Department of Social Development 2021/2022 APP; with Minister & AGSA Input

Meeting report

The Chairperson convened the virtual meeting and welcomed the delegation in attendance from the Auditor-General of South Africa (AGSA), and the Department of Social Development. The delegation from the AGSA included Mr Lourens van Vuuren (Corporate Executive), Ms Mbali Tsotetsi (Corporate Executive), Mr Faizel Jogee (Senior Manager), and Ms Uviwe Plaatjies (Manager of the National Development Agency’s Audits). The delegation from the Department included Ms Lindiwe Zulu (Minister of Social Development), and Mr Linton Mchunu (Director-General).

The purpose of the virtual meeting was for the Committee to receive a briefing by the AGSA on the Annual Performance Plan (APP) of the Department and its entities. Another item on the agenda was for the Committee to consider the Strategic Plan and the Budget of the Department.

The Chairperson noted the apologies from Ms N Mvana (ANC), Ms D Ngwenya (EFF), Ms L van der Merwe (IFP), and Ms M Sukers (ACDP). It was noted that the delegation from the Department would join the meeting after the briefings by the AGSA.

Briefing by the AGSA:
Mr Faizel Jogee, AGSA: Senior Manager, commenced the presentation to the Committee.

Objectives of the review of the APPs:
The AGSA reported that the objectives of the review of the APPs was that interim reviews provide early warning for previously identified concerns about measurability of indicators and targets. The focus was on programmes linked to the Department’s mandate. The review did not include performing detailed procedures where underlying systems and supporting documentation were inspected to give assurance on verifiability of indicators and targets. The review focused on whether targets and indicators were specific, measurable and time-bound, as required. The AGSA conducted reviews of the APPs for the Department and the South African Social Security Agency (the SASSA).

Review of the Department of Social Development’s APP:
The AGSA reviewed the final draft of the Department’s APP, specifically regarding Programme Four (Welfare Services Policy Development and Implementation Support). Various issues were identified during the review. The review was conducted mainly against the requirements of the Framework for Managing Programme Performance Information (the FMPPI) and the Revised Framework for Strategic Plans and APPs (the R-FSAPP). The applicable targets reviewed were those under the Medium-Term Expenditure Framework (the MTEF) period of 2021/2022 to 2023/2024 financial years.

The AGSA’s findings were identified on the targets or indicators and on the technical indicator descriptions that were not specific, measurable, time-bound, or relevant.

The AGSA also identified inconsistencies between targets from the annual performance targets to the quarterly reporting targets. It was reported that the management corrected the identified findings.

Review of the SASSA’s APP:
The AGSA reviewed the final draft of the SASSA’s APP, specifically regarding Programme Four (Welfare Services Policy Development and Implementation Support). Various issues were identified during the review. The review was conducted mainly against the requirements of the Framework for Managing Programme Performance Information (the FMPPI) and the Revised Framework for Strategic Plans and APPs (the R-FSAPP). The applicable targets reviewed were those under the Medium-Term Expenditure Framework (the MTEF) period of 2021-2022 to 2023-2024 financial years.

The SASSA’s Strategic Plan was evaluated in the previous financial year, after which the entity was informed of the AGSA’s findings and it was subsequently corrected. The AGSA reviewed two of the SASSA’s programmes, including Programme One (Administration) and Programme Two (Benefits Administration and Support). The first programme’s inputs were provided to add value, as only the second programme was selected for auditing by the AGSA. The review was conducted mainly against the requirements of the FMPPI and the R-FSAPP.

The AGSA reported no findings on whether the APP contained all the core elements. However, findings were made regarding the relevance and measurability of indicators and targets. The AGSA made three findings in this regard, including the following:

● Indicators were not well defined: The AGSA reported that some definitions of indicators in the first programme were unclear as the method of calculation did not clearly specify how it was to be calculated. Some percentage indicators did not have numerators and denominators clearly defined.

● Indicators were not verifiable: Various indicators in the first programme had not been defined to allow for regular and consistent data collection for reporting, as the source of information was not fully and clearly defined, or the method of calculation was not specified.

● Measurability: Some formulae seemed to be incorrect or did not support the intended purpose. In some cases, targets were incorrectly stated or not indicated at all.

It was reported that the management corrected the findings identified by the AGSA after being informed of the findings, as outlined above.

