FOURTH QUARTER ANALYSIS PRESENTATION TITLE...

PRESENTATION TITLE

Presented by:

Name Surname

Directorate

Date

FOURTH QUARTER ANALYSIS

REPORT FOR THE 2016/17

FINANCIAL YEAR

Presented by:

Acting DG

Date: 06 September 2017

Contents• Part A: Overview of non-financial performance

• Part B: Main Account financial performance

• Part C: Water Trading Entity financial performance

• Definitions

Appendices

• Part A: Compliance issues

• Part B: Detailed analysis of non-financial performance

• Part C: Main Account financial performance

• Part D: Water Trading Entity financial performance

• Part E: Supply Chain Management matters

• Part F: Progress on 2015/16 audit outcomes

• Part G: Risk Management matters

• Part H: Internal Audit matters

• Part I: Progress on Bucket Eradication

• Part J: Cost containment adherences in the

sector/department 2

QUARTER 4 PROGRESS REPORT FOR THE 2016/17 FINANCIAL YEAR

PART A: OVERVIEW OF NON-

FINANCIAL PERFORMANCE

3

Pre-audit analysis of annual

performance

Main Account Water Trading

4

Achieved48%

Partially achieved

21%

Not achieved

31%

Achieved75%

Partially achieved

25%

Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

ANALYSIS OVERVIEW OF MAIN

ACCOUNT PERFORMANCE

5

• PROGRAMME 1: ADMINISTRATION

• PROGRAMME 2: WATER SECTOR MANAGEMENT

• PROGRAMME 3: WATER INFRASTRUCTURE DEVELOPMENT

• PROGRAMME 4: WATER AND SANITATION SERVICES

• PROGRAMME 5: WATER SECTOR REGULATION

Analysis per budget programme

6

P1: Admin P2: Planning P3: Infrastructure P4: Sanitation P5: Regulation

Not achieved -10% -9% -39% 0% -57%

Partially achieved -10% -27% -28% -17% -17%

Achieved 80% 64% 33% 83% 26%

80%64%

33%

83%

26%

-10%

-27% -28%-17% -17%

-10%

-9%

-39% -57%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%%

ach

iev

em

en

t o

f an

nu

al

targ

et

Main Account

Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

ANALYSIS OVERVIEW OF WATER

TRADING PERFORMANCE

7

• ADMINISTRATION

• PROTO-CATCHMENT MANAGEMENT AGENCIES

Analysis per budget programme

8

Fin Mgt Proto CMAs

Not achieved 0% 0%

Partially achieved -23% 0%

Achieved 67% 100%

67%

100%

-23%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

iev

em

en

t o

f an

nu

al

targ

et

Water Trading sub-programmes

Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

PART B: OVERVIEW OF MAIN

ACCOUNT FINANCIAL

PERFORMANCE

9

Departmental spending as at 31

March 2017

10

Overall departmental

performance

Amount in

R’000

Adjusted budget (Total) 15 524 597

Departmental expenditure 15 635 438

% spent 101%

Available (110 841)

Departmental Expenditure: Per

Programme and Economic Classification Programme Adjusted

budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

1 Administration 1 547 743 1 504 930 42 813 97%

2 Water Plan & Info Mgt. 749 656 695 603 54 053 93%

3 Water Infra Dev. 12 130 318 12 082 463 47 855 100%

4 Water & Sanitation Services 778 488 1 070 757 -292 269 138%

5 Water Sector Reg. 318 392 281 685 36 707 88%

Total 15 524 597 15 635 438 -110 841 101%

Economic classification

Current payments 3 186 536 3 139 947 46 589 99%

Compensation of employees 1 540 217 1 439 945 100 272 93%

Goods and services 1 646 244 1 699 928 -53 684 103%

Interest on rent and land 75 74 1 99%

Transfers and subsidies 7 503 548 7 482 875 20 673 100%

Payment of capital assets 4 834 510 5 012 613 -178 103 104%

Payments for financial assets 3 3 -

Total 15 542 597 15 635 438 -110 841 101%11

NotesEconomic

classification

Notes

Compensation

of employees

The under spending of R100.272 is mainly due to

the Vacant posts across all five programmes. The

Department is in the process of reviewing the

organisational structure.

The CoE budget is specifically and exclusively

appropriated. Parliament`s approval is required to

utilize this budget for any other purpose. All the

unspent funds on CoE will be therefore surrendered

to National Treasury

Goods and

services

The overspending is due mainly to:

• Expenditure incurred for water tankering in

respect of drought relieve activities, and

• Expenditure incurred in respect of operations

and maintenance related interventions.

12

NotesEconomic

classification

Notes

Transfers and

subsidies

The under spending is mainly due to:

The amount of R14 million allocated to Thabazimbi

Local Municipality (LM) (WSIG) could not to be

transferred due to risk of misappropriation of funding

and the unconducive environment within which

Thabazimbi LM finds itself (facing legal issues and

administration).

Payment for

capital assets

The overspending is due mainly to unfunded

projects in Bucket Eradication Programme which

were processed against the insufficient budget

13

TRANSFERS AND SUBSIDIES &

OPERATIONAL EXPENDITURE

Analysis and efficiency of expenditure

14

Transfer and subsidies budget vs.

expenditure as at 31 March 2017

Recipients of transfers and

subsidies

Adjusted

budget

R`000

Actual

transfer

R`000

Variance

R`000

%

spent

Provinces and municipalities 4 695 548 4 681 319 14 229 100%

Departmental agencies and

accounts 1 726 569 1 725 869 700 100%

Higher education institutions 981 - 981 0%

Foreign governments and

international organisations 188 789 188 250 539 100%

Public corporations and private

enterprises 844 773 844 773 - 100%

Non-profit institutions 4 063 3 337 726 82%

Households 42 825 39 327 3 498 92%

Totals 7 503 548 7 482 875 20 673 100%

15

Transfers and subsidies• Conditional Grants: The Department received R4.694 billion for Regional

Bulk Infrastructure and Water Services Infrastructure Grants, of which R4.681

billion has been transferred to municipalities.

• Departmental Agencies and Accounts: A total amount of R1.726 billion was

transferred out of the R1.727 billion allocated to various Agencies (Energy

Water Sector Education and Training Authority, Public Sector Education and

Training Authority, Water Trading Account: Augmentation, Water Research

Commission and SA Nat Space Agency).

• Higher Education Institutions: An amount of R0.981 million was allocated but

could not be made to Stellenbosch University.

• Foreign governments and international organizations: An amount of

R188.250 million was transferred out of the R188.789 million allocated to

African Minister Council on Water (AMCOW) , Komati River Basin Water

Authority, Limpopo Watercourse Commission, Orange-Seque River Basin

Commission, Subscription Fees: African Union membership fees and AMCOW

Trust Fund .

