TABLE OF CONTENTS PART A: GENERAL INFORMATION

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1 TABLE OF CONTENTS PART A: GENERAL INFORMATION 1. DEPARTMENT S GENERAL INFORMATION LIST OF ABBREVIATIONS/ACRONYMS FOREWORD BY THE EXECUTIVE AUTHORITY REPORT OF THE ACCOUNTING OFFICER Submission of Information Information on the Department OVERVIEW OF THE FINANCIAL RESULTS OF THE DEPARTMENT Departmental Receipts Programme Expenditure Virements/Roll Overs Funds to be Rolled-Over to the 2014/15 Financial Year Unauthorised, Irregular, Fruitless and Wasteful Expenditure Future Plans of the Department Capacity Constraints Public Private Partnerships (PPP) Discontinued Activities/Activities to be Discontinued New/ Proposed Activities Supply Chain Management Gifts, Donations Received in kind from Non Related Parties Exemptions and Deviations Received from the National Treasury Events after the Reporting Date Corporate Governance Arrangements Asset Management Performance Information Scopa Resolutions Prior Modifications to Audit Reports Improvement in Financial Management Acknowledgement and Appreciation STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT STRATEGIC OVERVIEW Vision Mission Values LEGISLATIVE AND OTHER MANDATES OTHER PRESCRIPTS IN SUPPORT OF HOUSING PROCEDURES ENTITIES REPORTING TO THE MEC ORGANISATIONAL STRUCTURE PART B: PERFORMANCE INFORMATION 1. AUDITOR GENERAL S REPORT: PREDETERMINED OBJECTIVES OVERVIEW OF DEPARTMENTAL PERFORMANCE Service Delivery Environment Service Delivery Improvement Plan Organisational environment Key policy developments and legislative changes STRATEGIC OUTCOME ORIENTED GOALS PERFORMANCE INFORMATION BY PROGRAMME Programme 1: Administration Programme 2: Housing Needs, Research and Planning Programme 3: Housing Development Programme 4: Housing Asset Management

2 5. TRANSFER PAYMENTS Transfer payments to public entities Transfer payments to all organisations other than public entities...47 The table below reflects the transfer payments made for the period 1 April 2013 to 31 March CONDITIONAL GRANTS Conditional grants and earmarked funds paid CAPITAL INVESTMENT Capital investment, maintenance and asset management plan...50 GOVERNANCE INTRODUCTION RISK MANAGEMENT FRAUD AND CORRUPTION MINIMISING CONFLICT OF INTEREST CODE OF CONDUCT HEALTH SAFETY AND ENVIRONMENTAL ISSUES PORTFOLIO COMMITTEES SCOPA RESOLUTIONS PRIOR MODIFICATIONS TO AUDIT REPORTS INTERNAL CONTROL UNIT INTERNAL AUDIT AND AUDIT COMMITTEES AUDIT COMMITTEE REPORT REPORT OF THE AUDITOR GENERAL PART C: ANNUAL FINANCIAL STATEMENTS PART D: HUMAN RESOURCE MANAGEMENT INTRODUCTION OVERVIEW OF HUMAN RESOURCES The status of Human Resource in the Department Human Resources Priorities for the under review and the impact of these Workforce planning and key strategies to attract and recruit a skilled and capable workforce Employee Performance Management Employee Wellness Programme Employee Relations Management Unit HUMAN RESOURCES OVERSIGHT STATISTICS Personnel related expenditure Employment and Vacancies Filling of SMS Posts Job Evaluation Employment Changes Employment Equity Signing of Performance Agreements by SMS Members Performance Rewards Foreign Workers Leave utilisation HIV/AIDS & Health Promotion Programmes Labour Relations Skills development Injury on duty Utilisation of Consultants Severance Packages...154

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4 1. DEPARTMENT S GENERAL INFORMATION PHYSICAL ADDRESS: DEPARTMENT OF HUMAN SETTLEMENTS BUILDING NO 6 &7 RIVERSIDE GOVERNMENT COMPLEX GOVERNMENT BOULEVARD RIVERSIDE PARK EXTENSION 2 MBOMBELA 1200 POSTAL ADDRESS: PRIVATE BAGX MBOMBELA 1200 TELEPHONE NUMBERS: /6088 FAX NUMBER: WEBSITE ADDRESS: dhs.mpg.gov.za 2. LIST OF ABBREVIATIONS/ACRONYMS AGSA MEC BBBEE HOD CFO PFMA TR DHS MTEF SMME SCM PMC PMU MEGA IDPs IRDP HSDG CRDP PHP SMS SITA Auditor General of South Africa Member of Executive Council Black Broad Based Economic Empowerment Head of Department Chief Financial Officer Public Finance Management Act Treasury Regulations Department of Human Settlements Medium Term Expenditure Framework Small Medium and Micro Enterprises Supply Chain Management Provincial Management Committee Project Management Unit Mpumalanga Economic Growth Agency Integrated Development Plans Integrated Residential Development Programme Human Settlement Development Grant Comprehensive Rural Development Programme People Housing Programme Senior Management Services State Information Technology Agency 1

5 3. FOREWORD BY THE EXECUTIVE AUTHORITY The Department of Human Settlements is, in terms of Section 26 of the Constitution of the Republic of South Africa (Act no 108 of 1996), embedded with the mandate to provide adequate housing and strategically positioned to coordinate the development of sustainable integrated human settlements. The 2013/14 Annual Report provides an account of the department s performance as guided by its Strategic and Annual Performance Plans. Outcome 8 sets out four outputs which are: Upgrading of informal settlements, Increasing access to basic services, Provision of affordable accommodation for rental and for people within the gap market, earning between and and Identification of well-located land for human settlements development, as focus delivery areas between 2009 and The Department made remarkable strides realising mega integrated human settlements projects. The Klarinet Project at emalahleni Local Municipality continued to deliver on different housing typologies and social and economic facilities. During this period, the Department delivered low income houses, 1 community hall, 2 child care centres, 326 community residential units (CRUs) and installed internal services to s t a n d s. E q u a l l y remarkable was the issuing of Title Deeds to beneficiaries for full property ownership. Significant progress was also recorded at the Klarinet and Siyathuthuka Sustainable Integrated Human Settlements which are at emalahleni and Emakhazeni Local Municipalities, respectively. In addition, new Integrated Human Settlements were also commenced with at Standerton, Lekwa Local Municipality and Rockdale at Steve Tshwete Local Municipality. Two portions of land were purchased for the development of Integrated Sustainable Human Settlements at emalahleni and Dipaleseng Local Municipalities. It is also worth noting that these achievements did not come without any challenges. Misalignment of municipal plans to that of the department, inadequate bulk infrastructure in some municipalities and the ever growing demand for housing continued to affect hassle free delivery. It is important therefore that as role players, we join hands and work together to tackle these challenges in order to accelerate service delivery. There is need to align plans with Spatial Development Frameworks and Integrated Development Plans of Municipalities. As we continue to lead our people to the promised land, we need to find simpler, better, faster and efficient methods of service delivery. The Department will continue with the upgrading of informal settlements on suitably located land; bringing more people closer to their places of work; strengthen spatial planning system, which is well integrated and efficient across the spheres of government; and effectively support poor and urban livelihoods. Having reflected on the journey for this period, my gratitude goes to the Portfolio Committee on Human Settlements, Co-operative Governance and Traditional Affairs for its guidance and oversight role. Let me commend the leadership shown by the Accounting Officer, management team and the entire personnel. MS V.S. SIWELA (MPL) MEC: HUMAN SETTLEMENTS 2

6 4. REPORT OF THE ACCOUNTING OFFICER 4.1 Submission of Information It is a great honour for me to submit the 2013/14 Annual Report for the Department of Human Settlements in terms of the Public Finance Management Act, Section 40 (1)(d) Information on the Department The 2013/14 Financial Year marked the final year of the 5 year Medium Term Strategic Framework (MTSF) for the period. During this MTSF period, the department dedicated itself and directed its energy in mastering the new direction as espoused in the Breaking New Ground policy. Taking queue from national outcome 8, which places emphasis on delivering sustainable integrated human settlements and improving the quality of household life, significant progress w a s registered towards the implementation of this new policy direction. The Department remained focused on upgrading of informal settlements; the provision of basic services to households; provision of affordable rental accommodation and subsidies for people within the gap market of R3 501 to R15 500; and identification of well-located land for development of integrated human settlements. Furthermore, the Department played a major role within the 8 Comprehensive Rural Development Programme municipalities through its Peoples Housing Process. At the beginning of the financial year, the Department carried over incomplete units and planned a further units, which combined to units to be delivered in 2013/14. The Department also planned to connect sites to water and sanitation; to build 453 units for rental accommodation; and to purchase 2 pieces of well-located land for the development of integrated human settlements at Dipaleseng and emalahleni Local Municipalities; and township establishment for new integrated human settlements in 12 areas on land purchased by the Department in previous financial years. All these targets were planned to be delivered across the 18 municipalities in the province To this effect, a total of housing units; sites; two portions of well-located land and rental units were delivered. About units were at various milestones. It is also pleasing to indicate that in addition t o progress made with the Klarinet and Siyathuthuka BNG developments, work on another BNG project has commenced at Standerton, and Rockdale at L e k w a and Steve Tshwete Local Municipalities, respectively. Parts of the 2013/14 h i g h l i g h t s were the construction of houses for the elderly during the Mandela Day Campaign and 200 young people volunteered on community services through the National Youth Service Programme. It is also worth to note the accolades received from the National Govan Mbeki Awards ceremony in recognition of the excellent and outstanding work at the Klarinet Project at emalahleni and Steve Tshwete Local Municipality as the best accredited municipality. Lastly, I wish to express my sincerest gratitude to all those who made positive inputs towards our quest to deliver integrated sustainable human settlements. MR S.M MTSWENI HEAD OF DEPARTMENT 3

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8 5. OVERVIEW OF THE FINANCIAL RESULTS OF THE DEPARTMENT 5.1 Departmental Receipts 2012/2013 Estimate Amount (Over)/ Under Collection Estimate Amount (Over)/ Under Collection Departmental receipts Collected Collected R 000 R 000 R 000 R 000 R 000 R 000 Sale of goods and services other than capital assets (14) (54) Interest, dividends and rent on land (480) Sale of capital assets (23) 0 27 (27) Financial transactions in assets and liabilities (594) (280) Total (1 111) The Department has over collected for the financial year by an amount of R million which equates to 45.5% of the revenue estimate. Improved debt recovery rate and interest earned more than anticipated contributed to the over collection. The Department does not have Departmental specific tariffs. All tariffs charged by the Department during the financial year under review were determined by National Treasury which include amongst other commission on insurance and garnishee orders. The Department has received an amount of R 0.62 million from the sale of Ageing State Owned Vehicles through Auction and this amount has been accounted for under Sale of Capital Assets. An amount of R million was written off as irrecoverable debt during the financial year under review as disclosed on the Statement of Financial Performance. 5.2 Programme Expenditure The Department was allocated a budget of R billion during the 2013/14 financial year as compared to R billion for 2012/13 financial year. The Departmental budget decreased by R million during budget adjustment resulting in a total budget of R billion. The above decrease is due to function shift of R million, surrender of R million and an additional amount of R million allocated to the Department during budget adjustment. The decrease of budget during the 2013/14 adjustment appropriation was as a result of the following: Description Amount R 000 Programme Transfer of bursary function to Department of Education 138 Administration Surrender for funding of Provincial Priorities All Programmes Disaster Relief Grant allocation (1 764) Housing Development, Implementation TOTAL The Department s final budget appropriation of R billion increased by R million or 13.9% compared to the previous financial year s budget of R billion. The Department managed to spend R billion or 90.8% of the total budget as at 31 March 2014 compared to R billion or 97.2% of the previous financial year (2012/13) and under spent by R million which constitutes 9.2% of the total budget for the year. The above Departmental spending of 90.8% decreased by 6.4% compared to 97.2% for previous financial year (2012/13). The table below is the summary of expenditure per programme for 2013/14 financial year as well as over or under expenditure per programme for 2012/13 financial year, while the details are disclosed in the Appropriation Statement. 5