Status of records review and preventative controls:
The purpose of the status of records review was to identify key areas of concern that may derail progress in preparation of financial and performance reports and compliance with relevant legislation, and may result in regression in audit outcomes, to provide the AGSA’s assessment of key focus areas that have been reviewed, to assess the progress made in implementing action plans and following through on commitments made in previous engagements, and to identify matters that added value in putting measures and action plans in place well in advance to mitigate risks.

On the status of records review for the Department, the AGSA noted the following key considerations that had to be addressed (as of 30 September 2020):

● Financial aspects: It was noted that applicants receiving an additional R350 unemployment social relief of distress (SRD) grant could be ineligible, leading to overpayments, which could result an in increase in the debtor’s balance. Payments for SRD-grants (including food parcels, vouchers, uniforms, and the like) were not done in terms of policies and procedures, resulting in ineligible beneficiaries receiving grants. Valuation of grant debtors and debtors’ impairment remained a risk, as irrecoverable amounts were not written off or impaired.

● Performance aspects: The Department’s guidelines on performance monitoring and reporting were last updated and approved in March 2012. The AGSA noted that key updates of the National Treasury’s Regulations were missing.

● Human resources aspects: The AGSA noted that there remain vacancies in key posts, such as the Director-General position. The policy and procedure on recruitment processes were last updated and approved in October 2014 and thus needed revision.

On the status of records review for the SASSA, the AGSA noted the following key considerations that must be addressed (as of 30 September 2020):

● Financial aspects: The AGSA noted the following misstatements that negatively impacted the completeness of interim financial statements: that disclosure of contingent liabilities was omitted, that the interest earned from the concessionary loan was not capitalised to the loan account as it accrued on monthly basis thus misstating the concessionary loan balance and interest income, and that there were differences noted by management on beneficiaries identity numbers on the detailed reconciliations for the period of May to July 2020. The latter misstatement could result in the inaccurate measurement and disclosure of expenditure in financial statements, which would amount to a material misstatement.

● Performance aspects: The AGSA reviewed the performance reports of the first two quarters and noted that at end of the second quarter the entity had not achieved the desired quarterly performance for two consecutive quarters. The targets of the APP were therefore at risk of not being achieved, which could have a significant negative impact on service delivery.

● Compliance aspects: The AGSA noted that there was slow progress made in the finalisation of cases under investigation, which had a significant impact on consequence management.

On the status of records review for the National Development Agency (NDA), the AGSA noted the following key considerations that must be addressed (as of 30 September 2020):

● Performance aspects: The AGSA reported that the NDA did not have an adequate system in place to facilitate effective performance monitoring. The following issues were identified: internal audits raised the concerns about the accuracy of data used to support reporting achievements, a lack of supporting documents for achievements reported remain a concern, and the effectiveness of the Ndzalamo-system to capture performance information was also a concern.

● Supply-chain management aspects: Procurement processes should be done timeously to prevent contract extension. The AGSA noted that not all contracts were listed on the NDA’s procurement plan.

● Compliance aspects: The AGSA noted there was an increase in irregular expenditure that may have a negative impact on audit outcomes. The NDA was still in the process of investigating the irregular expenditure the entity incurred in prior years. If this process is not finalised before the reporting phase, it would have an impact on consequence management. The AGSA expressed concern that there was no formal policy or standard operating procedure in place to guide employees in addressing matters relating to irregular, fruitless and wasteful expenditure.

● IT management aspects: Regarding the Ndzalamo-project, the AGSA noted that various system elements had not yet been implemented while 85% of the expenditure had already been paid.

Preventative controls to be implemented and the AGSA’s guides:
The AGSA reported that it developed preventative control guides to assist and empower accounting authorities with the objectives to create general awareness regarding roles and legislative obligations, to enable the accounting authorities to effectively address assurance needs of oversight structures, and to enable these structures to diagnose weaknesses in preventative mechanisms and focus oversight efforts on obtaining assurance from the executive authority that weaknesses are being effectively addressed.

The preventative control guides were distributed in October 2020, and the AGSA recommended that the entities of the Department distribute the guides to all affected divisions to implement preventative controls when determined appropriate to do so in order to further strengthen the controls environment. The AGSA reported that the control deficiencies identified during the course of the auditing processes would be communicated to management for consideration.