• Public corporations and private enterprises: An amount of R844.773

allocated to water boards (Amatola, Magalies, Sedibeng and Umgeni) was

transferred in full.

• Non-profit institutions: An amount of R3.337 million was transferred out of

the R4.063 million allocated to Strategic Water Partner network, Donations and

Gifts and Claims against the State.

16

Operational expenditure per programme

Programme Adjusted

budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

1 Administration 774 040 774 039 1 100%

2 Water Plan & Info Mgt. 263 562 244 314 19 248 93%

3 Water Infra Dev. 405 626 502 385 -96 759 124%

4 Water & Sanitation

Services110 901 110 901 - 100%

5 Water Sector Reg. 92 115 68 289 23 826 74%

Total 1 646 244 1 699 928 -53 684 103%

17

The Operational Expenditure is mainly made up of Goods and Services. The

overspending in Goods and Services is due mainly to:

• Expenditure incurred for water tankering in respect of drought relieve activities, and

• Expenditure incurred in respect of operations and maintenance related

interventions.

In terms of classifications, most of expenditure in Goods and Services was incurred in

Contractors (21%), Operating leases (19%), Consultants: Business and advisory services

(15%), Travel and subsistence (12%) and Infrastructure and planning services (7%)

INFRASTRUCTURE PROGRAMMES /

GRANT ALLOCATIONS

Budget vs. expenditure as at 31 March 2017

Summary of infrastructure

programmes

Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Regional Bulk Infrastructure

Grant (RBIG)

Direct Grant

1 850 000 1 849 791 209 100%


Grant(RBIG)

Indirect Grant

3 478 829 3 481 268 -2 439 100%


Grant (Water Boards)

844 773 844 773 - 100%

Desalination Plant 301 168 301 168 - 100%

Water Services Infrastructure

Grant (WSIG)

Direct Grant

2 844 982 2 830 982 14 000 100%

Water Services Infrastructure

Grant(WSIG) :

Indirect Grant

362 145 413 259 -51 114 114%

Accelerated Community

Infrastructure Programme

(ACIP)

206 803 206 803 - 100%

Bucket Eradication

Programme(BEP)

Indirect Grant

512 797 831 390 -318 593 162%

WTA: Capital Projects 1 544 462 1 544 462 - 100% 19

PART C: OVERVIEW OF WATER

TRADING FINANCIAL PERFORMANCE

20

21

Approved Final Actual Variance

Budget Budget Amounts Amounts

R'000 R'000 R'000 R'000

Revenue 10 167 460 10 696 197 11 798 111 1 101 914

Taxes and transfers 1 499 528 1 499 528 1 499 528 -

Sale of water services 8 370 812 8 619 501 9 170 645 551 144

Construction revenue 221 940 501 988 409 401 ( 92 587)

Commission earned - - 2 920 2 920

Lease revenue earned 13 753 13 753 12 158 ( 1 595)

Interest revenue 61 427 61 427 697 472 636 045

Other receipts - - 5 987 5 987

Total Revenue 10 167 460 10 696 197 11 798 111 1 101 914

Expenses 4 820 672 5 322 720 14 546 345 (9 223 625)

Employee benefit costs 908 523 908 523 924 382 ( 15 859)

Operating expenditure 1 389 046 1 891 094 2 852 957 ( 961 863)

Impairment on financial assets - - 2 787 552 (2 787 552)

Finance cost 452 077 452 077 6 039 562 (5 587 485)

Depreciation, amortisation and impairment 2 071 026 2 071 026 1 832 133 238 893

Loss on disposal of fixed assets - - 109 759 ( 109 759)

Total Expenses 4 820 672 5 322 720 14 546 345 (9 223 625)

Surplus/(Deficit) from operating activities 5 346 788 5 373 477 (2 748 234) (8 121 711)

Projects Expenditure 5 495 175 5 714 475 4 541 610 1 172 865

Allocation from government grants 1 988 582 1 897 378 1 482 794 414 584

Rehabilitation and Refurbishment of existing water resource

infrastructure 600 000 400 000 343 796 56 204

Rehabilitation of Conveyance System 319 500 293 500 265 542 27 958

Water Metering Projects 155 619 55 619 37 013 18 606

Other Projects 2 431 474 3 067 978 2 412 465 655 513

Budget Surplus/(Deficit) ( 148 387) ( 340 998) (7 289 844) (6 948 846)

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017

22

WATER TRADING ENTITY PERFORMANCE ANALYSIS

FOR THE YEAR ENDED 31 MARCH 2017

REASON ON ORIGINAL BUDGET DEVIATION

The projected revenue for the financial year 2016/17 was revised to R10.6 billion which is an increase of R528

million. The Improvement on the revenue projection can be mainly attributed to the increase on construction

revenue and efforts made by the entity to improve the billing efficiency for water sales. The Operating

expenditure was revised to R1.8 billion in order to cover the increase on the construction costs and electricity

consumption for operation of the pumping station while project expenditure budget was increased from R5.4

billion to R5.7 billion in order to cover projects such as Vaal Water Treatment Plant that required funding during

the financial year 2016/17.

REASON ON THE REVENUE VARIANCE

The favourable variance on revenue performance can be attributed the increase on the construction order book,

efforts made by the entity to improve the billing efficiency for water sales and interest charged on overdue

customers accounts. The total revenue against the revised budget for the financial year reflects a favourable

variance of R1.1 billion.

REASON ON THE EXPENSES VARIANCE

The Over spending on total expenses can be mainly attributed to the increase on the finance costs, Goods and

Services and employee costs. The Increase on finance cost is due to the cash flow timing difference on off-

budget projects (undertaken by Trans Caledon Tunnel Authority-TCTA),while the over spending on the goods

and services can be attributed to the increase on the TCTA management fees. The TCTA management fee

increased from R653 million in the financial year 2015/16 to R1.4 billion in the financial 2016/17.The Over

spending on employee costs is mainly due to the non-capitalisation of employee costs incurred by construction

units during the financial year 2016/17. The unfavourable variance on impairment of assets is due to the fact the

entity doesn't budget for impairment on financial assets.

