Department of Communications briefing on issues raised by the Auditor-General in its 2012/13 Annual Report

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Communications and Digital Technologies

17 October 2013
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

The Chairperson informed the Committee that the Minister sent a letter of apology for herself and on
behalf of the Deputy Minister and the Director General of their inability to be present at the meeting.

Members expressed their displeasure at the absence of the Department of Communications (DoC) leadership. There was no way vital issues of the Department could be raised and discussed with the supposed leadership not being present.  There was also disapproval voiced by all the Members at the number of documents that had been presented at the last minute by the Department, and the fact that the presentation slides did not tally with the documents before them.  They commented that it signified a lack of preparedness on the Department’s side.  At one stage, a Member suggested as most of the issues to be discussed dealt with leadership, the Department’s leadership should have asked for the meeting to be postponed, rather than to be absent from the meeting.  Another Member submitted that most of the presentations were just copied from the previous year’s report.  

The Department highlighted the challenges faced in the 2012/13 financial year that curbed the achievement of its target to 54%.  The level of non-achievement was attributed to several issues:

• Human Resource capacity constraints in certain vital areas, partly because of low remuneration but also because of a scarce skills base to deliver on specific areas.

• Inadequate leadership oversight due to the absence of the Director General.   This had had a negative impact on the performance of the Department, creating instability and uncertainty.

• A non-functional internal audit to assist in detecting areas of concerns. This had led to the non-reliance by the AG on internal audit reports.

• Finalisation of the migration process, which had had a negative impact on recruitment.

• Delays in ICT policy review as a result of the change in the review process.

• Delays due to lengthy periods of public consultation on respective bills.

• Delays with respect to the Broadcasting Digital Migration (BDM) project were largely related to the court proceedings.

The Department pointed out the measures that had been put in place to improve the performance of the Department in response to the issues raised by the AG. They were:

• All critical projects had been prioritised and were monitored on a monthly basis by various governance structures in the Department.

• All managers were required to provide evidence on all completed projects for verification by Internal Audit.

• Projects had been aligned to budgets to ensure expenditure was tracked on a monthly basis.

• Migration of staff to the new structure had commenced and would be finalised by 1 November 2013.

• 38 critical and funded vacancies had been identified and would be advertised by 1 November 2013.

The Department was currently reviewing all its policies to ensure that they were in line with all relevant regulations.  A Compliance and Governance Unit had been established on a pilot basis to ensure that a sufficient level of assurance was provided on all processes of the Department.

Management had put in place stringent measures to ensure that there were consequences for all instances of non-compliance.

A Member voiced his concerns about some of the issues that kept cropping up and yet did not seem to be rectified. He wanted to know why some of the corrective measures put in place were working for some projects, and not working for others. It seemed that there was a day to day problem in compliance which signified that there were some people at the Department who were not doing their jobs properly. How would the Department assure the Committee that these issues would not keep recurring?

The Department reported that it had implemented an Electronic Organisational Performance Management System which allowed for online capturing and dashboards, and uploading of evidence. A process of initiating the financial functionality of the system had already been put in place. By the end of 2014/15, financial information like actual budgets against projects and expenditure would be uploaded on a quarterly basis. It would produce more accountability. The introduction of Project Management would also make a huge impact in terms of proper budgeting, proper planning and accountability.

The Chairperson commented that he hoped that the Department would go back and effect the fundamental changes that had been raised. The Minister had asked to be given a time to come and address the Committee on the progress report of the Department, and he must be given a time to do so.
 

Meeting report

Briefing by the Department of Communications on its plan to deal with the Issues raised by the Auditor-General on its Annual Report
The Chairperson informed the Committee that the Minister had sent a letter of apology for herself and on behalf of the Deputy Minister and the Director General, for their inability to be present at the meeting. He added that the Minister said he would appreciate it if at a later date an opportunity would be given to him and the Department of Communication (DOC) by the Portfolio Committee, to give a progress report on the issues raised on 20 August 2013. Mr Themba Phiri, the Deputy Director General, ICT Policy and Dr Sam Vilakazi, Deputy Director General, Administration would represent the Department, with a few others. 