On the preventative controls, the AGSA recommended that that accounting officers and authorities must prioritise its independent oversight functions and implement effective consequences. On institutionalised internal controls, it was recommended that the entities of the Department implement suitable risk management protocols and use the assessments of independent assurance providers. On the procurement of goods and services, it was emphasised that the entities must use procurement plans to enable proper planning, ensure adequate capacity and skills for supply-chain management protocols, ensure safeguarding against conflicts of interest, and to implement standardised and effective procurement processes. On the preparation of financial statements, the AGSA recommended that the entities must ensure proper record-keeping and document control, to conduct independent reviews and reconcile accounting records, carry out in-year reporting and monitoring in a timeous manner. Lastly, on asset management, it was emphasised that these entities must keep records of assets, perform conditional assessments, and implement controls to safeguard assets.

The AGSA reported that it was paramount that its recommendations be implemented as it will ensure that the Department and its entities move towards a clean audit outcome during the 2021/2022 financial year, and to show improvement from previous audit outcomes.

Material irregularities in the Portfolio of Social Development:
As a continuation of the AGSA’s briefing to the Committee, members were briefed on the material irregularity process at the AGSA. This included an outline of the expanded mandate of the AGSA, and the accounting and executive authorities, the implementation of the material irregularity process, examples of material irregularities, the legal obligations of accounting authorities to address material irregularities, and the difference between material irregularities and irregular expenditure (see the attached presentation). Ms Mbali Tsotetsi, AGSA: Corporate Executive, presented this part of the briefing to the Committee.

The AGSA has a constitutional mandate as the supreme audit institution to strengthen our country’s democracy by enabling oversight, accountability, and governance in the public sector through auditing, thereby building public confidence. It is against this background that the expanded mandate of the AGSA to strengthen accountability measures in the public sector should be understood.

The obligations of the accounting authorities include the prevention of all irregularities and to take action where they occur. The AGSA helps in identifying irregularities that could have a significant impact on auditees’ finances, resources, and service delivery, and notifies the accounting officers so that timeous and appropriate steps can be taken in accordance with the enabling legislation. The AGSA gives the required space and opportunities to the accounting authorities to take the required actions to deal with irregularities before using its own powers. In addition, the obligations of the executive authorities remain unchanged and pertains to its oversight and monitoring roles. By reporting material irregularities, most material matters are highlighted, and information is provided to assist oversight and monitoring roles of the executive authorities.

The AGSA’s expanded mandate allows it to refer material irregularities to the appropriate bodies, to recommend actions to resolve these material irregularities with clear timelines for implementation, and to issue a certificate of debt for failures to implement the remedial actions recommended. It is crucial that the Committee notes what is expected from members once the AGSA identified a material irregularity to ensure that effective monitoring of the progress made to implement remedial action regarding material irregularities.

The AGSA reported that for the audit of the 2020/2021 financial year, the full definition of a material irregularity would be implemented, and that the SASSA had been included in this process.

Discussion
The Chairperson thanked the delegation from the AGSA for the briefings made to the Committee. He stated that there is a concern that the Committee needed to be further empowered in terms of a full understanding and effective use of the information presented. Another engagement session with the AGSA might be required in the near future to address this concern.

Ms L Arries (EFF) appreciated the presentation from the AGSA. The briefing gives a clear indication of where fraud and corruption is taking place within the Department. The AGSA has indicated that there is a process followed to institute criminal charges against wrongdoers. At what point did the Department take responsibility for those material irregularities? The slow progress in disciplinary and consequence management resulted in the problem that the same culprits and wrongdoers are still in the employment of the Department. This will cause a continuation in reports of corruption and wrongdoing. The extent of material irregularities, sitting at R6.9 billion, remains a serious concern. Regarding the overpayment to people receiving the SRD-grants, she said that monies have been lost which are hard to recover. What measures do the AGSA have in place to monitor whether its recommendations regarding the findings made are implemented or taken seriously by the entities involved?

Mr D Stock (ANC) also appreciated the presentation from the AGSA which highlighted the areas of concern. It also gave an indication of what the best approach was that the Department was supposed to take to correct or remedy the situation and high levels of material irregularities. On the status of records review, he noted the AGSA’s concern that there was a need for intervention in the areas of compliance management, procurement processes, and contract management. He asked for clarity on what measures (according to the AGSA) can be implemented by the Department to ensure that these problems relating to audit outcomes and findings do not persist. What are the key preventative measures that should be put in place to prevent the recurrence of the irregular audit findings for the Department?

