WCED on plans to address audit outcome findings; Provincial Forensic Services Quarterly Reports

Meeting report

Briefing by the WCED
Mr Leon Ely, CFO, Western Cape Education Department (WCED), briefed the Committee on how the Department was dealing with the audit findings to mitigate future reoccurrence. The presentation focused on the audit of the Annual Performance Report and report on the audit of the Financial Statements. The AGSA raised findings with the Department on compliance with key legislation relating to performance, pre-determined objectives and internal control deficiencies.

Concerning the Annual Performance Report audit, the Centralised Educational Management Information System (CEMIS) system was updated to prepare regular, accurate and complete textbook reports. A Textbook Retrieval and Retention Management Plan was developed for schools and implemented. Circular 28/2020 was sent to schools to guide schools in managing textbooks. The School Planning Calendar would assist LTSM committees at schools. A school LTSM Standard Operational Procedures has been developed for governing bodies and school management teams. Controls have been strengthened at the district level to monitor school textbook processes. The LTSM Framework was amended and updated.

 The monitoring of targets for performance indicators was discussed at top management meetings. Quarterly reports on the performance of targets have been submitted to the audit committee. A risk mitigating report on indicators was also submitted to the audit committee. Annual performance indicators are being monitored quarterly by the Directorate: Business Strategy and Stakeholder Management. Training sessions were conducted with responsibility Managers, and Annual Performance Indicators form part of the departmental risk register.

On the audit of the financial statements, quarterly reports were submitted to the Provincial Treasury on the Interim Financial Statements. There is a control list for inputs that are managed to track submission of inputs. There is daily reporting to the Director for Financial Accounting to identify any risks on possible delays. There is weekly feedback with the Chief Director for Financial Management on the status of Annual Financial Statements. Progress will be submitted to the Audit Committee during May 2022. The status and final submission would be made towards the end of May 2022 and reported to the Chief Director for Financial Management. The Provincial Treasury performs quarterly assessments on the Interim Financial Statements, and the Audit Committee reviews the annual financial statements as per the final quarter.

Briefing by the Provincial Forensic Services
Mr Janse van Rensburg, Chief Director, Provincial Forensic Services, briefed the Committee on cases investigated per Department and entity during the first and second quarters of 2021/22. He took the Committee through the caseload reconciliation of all the Department’s investigations in progress as 30 September 2021, cases finalised as at 1 April 2021 – 30 September 2022, outcomes of finalised cases of all departments, recommendations made and status as at end of quarter 4 of 2021/22, and recommendations of criminal cases of all departments.

Regarding caseload reconciliation of all departments, as at 1 April 2021, 20 new cases were opened. During Quarters 1 and 2 of 2021/22, there were 16 new cases and 15 cases were finalised. There were currently 19 cases on hand as at 30 September 2021, of which 12 were in progress and seven not yet started.

On investigations in progress as 30 September 2021 to 31 March 2022, ten cases were closed and two were in progress. About cases finalised as at 1 April 2021 – 30 September 2022, 16 cases are expected to be finalised by 30 September 2022; others are still pending. Concerning recommendations made and status as at the end of Quarter 4 of 2021/22, 50 recommendations were made and three civil recommendations were also made. Lastly, pertaining to recommendations of criminal cases of all Departments, the PFS recommended criminal action of 5 cases to the SAPS and to be finalised during Quarters one and two of 2021/22. All recommendations were implemented and cases were lodged by the PFS with SAPS.

Discussion
Deliberations with the WCED
Mr A van der Westhuizen (DA) said his main concern was that the emphasis was not on being able to account for textbooks which are supposed to be given to children but textbooks that were in a storage room still unwrapped. He then asked about the plan to make sure textbooks were handed to children instead of being locked in an office. There was a new Textbook Retrieval & Retention Management Plan in place and enquired if the new Textbook Retrieval & Retention Management Plan would not inhibit the usage of textbooks for audit purposes.

Mr Brent Walters, Head of Department, WCED, stated that textbooks are distributed to schools, but if they are not used, that should be reported to the Department because every child has to have a textbook. Some schools work in different ways because of realities on the ground. For example, when some schools know children will not be coming next year, for one reason or another, they keep the textbooks and use them during the lesson time only. But other schools that are confident the kids would bring back the textbooks, let the learners have them and carry them to school every day. The controls have been adjusted concerning the findings.

Mr Archie Lewis, Deputy Director-General: Institution Development & Coordination, WCED, explained that there are things the Department has got full control of. For example, it has full control of submitting financial statements in time. But it’s a complicated area it has no full control of when it comes to textbooks. The reality is schools have an opportunity to order textbooks during May and June for the coming year. When they do that, they do procurement with projected numbers for 2023. The school also uses 50% of the norms and standards funding for Learning and Teaching Support Material (LTSM). It also depends on the quintile of the school. The quantum of the 50% of norms and standards differ, but the learner numbers remain the same. For example, the school with 1 000 learners in quintile one would receive more money than the school with 1 000 learners in quintile four. But both schools must procure books for the same number of learners for the same subject areas. That is why certain schools do not have sufficient money to order textbooks for every child.

Another thing is the ordering of books is also affected by new learners landing in the province in January and February from other provinces. Six years ago, the AG found some textbooks in a storeroom packed and unused. Schools are projecting learner numbers. If the numbers drop, then some textbooks are not used. But that is not fruitless expenditure because when the numbers increase the following year, those books would be used.

Mr D America (DA) wanted to know if the Audit Committee was represented in the meeting and if the Audit Committee was satisfied with the findings raised and measures put in place by the Department.

Mr Ely explained the Audit Committee meets quarterly and reports to the HOD, MEC and SCOPA. It prepares reports for SCOPA and does mitigations identified. The matters discussed in the Committee meeting were discussed with the Audit Committee first. There is a process to monitor progress.