Ms R Lesoma (ANC) expressed her utmost displeasure at the information. She added that whether the apology letter was accepted or rejected by the Portfolio Committee was irrelevant, because they were not present at the meeting. Furthermore, there was a need to be sure who the real project leader of the Department was, in terms of operations. There was no way vital issues of the Department could be raised and discussed with the supposed leader being absent.

The Chairperson listed out the major documents and the supporting documents that would be presented by the Department. They were: Presentation to the Portfolio Committee by the DOC and State-Owned Companies Contributing to Government Priorities, International MOU’s, responses to answered questions, the Department’s contribution to the five priorities of Government, responses to unanswered questions, bilateral agreements signed by South Africa around the DOC,  the integrated plan and progress report for 2011/12, 2012/13, with findings by the Auditor-General (AG). It was, however, noticed that the document projected was not part of the ones mentioned, or distributed to the members of the Committee.

Mr Phiri apologised that the document being projected was in the process of being printed and would be given to the Committee members shortly.  He informed the Committee that the several documents prepared were in response to the issues raised by the AG, were all for the attention of the Portfolio Committee.

Mr C Kekana (ANC) advised the Department that they should devise a means of giving a precise but comprehensive presentation. This was to afford the Committee a general overview of the issues at hand, but in a way that it could be easily absorbed. He added that people get lost and uninterested when they were loaded with lots of information.

Ms Lesomo drew attention to the fact that a few of the slide numbers were inconsistent and should therefore be taken into cognizance when the presentation was being made.

The Chairperson added that the documents should be summarised, but no vital information should be skipped.

Dr Vilakazi gave the presentation on behalf of the Department. He highlighted the challenges the Department had faced in the 2012/13 financial year that had curbed the achievement of its target to 54%. He attributed this level of non-achievement to:

• Human Resource capacity constraints in certain vital areas, partly because of low remuneration but also because of a scarce skills base to deliver on specific areas.

• Inadequate leadership oversight due to the absence of the Director General.   This had had a negative impact on the performance of the Department, creating instability and uncertainty.

• A non-functional internal audit to assist in detecting areas of concerns. This had led to the non-reliance by the AG on internal audit reports.

• Finalisation of the migration process, which had had a negative impact on recruitment.

• Delays in ICT policy review as a result of the change in the review process.

• Delays due to lengthy periods of public consultation on respective bills.

• Delays with respect to the Broadcasting Digital Migration (BDM) project were largely related to the court proceedings.

Ms J Kilian (COPE) interrupted the presentation and informed the Chairperson that the documents given to her were not relevant to the presentation being made. They were incomplete and confusing.

Dr Vilakazi pointed out the measures that had been put in place to improve the performance of the Department in response to the issues raised by the AG. They were:

• All critical projects had been prioritised and were monitored on a monthly basis by various governance structures in the Department.

• All managers were required to provide evidence on all completed projects for verification by Internal Audit.

• Projects had been aligned to budgets to ensure expenditure was tracked on a monthly basis.

• Migration of staff to the new structure had commenced and would be finalised by 1 November 2013.

• 38 critical and funded vacancies had been identified and would be advertised by 1 November 2013.

The Department was currently reviewing all its policies to ensure that they were in line with all relevant regulations.  A Compliance and Governance Unit had been established on a pilot basis to ensure that a sufficient level of assurance was provided on all processes of the Department.

Management had put in place stringent measures to ensure that there were consequences for all instances of non-compliance.

Workshops were regularly conducted to raise awareness among the staff.

The Department had engaged the National Treasury Technical Assistance Unit (TAU) to ensure that the targets set were SMART.

The Department of Public Service and Administration (DPSA) had designated an official at Deputy Director General (DDG) level to assist the Department to expedite all outstanding HR, issues pending the appointment of the Head of Human Resources.

Internal Audit would be capacitated by appointing a Chief Director responsible for Internal Audit.

Mr A Steyn (DA) interrupted and re-emphasised that the slides being presented were different from the documents he had with him. They were so confusing.

Ms Lesoma reminded the Department that they had promised that they were going to cross reference
the slides being discussed with the document labelled “Integrated Action Plan And Progress Report for 2011/2012 and 2012/2013 Findings,” for  better understanding of the report.

Ms Kilian expressed her disapproval at the issues surrounding the right kind of documents. She added that it actually signified a lack of preparedness on the Department’s side.