9 Departmental Summary Final Appropriation 2012/2013 (Over)/ Final Expenditure Under Appropriation Expenditure Expenditure (Over)/ Under Expenditure R 000 R 000 R 000 R 000 R 000 R 000 Administration Housing Needs, Research and Planning Housing Development, Implementation Housing Asset Management Total Late delivery of ordered Government Owned Vehicle (Staging Truck) contributed to the under Expenditure in Programme 1: Administration. Bulk Water Reticulation Project at Mkhondo Local Municipality which was commissioned during the last quarter of the financial year resulted in an under expenditure in Programme 2: Housing Needs, Research and Planning. The under expenditure in Programme 3 : Housing Development Implementation can be attributed to the withholding of the Provincial Conditional Grant (Human Settlement Development Grant) by National during the first quarter of the financial year under review. Non availability of municipal bulk infrastructure, inadequate professional personnel, lack of works and financial capacity as well as poor performance by some of the contractors also contributed to the under expenditure. The unspent amount of R million has been surrendered to the Provincial Revenue Fund and Roll Over application has been submitted to that effect in accordance with the Public Finance Management Act and its Regulations. 5.3 Virements/Roll Overs The following virements were made after the 2013/14 budget adjustment appropriation TRANSFER FROM TRANSFER TO AMOUNT R 000 Administration Housing Needs, Research and Planning 26 Housing Needs, Research and Planning Administration 616 Housing Development, Implementation Housing Needs, Research and Planning The Department surrendered an amount of R 5.0 million to the Provincial Revenue Fund after the budget adjustment estimate to fund other Provincial priorities 5.4 Funds to be Rolled-Over to the 2014/15 Financial Year An application is hereby made for the roll-over of unspent funds amounting R million from the 2013/14 financial year to the 2014/15 year in terms of the Treasury Regulations 6.4.1(a) and (b). 5.5 Unauthorised, Irregular, Fruitless and Wasteful Expenditure The Department incurred Irregular Expenditure of R million during the financial year. This amount has been disclosed on note 22 to the Annual Financial Statements. 5.6 Future Plans of the Department The following are some of the future plans that the department will implement to improve its performance: Vacant budgeted posts for each financial year will be filled in the second quarter of each financial year once the improvement of conditions of service (ICS) has been implemented to avoid over expenditure on compensation of employees; Programme and Project Management Unit (PMU) to submit project implementation and performance report on monthly basis; 6

10 Alignment of Departmental Plans with Municipal IDPs; Improve Project and Contract Management; and The Department will continue to conduct quarterly expenditure and performance reviews to monitor performance and spending patterns. 5.7 Capacity Constraints The inadequate number of technical professionals is not only limited to the Department, it is a national challenge. For this reason, technical staff remunerations were reviewed and approved by the Department of Public Service and Administration (DPSA) and were implemented. 5.8 Public Private Partnerships (PPP) The Department did not enter into any PPP during the financial year under review. 5.9 Discontinued Activities/Activities to be Discontinued The Provincial Executive Council took a decision to centralise the function of Bursary Management to the Department of Education in the prior financial year, hence the transfer of R million during budget adjustment New/ Proposed Activities There were no new activities undertaken by the Department during the financial year under review Supply Chain Management The Department had a functional Supply Chain Management (SCM) Unit during the financial year. The following committees were established to execute SCM functions as per the prescripts; Bid Specification Committee; Bid Evaluation Committee; Bid Adjudication Committee; and Finance Committee Gifts, Donations Received in kind from Non Related Parties There were no donations received by the Department during the financial year under review. However the Department will in future partner with the private sector for them to assist in implementing some of the programmes Exemptions and Deviations Received from the National Treasury There were no exemptions and deviations received from the National Treasury Events after the Reporting Date The Department processed invoices to the value of R million during April and May 2014 which relates to the financial year. These payments however do not form part of the 2013/14 financial year s expenditure and are disclosed as note number 18 of the Annual Financial Statements Corporate Governance Arrangements The Department conducted a Risk Assessment workshop during the reporting period which was used to develop the 2013/14 Internal Audit Operational Plans. The Shared Audit Committee approved the 2013/14 Internal Audit Operational plans during the year. The Shared Audit Committee also reviewed the internal audit reports submitted by the Shared Internal Audit unit and the Annual Financial Statements for 2013/14 financial year before the submission to the Provincial Treasury and the Auditor General. Departmental Senior Managers submitted their financial disclosures to the Public Service Commission through the Executive Authority. 7

11 5.16 Asset Management The Department has ensured that all movable, immovable, major and minor assets are included in the asset register. The Department has ensured that the assets register complies with the minimum requirements of the asset register as per the Asset Management Framework issued by the National Treasury Performance Information The established Planning Section reporting to the Corporate Services coordinates the strategic planning sessions out of which programmes derive their purposes, objectives and measures over the MTEF period. It is then detailed to an Operational Plan (Ops) which gives quarterly targets. On a monthly basis Programmes report on achievements based on the OPS plan objectives. The Planning Section evaluates implementation through the Monitoring and Evaluation sub-programme Scopa Resolutions There were no SCOPA resolutions taken on the 2013/14 Annual Report Prior Modifications to Audit Reports Refer to Part C of the Annual Report Improvement in Financial Management There has been improvement in implementing and complying with the PFMA during the year of reporting. The monthly financial reports were submitted timeously to the Provincial Treasury and Executive Authority. Most of the audit queries received from both the Internal Audit and Auditor General were different from issues raised in previous financial years Acknowledgement and Appreciation Given this showing, it is clear that the 2013/14 period was a better period albeit challenges experienced. My appreciation goes to my Executive Authority, Oversight Bodies, Staff Members of the Department of Human Settlements and all who made inputs of many forms towards the course of delivering settlements in an integrated and sustainable manner. MR SM MTSWENI HEAD OF DEPARTMENT DEPARTMENT OF HUMAN SETTLEMENTS DATE: 30 May

12 6. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT To the best of my knowledge and belief, I confirm the following: All information and amounts disclosed throughout the annual report are consistent. The annual report is complete, accurate and is free from any omissions. The annual report has been prepared in accordance with the guidelines on the annual report as issued by National Treasury. The Annual Financial Statements (Part E) have been prepared in accordance with the modified cash standard and the relevant frameworks and guidelines issued by the National Treasury. The Accounting Officer is responsible for the preparation of the annual financial statements and for the judgements made in this information. The Accounting Officer is responsible for establishing, and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements. The external auditors are engaged to express an independent opinion on the annual financial statements. In my opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the department for the financial year ended 31 March Yours faithfully MR SM MTSWENI HEAD OF DEPARTMENT DATE: 30 May

13 7. STRATEGIC OVERVIEW 7.1 Vision Sustainable integrated human settlements 7.2 Mission To facilitate the creation of sustainable integrated human settlements 7.3 Values Accountability; Performance; Service Excellence; Consultation; Integrity; and Service Standards 8. LEGISLATIVE AND OTHER MANDATES The legislative frameworks from which the Department derives its mandate are listed as follows: Housing Act No. 107 of 1997; National Housing Code; Rental Housing Act; Housing Consumers Protection Measures Act; Intergovernmental Relations Framework Act, 2005; Social Housing Act No.16 of 2008; Deeds Registry Act No 11 of 1996; and Upgrading of Land Tenure Act No. 34 of OTHER PRESCRIPTS IN SUPPORT OF HOUSING PROCEDURES Public Finance Management Act No. 1 of 1999 as amended by Act 29 of 1999; Promotion of Equality and Prevention of Unfair Discrimination Act No. 4 of 2000; Preferential Procurement Policy Framework Act No.5 of 2000; Skills Development Act No. 97 of 1998; and Employment Equity Act No.55 of ENTITIES REPORTING TO THE MEC 10

14 Mr P.S. Shube (Acting) Chief Director: Corporate Services Ms T. Mashego (Acting) Director: Human Resource Management Mr T. Selowe (Acting) Director: Legal Services Mr R. Mogane (Acting) Director: Planning & Programme Management Mr F.L. Ngobe Director: Communications Mr L. Appasamy Director: Housing Subsidy Systems Mr A.M. Mabuza (Acting) Director: Stakeholder Management 10. ORGANISATIONAL STRUCTURE MEC V.S. Siwela (MPL) Mr B.S. Khoza Personal Assistant & Head: MEC s Office Mr S.M. Mtsweni Head of Department Mr D. Awogu Chief Director: Incremental Housing Dr. A.B. Shabane Chief Director: PHP & Rural Development Mr S.E.B. Matsebula Chief Financial Officer Mr E. Maimela (Acting) Director: Integrated Residential Development Programme Mr T. Mnisi Director: Peoples Housing Process Mr M.D. Mashabane (Acting) Director: Financial Management Ms T. Matsebula (Acting) Director: Strategic Housing Support & Housing Assets Mr R.S. Mabuyakhulu (Acting) Director: Informal Settlement Upgrading Mr T.C. Mashile Director: Supply Chain Management Ms H.N. Zitha Director: Urban Renewal, Rental & Social Housing Ms N.M. Fakude (Acting) Director: Rural Settlements & Farmworker Residential Development Mr N. Bellim (Acting) Director: Financial Accounting Ms V. Manana (Acting) Chief Director: Technical Services Ms S. Madonsela (Acting) Director: Technical Services Ehlanzeni Region Ms M.C. Thobela (Acting) Director: Technical Services Nkangala Region Mr K. Khadambi (Acting) Director: Technical Services Gert Sibande Region Mr V. Mtsweni Regional Director: Nkangala Region Mr B.A. Mahlangu (Acting) Regional Director: Ehlanzeni Region Mr L. Duba (Acting) Regional Director: Gert Sibande Region Mr R. Ledwaba Director: Rental Housing Tribunal 11

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16 1. AUDITOR GENERAL S REPORT: PREDETERMINED OBJECTIVES The AGSA currently performs certain audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the auditor s report. Refer to page 59 of the Report of the Auditor General, published as Part E: Financial Information. 2. OVERVIEW OF DEPARTMENTAL PERFORMANCE 2.1 Service Delivery Environment The built environment, in which the Department of Human Settlements operates, is faced with lot of external dependencies and factors ranging from political, environmental, social, technological, economic issues to legislative framework. In order to achieve its strategic goal of developing sustainable integrated human settlements, the Department must continuously manage and mitigate the risks that are associated with these factors. Moreover, it has to forge strategic partnerships with institutions and role players such as municipalities, financial institutions, regulatory bodies, community organisations and small medium macro enterprises, amongst others. The Intergovernmental Relations Framework Act of 2005 provides for the establishment of proper structures and institutions to inter-link all spheres of government. In this regard, it is expected of the Department of Human Settlements to forge cooperation and relationships in different government sectors to ensure proper coordination. To this effect, the Department endeavours to work together with these strategic partners in planning and budgeting, executing, monitoring and evaluating its programmes. The Department during the year under-review has provided households with access to basic services such as water and sanitation, housing opportunities to nearly households to both rural and urban communities. Furthermore, the Department delivered child care facilities and community halls to provide a habitable and secure environment and venues for community activities. In order to restore human dignity the Department issued about tittle deeds to home owners. Through these programmes, secondary benefits such as job and economic empowerment opportunities were also derived. In 2013/14, the Department, operated where Municipal Spatial Development Framework (SDF) were not aligned to the human settlements concept, Municipal Integrated Development Plan (IDP) were not providing accurate information regarding the status quo of the municipal priorities and the involvement of the community. In addition there was no buy-in from the private sector/ Banking sector regarding the gap market, and no bulk services installed on allocated land. Another persistent challenge remained the high demand for low income houses which often contributed to community unrests. To mitigate these circumstances the Department engaged municipalities and sector departments in planning processes through Intergovernmental Fora, Public Private Partnership initiatives, and bilateral engagements with key strategic role players such as financial institutions and the private sector. Further emphasis was given to proper identification and management of beneficiaries. 2.2 Service Delivery Improvement Plan Main services and standards Main services Beneficiaries Current/actual standard of service 2012/13 Desired standard of service 2013/14 achievement 2013/14 Provision of informal settlements upgrading All qualifying service beneficiaries in Mpumalanga Province 1546 units per annum 4000 units per annum 2276 units per annum 5894 sites serviced per annum 13

