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Brief on NYDA financial report for 2009/10, covering financial & non-financial performance, audit outcomes, challenges, and achievements.
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Presentation to the Portfolio Committee on NYDA Annual Report 03 November 2010_________________________ NYDA Presentation template/Rev02
letter of invitation 26 October 2010 The Minister Hon OC Chabane Minister in the Presidency: Performance Monitoring and Evaluation Cc: Mr A Lungisa Chairperson: National Youth Development Agency (NYDA) Dear Honourable Chabane The Portfolio and Select Committees on Women, Children, Youth and People with Disabilities kindly requests the National Youth Development Agency (NYDA) to brief the Committee on Financial Statements and Annual Report for financial year 2009/10. The focus of the presentations should encompass the following: Financial performance: An overview of the spending trends of the entity as reflected in the annual financial statements: management report; report of the auditor-general; statement of accounting policies and related matters; appropriation statement; notes to the appropriation statement; income statement (statement of financial performance); balance sheet (statement of financial position), statement of changes in net assets; cash flow statement; notes to the annual financial statements, disclosure notes to the annual financial statements and annexes on transfers (including all transfers in Division of Revenue Act). The entity’s management of income, expenditure, transfers, cash and assets, as well as the state of its financial management systems – achievements and challenges. An input on the various sets of ‘Notes’ to the different sections of the financial statements An overview of the audit report. An overview of the audit committee. Overspending and other poor audit outcomes. Supply chain management.
Non-financial performance: • Information on the external and internal challenges faced by the entity in the year under review. • Organisational concerns and opportunities. • Performance of the NYDA viz-a-vis its aims, objectives and performance targets over the previous year. • Efficiency and productivity of the NYDA in relation to its mandate. • Programmatic performance information in relation to the Strategic Plan, specifically: • The achievement of desired outcomes (that is, progress made in achieving stated goals and objectives). • The delivery of planned outputs (that is, delivery against each and every performance indicator and target • specified in the entity’s strategic plan, as well as the allocated budget.) • Please also indicate if there are any virements between programmes/projects in the 2009/2010 and if so, why? • The Committees would appreciate the attendance of the Provincial Youth Development Boards to be part of the • meeting. • It would be appreciated if you extend this invitation to the Provincial Youth Development Boards. • Details of the meeting are as follows: • Date: Wednesday, 03 November 2010 • Time: 11:00 – 13:00 • Venue: G26, New Wing Parliament • For enquiries contact the Committee Secretary, Neliswa Nobatana at tel:(021) 403 3840,fax:(021)0866607716, • cell: 083 709 8472, email: nnobatana@parliament.gov.za • Sincerely • ___________________________ • Hon B Thompson • Chairperson: Portfolio Committee on Women, Children, Youth • and People with Disabilities
FINANCIAL PERFORMANCENYDA 2009/10 ANNUAL REPORT KEY MATTERS TO BE NOTED WHEN REVIEWING THE NYDA ANNUAL REPORT The NYDA was established through a merger between Umsobomvu Youth Fund (UYF) and National Youth Commission (NYC) effective 1 October 2010(refer NYDA’s Directors’ Report page 74) hence forth the NYDA only operated for 6 months ending 31 March 2010, this being its first year of operation; There are no comparatives for NYDA due to the fact that it is its first year of operations; The former entities operated for the first 6 months of the year (up to September 2009) and further NYC Act No.19 of 1996 was repealed on the 5th March 2010 and UYF is currently in the process of being dissolved as a section 21 company As required by Section 21(2) of the NYDA Act the assets, rights, liabilities and obligations of the former UYF and NYC were transferred to NYDA on the effective date (for summary of assets and liabilities transferred to NYDA please refer NYDA’s Directors Report page 74 and 75);
OVERVIEW OF THE STATEMENT OF FINANCIAL PERFORMANCE NATIONAL YOUTH DEVELOPMENT AGENCY: Income (page 80): Total income received during the period under review amounted to R296m of which R113m(representing 40% of the total income) represents Deferred Grant Income released to income due to adoption of GRAP reporting framework by NYDA and R165m represents Grants received from Government for the 6 months ending March 2010; The balance of income is represented by interest on loans and investments advanced by the NYDA to young people; included in the interest income of R14,6m is interest earned on impaired loans amounting to R5m
OVERVIEW OF THE STATEMENT OF FINANCIAL PERFORMANCE NATIONAL YOUTH DEVELOPMENT AGENCY: Expenditure (page 80 and 122): Total expenditure during the period under review amounted to R275m of which R139m(representing over 50% of the total expenditure) represents project disbursements; Operating expenses amounted to R132m of which R54m represents both impairment provisions and depreciation expenses for the period under review For detailed variance analysis i.e. budget versus actual expenditure please refer to page 122 and 123 of the annual report.
OVERVIEW OF THE CASHFLOW STATEMENT Expenditure (page 82 of the annual report): The total cash generated from the operating activities amounted to R7m as a result of R176m being cash received and cash disbursed amounting to R169m; Furthermore, net cash flows amounting R11m was generated from investing activities mainly due to loan repayment exceeding loans disbursed; As at period end cash and cash equivalents amounted to R24m and this main consist of R11m encumbered/restricted cash with R13m unrestricted/unencumbered.
Overview of the audit report The Auditor General of SA have issued an unqualified audit opinion on the NYDA financial statements however have raised a number of matters of emphasis which does not modify his opinion: Emphasis of matter: Material impairments amounting to R54m Non-compliance with laws and regulation Contravention of Section 66 of the PFMA relating to the borrowing of funds Contravention of Treasury Regulations 28.3.1 relating to materiality framework Contravention of Section 55(1)(c) of the PFMA relating to the submission of the annual financial statements to auditors Irregular expenditure amounting to R11m Non-compliance with regulatory and reporting requirements These matters have/are receiving management’s attention and progress is reported to the Board on a quarterly basis Report contained in pages 71 to 73 of the annual report
An overview of the audit committee The Audit committee was established as provided for by Section 77 of the PFMA; The Audit Committee has adopted appropriate terms and of reference in line with Treasury Regulations 27.1.8 and they have conducted their affairs in compliance with its charter Report is contained in page 70 of the annual report
Overspending and other poor audit outcomes and supply chain management Variance explanations on over/under expenditure has been detailed on page 122 of the annual report; Besides matters of emphasis, as contained in the audit report, all other audit findings relates to non significant and house keeping are receiving attention by management and reported to the Board on a quarterly basis; The NYDA has adopted its owns supply chain management policy, process and procedure which is in line with the requirements of a schedule 3A and currently is also in the process of developing a tools to assist with automation of SCM process and procedures
Information on the external and internal challenges faced by the entity in the year under review. During the year under review the NYDA managed the merger of the two former entities UYF and NYC This included the establishment of systems and processes to ensure efficient operations of the agency Harmonisation of conditions of employment for staff from the former entities ( Creating a new culture) Insufficient Funding- Funding for NYDA was based on UYF and NYC baselines, des not respond to NYDA mandate ( this had a snowball effect n all NYDA programmes) Limitations of the NYDA act ( Section 76 not 75)- Not enough resources for Agency to establish provincial and local structures Challenges with Performance Management systems which were aligned to schedule 3b entity not 3a
Organisational concerns and opportunities Insufficient Funding continues to undermine NYDA’s ability to deliver on its mandate Economic recession has increased the bulging of youth unemployment challenges MOA with Provinces provide the NYDA with an opportunity to establish provincial operations and roll out of its programmes
Performance of the NYDA viz-a-vis its aims, objectives and performance targets over the previous year.(responds bullet point 3&5 in letter of invitation) Economic participation