Ms S Tsebe (ANC) felt highly disappointed with the Department. She emphasized that most of the issues to be discussed were leadership issues, and that the Minister, the Deputy Minister or the Director General should be present. They should have asked for the meeting to be postponed, rather than to be absent from the meeting. Furthermore, she agreed with the submission of another Committee Member that most of the presentations were just copied from the previous year’s report.   All the documents presented were too confusing. She reminded the delegation that all that the Committee needed from them was a simple template, highlighting the issues raised by the AG and the corrective measures the Department had put in place.

Mr Steyn suggested that instead of going through the document on “Action Plans to Address Issues
raised by the Auditor-General in the Annual 2012/2013 Report”, the document on “Integrated Action Plan And Progress Report for 2011/2012 and 2012/2013 should be considered, as this depicted the progress report.

Mr Kekana said that it was unprofessional for them to have so many documents and then to expect the Committee to go through all of them in a short time.    Several of the documents did not give any proof of work done.

Ms Lesomo said she would suggest that the “Integrated Action Plan And Progress Report for 2011/2012 and 2012/2013 Findings” should be considered as Mr Steyn had suggested. The Department should have been sent back and should have been given an audience only when the DG was present. She suggested that in the future, the Portfolio Committee should insist that no presentation would be received from the Department if the DG was not available.

Ms M Shinn (DA) proposed that the” Achievement of Targets” in the Action Plans to Address Issues raised by the Auditor-General in the Annual Report, should be considered.

Ms Tsebe again expressed her annoyance at the unprepared state of the Department. She reminded the Committee that the Department had been told before hand to submit all presentations seven days before presentations would be made. If that was not possible, one to two days before would still have been fair enough, but to submit on the day of the presentation was to inhibit proper oversight by the Portfolio Committee.  The committee should not bend its rules because of the Department.

The Chairperson commented that there was need for leniency so that the deadline for submissions by all portfolio committees, which is 24 October, could be met.

Mr Kekena supported Ms Shinn’s proposal, and suggested that they continue with the presentation.

Ms Kilian said that the oversight functions of the Committee should be taken seriously by the Department.  She added that the issue of the time frame that had to be honoured, was why the Department would be given an audience. The Department was responsible for tabling the Independent Communications Authority of South Africa’s (ICASA’s) Annual Report in Parliament. She proposed that if the deadline was not next week, then this meeting could be postponed till Tuesday, to allow them to put their presentation together.

The Chairperson stated that the presentation should proceed in view of the timeframe.

Mr Phiri apologised for the mix up in the presentations. He added that that when they had received the information, they had been uncertain as to which information they should present to the Committee.

Mr Vilakazi presented relevant issues from the “Presentation to the Portfolio Committee on Communications. Action Plans to Address Issues raised by the Auditor-General in the Annual 2012/2013 Report.”   The main issues covered were:

Target Achievement: The action plan, status, timelines and responsibility were areas of responsibility. All projects and targets were monitored to ensure compliance. The Director General seeks to monitor implementation of projects on a weekly, monthly quarterly basis to identify areas of deficiencies.

Expenditure Management: Quality reviews were done to ensure that transactions were correctly recorded. An undertaken had been made by the Department that payments would be made within 30 days of valid invoices. Reports would be prepared and submitted.  Policies and processes would be reviewed and documented.

Human Resource Management: Migration of staff would be completed. Overtime would be managed through internal processes to ensure that 30% was not exceeded. Constant monitoring and checks would be performed by HR to ensure that all leave taken was properly approved, recorded and filed.

Information Technology: The IT Audit would be incorporated in the 2013/14 Internal Audit plan and would be considered annually. The IT infrastructure would be upgraded to be compatible with the disaster recovery site that had been developed at SITA.

Supply Chain Management (SCM): Irregular, fruitless and wasteful expenditure would be treated in line with the National Treasury guidelines issued in May 2013. A register would be held for this purpose in order to monitor it.

Leadership: The Accounting officer would always exercise oversight to ensure compliance with laws and regulations.

Financial Performance Management: The management would ensure that policies and processes were put in place to ensure that compliance was fully achieved.

In the Integrated Action Plan there were issues raised by the AG that had been briefly mentioned in the initial Action Plan.