17 Provision of People Housing Process All qualifying beneficiaries including 7 CRDP sites namely Mkhondo, Nkomazi, Bushbuckridge, Thembisile Hani, Dr Pixley ka Isaka Seme, Chief Albert Luthuli and Dr J.S Moroka 3133 units per annum 4000 units per annum 3097 units per annum Batho Pele arrangements with beneficiaries (Consultation access etc.) Current/actual arrangements Desired arrangements achievements Consult organised formations on construction Solicit departmental views via survey and questionnaires Develop a communication strategy to have consultation session with stakeholders 30% stakeholders consulted per quarter Equal access to service information in 3 District offices and 2 satellite offices Hold three stakeholder forum meetings annually Conduct two customer surveys Develop and improve a communication strategy to have consultation session with stakeholders twice per quarter in every district where Human Settlements programmes are operational Improve to 65% stakeholder access to information on services rendered Three stakeholder meetings held Not achieved Communication Strategy developed. Access to information on services rendered has improved Treated all clients with respect and dignity Telephone calls are answered promptly and politely Details of location and contact persons on the newsletter Inform stakeholders on the budget utilization quarterly Publish our performance against our targets on annual report Insufficient information sharing in districts with relevant stakeholders Treat all clients with respect and dignity Telephone calls will be answered promptly and politely Details of location and contact persons on the newsletter Inform our stakeholders on the budget utilisation quarterly Publish our performance against our targets on annual report Improve information sharing on the availability of services and needs by means of print and electronic media in 18 local municipalities four times a month All clients were treated with respect and dignity (No complaints recorded) Telephones calls were answered promptly and politely (No complaints recorded) Details of location and contact persons were published in the Departmental Service Commitment Charter, the Departmental Website and newsletter The Department forwarded expenditure report to National Department of Human Settlements, Department of Finance (Treasury), the Legislature and the public through publishing of the Annual Report, media and community outreach programmes. Departmental performance published on the annual report Departmental newsletters and annual report have been distributed to the 18 local municipalities and conducted 26 radio slots 14

18 Evaluate the performance of staff at all level Appraise the quality of the service rendered We insist on outputs for every rand allocated to a department Ensuring optimal utilisation of internal resources Monitoring of department s spending levels on a monthly basis Identifying risks and responding to them in the departmental budget and expenditure Evaluate the performance of staff at all level quarterly Appraise the quality of the service rendered annually We insist on outputs for every rand allocated to a department Ensuring optimal utilization of internal resources Monitoring of department s spending levels on a monthly basis Identifying risks and responding to them in the departmental budget and expenditure 71% of staff have been assessed on performance Appraisal conducted by internal audit, NHBRC, National Department of Human Settlements and Office of the Premier Verification on services rendered is conducted before payments Department rendered services with limited involvement of consulting services The spending of the Department was monitored on monthly basis through the In-Year Monitoring reports as per the PFMA Risks affecting Departmental Budget and Expenditure were identified and monitored on monthly basis. Service delivery information tool Current/actual information tools Desired information tools achievements Approved Service Delivery Improvement Plan Approved Service Delivery Improvement Plan Approved Service Delivery Improvement Plan Complaints mechanism Current/actual complaints mechanism Stakeholder Management Office Anti-Corruption Hotline Rental Tribunal District and Satellite Offices Desired complaints mechanism Develop and maintain complaints register achievements Complaints register developed and maintained 2.3 Organisational environment During the period under review, there were no organisational or structural changes that occurred; however, vacant Senior Management positions affected the pace of service delivery. A number of officials served under these vacant positions on acting capacity. This had a knock on effect on posts subsequent levels. Secondly, since the Department uses externally sourced capacity, through the appointment of contractors, it would appear that this aspect had a serious bearing on the performance of the Department. Many contractors failed to deliver the contracted work within the stipulated times in the contracts. 2.4 Key policy developments and legislative changes There were neither legislative nor key policy developments, except an approved beneficiary management policy by the Department. 15

19 3. STRATEGIC OUTCOME ORIENTED GOALS The 2013/14 financial year marked the final year of the Medium Term Strategic Framework. In 2009 the Department had targets based on the national delivery outcomes. The Department was responsible for Outcome 8, namely, Sustainable integrated human settlements and improved quality of household life. Outcome 8 has four outputs, which are: Upgrading of informal settlements; Increasing access to basic services; Provision of affordable accommodation for rental and for people within the gap market, earning between R3 501 and R15 500; and Identification of well-located land for human settlements development. The Department made remarkable strides towards achieving these strategic goals. On upgrading of informal settlements, a total of 2276 units were delivered including units carried over from the previous financial year. A total number of sites were serviced. Significant progress was recorded at the Klarinet and Siyathuthuka Sustainable Integrated Human Settlements which are at emalahleni and Emakhazeni Local Municipalities, respectively. In addition, new Integrated Human Settlements were commenced with at Standerton, Lekwa Municipality and Rockdale at Steve Tshwete Municipality. To date a total of 326 units for affordable rental were constructed. Two portions of land were purchased for the development of Integrated Sustainable Human Settlements in two municipalities, emalahleni and Dipaleseng. The Department also made immense contribution towards the achievement of outcome 7, creating vibrant rural communities and sustainable livelihoods, through the Peoples Housing Process and Rural Housing programme. Through these instruments, the Department delivered units to poor rural households. These units are built In situ, meaning on site where the household lives. The Department also finalised Sustainable Human Settlements Master Plan. 16

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21 4. PERFORMANCE INFORMATION BY PROGRAMME 4.1 Programme 1: Administration Programme Purpose: The programme exists in order to provide strategic administrative and management support to the Department. List of Sub-Programmes and Strategic Objectives Corporate Services - To provide political, strategic and administrative leadership and support to all programmes of the Department. Office of the CFO - To provide political, strategic and administrative leadership and support to all programmes of the Department 18

22 Strategic objectives: Programme 1: Administration Office of the Head of Department Strategic objectives 2012/2013 To provide political, strategic and administrative leadership and support to all programmes of the Department Effective administrative support Planned Target 1 x Annual and 4 x quarterly plans for Executive and Senior Management Meetings 1 x Annual plan for Executive and Senior Management Meetings Deviation from planned target to for Comment on deviations Effective administrative support An effective document management system maintained An effective Document Management System maintained Human Resource Management and Development Strategic objectives 2012/2013 Planned Target Deviation from planned target to for Comment on deviations To provide political, strategic and administrative leadership and support to all programmes of the Department Effective corporate services to the Department provided Human Resource Plan developed Employment Equity Plan developed Human Resource Plan developed Employment Equity Plan developed Performance appraisals conducted 245/377 = 65% of assessments conducted 132/377 or 35% of assessment not conducted Inadequate performance management and monitoring 19

23 Communication Services Strategic objectives 2012/2013 Planned Target Deviation from planned target to for Comment on deviations To provide political, strategic and administrative leadership and support to all programmes of the Department Communication Strategy developed Communication Strategy and plans reviewed Communication Strategy and plans reviewed Office of the Chief Financial Officer Strategic objectives 2012/2013 Planned Target Deviation from planned target to for Comment on deviations To provide political, strategic and administrative leadership and support to all programmes of the Department Financial accounting services rendered Supply chain management services rendered Accurate Annual Financial Statements 12 Verified Payrolls Procurement Plan developed and executed Accurate Annual Financial Statements 12 verified payrolls Procurement Plan developed and executed Render risk management service Risk management action plan developed Risk management action plan developed Financial accounting services rendered 100% of invoices paid within 30 days 94% of invoices paid within 30 day 6% Withheld HSDG during the first quarter. Inefficient contract management. Late submission of Banking details by service providers/ contractors. 20

24 Performance indicators Programme / Sub-programme: Office of the Head of Department Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of the plan/ document and level of execution Not applicable (new indicator) 1 x Annual and 4 x quarterly plans for Executive and Senior Management Meetings 1 x Annual and 4 x quarterly plans for Executive and Senior Management Meetings Availability and effectiveness of the system Not applicable (new indicator) An effective document management system maintained An effective document management system maintained. Programme / Sub-programme: Human Resources Development Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of an updated database Updated HR database Human Resource database developed Human Resource database developed Availability and level of execution of the Human Resource Plan document HR plan developed 1 x 100% 1 HR plan developed and 100% executed Availability and level of execution of the employment equity plan document Not applicable (new indicator) 1 x 100% 1 x Employment Equity Plan developed and 100% executed Number and percentage of officials assessed Not applicable (new indicator) 100% 245/377 = 65% of assessments conducted 132/377 or 35% of assessment not conducted Inadequate performance management and monitoring Availability and level of execution of the Human Resource Development Plan Not applicable (new indicator) 1 x 100% 1 HR development plan developed and 100% executed 21

25 Number and percentage of misconduct cases resolved, grievance and dispute cases against number received 33 grievances received and resolved; 2 disputes cases received; 7 misconduct cases received and 5 resolved 90% 24/23 cases resolved or 94% 1/23 or 4% case over achieved. Efficient implementation of labour processes and procedures Programme / Sub-programme: Wellness and Transversals Services Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Health and Wellness Services Availability and level of execution of the Employee Health and Wellness Programme implemented 4 employee health and wellness programmes implemented: HIV/Aids, Mental Health, Health and Safety and TB programme 1x 100% 1 Employee Health and Wellness Plan developed and 98% executed Programme/Sub-programme: Transversal Services Availability of the gender, disability, youth and children s rights reports Not applicable (new indicator) 1 x Annual; and 4 x quarterly monitoring report on the status of gender, disability, youth and children s rights Compiled 1 x Annual and 4 x quarterly report on the status of gender, disability, youth and children s rights Programme/Sub-programme: Legal Services Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number and percentage of legal instructions carried out Not applicable (new indicator) 100% 292/292 or 100% legal instructions carried out 22

26 Programme / Sub-programme: Communication Services Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of the revised strategy document and level of execution Not applicable (new indicator) 1 x Communication strategy developed 1 x Communication strategy developed Availability and level of execution of plans Annual report compiled on communication programmes implemented 4 x Communication plans developed and 100% executed 4 x Communication plans developed and 100% executed Programme / Sub-programme: Security Services Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of security management plan and number of reports Not applicable (new indicator) 1 x Security management plan developed and 4 assessment reports 1x security management plan developed and 4 quarterly Security Assessment Reports done Programme / Sub-programme: Stakeholder Management Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of strategy on stakeholder management Not applicable (new indicator) Strategy on Stakeholder Management developed Strategy on Stakeholder management developed A close out report of the project Not applicable (new indicator) Provincial Govan Mbeki Awards Project Provincial Govan Mbeki Awards Project close out report compiled 23

27 Programme / Sub-programme: Housing Subsidy Scheme Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Availability of report and number of housing subsidy beneficiaries approved housing subsidy beneficiaries approved 1 x x report available on, and , housing subsidy beneficiaries approved 1148 housing subsidy beneficiaries not approved Slow submission and poor quality of beneficiary application forms for approved projects. Programme / Sub-programme: Chief Financial Officer Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number and timely submission and accuracy of the financial statements Annual Financial statements for 2011/12 submitted. 1 x Accurate Annual and 4 Quarterly Financial Statements produced and submitted timely 1 x accurate Annual and 4 x quarterly financial statements produced and submitted timely. Availability of signed payrolls with verification dates 12 payroll certificates verified and signed 12 Verified Payrolls timely 12 Monthly signed payroll reports with verification dates Availability and level of execution of the procurement plan Not applicable (new indicator) Procurement Plan developed and executed 100% Procurement Plan developed and executed 100% Availability of the Risk management action plan and monitoring reports Annual risk management report compiled 1 x Risk management action plan developed and 3 x monitoring reports Risk Management action plan developed and 3 monitoring reports compiled Percentage of invoices paid 99% of invoices paid within 30 days of receipts 100% of invoices paid within 30 days 3 613/3829 or 94% of invoices paid within 30 day 216/3829 or 6% invoices paid after 30 days Withheld HSDG during the first quarter. Inefficient contract management. Late submission of Banking details by service providers/ contractors. 24

28 Reasons for all deviations Inadequate performance management and monitoring; Slow submission and poor quality of beneficiary application forms for approved projects; Withheld HSDG during the first quarter; and Inefficient contract management. Strategy to overcome areas of under performance The Department will review its business processes, conduct training on performance management and enforce compliance with the PMDS policy and SMS handbook; The department will review its institutional structures and arrangements; The Department will strengthen beneficiary management unit and capacitate municipalities within the three districts; Ensure compliance with the HSDG requirements; and The department to establish a dedicated contract management unit. Changes to planned targets 25