Ms A Abrahams (DA) asked for more details on the AGSA’s investigations within the supply-chain management directorates of the Department and its entities. She asked whether the problem within these directorates related to a lack of skills and training, or whether it amounted to a deliberate disregard for the rules and processes of supply-chain management protocols. What are the remedial actions that the Department should be implementing to address these issues?

Ms G Opperman (DA) referred to the R983 million lost through the overpricing of goods and services in the procurement processes of the Department. How many preliminary investigations have been instituted in efforts to find the wrongdoers who are liable? On the R666 million in revenue that was not billed, she asked for the reasons that the Department was struggling to recover these debts. Across the country, the various provincial Departments of Social Development have massive outstanding debts towards municipalities. She asked for progress in this regard. By how much did the debtors’ balance increase because of the overpayments of SRD-grants, and how many ineligible beneficiaries received food parcels and vouchers as a result of poor implementation of policies and procedures?

On the NDA, she asked to be provided with the reasons why not all of the entity’s contracts were listed in its procurement plans, and for clarity on what led to the continued increase in irregular expenditure. Why the investigations from prior financial years were not yet finalised. She emphasised the need for a formal standard operating procedure to be put in place to address irregular and wasteful expenditure.

Ms B Masango (DA) appreciated the presentation from the AGSA. She asked whether the AGSA was of the view that the timeframes in the process towards issuing a notice of debt to accounting officers can be shortened in the future. She referred to the process when an accounting authority or officer leaves the employ of the government while the process is ongoing, and a new employee has to come in. Does the new employee inherit the problems as it was left by the previous employee and the process is simply continued? More clarity was requested on the differences noted by management on beneficiaries’ identity numbers on the detailed reconciliations for the period of May to July 2020 for the SASSA.

The Chairperson commended the AGSA for its elaborate report provided to the Committee. It provides significant potential to improve the effectiveness of the Committee’s oversight role. He emphasised that Members should be empowered to fully master the nature of the information presented. What is the percentage of resolution of the instances of material irregularities since the 2018/2019 financial year? The compliance to legislation, procurement processes, and the financial health of the SASSA is a serious concern for the Committee as there do not seem to be improvements from previous financial years.

Responses by the AGSA:
Mr Lourens van Vuuren, AGSA: Corporate Executive, thanked the Committee for the questions and inputs made. He proposed that a workshop session be scheduled with the Committee to provide an opportunity for the AGSA to engage in more detail about the process around the management of material irregularities. The material irregularity process is quite detailed, and further dedicated engagements can be arranged. The Committee can also be briefed on the work and processes that goes into the status of records review. Through a workshop, the AGSA can provide the fundamental frameworks underlying the concepts of financial health and oversight roles. He referred members to the AGSA’s General Report that provides a breakdown of the instances of material irregularities. The General Report is available on the AGSA’s website.

The law is quite clear on the obligations of accounting authorities to prevent fruitless and wasteful expenditure, as well as irregular expenditure. The law is also clear on the actions that should be taken by the accounting authorities in this regard. It remains the responsibility of the accounting officers to identify transactions that amount to irregular or fruitless and wasteful expenditure before it is identified by the auditors. When the auditors identify an instance of material irregularity, the accounting authorities are given the opportunity to deal with the matter in a specific timeframe. There is no need for the material irregularity process to continue if the accounting authorities do their jobs by taking appropriate action to remedy the material irregularities and put measures in place to prevents is recurrence.

Material irregularities are regarded as resolved when the accounting officers take accountability and responsibility for the instances in question. However, when this is not the case, then it is the task of the AGSA to follow the rest of the steps in the material irregularity process. The AGSA gives the required space and opportunity to the accounting authorities to take the required actions to deal with irregularities before using its own powers to ensure that the instances of material irregularities are dealt with.

On the overpayments of SRD-grants, the AGSA has (through pro-active measures) identified instances where the individual who received the grant may not have been entitled to be a beneficiary. These instances have been brought to the attention of the Department and the SASSA to determine what actions should be taken to recover the debts. During the final audit when financial statements are received, the AGSA will do a follow-up to determine whether appropriate action had been taken and to consider the disclosed debts in the financial statements. It is paramount that appropriate actions are taken with any outstanding debts, otherwise the opportunity to recover monies is lost.