Discussion
Ms Lesomo wanted to know about the migration of the staff into the new structure and which body would effect it. About the IT overhaul, had the Department considered the risks associated with it, and how did they intend to mitigate them?. How had the service providers been appointed?

Ms Kilian pointed out that the Department should not see the concerns raised by the Committee as being negative. It was just pointing out the weakness that should be addressed. She was concerned that the same undertakings given in the report of the previous year were being repeated this year. How would the Department convince the Committee that issues raised this year would not be addressed again the next year.

Mr G Schneemann (ANC) voiced his concerns about some of the issues that kept popping up, and yet did not seem to be rectified. He wanted to know why some of the corrective measures put in place were working for some projects and not working for others. It seemed that there was a day to day problem in compliance, which signified that there were some people in the Department who were not doing their jobs properly. How would the Department assure the Committee that these issues would not keep recurring? When suppliers were paid late, they were placed in a serious predicament because the cash flow. It would be better for the Department to enter into a contract with the suppliers so as to ensure that the suppliers understood how they should be invoicing, instead of waiting for an incorrect invoice and then making corrections.

Mr Steyn said that the proposed action steps were general basic sound business management principles. Some of these principles were already in place in the Department; they were just not being enforced. He proposed that these principles be written in their performance contracts so that every individual would know what he or she was responsible for, and there would be consequences for not honouring such agreements. There would only be improvement when people start becoming accountable. It should be a very clear line of whom to hold accountable when the Department fell below expected targets.

Ms Tsebe reiterated that the absence of the Minister, the Deputy Minister and the Director General was of great concern. If the Minster could not come, then the Deputy should have been able to stand in for her. She did not understand the issue of the 30 days payment to the suppliers. Before any tender was awarded, all the details must have been submitted. The banking details must also have been verified. This should be one of the criteria for awarding contracts. What did the Department mean by irregular and fruitless expenditure?

Ms Shinn, having gone through the “Integrated Action Plan And Progress Report for 2011/2012 and 2012/2013 Findings,” which was a more detailed presentation, asked a few questions. She wanted clarification on performance agreements. The presentation had said that “there were daily reminders to all staff to submit their performance agreements for the month of April 2013” -- did the Department now have   all the performance agreements? If not, what disciplinary action had the DG taken against offenders?  
The Annual Conflict of Interest Declaration for 2012/13 had not been completed. All SMS (senior management service) members who did not comply had been requested to do so.  Ms Shinn asked how many people were involved and had they supplied their conflict of interest forms?   The revised code of conduct for the Specification and Evaluation Committee had been submitted to the DG for approval --, was the approval still outstanding?   Letters of demand and recovery had been sent to all employees who had been overpaid -- what about this? Regarding the “inadequate design of operating system security,” had there been any serious security breach, or any disciplinary or criminal action taken?

Mr Kekena said that it was unfair for the Department to be paid, and yet not to pay the contractors. How could the Department accept applications without certificates?

Mr Phiri said he had noted all the advice given and would proceed to answer some of the questions. Over the years, the Department had not filled vacancies, which signified a very serious problem.  Officials and skilled professionals had left to join other entities. There was an urgent need to halt the ongoing migration so that vacancies could be filled.

Dr Vilakazi replied that one of the major issues the Department had faced in this reporting year was that there was no head of IT. The person currently occupying the post had done an analysis of the IT environment.  He had identified all the areas of weakness and made recommendations as to how those issues could be dealt with. An IT strategy had been put in place to mitigate the risks. These risks had been analysed, documented and mitigating measures had been put in place. There was a process of upgrading the IT infrastructure in the IT environment. On the issue of the payment of service providers in 30 days, there was only a delay in payment if there was a delay in deliverables from the contactors or the Department was not satisfied with the work done. Basically, these issues arose with contractors that were not on contract, but did a once-off job. He added that the position of Head of HR had been advertised.

The Minister had started a series of engagements with some state-owned enterprises (SOEs) to make sure they developed an action plan. He would be meeting with them later in the month. On the issue of non-compliance in the Scheme for Ownership Support (SOS), it had been noted that the challenges and the filling of vacancies would address some of the salient issues. On the issue of leadership and accountability for non performance, the points raised were valid and noted. There are attempts at the moment to make all managers accountable at all levels.

