected that spending will be within budget subject to stringent measures adopted to contain spending pressures • It is however, foreseen that the Commission will not sustain it’s operations in future periods as it will not afford the existing establishment. Currently the organogram/COE of the Commission constitutes over 70% of the allocation (R48/67.2m). This leave less than R20 m for Goods or Services for purposes of service delivery and administration. The ratio of COE to Allocation is set to worsen to close to 80% of the allocation • The Commission as part of it’s planning for the following financial year, has initiated a projects to assess its business model, intensify cost containment efforts, raise funding, partnering with other state institutions as was done with the state broadcaster (SABC). • The risk is real plus exacerbated by the state-wide budget cuts announced by the Minister of Finance in the Medium Term Budget Policy statement of 2014. Finance report – Q2 2014/15 year

  10. Budget risk analysis • Reasons for shortfall • Inflation effect on G&S • Anticipated COE increase due to cost of living adjustments, filling of positions • Budget reduction notices Finance report – Q2 2014/15 year

  11. Expenditure – For 3 months – Q2 • For July to September 2014, total spending was R19, 5 million compared to R17,3 m in the first 3 months of the financial year. This represented 53% of the revised budget for the semester – an increasing spending rate, comparatively between the quarters where key drivers are; • Compensation of Employees – R13, 5 m (increase in leave provision) • Computer services is higher mainly due to work done around the website. During the quarter a total of R391, 095 was spent compared to R34, 086 in the first quarter • Travel and accommodation is above average by 12% (R1,9 m in Q2 whilst Q1 R1,2 m was spent{Gender Summit included}. Women month and provincial transformation hearings were amongst the key divers • Vehicle expenses getting higher will be contained ( fleet management procedures and the appointment of corporate services manager critical) • There were accounts under spending the trend of Q1: Professional services due to AGSA activities saturated in Q1, Printing : Research reports to be completed later in the financial year and Q1 included work overlapping from previous year. These are some of the timing differences explaining the comparative anomalies between the quarters Finance report – Q2 2014/15 year

  12. Quarter 2 of 2014/2015 - Expenditure analysis...1 Finance report – Q2 2014/15 year

  13. Quarter 2 of 2014/2015 - Expenditure analysis...2 Expenditure by economic classification & programme Finance report – Q2 2014/15 year

  14. Quarter 2 of 2014/2015 - Expenditure analysis...3 Deviations Key spending Drivers + Pressures Budget comprised of 68% (COE), 3% (Depre) & 29%(G&S). Actual year to date expenditure in line at respectively 68%, 1% and 31%. Therefore no material deviation per economic classification 2nd quarter COE higher than Q1 mainly due to leave provision (R1,5 m) + filing of positions G&S slacking in Q2 compared to Q1 due to AGSA fees – audit work concentrated in Q1 in the main • Service delivery programme accounts for over 50% of the spending. Spending on this programme increased in Q2 compared to Q1. • Corporate services is the second high spending programme at R5,4 m in Q2 compared to R4,9 in Q1 Finance report – Q2 2014/15 year

  15. Extra- ordinary transactions and developments • R2,3 m income recognition in lieu of vehicle purchases (6 of the 11 ordered). The amount will finally be R4,3 million when all the vehicles are delivered • Leave provision increased by R1,5 m – the entry for the six months period made during the second quarter. A leave planning intervention was put in place to rectify the situation • Donor income from Gender Summit partners – R1,2 million • Budget reduction letter received from national Treasury proclaimed a cut of R3,1 million for 2015/2016 and R4,7 m by 2016/2017. This directly impacts planning and poses a significant funding risk going forward. Finance report – Q2 2014/15 year

  16. Finance report – Q2 2014/15 year

  17. Statement of financial position – material figures and movements • Non-current assets grew from R1,5 million in the same period last year to R3,6 million mainly for the purchase of vehicles (R2,3m), net of depreciation and other small movements between the periods. • Cash was R15, 3 million as at September 2014 compared to R21, 3 million last year, same period. Despite a slight increase in creditors balances, the unpaid transfer money from the Department (R6 m) is the major difference between the cash balances for the two periods. • Receivables in the main from the department for an outstanding quarterly transfer allocation of R6 million. • Total Assets were therefore R25 million as at 30/09/2014 and R23 million same date prior period. • All liabilities were current and totalled R19 million (current) and R8,1 million (prior). Increases in provisions, conditional grant liability (R6m) and creditors explains increased figure • Net assets position still positive and is supported by accumulated surplus recorded at each period end. Finance report – Q2 2014/15 year