DefinitionsAbbreviation / Acronym Description

ACIP Accelerated Community Infrastructure Programme

AMD Acid Mine Drainage

BD Blue Drop

BEP Bucket eradication programme

Cat. Category

CMA Catchment Management Agency

CoGTA Cooperative Governance and Traditional Affairs

Comp Completed

Constr. Construction

DWS Department of Water and Sanitation

EC Eastern Cape

ENE Estimates of National Expenditure

DPSA Department of Public Service and Administration

Feas. Feasibility

FS Free State

GD Green Drop

IRS Implementation Readiness Study

KOBWA Komati Basin Water Authority

LP Limpopo

MMS Middle Management Service

MP Mpumalanga

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

23

DefinitionsAbbreviation / Acronym Description

MWIG Municipal Water Infrastructure Grant

NDP National Development Plan

NT National Treasury

NWRS National Water Resources Strategy

ORWRDP Olifants River Water Resource Development Project

RBIG Regional Bulk Infrastructure Grant

RHIG / RHIP Rural Household Infrastructure Grant / Programme

RID Record of Implementation Decision

SMS Senior Management Service

TCTA Trans Caledon Tunnel Authority

WC Western Cape

WIMP Water Infrastructure Management Programme

WMA Water Management Area

WMI Water Management Institutions

W&S Water and Sanitation

WPIM Water Planning and Information Management

WR Water resources (i.e. augmentation)

WS Water services (i.e. regional bulk infrastructure)

WSIG Water Services Infrastructure Grant

WSOS Water Services Operating Subsidy

WSR Water Sector Regulation

WTE Water Trading Entity

WTW Water Treatment Works

WWTW Wastewater Treatment Works

24

END

25

APPENDIX A: COMPLIANCE

ISSUES

26

• COMPLIANCE ISSUES

• DEPARTMENT’S STRATEGY MAP

• ANALYSIS ON THE ACHIEVEMENT OF GOALS

• ANALYSIS ON THE ACHIEVEMENT OF STRATEGIC OBJECTIVES

Compliance issues with financial and non

financial legislative prescripts for 2016/17

Relevant legislation Compliance requirements Departmental actions

• Treasury Regulation

5.3.1

• Chapter 1, Part III B of

the Public Service

Regulations, 2001.

• S40(4) of the PFMA,

Treasury Regulation

15

The accounting officer must

establish procedures for

quarterly reporting to

facilitate effective

performance monitoring,

evaluation and corrective

action.

Submitted

• Four quarterly

performance reports to

the National Treasury

(NT) and the DPME within

60 days after the end of

each quarter

• Twelve in-year monitoring

reports on the 15th day of

each month to NT

• Three interim financial

statements to NT

• Annual financial

statements and

performance reports to

AGSA and NT on 31

May 2017

27

Equitable and sustainable water and sanitation that supports socio-economic growth and development for the well-being of current and future generations.

• Promoting and maintaining high standards of professional ethics

• Utilising resources efficiently and effectively

• Providing services impartially, fairly, equitably and without bias

• Responding to people's needs; citizens are encouraged to participate in policy-making

• Rendering an accountable, transparent, and development -oriented public administration

1. Enhanced and protected

water as a resource across

the value chain

2. Equitable access to

reliable, sustainable and

acceptable water resources

and water and sanitation

services

3. An enhanced contribution

to socio-economic

development and

transformation by the sector

5. Sound cooperative

governance and an active and

engaged citizenry

4. An efficient, effective and

development oriented water

and sanitation sector

Vis

ion

Mis

sio

nV

alu

es

Go

als

Ob

jec

tive

s u

sin

g s

co

rec

ard

pe

rsp

ec

tive

s

1.2 Enhanced management of

water and sanitation

information

2.2 Targeted and aligned

planning for adequate water

availability and the enhanced

provision of water supply and

sanitation services

1.4 Enhanced water use

efficiency and management of

water quality

3.3 Targeted procurement

that supports black

entrepreneurs in the sector

4.3 An efficient, effective and

high performing organisation

5.1 Targeted and sustained

African and global

cooperation in support of the

national water and sanitation

agenda

5.2 Informed and empowered

communities and responsive

government securing

integrated and sustainable

partnerships to support the

W&S development agenda

2.1 A coordinated approach

to water and sanitation

infrastructure planning and

monitoring and evaluation

2.3 Adequate water

availability and enhanced

provision of sustainable and

reliable water supply and

sanitation services

2.4 Safe, reliable and

sustainable water supply and

water and sanitation services

infrastructure

3.4 Job opportunities created

that expand economic

opportunities for historically

excluded and vulnerable

groups

3.2 Targeted rural

development initiatives that

support smallholder farmers

4.4 Coordinated development

of the skills pool across the

sector

1.1 Water resources protected

through water supply and

sanitation services regulation,

compliance monitoring and

enforcement

1.5 Freshwater eco-systems

protected from Acid Mine

Drainage

3.1 Equitable water allocation

and availability for socio-

economic development

4.1 An enabling environment

for the management of water

resources and the provision of

basic water and sanitation

services across the sector

4.2 Sound governance and

oversight of the DWS Public

Entities

To ensure the universal access of all South Africans to equitable water resources and sustainable water and sanitation services, by:

• Protecting, developing, conserving, managing and regulating water resources;

• Managing, regulating and providing efficient and effective water and sanitation services;

• Providing strategic leadership and evidence based policy direction to a coordinated water and sanitation sector for improved sector performance and service delivery;

• Building the skills and capabilities of the sector and enhancing information management to inform decision making; and

• Enhancing communication and stakeholder partnerships with communities and sector constituencies to advance the national development agenda.

1.3 The integrity of freshwater

ecosystems protected

Scorecard legend

Operations

Customer People

Finance2.5 Enhanced provision of

sustainable and dignified

basic sanitation 28

Analysis of strategic oriented

goals

Goal1

Goal2

Goal3

Goal4

Goal5

Not achieved / no milestone -40% -40% -25% -25% 0%

Achieved 60% 60% 75% 75% 100%

60% 60%75% 75%

100%

-40% -40%-25% -25%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

ieve

me

nt

for

20

16

/17

29

Analysis of programme strategic

objectives

1: Admin 2: Planning3:

Infrastructure

4:Sanitation

5:Regulation

Not achieved / nomilestone

-25% -20% -33% 0% -60%

Achieved 75% 80% 67% 100% 40%

75% 80%67%

100%

40%

-25% -20%-33%

-60%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

ieve

me

nt

for

20

16

/17

30

APPENDIX B: DETAILED

ANALYSIS OF MAIN ACCOUNT

31

• PROGRAMME 1: ADMINISTRATION

• PROGRAMME 2: WATER SECTOR MANAGEMENT

• PROGRAMME 3: WATER INFRASTRUCTURE DEVELOPMENT

• PROGRAMME 4: WATER AND SANITATION SERVICES

• PROGRAMME 5: WATER SECTOR REGULATION

Administration

32

Corporate Services Financial Mgt Departmental Mgt Intl Water Coop

Not achieved 0% 0% -100% 0%

Partially achieved 0% -33% 0% 0%

Achieved 100% 67% 0% 100%

100%

67%

100%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

iev

em

en

t ag

ain

st

an

nu

al

targ

et

Analysis per sub-programme

Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

Water Planning & Information

Management

33Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

IntegratedPlanning

WaterEcosystem

Water Info MgtWS & LocalWater Mgt

SanitationPlanning & Mgt

Not achieved 0% 0% 0% 0% -100%

Partially achieved -33% 0% 0% -40% 0%

Achieved 67% 100% 100% 60% 0%

67%

100% 100%

60%

-33% -40%

-100%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%%

ach

iev

em

en

t ag

ain

st

an

nu

al

targ

et


Water Infrastructure Development

34

Water Services Infrastructure Infrastructure Dev & Rehab Op of Water Resources

Not achieved -37% -50% -33%

Partially achieved -38% -25% -17%

Achieved 25% 25% 50%

25% 25%

50%

-38%

-25%-17%

-37%

-50%

-33%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

% a

ch

iev

em

en

t ag

ain

st

an

nu

al

targ

et


Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

Water and Sanitation Services

35

Water Sector Support National Sanitation Services

Not achieved 0% 0%

Partially achieved -25% 0%

Achieved 75% 100%

75%

100%

-25%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

iev

em

en

t ag

ain

st

an

nu

al

targ

et


Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

Water Sector Regulation

36

Econ &social

regulation

Compliancemonitoring

EnforcementWS services& sanitationregulation

Institutionaloversight

WUAuthorisation

Water SectorReg Mgt &

Support

Not achieved -100% 0% 0% -25% -75% 0% -86%

Partially achieved 0% -25% 0% -25% 0% -100% -14%

Achieved 0% 75% 100% 50% 25% 0% 0%

75%

100%

50%

25%

-25% -25%

-100%

-14%

-100%

-25% -75%

-86%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

% a

ch

iev

em

en

t ag

ain

st

an

nu

al

targ

et


Achieved

(100%)

Partially

achieved

(50 – 99%)

Not

achieved

(<50%)

PART C: OVERVIEW OF MAIN

ACCOUNT FINANCIAL

PERFORMANCE

37

Programme 1: Administration

Sub-programme Adjusted

budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

Ministry 54 975 54 975 - 100%

Departmental Management 113 950 105 138 8 812 92%

Internal Audit 36 045 34 140 1 905 95%

Corporate Services 702 276 679 496 22 780 97%

Financial Management 226 746 220 902 5 844 97%

Office Accommodation 376 725 376 725 - 100%

Programme Management Unit - - - -

International Water Support 37 026 33 554 3 472 91%

Total 1 547 743 1 504 930 42 813 97%


Current payments 1 476 747 1 436 254 40 493 97%

Compensation of employees 702 707 662 215 40 492 94%

Goods and services 774 040 774 039 1 100%

Interest on rent and land - - 0%

Transfers and subsidies 26 924 24 683 2 241 92%

Payment of capital assets 44 069 43 990 79 100%

Payments for financial assets 3 3 -

Total 1 547 743 1 504 930 42 813 97%

38

Programme 1: reasons for

variances

The under spending is due mainly to:

• Reduced activities (travelling, air transport, travel agency

fees and accommodation) as part of cost containment.

• Late finalisation of contracts relating to the Development of

the National Water and Sanitation Resources and Services

Strategies

• Payments relating to the wellness contract, training

interventions, information technology (IT) contracts where

service level agreements were delayed, and the activities

relating to restructuring of the department.

• The transfers which could not be made to universities of

Stellenbosch and Western Cape

39

Programme 2: Water Planning &

Information Management


budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

Water Plan Info Man & Support 3 866 3 847 19 100%

Integrated Planning 102 875 82 859 20 016 81%

Water Ecosystem 52 372 52 339 33 100%

Water Information Management 499 016 474 908 24 108 95%

Water Serv. and Local Water Man 79 124 69 996 9 128 88%

Sanitation Planning & Mgt 12 403 11 654 749 94%

Total 749 656 695 603 54 053 93%


Current payments 659 154 627 633 31 521 95%


Goods and services 263 562 244 314 19 248 93%

Interest on rent and land 6 6 - 0%

Transfers and subsidies 16 003 16 003 - 100%

Payment of capital assets 74 499 51 967 22 532 70%

Payments for financial assets - - -

Total 749 656 695 603 54 053 93%

40


variances


• Unfilled vacancies during the greater part of the financial

year across the sub-programmes, and the concomitant

goods and services, and the related payments for capital

assets.

• Delays in implementation of the master plans projects, for

Water Services and Local Water Management.

• Feasibility studies and reconciliation strategies projects

relating to integrated planning could not commence due to

unexpected delays in the procurement stage.

• Re-advertisement of a bid relating to Water Ecosystems

where the only bidder could not meet set criteria specified

in the terms of reference

41

Programme 3: Water Infrastructure

Development


budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

Infrastructure Dev & Rehabilitation 1 731 912 1 731 912 - 100%

Operation of Water Resources 165 000 165 000 - 100%

Water Services Infrastructure 10 233 406 10 185 551 47 855 100%

Total 12 130 318 12 082 463 47 855 100%


Current payments 506 010 587 123 -81 113 116%


Goods and services 405 626 502 385 -96 759 124%

Interest on rent and land 69 68 1 99%

Transfers and subsidies 7 439 193 7 424 696 14 497 100%

Payment of capital assets 4 185 115 4 070 644 114 471 97%


Total 12 130 318 12 082 463 47 855 100%

42


variances


The unspent funds allocated to Thabazimbi Municipality in

respect of Water Services Infrastructure Grant which could not

to be transferred due to risk of misappropriation of funding and

the unconducive environment within which Thabazimbi found

itself (facing legal issues and administration) during 2016/17

Although the programme has underspent the budget, there

was overspending in Goods and Service mainly due to

expenditure incurred for water tankering in respect of drought

relieve activities, and operations and maintenance related

interventions.

43

Programme 4: Water & Sanitation

Services


budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

Water Sector Support 164 510 153 716 10 794 93%

National Sanitation Services 613 978 917 041 -303 063 149%

Total 778 488 1 070 757 -292 269 138%




Goods and services 110 901 110 901 - 100%

Interest on rent and land - - - 0%

Transfers and subsidies 16 246 12 493 3 753 77%

Payment of capital assets 519 453 838 046 -318 593 161%


Total 778 488 1 070 757 -292 269 138%

44


variances


Unfilled vacant funded positions, and direct overheads and

associated costs attached to the appointment of new

personnel

The over spending is due mainly to:

• The commitments for this programme (specifically in sub-

programme: National Sanitation Services) exceed the

allocated budget as result of Bucket Eradication

Programme which was paid without budgets.