On the question of the AGSA’s investigations within the supply-chain management directorates of the Department and its entities, the AGSA responded that one of the root causes for material irregularities in this regard is due to the inadequate planning of a supply-chain management unit that is under pressure. This makes it difficult to adhere to all of the prescribed processes. Another root cause is unclear or vague policies that are in place. It remains important that adequate and proper consequence management is timeously enforced for people who are wrongdoers. This is necessary to avoid situations of repeated wrongdoing that causes losses for the Department and its entities. The remedy for the root causes of material irregularities is to put updated policies and procedures in place that speaks to the challenges faced. These policies and procedures should then be communicated to everyone involved in the supply-chain management processes. It is also crucial that adequate training and consequence management be enforced in the supply-chain management unit. The prevalence of vacancies within the supply-chain management unit should be eliminated to ensure optimal running of the unit through ensuring that there is sustained stability in the leadership positions.

The Committee can obtain the information regarding the investigations into instances of material irregularities from the Department and its entities which are directly involved. It was requested that the Committee directs questions concerning the NDA directly to the management of that agency.

Ms Tsotetsi stated that the investigation that is outstanding from one public body related to the Northern Cape’s Provincial Department of Health, which was then referred to the National Treasury. On the question of what happens when an accounting authority or officer leaves the employment of the government, she stated that the process to deal with such a situation is still in the process of being finalised. In some cases, the notice of the AGSA’s intention for a certificate of debt can be reissued but depends on the specific circumstances that are different on a case-by-case basis.

Mr Jogee responded to the question on the overpayments of SRD-grants. He stated that the SASSA was informed of the instances where ineligible beneficiaries received the grants to which they were not entitled. The debtors’ figure will only be determined after the processes of the Department of Social Development and the SASSA are finalised and communicated to the AGSA. On the question of the differences noted by management on beneficiaries’ ID numbers on the detailed reconciliations for the period of May to July 2020 for the SASSA, he responded that the AGSA picked up that the identity numbers did not match those that were on the records of the entities. The status of records review is not a detailed audit but is used by the AGSA to evaluate the records at specific times during the audit and ties in with the AGSA’s mandate of monitoring the compliance of the Department and its entities.

The Chairperson thanked the AGSA for the briefings made to the Committee, and the engagements with members’ questions. He stated that the meeting would now move on to the next item on the agenda, which was the Committee’s engagement with the Department.

Briefing by the Department on Social Development on the APP:
Another item on the agenda was for the Committee to consider the APP, Strategic Plan, and Budget of the Department of Social Development. Mr Linton Mchunu, the Director-General, presented the briefing.

Contextual analysis:
The Department tabled the APP for the 2021/2022 financial year on 15 March 2021 as directed by Parliament and the Leader of Government Business in line with legislation. This APP is a continued expression of the key commitments of the sixth administration of the Department of Social Development to improve the quality of the lives of all South Africans. The APP is aligned to Chapter 11 of the National Development Plan which speaks to Social Protection and is also informed by the Government Priorities in the Medium-Term Strategic Framework (MTSF) 2019-2024, particularly Priority 4 on Consolidating Social Wage Through Reliable and Quality Basic Services. The Department convened and facilitated sessions with its entities and Provincial Departments on the development and alignment of all the APPs to both government and sector priorities. In finalising the APP, the Department conducted rigorous performance reviews to ensure that there was an alignment between the indicators and their related targets, to ensure that indicators were well-defined and measurable, and that targets followed the SMART-principles, that the key risks and mitigating factors for all outcomes were identified, and that the Technical Indicator Descriptions for all output indicators were completed.

On the Strategic Plan, there were no revisions made to the Department’s vision, mission, values, impact, and the outcomes as contained in the Strategic Plan (2021/2025). The APP outlines the response of the Department to the new demands for services brought on by the COVID-19 pandemic, such as increased demand for food, psycho-social services, and the consideration of providing income support to citizens aged 18 to 59. The Department’s portfolio is continuing in its path of reinvention by making a number of strategic shifts from its current trajectory in order to deliver effectively and efficiently on its mandate. Lessons are taken from the challenges experienced due to the COVID-19 pandemic, budget cuts, systemic issues, and the increased demand for social services.