29 Linking performance with budgets Sub-programme expenditure Administration Office of the MEC Corporate Services Final Appropriation 2012/2013 Expenditure (Over)/ Under Expenditure Final Appropriation Expenditure (Over)/Under Expenditure R 000 R 000 R 000 R 000 R 000 R (899) Total Economic Classification Compensation Goods & Services Transfers and Subsidies Payment for Capital Assets Payment for Financial Assets Total Programme 2: Housing Needs, Research and Planning Programme Purpose: To coordinate the rendering of technical services. List of Sub-Programmes and Strategic objectives Technical Services - Number of sites with access to bulk basic services; and - Number of Quality research, policy development, planning, monitoring and evaluation of programmes produced. Planning and Programme Management - Number of Quality research, policy development, planning, monitoring and evaluation of programmes produced 26

30 Strategic objectives: Programme /Sub-programme: Technical Services Strategic objectives Number of sites with access to bulk basic services 2012/2013 Engineering services, quality assurance, project management services to Housing and related projects rendered Planned Target Deviation from planned target to for Comment on deviations The function of bulk infrastructure for water and sanitation was assigned to MEGA during the course of the financial year. Bushbuckridge municipality has not yet exhumed the graves on site of the project. Programme/Sub-programme: Planning and Programme Management Strategic objectives Number of quality research, policy development, planning, monitoring and evaluation of programmes produced 2012/2013 Departmental planning, policy analysis and development, and programme management coordinated Planned Target Deviation from planned target to for Comment on deviations 27

31 Performance indicators Programme / Sub-programme: Quality Control and Inspection Services Performance Indicator Number or percentage of projects supported with engineering services Number of households that can be connected to water and sanitation Number or percentage of inspections conducted on housing units Number or percentage of quality control tests conducted 2012/2013 Not applicable (new indicator) Planned Target 8 3 projects supported with engineering services inspections conducted 256 quality control tests conducted or 100% Deviation from planned target to for Comment on deviations 5 projects The function of bulk infrastructure for water and sanitation was assigned to MEGA during the course of the financial year. Bushbuckridge municipality has not yet exhumed the graves on site of the project or 189% or 89% Unforeseen number of inspections and quality control tests conducted or 100% 2710 or 181% 1210 or 81% 28

32 Programme / Sub-programme: Project Planning Management Performance Indicator Number of house plans types designed Number or percentage of housing projects registered with NHBRC Number or percentage of feasibility studies conducted Number or percentage of project inspections on social and economic facilities 2012/ house plans designed Planned Target 1 project enrolled 50 or 100% of housing projects registered 15 sites investigated 3 8 house plans designed 24/50 or 48% housing projects registered Deviation from planned target to for Comment on deviations 5 house plans 5 additional plans were designed to provide more options to beneficiaries. 26/50 or 52% housing projects registered 10 or 100% 0 10 or 100% 0 72 or 100% 72 or 100% Non-alignment of Departmental plans with Municipal IDPs 29

33 Programme / Sub-programme: Planning and Programme Management Performance Indicator Number of plans produced and implemented Complete Provincial Integrated Sustainable Human Settlements Master Plan Number of performance reports compiled Number of research reports produced Number of reports on policies reviewed, policy development facilitated and monitored 2012/2013 Planned Target plans produced and implemented Not applicable( New indicator) 1 1 Provincial Integrated Sustainable Human Settlements Master Plan completed performance reports (3 quarterly and 1 Annual) compiled research reports produced policies reviewed, policy development and monitored and approved Deviation from planned target to for Comment on deviations 7 policies Unforeseen need to review of departmental policies Reasons for all deviations The function of bulk infrastructure for water and sanitation was assigned to MEGA during the course of the financial year; Non-alignment of Departmental plans with Municipal IDPs; and Inadequate Technical and Professional capacity within the Department. Strategy to overcome areas of under performance Improve on integrated planning and inter-governmental relations; Strengthening working relations with contractors and NHBRC to ensure efficient and effective service delivery; Intensify Quality and Inspection programme to ensure delivery of quality houses; and Reviewing and strengthening of instructional capacity and arrangements. Changes to planned targets 30

34 Linking performance with budgets Sub-programme expenditure 2012/2013 Housing Needs, Research and Planning Final Appropriation Expenditure (Over)/ Under Expenditure Final Appropriation Expenditure (Over)/ Under Expenditure R 000 R 000 R 000 R 000 R 000 R 000 Administration Planning Policy Needs Research Total Economic Classification Compensation Goods & Services Transfers and Subsidies Current Payment to Capital Assets Total Programme 3: Housing Development Programme Purpose: To provide different services or products of houses for the creation of integrated sustainable human settlements List of Sub-Programmes and Strategic objectives Financial Intervention - Number of units provided for the gap market R3 500 to R12 800; - Number and size of land purchased; - Number of land developed for integrated Human Settlements; - Number of sites for IRDP 1; and - Number of Housing units for IRDP 2. Incremental Intervention - Number of sites upgraded for accommodation within the informal Settlements; and - Number of units upgraded for accommodation within the informal Settlements. Social and Rental intervention - Number of units for Rental Stock. Rural Intervention - Number of housing units for Rural Development. 31

35 Strategic objectives: Programme Name: Strategic objectives Number of units upgraded for accommodation within the informal Settlements Number of sites upgraded for accommodation within the informal Settlements Number of Rental Stock units provided Number of units provided for the gap market R3 500 to R /2013 Planned Target Deviation from planned target to for Comment on deviations units units 964 units units Withheld HSDG during the first quarter. Non-availability of basic infrastructure especially sewer and water. Slow submission and poor quality of beneficiary application forms for approved projects. Lack of works and financial capacity by contractors sites 5894 sites 914 sites Additional 914 sites were connected in response to provincial priority projects. 20 units 104 units 42 units 62 units The counterpart funding from external stakeholders was not honoured timeously. Late appointment of service providers by Emalahleni Housing Association. 80 units 2 units 78 units Unavailability of qualifying beneficiaries due to the R property price threshold Number of land developed for integrated Human Settlements 12 portions of land developed 12 portions Projects were not ready for implementation Number and size of land purchased 3 portions 2 portions 2 portions or 844,010 hectares Number of sites for IRDP 1 Number of Housing units for IRDP sites sites 155 sites Hard rock surface encountered on site at Emakhazeni 610 units units 855 units 617 units Delays in finalizing IRDP: phase 1 project. 32

36 Number of housing units for Rural Development 156 units 131 units 51 units 80 units Withheld HSDG during the first quarter. Slow submission and poor quality of beneficiary application forms for approved projects. Lack of works and financial capacity by contractors PERFORMANCE INDICATORS AND TARGETS SUB PROGRAMME: FINANCIAL INTERVENTION Programme / Sub-programme: Individual Housing Subsidies Performance Indicator Number of Individual Housing Subsidies units, provided, including those children affected by death of a parent or guardian 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 54 units 210 units 35 units 175 units Fewer applications for qualifying beneficiaries received. Programme / Sub-programme: Finance Linked Subsidy Programme Performance Indicator Number of Finance Linked Individual subsidies provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 80 units 2 units 78 units Unavailability of qualifying beneficiaries due to the R property price threshold 33

37 Programme / Sub-programme: Rectification of RDP stock: Pre 1994 Performance Indicator Number of units to be rectified Assessment report 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 120 units 39 units 81 units Resistance by beneficiaries to vacate their old properties Contractor appointed for Mbombela for assessment of units Contractor appointed for Mbombela for assessment of units Programme / Sub-programme: Social and Economic Facilities Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number of community halls and child care facilities provided facilities completed ( incomplete projects are at an average of 75% completion) 4 (2 community halls and 2 child care) facilities not completed Delays in the finalization of designs due to relocation of project from CRDP to BNG sites. Programme / Sub-programme: Housing Chapters of IDP Performance Indicator Number of municipalities supported 2012/ municipalities assisted Planned Target Deviation from planned target to for Comment on deviations 34

38 Programme / Sub-programme: Capacity Development Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number of officials and municipalities capacitated in policy development and management 9 officials capacitated on housing policy development and management 8 departmental and municipal officials in policy development and management 18 municipalities capacitated on the FLISP 13 Departmental and municipal officials capacitated 18 municipalities capacitated on the FLISP 5 officials There were requests for additional 5 officials to be capacitated 8 CRDP Municipalities trained on Enhanced PHP programme 8 CRDP and 2 non-crdp Municipalities trained on Enhanced PHP programme 2 municipalities The need for additional 2 municipalities to be trained arose during the course of the financial year. Programme / Sub-programme: Housing Consumer Education Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number of trainers trained in the trainthe trainer programme 41 trainers trained 40 trainers trained 53 trainers trained 13 trainers trained More requests received than anticipated Number of consumer beneficiaries workshoped beneficiaries beneficiaries beneficiaries beneficiaries Training received more interest from beneficiaries Programme / Sub-programme: Accreditation and support of Municipalities Performance Indicator Number of Municipalities Accredited Number of Municipalities supported 2012/ municipality accredited for level 2 Planned Target Deviation from planned target to for Comment on deviations 35

39 PERFORMANCE INDICATORS AND TARGETS PROGRAMME: FINANCIAL INTERVENTION Programme / Sub-programme: Project Linked Subsidies Performance Indicator Number of Project Linked Subsidy units provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 302 units 348 units 47 units 301 units Insufficient bulk infrastructure resulted in the reduction of scope to avoid over-flow of sewer. Programme / Sub-programme: IRDP-Phase 1: Planning and Services Performance Indicator Number of Integrated Residential Development Phase 1 completed Sites 2012/2013 Planned Target Deviation from planned target to for Comment on deviations sites sites 155 sites Hard rock surface encountered on site at Emakhazeni during construction. Programme / Sub-programme: IRDP-Phase 2: Top Structure Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number of Integrated Residential Development Phase 2-Top structure completed 610 top structures top structures 855 top structures 617 top structures Delays in finalizing IRDP: phase 1 project. 36

40 Programme / Sub-programme: People s Housing Process Performance Indicator Number of PHP units constructed 2012/2013 Planned Target Deviation from planned target to for Comment on deviations units units 847 units units Withheld HSDG during the first quarter. Non-availability of basic infrastructure especially sewer and water. Slow submission and poor quality of beneficiary application forms for approved projects. Lack of works and financial capacity by contractors Programme / Sub-programme: Incomplete units at various milestones Performance Indicator Number of complete units 2012/2013 Not applicable (new indicator) Planned Target Deviation from planned target to for Comment on deviations units units 607 units Lack of works and financial capacity by contractors Programme / Sub-programme: Informal Settlements Upgrading/Units Performance Indicator Number of informal settlements units upgraded 2012/2013 Planned Target Deviation from planned target to for Comment on deviations units units 964 units units Withheld HSDG during the first quarter. Non-availability of basic infrastructure especially sewer and water. Slow submission and poor quality of beneficiary application forms for approved projects. Lack of works and financial capacity by contractors 37

41 Programme / Sub-programme: Informal Settlements Upgrading/Sites Performance Indicator Number of informal settlements sites upgraded 2012/2013 Planned Target Deviation from planned target to for Comment on deviations sites sites 914 sites Additional 914 sites were connected Programme / Sub-programme: Consolidation Subsidies Performance Indicator Number of consolidation subsidies provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 300 subsidies 150 subsidies 68 subsidies 82 subsidies Untraceable beneficiaries and delays in finalizing de-registration and registration processes Programme / Sub-programme: Emergency Housing Assistance Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number of emergency housing assistance provided 555 housing assistance provided 606 housing assistance provided 210 housing assistance provided 396 housing assistance not provided The slow performance by the appointed contractors 38

42 PERFORMANCE INDICATORS AND TARGETS PROGRAMME: SOCIAL AND RENTAL INTERVENTIONS Programme / Sub-programme: Operational support to Social Housing Institutions Performance Indicator Number of Social Housing institutions (Operation Support) supported. 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Programme / Sub-programme: RENTAL STOCK Performance Indicator Number of Rental Stock units provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 20 units 104 units 42 units 62 units The counterpart funding from external stakeholders was not honoured timeously. Late appointment of service providers by Emalahleni Housing Association. 39