• Programme 4 over spending has led to unauthorised

expenditure (Over spending of the main division of the

main division of the vote) of R292.269 million.

45

Programme 5: Water Sector Regulation


budget in

R’000

Actual

expenditure

in R’000

Available

budget in

R’000

%

spent

WS Regulation Man & Support 30 058 29 882 176 99%

Economic & Social Regulation 18 516 14 169 4 347 77%

Water Use Authorization & Admin 51 231 47 702 3 529 93%

Water Supp. Serv. & Sanitation

Regulation15 612 15 138 474 97%

Compliance Monitoring 74 914 69 949 4 965 93%

Enforcement 31 988 26 826 5 162 84%

Institutional Oversight 96 073 78 019 18 054 81%

Total 318 392 281 685 36 707 88%




Goods and services 92 115 68 289 23 826 74%

Interest on rent and land - - -

Transfers and subsidies 5 182 5 000 182 96%

Payment of capital assets 11 374 7 966 3 408 70%

Payments for financial assets- -

-

Total 318 392 281 685 36 707 88%

46


variances


• The unfilled vacancies during the greater part of the

financial year across the sub-programmes of this

programme, the concomitant goods and services and

Payments for Capital Assets

• The terms of reference for planned projects in Institutional

Oversight which relate to re-grading of the water entities,

water board boundary study and appointment of

professional staff to provide strategic advice and support,

were delayed.

• The planned projects in Sub-Programme: Economic and

Social Regulation such as consumer survey on raw water

pricing, regulatory model for the review of all tariffs and

policies which were deferred to 2017/18 financial year47

INFRASTRUCTURE PROGRAMMES /

GRANT ALLOCATIONS

Regional bulk infrastructure grant

(direct transfers)

Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 689 034 689 034 - 100%

Free State 45 716 45 716 - 100%

Gauteng - - - 0%

Kwa Zulu Natal 584 388 584 388 - 100%

Limpopo 180 159 180 159 - 100%

Mpumalanga 137 264 137 264 - 100%

Northern Cape 35 244 35 244 - 100%

North West 128 339 128 339 - 100%

Western Cape 49 856 49 647 209 100%

Total 1 850 000 1 849 791 209 100%

49


(indirect transfers)

Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 489 339 489 339 - 100%

Free State 396 793 399 232 -2 439 101%

Gauteng 253 278 253 278 - 100%

Kwa Zulu Natal 295 358 295 358 - 100%

Limpopo 1 497 473 1 497 473 - 100%

Mpumalanga 203 281 203 281 - 100%

Northern Cape 65 451 65 451 - 100%

North West 271 608 271 608 - 100%

Western Cape 6 247 6 247 - 100%

Total 3 478 829 3 481 268 -2 439 100%

50

Name of water board Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Amatola Water Board - - - 0%

Magalies Water Board 142 769 142 769 - 100%

Sedibeng Water Board 279 000 279 000 - 100%

Umgeni Water Board 423 004 423 004 - 100%

51


(Water Boards)

Desalination plant

(additional funding from adjusted ENE)

Location Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Head Office 301 168 301 168 - 100%

Total 301 168 301 168 - 100%

52

Water services infrastructure grant

(direct transfers)

Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 503 525 503 525 - 100%

Free State 130 967 130 967 - 100%

Gauteng 70 000 70 000 - 100%

Kwa Zulu Natal 855 622 855 622 - 100%

Limpopo 540 273 526 273 14 000 97%

Mpumalanga 398 707 398 707 - 100%

Northern Cape 140 984 140 984 - 100%

North West 204 904 204 904 - 100%

Total 2 844 982 2 830 982 14 000 100%

53

Water services infrastructure grant


Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 5 883 10 550 -4 667 179%

Free State 31 100 47 009 -15 909 151%

Gauteng - - - 0%

Kwa Zulu Natal 8 543 30 694 -22 151 359%

Limpopo 180 523 153 084 27 439 85%

Mpumalanga 1 699 1 278 421 75%

Northern Cape 3 254 2 100 1 154 65%

North West 131 143 168 544 -37 401 129%

Western Cape - - - 0%

Total 362 145 413 259 -51 114 114%

54

Accelerated community infrastructure

projects

Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 25 661 25 661 - 100%

Free State 9 501 9 501 - 100%

Gauteng - - - 0%

Kwa Zulu Natal 5 319 5 319 - 100%

Limpopo 200 200 - 100%

Mpumalanga 28 643 28 643 - 100%

Northern Cape 3 000 117 654 -114 654 3922%

North West 16 625 16 625 - 100%

Western Cape 3 200 3 200 - 100%

Head Office 114 654 - 114 654 0%

Total 206 803 206 803 - 100%

55

Bucket eradication programme


Province Adjusted

budget

R`000

Actual

expenditure

R`000

Available

R`000

%

spent

Eastern Cape 83 344 83 344 - 100%

Free State 258 248 517 234 -258 986 200%

Gauteng - - - 0%

Kwa Zulu Natal - - - 0%

Limpopo - - - 0%

Mpumalanga - - - 0%

Northern Cape 154 836 214 443 -59 607 138%

North West 16 369 16 369 - 100%

Western Cape - - - 0%

Total 512 797 831 390 -318 593 162%

56

PART D: OVERVIEW OF WATER

TRADING FINANCIAL PERFORMANCE

57

58

ORWRDP (Ph 2A) - De Hoop Dam 22 000 15 673 6 327 71% 22 000 22 000 71%

ORWRDP-2C 150 000 135 291 14 709 90% 150 000 150 000 90%

ORWRDP-2D 314 641 68 922 245 719 22% 56 896 314 641 22%

ORWRDP-2E 20 567 25 570 (5 003) 124% 64 499 20 567 124%

ORWRDP-2F 38 849 10 380 28 469 27% 64 499 38 849 27%

GLeWAP Phase (Nwamitwa Dam) 133 834 155 328 (21 494) 116% 98 544 133 834 116%

GLeWAP Phase (Tzaneen Dam Raising) 46 800 47 028 (228) 100% 36 800 46 800 100%

Dam safety rehabilitation program (DSRP) 144 761 81 497 63 264 56% 235 965 144 761 56%

Water Resources Project: Raising of Clanwilliam Dam 109 426 78 635 30 791 72% 209 177 109 426 72%

Development of Raising of Hazelmere Dam 203 164 190 649 12 515 94% 242 094 203 164 94%

Mzimvubu Water Project 113 514 73 999 39 515 65% 208 287 113 514 65%

Acid Mine Drainage (AMD) 599 821 599 821 0 100% 599 821 599 821 100%

SUBTOTAL 1 897 378 1 482 794 414 584 78% 1 988 582 1 897 378 78%

VAT 265 633 207 591 58 042 78% 278 401 265 633 78%

TOTAL 2 163 011 1 690 385 472 626 78% 2 266 983 2 163 011 78%

FOR THE MONTH ENDED 31 MARCH 2017

EXPENDITURE FOR AUGMENTATION FUNDED PROJECTS

ACTUAL

vs.