The focus area for the 2021/2022 financial year is to build cohesive, resilient families and communities by investing in people to eradicate poverty and vulnerability to create sustainable livelihoods for all citizens.

The targets of the APP for the 2021/2022 financial year:
For Programme 1 (Administration), the Department had set out 13 targets. The purpose of this programme is to provide leadership, management and support services to the Department and the social sector. The targets set out in the APP relates to ensuring a functional, efficient, and integrated sector. The key problems that this programme is seeking to address include:

• Addressing protracted processes by creating efficiencies to enable the core programmes to effectively execute their work;

• Improving organisational maturity by promoting and enforcing ethical practices, good governance as well as oversight of its entities;

• Inadequate evaluations to enable evidence-based policy and planning by conducting and number of evaluation studies with the development of theories of change to align with the results-based frameworks;

• Inadequate targeting of women enterprises in the procurement of goods and services;

• Non-compliance with legislation and policy prescripts and repeat AGSA findings by improving the internal control environment to obtain an unqualified audit opinion;

• A shift from a predominantly paper-based monitoring system to an electronic system;

• Inadequate management information systems to developing information and communication systems that promote automation, address data security matters, and enhance business intelligence for planning purposes through integrating systems; and

• Insufficient human capacity and skills by developing a sector human resource plan to enable appropriate capacity and a skilled workforce.

For Programme 2 (Social Assistance), the Department had set out one target. The purpose of this programme is to provide social assistance to eligible beneficiaries. The target set out in the APP relates to ensuring reduced levels of poverty, inequality, vulnerability, and social ills. The key problem that this programme is seeking to address is the fact that South Africa is faced with high levels of hunger, poverty, and inequality and the Department (through its monthly transfers to SASSA to pay social grants to eligible individuals) seeks to reduce the levels of poverty and inequality.

For Programme 3 (Social Security Policy and Administration), the Department had set out ten targets. The purpose of this programme is to provide for social security policy development, administrative justice, the administration of social grants, and the reduction of incorrect benefit payments. The targets set out in the APP relate to reinforcing the outcomes of the first two programmes in the portfolio. The key problems that this programme is seeking to address include:

• The silo approach to the delivery of social protection benefits and services;

• The shortcomings in the governance arrangements of the SASSA through exploring potential amendments to the enabling legislation;

• The lack of social security coverage (including social assistance) for the majority of the population between the ages of 18 and 59 through engaging in consultations on policy for income support to this demographic;

• The lack of contributory social security coverage of informal sector and atypical workers, and for the majority of women during pregnancy through engagement with the policy development processes; and

• To strengthen levels of financial and compliance management by conducting audits.

For Programme 4 (Welfare Services Policy Development and Implementation Support), the Department had set out 23 targets. The purpose of this programme is to create an enabling environment for the delivery of equitable developmental welfare services through the formulation of policies, norms and standards, best practices and provide support to implementation agencies. The key problems that this programme is seeking to address include:

• The Department of Social Development does not have an overarching legislation for the sector;

• The high levels of substance abuse, social crime, and gender-based violence;

• Inadequate quality of Early Childhood Development Services;

• Fragmentation of service provision, poor case management and poor data collection on cases of violence against children resulting to children falling through the cracks of the child protection system;

• Inefficiencies in the foster care systems;

• The lack of skills and knowledge on HIV Social and Behaviour Change (SBC) programmes;

• The inaccessibility of adoption services to those in need;

• Poor access and availability to integrated services, and the protection of the rights of the elderly;

• Inadequate programmatic response in the provision of services to persons with disabilities; and

• Unprofessional and unethical conduct by unregulated social service practitioners.

For Programme 5 (Social Policy and Integrated Service Delivery), the Department set out 20 targets. The purpose of this programme is to develop and facilitate the implementation of policies, guidelines, norms, and standards for effective and efficient delivery of community development services to enable the poor, the vulnerable and the excluded within the South African society to secure a better life and build sustainable, vibrant, and healthy communities. This is the area that all the programmes, including the SASSA and the NDA, will contribute towards. The key problems that this programme is seeking to address include:

• Most of South Africans are dependent on social grants for a living;

• The lack of capacity in provinces to implement the developed Community Mobilisation and Empowerment Framework;

• The lack of work or employment opportunities;

• The significant backlog of NPOs that are not complying with outdated legislation;

• The Lack of capacity of the newly registered NPOs;

• The poor implementation of the National DSD sector NPO funding policy by provinces;

• That NPO funding in the sector is not integrated and reporting is not uniform;

• The poor monitoring and reporting of the food and nutrition program; and

• A lack of capacity in provinces to implement population policies.