43 Programme / Sub-programme: Community Residential Units Performance Indicator Number of community residential units (CRU) provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations units 284 units 191 units Progress was hampered due to resistance by residents to vacate the old hostel and heavy rains. Programme / Sub-programme: Secretariat to Mpumalanga Residential Tribunal Performance Indicator 2012/2013 Planned Target Deviation from planned target to for Comment on deviations Number and percentage of disputes resolved 133/150 or 87% disputes resolved 80% 222/192 or 93% disputes resolved 13% Over achievement due to efficient management systems and processes. 40

44 PERFORMANCE INDICATORS AND TARGETS SUB PROGRAMME: RURAL INTERVENTIONS Programme / Sub-programme: Rural Housing Performance Indicator Number rural housing units provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 156 units 131 units 51 units 80 units Withheld HSDG during the first quarter. Slow submission and poor quality of beneficiary application forms for approved projects. Lack of works and financial capacity by contractors Programme / Sub-programme: Farm Worker Housing Assistance Performance Indicator Number of farm worker housing assistance units provided 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 0 78 units 0 78 units Withheld HSDG during the first quarter. Non-availability of basic infrastructure especially sewer and water. Lack of works and financial capacity by contractors Reasons for all deviations Withheld HSDG during the first quarter; Insufficient bulk infrastructure; Lack of works and financial capacity by contractors; Inadequate beneficiary management; Unavailability of qualifying beneficiaries due to the R property price threshold; and Resistance by beneficiaries to vacate their old properties. 41

45 Strategy to overcome areas of under performance Compliance with HSDG requirements; Alignment of departmental plans with municipal IDPs; Review the housing delivery value chain; The Department will strengthen beneficiary management unit and capacitate municipalities within the three districts; National Department of Human Settlements to review FLISP policy of R threshold; and Appoint contractors based on CIDB grading and strengthen project management within the Department. Changes to planned targets Housing instrument Original Planned Targets Revised Planned Targets Sites Units Other Sites Units Other Informal Settlements upgrade Financed Linked Subsidy Programme (FLISP) Land development portions portions Land purchase portions portions IRDP phase 1: planning and Services IRDP Phase 1 Planning and services (Informal Settlements) IRDP phase 2: Top structure Individual subsidies Rectification Pre Social and Economic Facilities Accreditation and Support Housing Chapters of IDP Project linked People s Housing Process People s Housing Process: Informal Settlements Consolidation (excluding Blocked Projects Consolidation (Blocked Projects) Emergency Housing Support to Social housing Community residential Units Institutional Subsidies

46 Social Housing Rural Housing Farm Workers Incomplete units at various milestones TOTAL Linking performance with budgets Sub-programme expenditure of Programme 3 Housing Development, Implementation and Targets 2012/2013 Final Appropriation Expenditure (Over)/ Under Expenditure Final Appropriation Expenditure R 000 R 000 R 000 R 000 R 000 R 000 (Over)/ Under Expenditure Administration (139) Financial Intervention Incremental Intervention Social And Rental Intervention Rural Intervention (6 916) (12 160) Total Economic Classification Compensation Goods & Services Transfers and Subsidies Current Payment to Transfers and Subsidies Capital Payment for Capital Asset Payments for Financial Assets (199) (91) Total

47 4.4. Programme 4: Housing Asset Management Programme purpose: The purpose of Housing Asset Management is to facilitate assets management. List of sub-programmes and Strategic objectives Housing Assets Management - Number of title deeds handed over to beneficiaries Strategic Objectives Programme Name: Housing Assets Management Strategic objectives Number of title deeds handed over to beneficiaries 2012/2013 Planned Target Deviation from planned target to for Comment on deviations 100% More beneficiaries received their tittles deeds Performance indicators and Annual targets Programme Name: Housing Assets Management Performance indicator Number and percentage of properties transferred Number and percentage of untraceable beneficiaries registered and de-registered 2012/2013 Not applicable (new indicator) Planned Target Deviation from planned target to for Comment on deviations or 100% or 180% or 80% More properties were transferred to beneficiaries during the financial year to clear backlog. 100% 100% 217/500 or 43% 283/500 or 57% Non-submission of beneficiary information by municipalities Non-response by targeted beneficiaries Delays of court processes 44

48 Number and percentage of properties transferred to qualifying beneficiaries through Extended Enhanced Discount Benefit Scheme 0 100% 0 100% Upon investigation it was established that all Extended Enhanced Discount Benefit Scheme were transferred to municipalities prior to 2013/14. Reasons for all deviations Non-submission of beneficiary information by municipalities; Non-response by the targeted beneficiaries; and Delays in court processes. Strategy to overcome areas of under performance Registration of properties upon issuing of completion certificate; Strengthen consumer education programmes with the department; and Establish working relationship with the magistrate courts; Changes to planned targets 45

49 Linking performance with budgets Sub-programme expenditure Housing Asset Management Final Appropriation 2012/2013 Expenditure (Over)/ Under Expenditure Final Appropriation Expenditure (Over)/Under Expenditure R 000 R 000 R 000 R 000 R 000 R 000 Administration Sale and Transfer of Housing Properties Devolution of Housing Properties Housing Properties Maintenance Enhanced Extended Discount Benefit Scheme Total Economic Classification Compensation Goods & Services Transfers and Subsidies Payment to Capital Asset Total

50 5. TRANSFER PAYMENTS 5.1 Transfer payments to public entities Name of Public Entity Mpumalanga Housing Associations Services rendered by the public entity Social housing provides good quality rental accommodation for the upper end of the low income market Amount transferred to the public entity Amount spent by the public entity s of the public entity Good quality rental accommodation provided. 5.2 Transfer payments to all organisations other than public entities The table below reflects the transfer payments made for the period 1 April 2013 to 31 March 2014 Name of transferee Type of organisation Purpose for which the funds were used Did the dept. comply with s 38 (1) (j) of the PFMA Amount transferred (R 000) Amount spent by the entity Reasons for the funds unspent by the entity Steve Tshwete Local Municipality Local Government Construction of 350 units for eradication of Informal Settlements Yes 24,500 Units at various milestones Weather conditions caused delay on the project Emalahleni Local Municipality Local Government Financial assistance for the purchase of the Farm Leeupoort and Tweedam Not applicable 42,050 0 Land transfer processes not finalised Govan Mbeki Local Municipality Local Government Financial assistance for the disposal of stands at Emzinoni Not applicable 31,841 31,841 Victor Khanye Local Municipality Local Government Financial assistance for the disposal of stands at Botleng Not applicable 55,647 55,647 The table below reflects the transfer payments which were budgeted for in the period 1 April 2013 to 31 March 2014, but no transfer payments were made. Name of transferee Purpose for which the funds were to be used Amount budgeted for (R 000) 47 Amount transferred (R 000) Reasons why funds were not transferred

51 6. CONDITIONAL GRANTS 6.1 Conditional grants and earmarked funds paid The table below describes each of the conditional grants and earmarked funds paid by the department. Conditional Grant 1: Department/ Municipality to whom the grant has been transferred Purpose of the grant Expected outputs of the grant outputs achieved Steve Tshwete Local Municipality Upgrading of Informal Settlements 350 units Units at various milestones Amount per amended DORA 25,000 Amount transferred (R 000) 24,500 Reasons if amount as per DORA not transferred Amount spent by the department/ municipality (R 000) Reasons for the funds unspent by the entity Monitoring mechanism by the transferring department A contract was entered into between the Department and the Municipality for 24, Weather conditions caused delay on the project Quarterly non-financial and financial information 48

52 6.2 Conditional grants and earmarked funds received Department who transferred the grant Purpose of the grant Expected outputs of the grant National Department of Human Settlements To provide funding for the creation of sustainable Human Settlements Financial Interventions Incremental housing programmes Social and rental housing Rural housing outputs achieved See report on Performance Information Amount per amended DORA 1,126,096 Amount received (R 000) 1,126,096 Reasons if amount as per DORA was not received N/A Amount spent by the department (R 000) 1,013,077 Reasons for the funds unspent by the entity Late approval of the business plan and the late receipt of cash from the National Department of Human Settlements Reasons for deviations on performance Measures taken to improve performance Monitoring mechanism by the receiving department See report on performance information, financial and non- financial. See report on performance information, financial and non- financial. See report on performance information, financial and non- financial. 49

53 7. CAPITAL INVESTMENT 7.1 Capital investment, maintenance and asset management plan Infrastructure projects New and replacement assets Existing infrastructure assets - Upgrades and additions - Rehabilitation, renovations and refurbishments - Maintenance and repairs Infrastructure transfer Final Appropriation R /2013 Expenditure R 000 (Over)/ Under Expenditure R 000 Final Appropriation R 000 Expenditure R 000 (Over)/Under Expenditure R Current Capital Total The Department had experience challenges in different municipalities such as Bushbuckridge where the Department could not start the project as the result of challenges experienced with exhumation of graves in Thulamahashe. There were also land claims issues which the municipality has requested the department to give it time to resolve the matter. Signing off of compliance certificates in Nkomazi for the electrification project which was completed was delayed by the municipality; hence the payments could not be processed. In Gert Sibande region the projects started very late at Maphepheni, Malayinini and Rustplaas because the consultants has not finalise the plans on time. In the Nkangala region the Department was waiting for the finalisation of the Integrated Housing project at Emakhazeni municipality. In order to remedy the situation, the Department had to facilitate the signing off of compliance certificate and release payments. Negotiations with Bushbuckridge community should have been finalised to start with servicing of sites. Establishment of a consultative process with the consultant for the Gert Sibande region to submit the approved plans. 50

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55 1. INTRODUCTION Commitment by the department to maintain the highest standards of governance is fundamental to the management of public finances and resources. Users want assurance that the department has good governance structures in place to effectively, efficiently and economically utilize the state resources, which is funded by the tax payer. 2. RISK MANAGEMENT The Department has established a Risk Management Unit as per the approved organisational structure. The Risk Management Unit reports to the Accounting Officer. The Department has also established a Risk Management Committee in order to facilitate the implementation of the risk management strategy. Management reports, internal audit reports and risk management reports are used to identify risks. Each manager is responsible for managing risks that fall within their area of responsibility. The risk assessment for the financial year 2013/14 was conducted in March This exercise is intended to assess any possible high-risk areas within the Department. The Department has also developed the risk management strategy (inclusive of the fraud prevention plan) and the risk management policy. 3. FRAUD AND CORRUPTION A fraud prevention plan has been developed and is reviewed as and when a need arises. The plan contains practices, procedures, reports and other mechanisms to monitor and safeguard the assets of the Department. Awareness workshops on fraud prevention as well as whistle blowing mechanisms were also conducted in the department. The internal audit unit monitors from time to time the compliance to these procedures. Reports on these findings are directed to the Accounting Officer. The department does not have an Anti-Corruption Unit. Such cases on suspected fraud and corruption are investigated by the Integrity Management Unit that is located in the Office of the Premier. 4. MINIMISING CONFLICT OF INTEREST The Department has a Supply Chain Management Code of conduct displayed in all departmental offices. The Department is also guided by the Code of Conduct as contained in the Public Service Act. 5. CODE OF CONDUCT The Department has a Supply Chain Management Code of conduct displayed in all departmental offices. The Department is also guided by the Code of Conduct as contained in the Public Service Act. 6. HEALTH SAFETY AND ENVIRONMENTAL ISSUES The Department has a Health and Wellness Programme which provides, among other things Occupational Health Services. The Department has also established an Occupational Health and Safety Committee as required by the Occupational Health and Safety Act. 7. PORTFOLIO COMMITTEES Dates of meetings: 9 May 2013; 5 September 2013; 12 November