On the issue of fruitless and wasteful expenditure, it could be minimised, but most times the waste could be estimated only after the spending had occurred. The only solution at the time was to recover the money from the official involved and that was where the legal matter would come in. If the person was negligent, then the process of recovery kicks in.   Wasteful expenditure should be resolved in around 14 days.

On compliance issues, the Department had resolved that from the secretaries to the DG, everyone would be held accountable for compliance. Disciplinary measures for non-compliance would be instituted. For example, the person that deliberately did not fill in a leave form before going on leave would face sanctions. On deliverables on the performance contracts, a process had been initiated. Key issues were placed in the performance contracts of officials, and accountability would thus be demanded on the basis of the performance contract.

The position of the Internal Auditor had been advertised to overcome capacity challenges. On the issues raised by the AG, the Department had gone back to check all the processes, such as performance management, declarations of interest and supply chain management.  The Department was happy that it had gone back to address those issues but most importantly, there had to be strict compliance so that those issues did not crop up again. On the issue of the overtime, when people had exceeded their this and approvals were still given, it might become tricky to punish the person who had received the overtime. One of the measures placed on the issue of leave was that if a person went on leave without filling the necessary forms, when he or she came back to fill the forms, he or she would be given the leave with no pay.  Stringent measures were put in place on bonuses paid for 2012/13.  They were confined to lower levels with a view that at a higher level, there would not be a proper motivation because of the non-achievement of 46% of the target.

Ms Lesoma repeated her question about the guarantee of an improvement after all these measures had been put in place, especially because there were some issues that had arisen that only the DG could answer. She noted that there was nothing different between the report of last year and this one. She added that the AG did not implement, he just gave advice -- but did he get listened to?

Ms Tsebe appreciated the DDGs for responding to the questions in the best way possible. However, she asked why some projects were tagged “on a daily basis,” while others were tagged “ongoing”. Had anyone been deployed from the office of the AG to the Department to assist in the audit section?

Ms Kilian agreed with her colleagues that the main issue at hand was the absence of the Executive Heads of the Department. If the leadership issues at the Department were not corrected this year, it would produce the same issues in the coming year. She noted that the vacancy rate for last year was 29.5% and had now increased to 37.79%. She said stringent measures imposed on people made them behave themselves. For example, if people did not fill in leave forms, money should be deducted from their salaries and they would sit up. The overtime issue may be related to the high vacancy rate at the Department.

Mr Phiri replied that the issues that had been raised were valid. There was emphasis from the Minister that sought to enforce the right thing. There was a level of leadership structure that spoke to leadership accountability.

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring, responding on performance monitoring, said that the Department had implemented an Electronic Organisational Performance Management System which allowed for online capturing and dashboards, and uploading of evidence.  A process of initiating the financial functionality of the system had already been put in place.  By the end of 2014/15, financial information, like actual budgets against projects and expenditure, would be uploaded on a quarterly basis. It would produce more accountability. The AG and the Audit Committee were really impressed with the Electronic Organisational Performance Management System. The AG and Audit Committee would have their own passwords that would give them viewing access to the financial status of the Department. The introduction of project management would also make a huge impact in terms of proper budgeting, proper planning and accountability.

Dr Vilakazi replied that the AG spent considerable time at the Department due to the fact that there was no reliance on any other report, and this had led to the escalation of fees. However, when things were functioning, the AG just came around between September and October to do an interim audit, and he would come again after the financial year to do the final scrutiny of the report.

Ms Lesoma expressed appreciation to the team for the presentation.  Despite their non-performnce, they had still come to present their report.

Ms Shinn asked the Department whether the lack of attracting people to fill vacancies was mainly because of money, or because people knew that the Department was not a leader, or on top of ICT, and therefore taking up a career at the Department was not advantageous to them.

Mr Phiri said that when a professional environment was toxic for professionals who wantednt to build their careers, the present issues at the Department could actually be a deterrent. However, there were still pockets of professionals presently in the Department. It was also true that several professionals had left because they went to better organisations that needed their expertise, but the main difficulty was in attracting new individuals.

He expressed his appreciation to the Chairperson and the Committee for all the advice given.

The Chairperson commented that he hoped that the Department would go back and effect the fundamental changes that had been raised. He added that the Minister had asked to be given a time to come and address the Committee on the progress report of the Department, and he must be given a time to do so.

The meeting was adjourned.
 

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