There are a total of 67 annual targets in the 2021/2022 APP as compared to 59 annual targets in the APP of the 2020/2021 financial year. The Department’s APP of the 2021/2022 financial year includes some of the unmet commitments during 2020/2021 to ensure continuity in development of critical policies and legislation to enable delivery of social services.

The Budgetary Review and Recommendation Report (the BRRR):
The recommendations from the Department of Social Development’s BRRR included seven core recommendations that was outlined to the Committee as follows:

• Recommendation 1: The Minister of Social Development should ensure that within the 2021/2022 financial year, the Department finalises the entity oversight framework and ensure that it is institutionalised across the social development portfolio. This process is underway through the finalisation and establishment of the Entity Oversight Framework, the Oversight Forum, and the Joint Committee between the South African Post Office and the SASSA.

• Recommendation 2: The Minister of Social Development should ensure that within the 2021/2022 financial year, the Department fills the vacant post of the Director-General. The process of filling the post is underway and will be finalised during 2021 as outlined.

• Recommendation 3: The Minister of Social Development should ensure that the Department engages with the office of the Deputy President as a Leader of Government Business to make sure that the 2018 Cabinet Resolution on the employment of social workers is implemented. The process is underway with the Minster escalating the matter through Cabinet processes. The Department has commenced engagements with Sector Departments to determine the number of social workers absorbed to date, with plans regarding the employment of social workers in the future.

• Recommendation 4: The Minister of Social Development should ensure that within the 2021/2022 financial year, irregular expenditure is significantly reduced across the social development portfolio. The process is underway with the strengthening of the Department’s internal controls and measures to reduce irregular, fruitless and wasteful expenditure.

• Recommendation 5: The Minister of Social Development should also ensure that the Department, within the 2021/2022 financial year, improves on its non-financial performance (achievement of targets), especially in critical programmes.

• Recommendation 6: The Minister of Social Development should also ensure that the Department, during this medium term, employs more people with disabilities and reach the government’s target of 6%.

• Recommendation 7: The Minister of Social Development should also ensure that the Department and its entities continue on their quarterly reporting to the Committee on their action plans to address AGSA’s findings. The plans should clearly demonstrate how they will address the AGSA’s findings and make sure that their root causes do not happen again. There should be a portfolio approach (including the Department and its entities) on how the AGSA’s findings are addressed.

The MTEF-baseline allocations:
The Department reported that its social grants budget has been reduced by R8 billion in the 2021/2022 financial year. This budget will be further reduced in the 2022/2023 financial year by R10.7 billion, and in the 2023/2024 financial year it will be reduced by R19.5 billion.

The SASSA budget has been reduced by R641 million in the 2021/2022 financial year. This budget will be further reduced in the 2022/2023 financial year by R818 million, and in the 2023/2024 financial year it will be reduced by a further R715 million. These reductions are largely the result of the wage bill containment strategy as announced in the 2020 National Budget. The SASSA should give due consideration to achieving efficiencies in its operations and managing its wage bill.

The budget of the NDA has been reduced by R20.9 million in the 2021/2022 financial year. This budget will be further reduced in the 2022/2023 financial year by R26.4 million, and in the 2023/2024 financial year it will be reduced by a further R20.8 million. This is mainly as a result of the wage bill containment strategy as announced in the 2020 National Budget.

The operational budget of the social development portfolio has also been subject to reductions. The budget for the compensation of employees was reduced by R63 million in the 2021/2022 financial year. This budget will be further reduced in the 2022/2023 financial year by R97.5 million, and in the 2023/2024 financial year it will be reduced by a further R61.3 million. This is mainly as a result of the wage bill containment strategy as announced in the 2020 National Budget. The budget for goods and services was reduced by R27 million in the 2021/2022 financial year. This budget will be further reduced in the 2022/2023 financial year by R22 million, and in the 2023/2024 financial year it will be reduced by a further R40 million.