56 ISSUES RAISED That the Department should fill in all vacant funded posts by end of June 2013 That the Department should improve on planning by developing SMART strategic objectives, indicators, and targets, and ensure that there is alignment between the Strategic Plan and Annual Performance Plan, going forward That the Department should develop a Human Resource Strategy/Plan and Employment Equity Plan The Department must develop a system and mechanism to monitor contractors. The Department must develop a tool, system to identify deserving beneficiaries for housing units The Department must develop a stakeholder and tools for complaints by the Public especially beneficiaries. HOW THEY WERE HANDLED During the period under review the Department made 24 appointments, see HR oversight report The Department has remarkably made improvements on its Annual Performance Plan of 2014/15 in line with SMART principle, including the alignment of the Strategic Plan and Annual Performance Plan A human resource strategy and employment equity plans were developed The Department has a project management and monitoring system in place, however it needs to be reviewed The Department has developed a beneficiary management which guides the process of selecting beneficiaries The Department has developed a Stakeholder Management Strategy which incorporates which incorporates complaints management mechanisms. This strategy is still in draft form. 8. SCOPA RESOLUTIONS There were no SCOPA resolutions for the financial year 2013/ PRIOR MODIFICATIONS TO AUDIT REPORTS Nature of qualification, disclaimer, adverse opinion and matters of noncompliance Adequate and reliable corroborating evidence could not be provided for 20% of the major variances disclosed in the annual performance report Financial year in which it first arose Progress made in clearing / resolving the matter 2012/13 Budget Committee has been established and one meeting has been held. Reported units are supported by Data sheet signed by Monitor, Inspector and responsible manager. The validation of Portfolio of Evidence and Project verification of 1st, 2nd and 3rd quarters is in progress. Performance Audit by Internal Audit has been concluded and a final report issued. 53

57 Significantly important targets with respect to housing needs, research and planning as well as housing development were materially misstated 2012/13 Budget Committee has been established and one meeting has been held. Reported units are supported by Data sheet signed by Monitor, Inspector and responsible manager. The validation of Portfolio of Evidence and Project verification of 1st, 2nd and 3rd quarters is in progress. Performance Audit by Internal Audit has been concluded and a final report issued. The department did not consider relevant systems for the appointment of contractors for housing construction projects and did not suitably develop indicators and targets during the annual performance process 2012/13 Budget Committee has been established and one meeting has been held. Reported units are supported by Data sheet signed by Monitor, Inspector and responsible manager. The validation of Portfolio of Evidence and Project verification of 1st, 2nd and 3rd quarters is in progress. Performance Audit by Internal Audit has been concluded and a final report issued. Material misstatements of commitments 2012/13 Material misstatements of commitments identified by the auditors in the submitted financial statement were subsequently corrected and the supporting records provided, resulting in the financial statements receiving an unqualified audit opinion As at end of March 2014, 1088 projects with end dates prior to 31 March 2010 have been zero balanced. This amounted to R571,013, The department did not have and maintain an effective and efficient system of internal control regarding performance management Funded vacant posts were not filled within 12 months, as required by Public Service Regulation 1/VII/C 1A.2 Employees were appointed without properly verifying the claims in their applications, in contravention of Public Service Regulation 1/VII/D /13 The department has an approved Policy on Management Performance information 2012/13 26 vacant funded posts have been advertised as at the end of June And a further 33 were advertised as at the end of December Of the 26 posts, 17 appointments have been made, 6 submitted to cabinet, 1 withdrawn and 2 were readvertised. Of the 33 posts, 18 appointments have been made. 2012/13 The agreement has been signed by the Head of Department as well as the official in question. The employment condition and status of the affected official have been reviewed. 54

58 Quarterly performance reports were not submitted within the required timeframe to the Provincial Treasury, the National Treasury and the transferring national officer, as required by section 12(2)(c) of DORA The department did not impose penalties on defaulting contractors or other service providers 2012/13 The 1st quarter, 2nd quarter and 3rd quarter performance reports were submitted to Provincial Treasury on 28 August 2013, 05 November 2013 and 03 February 2014 respectively. 2012/13 The penalty clause could not be invoked since most delays were caused by department through late submission of beneficiaries. The department did not implement effective human resource management to ensure that adequate and sufficiently skilled resources were in place and that performance was monitored 2012/13 There is a Performance Management and Development System and a committee thereof to monitor the performance of officials. The officials are assessed on a quarterly basis. 10. INTERNAL CONTROL UNIT Internal controls are any actions taken by management, the executive authority and other parties to enhance risk management and increase the likelihood that established objectives and goals will be achieved. Management achieves this control by implementing an internal control system encompassing all the policies and procedures adopted by management to assist the department in achieving its objectives. The department does not have an internal control Unit, however, the shared internal audit function located within the Office of the Premier provides Management with assurance on the adequacy and effectiveness of internal controls. Based on the internal audit work performed for the department, we can report that there has been improvement in the general system of internal control for the period under review. Where weaknesses were identified, these were communicated to Management, who committed itself and developed action plans to remedy the situation and strengthen the internal control environment. This commitment resulted in significant number of management action plans being successfully implemented. 11. INTERNAL AUDIT AND AUDIT COMMITTEES The department has not established its own internal audit function and audit committee. However, based on previous determination, instead it utilizes the services of the shared Internal Audit function and shared Audit Committee located within the Office of the Premier. The shared Internal Audit function operated within an approved Internal Audit Charter and in accordance with the requirements of the PFMA, Treasury Regulations and the Standards set for the Professional Practice of Internal Auditors by the Institute of Internal Auditors. The shared Internal Audit function assists the Department achieve its objectives through providing an independent objective assurance to Management regarding the adequacy and effectiveness of risk management, control and governance processes. The following audit assignments were conducted and completed by the shared Internal Audit function for the year under review: Quarterly Performance Information Review of Interim Financial Statements Revenue Management Performance Information System Management Performance Assessment Tool Information Technology General & Application Controls Information Technology Governance Review Follow-up Internal Audit and External Auditors Reported Audit Findings The shared Audit Committee comprises of external non official members and operates within an approved Audit Committee Charter and in accordance with the requirements set by the PFMA and its Treasury Regulations. 55

59 The role of the shared Audit Committee is to assist the Accounting Officer and Management of the department discharge their duties regarding risk management; financial information; internal controls and governance processes. In this regard, the shared Audit Committee independently oversees the operations and the activities of that department. The shared Audit Committee has direct and unobstructed lines of communication to the Accounting Officer, Senior Management, the relevant treasury, shared internal audit and external audit. Attendance of audit committee meetings by audit committee members In accordance with section 77(b) of the PFMA, an Audit Committee must meet at least twice a year. During the financial year under review, the shared Audit Committee held five (5) meetings and these were attended as follows: Name Qualifications Internal or External Ms. G Deiner Chairperson Ms. T. Njozela Mr. T. Kgokolo Mr. X. Khumalo Mr. Z. Fihlani Adv G Khoza B.A. Degree HDip in Education BCompt MBA BCompt Honours BCom CA(SA) BCompt Honours BCom (Accounting) CA(SA) BCom Honours (Accounting) BCom M.Comm (Tax) HDip in Tax Law BCompt Honours (CTA) B.Com (Accounting) HDip in Tax Law LLB BProc Date appointed Date Resigned No of meetings attended External 01 Jun 2009 N/A 5 External 01 Oct 2012 N/A 4 External 01 Oct Jan External 01 Oct 2012 N/A 2 External 01 Oct Dec External 01 Mar 2014 N/A 1 The members of the shared Audit Committee continued to meet with the Accounting Officer, Senior Management of the Department, the shared Internal Audit and External Audit collectively and individually (as and when the need arised) to address matters related to risk management, control and governance processes as well as challenges facing the Department. All the members of the shared Audit Committee are independent, non-official members and have been appointed from outside the public service. 12. AUDIT COMMITTEE REPORT We are pleased to present our report for the Department of Human Settlements for the financial year ended 31 March Audit Committee Responsibility The Audit Committee reports that it has complied with its responsibilities arising from Section 38 (1) (a) (ii) of the Public Finance Management Act and Treasury Regulation The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein. Independence of the Audit Committee The Audit Committee is independent of Management in the execution of its duties. All the members of the Audit Committee have been appointed from outside the public service pursuant to section 77 (a) (i) of the PFMA. The qualifications of the members and details of their attendance at meetings is included in Governance Section of the Annual Report above. 56

60 As reported in the Governance section, it was unfortunate that Mr T. Kgokolo, who was an active member of the Committee, resigned as a member in January Adv. G. Khoza was appointed in March 2014 as a replacement of Mr Z Fihlani, whose service was prematurely terminated. The members remain committed to providing oversight and advice of a high standard mmittee, resigned as a member in January Adv. G. Khoza was appointed in March 2014 as a replacement of Mr Z Fihlani, whose service was prematurely terminated. The members remain committed to providing oversight and advice of a high standard The Effectiveness of Internal Control In line with the provisions of the PFMA and King Report on Corporate Governance, Internal Audit provided the Audit Committee and Management with assurance whether the system of internal controls is adequate and effective. Our review of the findings of the Internal Audit work, which was based on the risk assessments conducted in the department revealed certain weaknesses, which were then raised with the Department. The following internal audit work was completed during the year under review: Quarterly Performance Information Performance Information System Review of Interim Financial Statements Revenue Management Management Performance Assessment Tool Information Technology General & Application Controls Information Technology Governance Review Follow-up Internal Audit and External Auditors Reported Audit Findings The following were areas of concern: Performance indicators which do not meet the SMART principles Slow progress and delay in implementation of agreed management corrective action plans to address identified control weaknesses Slow progress with implementation of Phase 1 of the Corporate Governance of Information and Communication Technology Policy Framework in the South African Public Service (CGICTPF) developed by the National Department of Public Service and Administration as evidenced by the following: - Lack of Information Technology Strategic Plan - Ineffective Information Technology Steering Committee - Inadequate communication of Information Systems Security Policy within the Department - Business Continuity Plan not tested and formally implemented In-Year Management and Quarterly Report We have reviewed the quarterly reports prepared and issued by the Department to the Treasury as is required by the PFMA. We are satisfied with the content and quality thereof. Evaluation of Financial Statements We have reviewed the draft and unaudited annual financial statements prepared by the Department. In this regard, the Audit Committee has: reviewed and discussed the unaudited annual financial statements to be included in the annual report, with the Accounting Officer and Management reviewed whether there are any changes in accounting policies and practices reviewed the department s compliance with legal and regulatory provisions reviewed the information on predetermined objectives to be included in the annual report reviewed the quality and timeliness of the financial information availed to the Audit Committee for oversight purposes during the year such as interim financial statements. Internal Audit The Audit Committee is satisfied that the internal audit activity is operating reasonably effectively and that it has addressed the risks pertinent to the Department in its audits. Ms Gaylene Deiner Chairperson of the Shared Audit Committee Office of the Premier Date: 30 May

61 58

62 Report of the auditor-general to the Mpumalanga Provincial Legislature on vote no.13: Department of Human Settlements Report of the financial statements Introduction 1. I have audited the financial statements of the Department of Human Settlements set out on pages 63 to 120 which comprise the appropriation statement, the statement of financial position as at 31 March 2014, the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information. Accounting officer s responsibility for the financial statements 2. The accounting officer is responsible for the preparation and fair presentation of these financial statements in accordance with the Modified Cash Standard as prescribed by the National Treasury and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and the Division of Revenue Act of South Africa, 2013 (Act No. 2 of 2013) (DoRA), and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor-general s responsibility 3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and Internal Standards on Auditing. Those standards require that I comply with ethical requirements, and a plan to perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion 6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Department of Human Settlements as at 31 March 2014 and its financial performance and cash flows for the year ended, in accordance with the Modified Cash Standard as prescribed by the National Treasury and the requirements of the PFMA and DoRA. Emphasis of matter 7. I draw attention to the matter below. My opinion is not modified in respect of this matter. Material underspending of the budget 8. The department materially underspent its budget. At the date of this report, underspending amounted to R The underspending related to household development projects that were delayed. Report on other legal regulatory requirements 9. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was 59