REVISED

BUDGET PROJECT NAME

YTD ANNUAL

CASH FLOW ACTUAL

VAR.

&

ORIGINAL

BUDGET VARIANCE

REVISED

BUDGET

59

Analysis of Revenue Projects Performance- YTD against the Revised Budget...Cont

•The under spending on the infrastructure projects is due to the following:

•Delays in the appointment of the civil PSP for Clanwilliam Dam projects. (The tender has been

advertised and closed but not yet evaluated). In the process of appointing a technical sub evaluation

committee for the technical evaluation of the bids

•There was a challenges with the installation of operational anchors, which resulted in slow progress

on the Hazelmere project. However the challenge was resolved and the construction is in progress.

•The late approval of the variation order for Mzimvubu Water Project has caused the delay in the

appointment of sub-consultant to do the investigation which affected the design work by the PSP. The

specification to appoint the ECO has been approved.

•The construction projects of DSRP are not progressing well due to the following reasons:

•The design of drawings have not yet been signed by an APP and an approved EMP has not been

completed, awaiting (1) the approval of the appointment of an APP for construction and (2) an

Environmental Management Plan (EMP).

•Delays in appointment of subcontractors for cutting of spillway notches and provision of gabion and

rock fill materials.

•Supplier not performing in accordance with specification on the contract.

•Delays with the approval of the National Tender for supply and delivery of crusher-run.

•Delay in the approval of TOR for combined civil, mechanical and electrical works.

•Due to the current under spending on infrastructure projects there was budget reduction of R103 million

(VAT Incl.) from the original budget of R2.26 billion.

60

REHABILITATION AND REFURBISHMENT FOR THE NATIONAL WATER RESOURCES

INFRASTRUCTURE


ECONOMIC

CLASSIFICATION

YEAR TO DATE ANNUAL

BUDGET ACTUAL

% SPENT

ORIGINA

L

BUDGET

REVISED

BUDGET

ACTUA

L vs.

REVISE

D

BUDGE

T R'000 R'000 R'000

Central Operations 269 038 195 824 73% 348 018 269 038 73%

Eastern Operations 58 055 45 730 79% 62 700 58 055 79%

Northern Operations 52 588 67 545 128% 107 289 52 588 128%

Southern Operations 20 319 34 697 171% 81 993 20 319 171%

TOTAL 400 000 343 796 86% 600 000 400 000 86%

61

BUDGET ACTUAL

ORIGINAL

BUDGET

REVISED

BUDGET

R'000 R'000

Central Operations 183 528 185 610 101% 194 528 183 528 101%

Eastern Operations 4 479 133 3% 4 479 4 479 3%

Northern Operations 49 843 67 545 136% 54 843 49 843 136%

Southern Operations 55 650 12 253 22% 65 650 55 650 22%

TOTAL 293 500 265 542 90% 319 500 293 500 90%

REHABILIATION OF CONVEYANCE SYSTEM EXPENDITURE FOR THE NATIONAL WATER RESOURCES INFRASTRUCTURE


ECONOMIC CLASSIFICATION

YEAR TO DATE ANNUAL

% SPENT

ACTUAL

vs.

REVISED

BUDGET R'000

62

BUDGET ACTUAL

ORIGINAL

BUDGET

REVISED

BUDGET

R'000 R'000

Water Meters-Central Operation 9 723 8 986 92% 43 992 9 723 92% Water Meters-Eastern Operation 17 755 9 646 54% 32 891 17 755 54% Water Meters-Northern Operation 15 920 11 738 74% 44 542 15 920 74% Water Meters-Southern Operation 12 221 6 643 54% 34 194 12 221 54% TOTAL 55 619 37 013 67% 155 619 55 619 67%

WATER METERING EXPENDITURE FOR THE NATIONAL WATER RESOURCES INFRASTRUCTURE


ECONOMIC CLASSIFICATION

YEAR TO DATE ANNUAL

% SPENT

ACTUAL

vs.

REVISED

BUDGET R'000

Analysis of Revenue Funded Projects

Project Expenditure Performance

The under spending on revenue funded projects can be attributed to

the following reasons:

×Process of sourcing quotation from the appointed pool of contractors is

taking longer.

×No successful bidder during the evaluation process for the metering

projects.

63

PART E: SUPPLY CHAIN

MANAGEMENT MATTERS

64

Procurement issues

Achievements

• New SCM committees (BAC, BEC and BSC) as well as

ICT Committee have been appointed and are functional.

• SCM delegations and procedure manuals have been

approved and are implemented.

Challenges

• Non-compliance with SCM processes by Implementing

Agents results in irregular expenditure.

• Poor record keeping of projects information by IAs and lack

of cooperation when required to provide information.

• MOU’s between Department and Implementing Agents do

not have specific project duration – projects run for longer

periods.

65

Procurement issues

Remedies

• Formalise and streamline principal – agent relationships through

standard MOU’s.

• Issue a circular to IAs providing instructions and guidance on the

procurement processes that must be followed when implementing

DWS projects.

• Centralise approval of tenders and variations on projects

implemented by IAs at DWS. The final authority to approve must

be done by the Department (Accounting Officer).

• DWS will participate in Bid Evaluation Committee meetings of

high value tenders (threshold to be determined) facilitated by

Implementing Agents to provide advisory support.

• All memoranda of understanding between Department and IA’s

will be reviewed and standardised to allow DWS to exercise

oversight role on its projects.

• Review SCM capacity of all IAs To exclude IA’s with less capacity

from the list of approved IA’s.

66

PART F: PROGRESS ON 2015/16

AUDIT OUTCOMES

67

Overview of 2015/16 findings

• All 18 findings impacting the Audit Report were relating to

Commitments on Infrastructure Projects implemented by

Implementing Agents on behalf of the Department.

• The root causes for all these findings is similar and relates

to the following:

1. Lack of monthly reporting on Accruals and Commitments on

Infrastructure Projects implemented by Implementing Agents

2. Documents for projects implemented by Implementing Agents not

available at the Department

3. Lack of reconciliation of invoices sent by Implementing Agents

68

Actions taken to address the root causes

of findings

1. Finance Circular 7 of 2016 was rolled out which outlines the

supporting documents that must be submitted by Implementing

Agents prior to payment being made.