The Budget Vote for the 2021/2022 financial year:
The Minister of Social Development, Ms Lindiwe Zulu, will on 25 May 2021, table the Department’s Budget Vote 17 to outline the overall plan for the current 2020/2021 financial cycle. The theme will largely centre around the focus of building cohesive, resilient families and communities by investing in people to eradicate poverty and vulnerability towards creating sustainable livelihoods.

The budget vote will be delivered virtually as many countries including South Africa are battling with the COVID-19 pandemic. As a result of the pandemic, many people have lost their lives, jobs, and other sources of income and this has overtime put a strain on the government’s allocation of resources. In addition, the budget will further highlight how the social sector responded to the impact of the COVID-19 pandemic on the lives of vulnerable South Africans, especially, children, women, and older persons. Most importantly, it has to be acknowledged that despite a constrained public purse, this year the budget vote will, more than ever before, focus more on the lives and wellbeing of South Africans.

Recommendations:
The Department recommended that the Committee note the changes in the approach in the development of the APP for the 2021/2022 financial year, the MTEF Baseline Allocations for the portfolio, the BRRR including its commitments and progress made, and also note the high-level overview of the Department’s Budget Vote for 2021.

Discussion
Mr Stock appreciated the comprehensive briefing from the Department. He asked whether there were any legislative policies or frameworks that regulated the reprioritisation of funds to other activities or programmes. What measures were put in place to ensure that the SMART-principles were adhered to in the development of its APP to prevent the mismanagement of funds? He also asked for an update on the current status quo regarding the SRD-grants and whether it will continue to be administered.

Ms Arries asked what measures the Department will follow and implement to ensure that crucial vacancies are filled as a matter of urgency. What will be the financial impact on the Department’s budget as a result of the lapsing of the temporary disability grant?

Ms Abrahams also appreciated the comprehensive briefing from the Department. She asked for more details on the reasons the Department was implementing its budget cuts in the areas outlined to the Committee. Are there any concerns that the Committee should be aware of relating to the expected impact the budget cuts will have on service delivery?

The Chairperson thanked the Department for the briefing made and noted the improvement in the performance information presented to the Committee. He stated that the AGSA’s report did not present a good situation to the Committee regarding the preventative controls of Department. He referred to the AGSA’s report that the irregular expenditure stands at R6.9 billion for the Department, with a rate of 9% resolution of the implicated transactions. It is a concern that there is such a small resolution rate, and the Department needs to present information and a plan of action regarding this matter to the Committee.

Responses from the Department:
Mr Mchunu thanked members for their input. The Department has been engaging with the AGSA in terms of its report regarding irregular expenditure. In this regard, measures have been put in place to ensure that the challenges identified do not recur. The Department is taking consequence management more seriously given the financial loss it has caused as a result of a lack of effective consequence management measures. The level of irregular expenditure has significantly decreased from previous financial years. The Department is cooperating fully with the AGSA to ensure that the issues raised are addressed, and regular engagements are underway in this regard. Employees within the Department are mandated to undergo a compulsory ethics programme with the National School of Government, which resonates with the guidance provided by the Minister of Public Services and Administration.

There is a paradigm shift away from the Department’s old ticking checkboxes approach towards making substantial changes within the community. In finalising the APP, the Department conducted the rigorous performance reviews to ensure that there is an alignment between the indicators and their related targets, to ensure that indicators are well-defined and measurable, and that targets follow the SMART principles, that the key risks and mitigating factors for all outcomes are identified, and that the Technical Indicator Descriptions for all output indicators are completed.

The Minister of Social Development concluded by reaffirming the Department’s commitment to build cohesive, resilient families and communities by investing in people to eradicate poverty and vulnerability to create sustainable livelihoods for all citizens. The findings of the AGSA’s report remains a significant concern for the Department. She directed the Department to present her with a detailed plan of action on how the findings of the AGSA’s report will be responded to. Regarding the budget cuts, she emphasised that the Department was looking into the specific impacts that it will have on its service delivery, specifically regarding food and access to social services. She thanked the Committee for the opportunity to brief Members on the APP for the 2021/2022 financial year.

The Chairperson thanked the Department for the briefing, and thanked Members for their input during the meeting.

The meeting was adjourned.