63 to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters. Predetermined objectives 10. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programme presented in the annual performance report of the department for the year ended 31 March 2014: Programme 3: housing development, on pages 31 to I evaluated the reported performance information against the overall criteria of usefulness and reliability. 12. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury s annual reporting principles and whether the reported performance was consistent with the planned programme. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measureable, time bound and relevant, as required by the National Treasury s Framework for managing programme performance information (FMPPI). 13. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete. 14. The material findings in respect of the selected programme are as follows: Programme 3: Housing Development Usefulness of reported performance information Measurability of indicators and targets Performance targets not specific and indicators not well defined 15. The FMPPI requires the following: Performance targets must be specific in clearly identifying the nature and required level of performance. A total of 21% of the targets were not specific. Performance indicators must be well defined by having clear data definitions so that data can be collected consistently and is easy to understand and use. A total of 21% of the indicators were not well defined. This was because management did not adhere to the requirements of the FMPPI, and technical indicator descriptions did not exist to accurately measure and record performance information. Reliability of reported performance information 16. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Adequate and reliable corroborating evidence could not be provided for 21% of the targets to assess the reliability of the reported performance information. The department s records did not permit the application of alternative audit procedures. This was because of technical indicator descriptions did not exist to accurately measure and record performance information. Additional matter 17. I draw attention to the following matter: of planned targets 18. Refer to the annual report on pages 13 to 52 and 19 to 45 for information on the achievement of the planned targets for the year. This information should be considered in the context of the material findings on the usefulness and reliability of the reported performance information for the selected programme information for the selected programme reported in paragraphs 15 and 16 of this report. 60

64 Compliance with legislation 19. I performed procedures to obtain evidence that the department had complied with applicable legislation regarding financial matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows: Human resource management and compensation 20. Funded vacant posts were not filled within 12 months, as required by public service regulation 1/VII/C.1A Employees were appointed without properly verifying claims in their applications, in contravention of Public Service Regulation 1/VII/D.8. Service delivery human settlements 22. The department did not ensure that subsidies to beneficiaries were approved and paid in compliance with the specified entry requirements of the individual subsidy programme, as required by paragraph 4, part 3A of the Housing code issued in terms of section 4 of the Housing Act of South Africa, 1997 (Act No. 107 of 1997). 23. The department did not impose penalties on defaulting contractors. 24. The quality of houses that were built was not in accordance with specific requirements. Internal control 25. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the annual performance report and the findings on non-compliance with legislation included in this report. Leadership 26. The department did not implement effective human resource management to ensure that adequate and sufficiently skilled resources were in place and that performance was monitored. 27. Oversight responsibility was not exercised regarding performance reporting and compliance as well as related internal controls. Financial and performance management 28. The department did not prepare regular, accurate and complete performance reports that were supported and evidenced by reliable information. 29. Management at the appropriate level did not ensure that compliance with applicable laws and regulations was adequately reviewed and monitored throughout the year. Mbombela 31 July

65 ANNUAL FINANCIAL STATEMENTS 62

66 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 APPROPRIATION STATEMENT Adjusted Appropriation Shifting of Funds Appropriation per programme 2013/ /13 Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation Expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R Administration Current payment 101,588 (117) , , % 85,218 82,375 Transfers and subsidies % Payment for capital assets 7, ,952 6,715 1, % 4,240 4,078 Payment for financial assets % Housing Needs, research and Planning Current payment 31,494 (18) 2,173 33,649 33, % 37,685 31,272 Transfers and subsidies % Payment for capital assets 18, ,183 6,862 11, % 7,348 3, Housing Development, Planning and Targets Current payment 50,236 (24) (2,763) 47,449 47, % 57,427 49,704 Transfers and subsidies 1,126, ,126,151 1,015, , % 980, ,492 Payment for capital assets 1,200 (84) - 1,116 1, % - - Payment for financial assets % Housing Asset Management Current payment Transfers and subsidies 4, ,261 4, % 5,567 5,567 Payment for capital assets Subtotal 1,341, ,341,012 1,217, , % 1,178,092 1,145,125 Statutory Appropriation Current payment 1, ,682 1,712 (30) 101.8% 1,652 1,695 Transfers and subsidies Payment for capital assets TOTAL 1,342, ,342,694 1,218, , % 1,179,744 1,146,820 63

67 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Final Appropriation 2013/ /13 Expenditure Final Appropriation Expenditure TOTAL (brought forward) 1,342,694 1,218,995 1,179,744 1,146,820 Reconciliation with statement of financial performance ADD Departmental receipts ,712 Aid assistance - - amounts per statement of financial performance (total revenue) 1,346,245 1,183,456 ADD Aid assistance Prior year unauthorised expenditure approved without funding amounts per statement of financial performance (total expenditure) 1,218,995 1,146,820 64

68 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Current payments Compensation of employees Adjusted Appropriation Shifting of Funds Appropriation per economic classification 2013/ /13 Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R ,119 (3,031) - 137, , % 138, ,691 Goods and services 44,881 2,872-47,753 47, % 42,679 39,355 Transfers and subsidies Provinces and municipalities Departmental agencies and accounts Public corporations and private enterprises 25, , , , % , ,261 4, % 5,567 5,567 Households 1,101,151 (129,492) - 971, , , % 981, ,030 Payments for capital assets Buildings and other fixed structures 16, ,483 5,222 11, % 7,498 3,179 Machinery and equipment 10,777 (858) - 9,919 8,562 1, % 4,090 3,980 Intangible assets % - - Payments for financial assets % - - Total 1,342, ,342,694 1,218, , % 1,179,744 1,146,820 65

69 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Statutory Appropriation 2013/ /13 Direct changes against the National/ Provincial Revenue Fund Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Member of executive committee / parliamentary officers 1, ,682 1,712 (30) 101.8% 1,652 1,695 Total 1, ,682 1,712 (30) 101.8% 1,652 1,695 Statutory Appropriation per economic classification 2013/ /13 Program 1 Per Economic classification Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Current payments Compensation of employees 1, ,682 1,712 (30) 101.8% 1,652 1,695 Total 1, ,682 1,712 (30) 101.8% 1,652 1,695 66

70 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Detail per programme 1 - ADMINISTRATION 2013/ /13 Detail per sub-programme Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R Office of the MEC Current payment 6, ,365 4,191 2, % 4,214 4, Corporate Services Current payment 95,285 (176) ,696 97,832 (2,136) 102.2% 81,004 78,317 Transfers and subsidies % Payment for capital assets 7, ,952 6,715 1, % 4,240 4,078 Payment for financial assets % - - Total 109, , ,802 1, % 89,492 86,899 67

71 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March / /13 Programme 1 per Economic classification Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Current payments Compensation of employees 70,090 (1,650) (26) 68,414 68, % 54,621 54,621 Goods and services 33,180 1, ,329 35, % 31,832 29,449 Transfers and subsidies to: Provinces and municipalities % Departmental agencies and accounts Households % Payment for capital assets Buildings and other fixed structures Machinery and equipment 7,877 (774) - 7,103 5,866 1, % 4,090 3,980 Intangible assets % - - Payments for financial assets % - - Total 111, , ,514 1, % 91,144 88,594 68

72 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Detail per programme 2 HOUSING NEEDS, RESEARCH AND PLANNING 2013/ /13 Detail per sub-programme Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R Administration Current payment 26,584-2,241 28,825 29,995 (1,170) 104.1% 32,877 28,108 Transfers and subsidies Payment for capital assets 18, ,183 6,862 11, % 7,348 3, Policy Current payment 1,127 - (31) 1, % Transfers and subsidies Planning Current payment 1, ,871 1, % 1,922 1,219 Transfers and subsidies Research Current payment 1,912 (18) (37) 1,857 1, % 2,036 1,455 Transfers and subsidies % Total 49,677-2,173 51,850 40,527 11, % 45,143 34,463 69

73 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March / /13 Programme 2 per Economic classification Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Current payments Compensation of employees 25,520-2,789 28,309 28, % 33,318 26,905 Goods and services 5,974 (18) (616) 5,340 5, % 4,367 4,367 Transfers and subsidies to: Households % Payment for capital assets Buildings and other fixed structures 16, ,483 5,222 11, % 7,348 3,081 Machinery & equipment 1, ,700 1, % - - Total 49,677-2,173 51,850 40,527 11, % 45,143 34,463 70

74 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Detail per sub-programme 3.1 Administration Detail per programme 3 HOUSING DEVELOPMENT, IMPLEMENTATION, PLANNING AND TARGETS Adjusted Appropriation Shifting of Funds 2013/ /13 Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Current payment 50,236 (24) (2,763) 47,449 47, % 57,427 49,704 Transfers and subsidies (199) 461.8% 15,336 15,427 Payment for capital assets 1,200 (84) - 1,116 1, % - - Payment for financial assets % Financial Interventions Current payment Transfers and subsidies 152, , ,520 14, % 140, , Incremental Interventions Current payment Transfers and subsidies 774, , ,155 91, % 700, , Social and Rental Interventions Current payment Transfers and subsidies 165, , ,997 (6,916) 104.2% 85,100 97, Rural Interventions Current payment Transfers and subsidies 34, ,049 22,154 11, % 39,500 26,983 Total 1,177,587 - (2,763) 1,174,824 1,063, , % 1,037,890 1,018,196 71

75 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March / /13 Programme 3 per Economic classification Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Current payments Compensation of employees 44,509 (1,381) (2,763) 40,365 40, % 50,947 44,165 Goods and services 5,727 1,357-7,084 7, % 6,480 5,539 Transfers and subsidies to: Provinces and Municipalities 25, , , , % - - Households 1,101,151 (129,538) - 971, , , % 980, ,492 Payment for capital assets Machinery & equipment 1,200 (84) - 1,116 1, % - - Payment for financial assets % - - Total 1,177,587 - (2,763) 1,174,824 1,063, , % 1,037,890 1,018,196 72

76 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2014 Detail per programme 4 HOUSING ASSET MANAGEMENT 2013/ /13 Detail per sub-programme Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R Administration Current payment Transfers and subsidies 4, ,261 4, % 5,567 5,567 Total 4, ,261 4, % 5,567 5,567 73

77 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March / /13 Programme 4 per Economic classification Adjusted Appropriation Shifting of Funds Virement Final Appropriation Expenditure Variance Expenditure as % of final appropriation Final Appropriation expenditure R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Transfers and subsidies to: Public Corporations and Private Enterprises 4, ,261 4, % 5,567 5,567 Total 4, ,261 4, % 5,567 5,567 74

78 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March Detail of transfers and subsidies as per Appropriation Act (after Virement): Detail of these transactions can be viewed in the note on Transfers and subsidies, disclosure notes and Annexure 1 (A, B, and C) to the Annual Financial Statements. 2. Detail of specifically and exclusively appropriated amounts voted (after Virement): Detail of these transactions can be viewed in note 1 (Annual Appropriation) to the Annual Financial Statements. 3. Detail on payments for financial assets Detail of these transactions per programme can be viewed in the note on Payments for financial assets to the Annual Financial Statements. 4. Explanations of material variances from Amounts Voted (after Virement): 4.1 Per programme Final Appropriation Expenditure Variance R 000 Variance as a % of Final Appropriation Administration 111, ,514 1,245 1% Late delivery of ordered Government owned vehicle (Staging truck) contributed to the under expenditure of R1,275 million in Programme 1: Administration. Roll over application has been submitted to the Provincial Treasury. Housing Needs, Research and Planning 51,850 40,527 11,323 22% Bulk Water Reticulation project at Mhondo Local Municipality which was commissioned during the last quarter of the financial year resulted in an under expenditure of R11,323 million in Programme 2: Housing Needs, Research and Planning. Roll over application has been submitted to the Provincial Treasury. Housing Development, Implementation, Planning and Targets 1,174,824 1,063, ,131 9% The under expenditure of R111,131 million in Programme 3: Housing Development Implementation, Planning and Targets can be attributed to the withholding of the Provincial Conditional Grant (Human Settlements Development Grant) by National Human Settlements during the first quarter of the financial year under review. Non availability of municipal bulk infrastructure, inadequate personnel, lack of work and financial capacity as well as poor performance by some of the contractors also contributed to the under expenditure. Roll over application has been submitted to the Provincial Treasury. Housing Asset Management 4,261 4,261-0% 75

79 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March Per economic classification Current payments Final Appropriation Expenditure Variance Variance as a % of Final Appropriation R 000 R 000 R 000 R 000 Compensation of employees 137, , % Goods and services 47,753 47, % Transfers and subsidies Provinces and municipalities 154, , % Departmental agencies and accounts Public corporations and private enterprises 4,261 4,261-0% Households 971, , ,571 11% Payments for capital assets Buildings and other fixed structures 16,483 5,222 11,261 68% Machinery and equipment 9,919 8,562 1,357 14% Intangible assets % Payments for Financial Assets % 4.3 Per conditional grant Human Settlements Human Settlements Development Grant Final Appropriation Expenditure Variance R 000 R 000 R 000 Variance as a % of Final Appropriation 1,126,096 1,014, ,270 10% The under expenditure of R111,131 million in Programme 3: Housing Development Implementation, Planning and Targets can be attributed to the withholding of the Provincial Conditional Grant (Human Settlements Development Grant) by National Human Settlements during the first quarter of the financial year under review. Non availability of municipal bulk infrastructure, inadequate personnel, lack of work and financial capacity as well as poor performance by some of the contractors also contributed to the under expenditure. Roll over application has been submitted to the Provincial Treasury. 76