2. Finance Circular 8 of 2016 was issued which requires

reconciliation of all Implementing Agents invoices before

payment is made. A payment reconciliation template was

developed and is being used by all Regional Offices.

3. Finance Circular 6 of 2016 was issued which prohibits the

payment of retention fees until the defects liability period has

passed and supporting documents have been provided to

prevent duplicate payments of retention fees.

4. A reporting template for Commitments on Infrastructure Projects

was developed and is being used by all regions. This template

is updated on a monthly basis by regions as and when

payments are made, and when new contracts and variation

orders are entered into. The templates are reported to Head

Office on a monthly basis for consolidation and review.69

4. Finance Operating Procedures were signed off by the Director

General which stipulate the monthly reports that are submitted on

a monthly basis by all regional office. The Standard Operating

Procedures also include consequence management in instances

of non-submission and submissions of poor quality.

5. Road Shows were held in all regional offices to conduct

substantive training on all the new policies which have been

issued, and the new reporting templates.

6. Audit Files are being kept by all regions for all projects

implemented by Implementing Agents on behalf of the

Department. These files are inspected through surprise visits by

Head Office.

N.B. All these actions address all root causes which caused the

findings on Commitments for Infrastructure Projects, and are at

100% Implementation.

70

Actions taken to address the root causes

of findings

Progress on SCM actions arising from

2015/16 audit outcomes

• All the actions which were in the action plan has achieved 100% this means

that recommendations by Internal Audit and Auditor General have been

implemented as a result there were no qualification lines regarding SCM.

• SCM will on on-going basis continue to provide on job training to staff H/O

and the Region.

• SCM standard operating procedures have been approved to provide

guidance on implementation of policies.

• SCM will continue to improve quality checking at H/O and the Regions.

• The department has implemented the National Treasury Centralised

Database (CSD) which has assisted in reducing the requests processed with

one or two quotations now the department is sourcing more than five (5) and

the database has thousands of suppliers.

• Monthly reconciliations are conducted on infrastructure projects prior a

payment is processed at Regional level.

• investigations on cases of irregular expenditure are underway. Appropriate

steps including disciplinary action are taken per case as and when

investigations are finalised.

71

PART G: RISK MANAGEMENT

MATTERS

72

Strategic Risks

• 35 strategic risks identified

• 101 risk action plans were identified

• 76 risk action plans are currently in

progress

• 4 are complete

• 3 have not commenced

• 18 are outstanding

73

CRITICAL RISKS

74

75

Risk Mitigation• Poor revenue collection-(Municipalities/Water Boards

not paying for water )

• Strengthening of intergovernmental relations and continuous

engagement with COGTA and National Treasury on outstanding

debts of Water Boards and Municipalities

• Institute legal action to recover outstanding monies

• Possible qualified audit opinion • Implementation of the AG Action Plan

• Implementation of Internal Audit Recommendations

• Customer Relations Management are evaluated on a continuous

basis to address customer complaint's

• Implement and monitor the adherence to SCM processes

• Continuous implementation of SOP for accruals and

commitments

• Implement the templates for accruals and commitments

• Continuous engagements with all stakeholders including the

I/Agents on accruals and commitments

• Projects not completed on time and within budget • Continuous monitoring of projects

• Project steering committee in place

• Project expenditure is monitored on a continuous basis

• Project Co-ordination Committee (PCC) in place for mega

projects

• Projects are verified on a continuous basis

• Establishment of the Project Management Unit/Office.

• Development of the costing methodology for projects

• Appointment of project managers and engineers

76

Risk Mitigation

• WTE-the SCM Strategy does not suite the

construction environment

• Engage with the CD:SCM to review the SCM Strategy

• Regular engagements with the CD:SCM to address

SCM challenges on critical projects

• Implementation of the socio -economic policy

• The new National Treasury Framework for

Infrastructure Procurement will soon be implemented

• WTE-SCM policy is being implemented

• Delayed establishment of new

entities/agencies

• Appointment of a PSP to assist with the development of

the business case, transitional plan and the Legislation

for the establishment of the independent regulator

• Draft Economic regulation strategy developed and

concept thereof included in the presentations conducted

during the Draft revised pricing strategy public

consultation process.

• Terms Of Reference for Management Support drafted

and await approval.

77

Risk Mitigation• Acid mine drainage • Development and consultation of the levy for mine water

management with National Treasury, DMR and DEA.

• Development of a mine water management policy

• TCTA is currently implementing the short and long term

solution for AMD.

• Mine Water Management Policy has been approved

• Filling of vacant posts within Chief Directorate: Mine Water

Management

• Development of the strategy for AMD per catchment

management area (3 CMA) - Assessment has commenced

then strategy to be developed)

• Ineffective water authorisation regulatory

regime (Automation of the water licensing

system)

• IImplementation of the National Integrated Information

System (WARMS and EWUULA's)

• Develop the new regulation for the reallocation of water

• Aged infrastructure at a municipal level • Development of reliable water and sanitation service

delivery implementation plans for District Municipalities.

• Development of National Water and Sanitation Master

Plan

• Ensure 94 WSA are audited on Water and Sanitation

delivery performance

• Bie-annual WSA socio economic assessment on the

impact/benefit of water service infrastructure

78

Risk Mitigation

• Water Losses/wastage of water • War on Leaks Programme is currently being implemented

• Continuous monitoring and enforcement is taking place

• Annual analysis on status of water losses in the 8 large water

supply system

• Integrated approach to education and awareness

• Shortage of skilled and technical people at a National

and Municipal Level

• Integration of the occupational framework for the water sector into the National Occupational Framework

• Implementation of the FET Water Phase 111 program to Local

Government, CMA's and DWS

• Water quality and service reliability • Development of the Integrated Water Quality Management plan• Develop the state of surface water quality report• Integrated Water Quality management strategy in place. • The draft state of water resource report is available and in process of

being finalized

79

Risk MitigationInability to guarantee sustainable provision and maintenance of bulk raw water infrastructure

Develop and Implement the Resource Management Plans (RMP), Asset Management Strategy (AMS), Operations and Maintenance Plans (O & M P), Rehabilitation and Refurbishment Plans (R & R) and EPPs.

The provisions in the Resource PoorFarmers (RPF) policy does notadequately address the needs of theintended beneficiaries

• Impact assessment of previous interventions. • Review of policy framework and regulations on Resource Poor

Farmers.

