March 2008

1. DEPARTMENT OF ENVIRONMENTAL AFFAIRS AND TOURISMREPORT TO THE PORTFOLIO COMMITTEE ON THE MLRF ANNUAL REPORT FOR THE2006/7 FINANCIAL YEAR March 2008

2. CONTENTS Overview…….. Introduction • Vision and Mission • Background to the MLRF Performance Information: • Vision and Mission • Background to the MLRF • Achievements Audit Report • Comparison with prior year • Results of 2006/07 audit • Way forward

3. OVERVIEW OF MLRF DEAT’s AIM…… vision – “a prosperous and equitable society living in harmony with our natural resources”.

4. OVERVIEW OF MLRF CONTINUED… DEAT’s AIM…… mission – “leading sustainable development of our environment for a better life for all” through: • Promoting conservation and sustainable utilization of our natural resources to enhance economic growth. • Promoting a global sustainable development agenda. • Transformation of the fisheries sector

5. MCM/MLRF Relationship to DEAT Programmes of DEAT The Branch: Marine and Coastal Management falls under Programme 3 of DEAT Programme 3: Marine and Coastal Management Promote the development and management of South Africa's marine and coastal environments in a way that ensures sustainability of the marine resources while maximising economic opportunities, job creation and poverty alleviation.

6. MARINE LIVING RESOURCES FUND Background to MLRF • MLRF established in terms of Section 10 of the MLRA, Act 18 of 1998 • MLRF is a schedule 3A Public Entity (PFMA) • MLRF is the main source of funding for operations of the Branch: Marine & Coastal Management

7. MARINE LIVING RESOURCES FUND CONTINUED Background to MLRF MLRF covers the operational costs of the 5 Chief Directorates: • R, A & I: Investigate and advise on sustainable use of resources through carrying out research • RM (Marine): Regulating utilisation through admin of fishing rights, permits & licences • MCS: Enforcing relevant laws and regulations • ICM: Managing human impacts on the coast through regulation • CFO: Financial management of the MLRF

8. MARINE RESEARCH Scientific Research Achievements: • Stock estimates and recommendations completed for 18 fisheries • Stock estimate reports for 2 new fishery sectors (horse mackerel & octopus) • Developed a graduate science programme to ensure skills development • Ecosystems effects of fishing & top predators studies completed for BCLME

9. MARINE RESOURCE MANAGEMENT Rights allocation & Regulation Achievements: • Long-term fishing rights granted in 20 fisheries • Average interest by previously disadvantaged rights holders = 59% (December 2006) • Draft policies on Subsistence & Small-scale fisheries published • Draft policy on the Management of Seals, Seabirds & Shorebirds published

10. INTEGRATED COASTAL MANAGEMENT Coastal conservation Achievements: • Published the Integrated Coastal Management Bill for comment • Gazetted Draft Marine Aquaculture policy for public comment • 3 Marine Protected Areas (MPAs) were declared (Aliwal Shoal, De Hoop and Goukamma) • Draft policies on BBWW & WSCD published for public comment • ToR for NPOA on land based sources of marine pollution

11. MONITORING, CONTROL & SURVEILANCE Enforcement Achievements: • Improved monitoring capacity through the implementation of the new Vessel Monitoring System • Effective deployment of EPVs • Joint SADC patrol to Mozambique • Co-operation agreements with law-enforcement agencies signed

12. CHIEF FINANCIAL OFFICER Turnaround Financial Strategy Achievements: • Implemented an MLRF turnaround strategy for weaknesses identified (AG and SCOPA) • Implemented Oracle and MAST - Dec 06 • Financial Management System • Management Information System • Draft Cost Recovery Model developed • Accounting policies and internal controls changed to ensure compliance with International Accounting Standards (IAS) and PFMA

13. MARINE LIVING RESOURCES FUND AUDIT REPORTFROM DISCLAIMED AUDIT OPINIONS (2003/04, 2004/05, 2005/06) TO A QUALIFIED AUDIT OPINION IN 2006/07 Moving Towards an Unqualified Audit for 2007/08

14. MLRF AUDIT 2006/07 OVERVIEW • Comparison of 2005/06 and 2006/07 financial year’s audit opinions • Present management plan to move from disclaimers and qualifications towards an unqualified audit report in 2007/08

15. SUMMARY OF ANNUAL REPORT This Annual Report represents a significant turnaround in the management and systems governing the Fund: • Previous audit report had 20 qualifications - AG decided not to express an opinion • Current audit report has 5 qualifications - AG decided to express an opinion • still a concern to the Department • Improvement in financial management has led to the clearing of significant disclaimers relating to revenue, debtors and disposal of assets

16. SUMMARY OF ANNUAL REPORT CONTINUED… • Correct application of IAS • Continued improvement of governance issues, with a focus on due diligence, strengthening the control environment and improving coordination, communication and monitoring • Special attention given to strengthening the financial accounting skills and capacity of the entity

17. COMPARISONS BETWEEN 2005/06 AND 2006/07 FINANCIAL YEARS

18. COMPARISONS BETWEEN 2005/06 AND 2006/07 FINANCIAL YEARS continued….

19. COMPARISONS BETWEEN 2005/06 AND 2006/07 FINANCIAL YEARS continued….

20. TOWARDS AN UNQUALIFIED AUDIT REPORT • Management formed a Project Steering Committee called “Let’s Fix It” - meets weekly, internal audit participates • Temporary staff appointed to assist in problematic areas i.e. creditors recons, balance sheet accounts recons, deferred income recons and fixed assets • CFO appointed

21. PROGRESS TO DATE • Asset verification process commenced and procedures for disposal of assets functional • Procedure manual on payables developed • Ongoing work on Supplier recons, payment on statement only • Budget process for the 2008/09 financial year was finalised • Ongoing training on Oracle financial system • Financial management training schedule with SAMDI finalised

22. LETS FIX IT!