  18. Financial Position as at 30 Sept 2014 • Balance sheet still healthy • Going concern assertion still valid – Solvency ration above 1 although worse than same period of last year • Assets decrease from liquid to more illiquid long term/non-current due to capitalization R2,3 m for cars so far; inversely more current liabilities/less current (cash) Finance report – Q2 2014/15 year

  19. Finance report – Q2 2014/15 year

  20. Gender Summit final figures • The summit over-subscribed and well attended • About 50% funded externally by partners and donors • All funding conditions were met and accounts were accordingly closed –out • Outputs includes POA, Conference Report and immeasurable public awareness and other key stakeholder relations Finance report – Q2 2014/15 year

  21. Supply chain management • Procurement plan activities (pending key tenders) • Banking services • Comprehensive insurance • Cleaning services (re-issue) • Legal Services (A panel for corporate matters – DC’s, civil + on Core work e.g. Sex Work, Judicial representation cases) • Other running services with expiring/lapsed contracts - Cellphones, Conferencing, etc • An SCM policy was reviewed during the quarter and accordingly approved for immediate implementation • Processes to be delegated to provinces, using the new electronic platform. Meetings with PC’s held already, Administrators trained on SCM and HQ admin trained in Travel order Pastel functionalities and shall be extended to include requisitioning and Purchase order generations – to Improve efficiency and finance to focus on internal control and/or value adding activities • The unit focuses as well to avoid incurrence of irregular expenditure through compliant procurement practices, contract administration and compliance enforcement, whilst management heightens consequence management/accountability in line with PFMA provisions Finance report – Q2 2014/15 year

  22. Risk management • The quarterly Committee meeting ahs regularly held : 20 May and first week of October 2014 ( A lag caused by audit and year end activities) • RM maturity assessment completed where a favourable score of 3 (reputable) was achieved. Signifying that RM is embedded in the CGE operation and growing/developing favourably • The risk assessment as updated (per Risk Register) is acceptable but for IT (infrastructure) and Finance (SCM) – interventions/action plans implemented to the satisfaction of Committee on all other areas. Exposures limited and no material threat to the CGE achieving its objectives • Insurance for office content (including expected new ICT items) and vehicle fleet currently been procured (invitations to prospective service providers) Finance report – Q2 2014/15 year

  23. TAS - Operation clean audit - roadmap • The model illustrates a coherent approach undertaken to Turnaround the performance and compliance environment within the Commission • The Commission is focussing on all these areas to attain the goal of a clean audit by year ending 31 March 2015. • Risky areas are under SCM, Assets and IT and are accordingly attended to. Detailed action plans and projects plans are followed for execution and regularly monitored through the Commission’s governance structures Finance report – Q2 2014/15 year

  24. Regularity Audit Outcomes 2013/2014 + Corrective measures Unqualified opinion on AFS Weaknesses currently addressed in terms of the Audit action plans developed subsequent to receipt of management letter of the 2013/2014 regularity audit. Active and ongoing implementation of AGSA’s recommendation Apart from summary on the left of slide, detailed action plans have been developed, implemented and tracked by oversight structures/leadership of the CGE on a continuous basis ..\..\Risk management\AG Proposed AC (Final) (2) 2014.xls

  25. Projects underway or completed in the period • Audit by AGSA – completed and reported to Parliament on 21 October 2014. Annual Report (including Annual financial Statements were filed by 30 September, complying with s55 of the PFMA and section 181(5) - Constitution • Pastel Evolution project concluded – system operating Live and records maintenance up to date. Improving on MIS/Report writing + decentralisation of activities especially on SCM by provinces. Asset management migrated and integrates with the main accounting system • Leave Administration – ESS system fully functional – Live from 1 October 2014. Records migrated successfully – Currently assurance work is being performed by internal audit division. System is Cloud hosted together with VIP • Internal controls – Audit action plans and commitments made to improve were compiled and reviewed by AGSA. Finance report – Q2 2014/15 year

  26. Other matters of importance • Litigations – no changes from the previous reports (CGE v Gasa and Axolute v CGE). • No fraud or related incident whatsoever were reported in the period, either through fraud line or internal whistle blowing procedures during the period and year long • A break in incident on 22 September 2014 at the NW office. An LCD monitor, Laptop and radio was lost plus a car “smash and grab” in PTA where a laptop was taken. Matters reported to the police and the security has been improved • SARS – claim of R2,9 m by SARS and has been queried down to about R1m and further possibility is to bring the claim/CGE exposure down to R500, 000 but for the challenges of finding information from the erstwhile payroll service provider Finance report – Q2 2014/15 year

  27. Q & A Thank You Finance report – Q2 2014/15 year

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