Possible irregular, fruitless, wasteful and unauthorised expenditure

• Investigation and disciplinary actions on irregular, fruitless, wasteful and unauthorised expenditure

• Workshop the Water Boards on the DWS SCM processes• Development, • implementation and monitoring of check lists across the value

chain of SCM• Review the MOU with implementing agents • Review of SCM policy to include the applicability of policy to

DWS IA• Quarterly reports on the verification of projects to top

management• Centralise the function to withdraw/transfer funds for 5B

projects.

80

Risk Mitigation

Non-payment of debts by Water boards/Municipalities and other users

•Cabinet memo on outstanding debts to be submitted•Formal engagement (submission) of GOGTA,SALGA and National Treasury on debt recovery•Appointment of the panel of legal practitioners to implement legal debt recovery processes•Continuous monitoring of cash flows

Strategic Risks-Mitigation

Measures not

implemented

81

82

Risk Mitigation not implemented• BBBEE policy is not fully implemented • Engage with the CD: SCM for Main and WTE to possibly include an official

with the Knowledge of BBBEE as advisors in Bid Committees

• Impact- (Targeted procurement that supports black entrepreneurs in

the sector will not be achieved )

• Non-implemented of the IT Master Plan and inappropriate IT

Business Operating Model

• Funding for the implementation of the IT Master Systems Plan-However

funding was received during August 2017

• Impact-( The target of an efficient, effective and high performing

organisation will not be achieved)

• Projects not completed within budget • Finance to be presented at project meetings

• Impact-(Will lead to lack of oversight over projects which may result in projects not being completed on time and within budget

• Possible irregular, fruitless, wasteful and unauthorised

expenditure

• Workshop the Water Boards on the DWS SCM processes• Centralisation of all invoices• Quarterly reports on the verification of projects to Top Management• Centralise the function to withdraw/transfer funds for 5B projects• Impact-Will lead a possible qualified audit opinion

• Non-achievement of planned targets • Allocation of the required resources in terms of human capital and funding• Impact-Will lead a possible qualified audit opinion –The organisation will not

achieve its APP targets

• Negative perception of government (DWS) by the general

public

• Use of Water Ambassadors by the Department

• Impact—Reputational damage to the organisation

• Reduced water quality and service reliability • Develop the state of water report

• Impact-The organisation will not improve the quality of water and

service reliability

83

Risk Mitigation not implemented

• Aged infrastructure at a Municipal level • Development of reliable water and sanitation service delivery

implementation plans for District Municipalities. As per APP- 17 (project

completion Mar 2018)• Impact-The aged infrastructure will dilapidate further

• Declining or poor water quality • Increase the number of staff at Compliance Monitoring and Enforcement

(dependant on the finalisation of the review of the structure)

• Finalise and implement the Waste Discharge Charge System - TORs are

being reviewed and will be submitted to Top Management

• Impact-Negative impact on water quality

• Pollution of water resources (AMD) • Development of the strategy for AMD per catchment management area (3 CMA) - Assessment has commenced then strategy to be developed). Assessment has not been finalised

• Delayed in establishment of the water sector economic

regulator

• Appointment of a PSP to assist with the development of the business

case, transitional plan and the Legislation for the establishment of the

independent regulator

• Impact-Will impact negatively on the effectiveness of

• water services provision and future investment in water

infrastructure

• Failure of the entities to meet their strategic objectives • Improve turnaround times for the approval of submissions

• Impact-The organisation will not perform effective oversight over the

Water Boards/CMA’s

• Management of natural disasters (drought, floods etc.) • Development of capacity building for Provincial Offices

• Impact-the staff will not be sufficiently capacitated to ensure

effective water resource protection

Challenges• Delay in implementing the risk mitigations

• Inadequate budget

• Shortage of critical skills

• The non-payment by Boards and Municipalities remains a constraint to

the organisation

• Accruals and commitments and irregular and unauthorised expenditure

remains a challenge to the organisation

• Invoices-not paid within 30 days-despite the efforts, not all invoices are

paid within 30 days

• Project management-The organisation does not have a project

management system, does not have an established .Project Management

Unit, does not have sufficient number of project managers to manage

projects. The organisation also has to decide on a single project

methodology

• Implementing Agents cited for non-adherence to SCM whilst DWS was

cited for irregular expenditure

• Irregular expenditure, unauthorised, fruitless and wasteful remains a

challenge to the organisation

84

PART H: INTERNAL AUDIT

MATTERS

85

BACKGROUND

• The new members of the Audit committee were appointed

effective 1 April 2016. Since the appointment they have

ensured that an audit committee charter is developed,

approved, signed and complied with in the carrying out of

their responsibilities. The audit committee has added

utmost value to the department by rigorous interrogating

the information that has been brought before them.

• A quality assessment of the members and the chairperson

of the audit committee was also performed which

confirmed the satisfaction of the management with the

quality of the work that the committee members renders.

With the assessment of the Audit Committee the work of

the internal audit (IA) was also assessed which also

reflected satisfaction of the management with the quality of

the service that is rendered by the IA function.

86

ACHIEVEMENTS

• Effective audit committee that meets on a

regular basis. For the financial year 16/17

the committee met 7 times.

• Assisted the Entity on the qualification

issues for 2015/16 financial year.

• Executive summary to Minister on

quarterly basis where all challenges are

raised.

87

CHALLENGES

• Completeness of Irregular Expenditure

(IE). Irregular expenditure not complete.

Investigations on Irregular expenditure are

not done as it is discovered.

• Completeness of commitments.

• Issuing of water licences take a long time.

• Capture of water licences on WARMS.

• BEP report still outstanding

88

CHALLENGES

• BCP and DRP not approved and implemented.

• Budget for long outstanding debtors of 1.3 billion

at WTE. History showed it will not recover these

debtors.

• Outstanding IA findings – pure implementation of

the internal audit recommendations.

• Appointment of external risk committee

chairperson.

• Meeting with the Minister to discuss quarterly

report.

89

CHALLENGES

• The position of the CAE has been

vacant for a period over a year.

• There is insufficient resources and in

some instances lack of skills within

the IA to service both the Entity and

the Main Vote.

90

RESOLUTIONS

• The Audit Committee regularly

follows up on the issues that are

raised in the subsequent meetings.

91

PART I: PROGRESS ON BUCKET

ERADICATION (LETTER DATED: 2 AND

25 AUGUST 2017 AS ADDENDUM)

92

PART J: COST CONTAINMENT

ADHERENCES IN THE

SECTOR/DEPARTMENT

93

Date post:	27-Apr-2018
Category:	Documents
Upload:	doanminh
View:	219 times
Download:	4 times