The Chairperson remarked that the response from the Department is encouraging and it is clear that it wants to avoid the reoccurrence of late submissions. He enquired why a qualified report is a major concern in SA, but it is not a big issue internationally. Also, he wanted to understand if going the traditional way of submissions will not pose problems for the Department.

Mr Walters stated that the submission of financial statements manually was another way of making sure the reports reach the hands of the AG so that there are misinterpretations and misunderstandings. The management has given this matter full attention and there are measures in place to make sure problems would not occur again. On the issue of unqualified audit with findings and unqualified audit with no findings, he said the previous Minister stated that both refer to a clean audit.

An official from the office of the AG stated that in terms of comparison to international practices, the legislation requires the audit report to focus on three matters: (1) legislation – to see if the Department has complied with legislation, (2) financial statements, and (3) performance of the Department – to see if the Annual Report is reflecting the true performance of the Department. These are the three assurances the AG has to deal with or mandated to report on.

Ms M Maseko (DA) enquired if a system allows schools to borrow each other’s books if the other school was running short of textbooks and asked how long it takes for a school to be upgraded to the next quintile.

Mr Ely explained the quintile system is a natural policy governed by National Treasury. Schools get ranked and qualified. There are five quintiles. The bulk of the schools falls in quintiles four and five. Quintiles one, two and three get equal allocations, while four and five get less. The Western Cape and Gauteng are seen as rich provinces because most schools are in quintiles four and five, while the rest of the provinces have quintiles one, two and three.

Mr Lewis further indicated that there was a lot of goodwill in schools on the ground. District Officials assist in sharing the resources and facilities. The needy schools do borrow from the other schools that have got plenty. But they have to return the books and furniture. There is provision to provide growing schools using the growth budget, but this is an ongoing process.

Mr M Xego (EFF) wanted to understand if the school imposes compensation to recover an unreturned textbook when a learner returns to school the following year; and asked if the audit committee advises the Department when it consolidates the findings before the final report is submitted.

Mr Lewis said schools do not get compensation when learners do not return textbooks. It is a loss to government.

Deliberations with the PFS
Mr America commented that he was encouraged by how the unit approached the disciplinary cases, including the recommendations to improve the control environment. Regarding matters referred for further sanctions to the SAPS, he wanted to know what sanctions were taken against the employees; asked what the status of the five criminal cases were and if the unit does service the local government for investigations.

Mr van Rensburg reported that most cases were reported to the SAPS. The five cases are still under investigation. The PFS makes follow-up quarterly with the investigators and the Hawks. The investigations have not reached the courts yet. He said that if the employee is still in the service of the Western Cape government and is caught in the wrong, the disciplinary process would occur. Employees usually resign during investigations, but the unit continues to pursue the matter. They are flagged. But when they want to get back to employment, the vetting process occurs, and the flag appears. He further indicated that they supported the local government where necessary through forensic tools. The Department of Local Government can deal with cases in municipalities. The PFS has no inherent investigation into municipalities, but it has the tools to support it when it needs assistance.

Mr van der Westhuizen wanted to find out what is being done to repeat offenders to ensure they account for their actions. They have a tendency to leave a Department because of misconduct and repeat the misconduct in another Department.

Mr van Rensburg said if the person is in the employ of the government, the investigation continues. But if the person resigns, the matter is kept on record.

Mr Xhego enquired how effective the process was in recovering the loss and cost incurred by the Department during the case because once the finding is made, the official gets blacklisted. One finds the same official working at another municipality. This phenomenon is rife in municipalities.

Mr van Rensburg explained that this applies to employees and companies dealing with the state. There is a process to withhold the pension money if the person is dismissed. But sometimes, it is not worth getting the money if there is no value. If the former employee is convicted in a criminal court, the Department could make the order be suspended. Restriction of companies is done and has been implemented so that they do not do business with the state.

The Chairperson asked why the names of the wrongdoers are not mentioned because most cases are around fraud, corruption and irregularity.

Mr van Rensburg said they are trying to protect information and that’s why they do not mention the names of the implicated individuals and companies because they do not want to jeopardise the court processes and protect government from litigation. The Department would wait until all the court cases are finalised.

Mr van der Westhuizen enquired if the PFS keeps track of the investigations to see the conviction rate and asked if the PFS would be able in future to share with the Committee cases that have been finalised successfully.

Mr van Rensburg indicated that they did keep track of the cases and there were processes they followed. They engage with the SAPS investigators, the Hawks, and the NPA quarterly, and the information is shared with the HODs and six Audit Committees. He noted that in a disciplinary hearing, evidence could be proved and measured against the court's verdict. If the court's decision goes against them, they would ask for reasons.

Ms Maseko asked how the money could be recovered when the person has resigned.

Mr van Rensburg said there are many more avenues that could be followed. If there has been non-compliance, the Department could agree with an employee on acknowledgement of debt and payment. When there is a judgement, the court processes are followed to get the money. Other ways could be found and it all depends on the pension fund rule.

Ms Maseko remarked that the Department could take action before the investigation starts, and the pension fund is the one thing departments needed to look at.

Resolutions

The Committee resolved to get a legal opinion about withholding pension money to recover misappropriated funds when a public servant has been found guilty. It further resolved to request a copy of the Textbook Retrieval and Retention Management Plan to look at the procedures that should be followed to satisfy the AG and request a document detailing the reporting of the PFS on closing cases.

Adoption of Committee Reports

The Committee then considered and adopted one set of minutes (dated 4 May 2022) and three quarterly Committee documents (3rd quarter, 4th quarter, and Legacy report).


The meeting was adjourned.