80 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF FINANCIAL PERFORMANCE for the year ended 31 March 2014 REVENUE Note 2013/ /13 R 000 R 000 Annual appropriation 1 1,341,012 1,178,092 Statutory appropriation 2 1,682 1,652 Departmental revenue 3 3,551 3,712 TOTAL REVENUE 1,346,245 1,183,456 EXPENDITURE Current expenditure Compensation of employees 4 137, ,691 Goods and services 5 47,746 39,355 Total current expenditure 184, ,046 Transfers and subsidies Transfers and subsidies 7 1,019, ,615 Total transfers and subsidies 1,019, ,615 Expenditure for capital assets Tangible assets 8 13,784 7,159 Intangible assets Total expenditure for capital assets 14,633 7,159 Payments for financial assets TOTAL EXPENDITURE 1,218,995 1,146,820 SURPLUS/(DEFICIT) FOR THE YEAR 127,250 36,636 77

81 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF FINANCIAL PERFORMANCE for the year ended 31 March 2014 Reconciliation of Net Surplus/(Deficit) for the year Voted funds 123,699 32,924 Annual appropriation 12,429 20,862 Conditional grants 111,270 12,062 Unconditional grants - - Departmental revenue and NRF Receipts 12 3,551 3,712 SURPLUS/(DEFICIT) FOR THE YEAR 127,250 36,636 78

82 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF FINANCIAL POSITION for the year ended 31 March 2014 Note 2013/ /13 ASSETS R 000 R 000 Current assets 124,304 33,344 Cash and cash equivalents 9 124,035 32,963 Receivables TOTAL ASSETS 124,304 33,344 LIABILITIES Current liabilities 124,253 33,313 Voted funds to be surrendered to the Revenue Fund ,699 32,924 Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund Payables TOTAL LIABILITIES 124,253 33,313 NET ASSETS Note 2013/ /13 R 000 R 000 Represented by: Recoverable revenue TOTAL

83 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF CHANGES IN NET ASSETS for the year ended 31 March 2014 Note 2013/ /13 R 000 R 000 Recoverable revenue Opening balance Transfers: 20 (6) Irrecoverable amounts written off 6.1 (9) - Debts recovered (included in departmental receipts) (31) (6) Debts raised 60 - Closing balance TOTAL

84 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF CASH FLOW for the year ended 31 March 2014 CASH FLOWS FROM OPERATING ACTIVITIES Note 2013/ /13 R 000 R 000 Receipts 1,346,183 1,183,429 Annual appropriated funds received 1.1 1,341,012 1,178,092 Statutory appropriated funds received 2 1,682 1,652 Departmental revenue received 3 1,533 1,678 Interest received 3.2 1,956 2,007 Net (increase)/decrease in working capital 191 (183) Surrendered to Revenue Fund (36,389) (8,275) Current payments (184,831) (165,046) Payments for financial assets (120) - Transfers and subsidies paid (1,019,411) (974,615) Net cash flow available from operating activities ,623 35,310 CASH FLOWS FROM INVESTING ACTIVITIES Payments for capital assets 8 (14,633) (7,159) Proceeds from sale of capital assets Net cash flows from investing activities (14,571) (7,132) CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in net assets 20 (6) Net cash flows from financing activities 20 (6) Net increase/(decrease) in cash and cash equivalents 91,072 28,172 Cash and cash equivalents at beginning of period 32,963 4,791 Cash and cash equivalents at end of period ,035 32,963 81

85 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March 2014 Summary of significant accounting policies The financial statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated. The historical cost convention has been used, except where otherwise indicated. Management has used assessments and estimates in preparing the annual financial statements. These are based on the best information available at the time of preparation. Where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial statements and to comply with the statutory requirements of the Public Finance Management Act (PFMA), Act 1 of 1999 (as amended by Act 29 of 1999), and the Treasury Regulations issued in terms of the PFMA and the annual Division of Revenue Act. 1 Basis of preparation The financial statements have been prepared in accordance with the Modified Cash Standard. 2 Going concern The financial statements have been prepared on a going concern basis. 3 Presentation currency Amounts have been presented in the currency of the South African Rand (R) which is also the functional currency of the department. 4 Rounding Unless otherwise stated financial figures have been rounded to the nearest one thousand Rand (R 000). 5 Foreign currency translation Cash flows arising from foreign currency transactions are translated into South African Rands using the exchange rates prevailing at the date of payment / receipt. 6 Current year comparison with budget A comparison between the approved, final budget and actual amounts for each programme and economic classification is included in the appropriation statement. 7 Revenue 7.1 Appropriated funds Appropriated funds comprises of departmental allocations as well as direct charges against the revenue fund (i.e. statutory appropriation). Appropriated funds are recognised in the statement of financial performance on the date the appropriation becomes effective. Adjustments made in terms of the adjustments budget process are recognised in the statement of financial performance on the date the adjustments become effective. The net amount of any appropriated funds due to / from the relevant revenue fund at the reporting date is recognised as a payable / receivable in the statement of financial position. 7.2 Departmental revenue Departmental revenue is recognised in the statement of financial performance when received and is subsequently paid into the relevant revenue fund, unless stated otherwise. Any amount owing to the relevant revenue fund at the reporting date is recognised as a payable in the statement of financial position. 82

86 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March Accrued departmental revenue Accruals in respect of departmental revenue (excluding tax revenue) are recorded in the notes to the financial statements when: it is probable that the economic benefits or service potential associated with the transaction will flow to the department; and the amount of revenue can be measured reliably. The accrued revenue is measured at the fair value of the consideration receivable. Accrued tax revenue (and related interest and / penalties) is measured at amounts receivable from collecting agents. 8 Expenditure 8.1 Compensation of employees Salaries and wages Salaries and wages are recognised in the statement of financial performance on the date of payment Social contributions Social contributions made by the department in respect of current employees are recognised in the statement of financial performance on the date of payment. Social contributions made by the department in respect of ex-employees are classified as transfers to households in the statement of financial performance on the date of payment. 8.2 Other expenditure Other expenditure (such as goods and services, transfers and subsidies and payments for capital assets) is recognised in the statement of financial performance on the date of payment. The expense is classified as a capital expense if the total consideration paid is more than the capitalisation threshold. 8.3 Accrued expenditure payable Accrued expenditure payable is recorded in the notes to the financial statements when the goods are received or, in the case of services, when they are rendered to the department. Accrued expenditure payable is measured at cost. 8.4 Leases Operating leases Operating lease payments made during the reporting period are recognised as current expenditure in the statement of financial performance on the date of payment. The operating lease commitments are recorded in the notes to the financial statements Finance leases Finance lease payments made during the reporting period are recognised as capital expenditure in the statement of financial performance on the date of payment. The finance lease commitments are recorded in the notes to the financial statements and are not apportioned between the capital and interest portions. Finance lease assets acquired at the end of the lease term are recorded and measured at the lower of: cost, being the fair value of the asset; or the sum of the minimum lease payments made, including any payments made to acquire ownership at the end of the lease term, excluding interest. 83

87 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March Aid Assistance 9.1 Aid assistance received Aid assistance received in cash is recognised in the statement of financial performance when received. Inkind aid assistance is recorded in the notes to the financial statements on the date of receipt and is measured at fair value. Aid assistance not spent for the intended purpose and any unutilised funds from aid assistance that are required to be refunded to the donor are recognised as a payable in the statement of financial position. 9.2 Aid assistance paid Aid assistance paid is recognised in the statement of financial performance on the date of payment. Aid assistance payments made prior to the receipt of funds are recognised as a receivable in the statement of financial position. 10 Cash and cash equivalents Cash and cash equivalents are stated at cost in the statement of financial position. Bank overdrafts are shown separately on the face of the statement of financial position. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held, other short-term highly liquid investments and bank overdrafts. 11 Prepayments and advances Prepayments and advances are recognised in the statement of financial position when the department receives or disburses the cash. Prepayments and advances are initially and subsequently measured at cost. 12 Loans and receivables Loans and receivables are recognised in the statement of financial position at cost plus accrued interest, where interest is charged, less amounts already settled or written-off. 13 Investments Investments are recognised in the statement of financial position at cost. 14 Impairment of financial assets Where there is an indication of impairment of a financial asset, an estimation of the reduction in the recorded carrying value, to reflect the best estimate of the amount of the future economic benefits expected to be received from that asset, is recorded in the notes to the financial statements. 15 Payables Loans and payables are recognised in the statement of financial position at cost. 84

88 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March Capital Assets 16.1 Immovable capital assets Immovable capital assets are initially recorded in the notes to the financial statements at cost. Immovable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of immovable capital assets cannot be determined accurately, the immovable capital assets are measured at R1 unless the fair value of the asset has been reliably estimated, in which case the fair value is used. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1. Immovable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the immovable asset is recorded by another department in which case the completed project costs are transferred to that department Movable capital assets Movable capital assets are initially recorded in the notes to the financial statements at cost. Movable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of movable capital assets cannot be determined accurately, the movable capital assets are measured at fair value and where fair value cannot be determined; the movable assets are measured at R1. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1. Movable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the movable asset is recorded by another department/entity in which case the completed project costs are transferred to that department Intangible assets Intangible assets are initially recorded in the notes to the financial statements at cost. Intangible assets acquired through a non-exchange transaction are measured at fair value as at the date of acquisition. Internally generated intangible assets are recorded in the notes to the financial statements when the department commences the development phase of the project. Where the cost of intangible assets cannot be determined accurately, the intangible capital assets are measured at fair value and where fair value cannot be determined; the intangible assets are measured at R1. All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1. Intangible assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the intangible asset is recorded by another department/entity in which case the completed project costs are transferred to that department. 17 Provisions and Contingents 17.1 Provisions Provisions are recorded in the notes to the financial statements when there is a present legal or constructive obligation to forfeit economic benefits as a result of events in the past and it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate of the obligation can be made. The provision is measured as the best estimate of the funds required to settle the present obligation at the reporting date. 85

89 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March Contingent liabilities Contingent liabilities are recorded in the notes to the financial statements when there is a possible obligation that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the department or when there is a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured reliably 17.3 Contingent assets Contingent assets are recorded in the notes to the financial statements when a possible asset arises from past events, and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not within the control of the department 17.4 Commitments Commitments are recorded at cost in the notes to the financial statements when there is a contractual arrangement or an approval by management in a manner that raises a valid expectation that the department will discharge its responsibilities thereby incurring future expenditure that will result in the outflow of cash 18 Unauthorised expenditure Unauthorised expenditure is recognised in the statement of financial position until such time as the expenditure is either: approved by Parliament or the Provincial Legislature with funding and the related funds are received; or approved by Parliament or the Provincial Legislature without funding and is written off against the appropriation in the statement of financial performance; or transferred to receivables for recovery. Unauthorised expenditure is measured at the amount of the confirmed unauthorised expenditure. 19 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the total value of the fruitless and or wasteful expenditure incurred. Fruitless and wasteful expenditure is removed from the notes to the financial statements when it is resolved or transferred to receivables for recovery. Fruitless and wasteful expenditure receivables are measured at the amount that is expected to be recoverable and are de-recognised when settled or subsequently written-off as irrecoverable. Irregular expenditure Irregular expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the value of the irregular expenditure incurred unless it is impracticable to determine, in which case reasons therefor are provided in the note. Irregular expenditure is removed from the note when it is either condoned by the relevant authority, transferred to receivables for recovery or not condoned and is not recoverable. Irregular expenditure receivables are measured at the amount that is expected to be recoverable and are derecognised when settled or subsequently written-off as irrecoverable. 21 Changes in accounting estimates A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors. The effect of a change in an accounting estimate shall be recognised prospectively. 86

90 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ACCOUNTING POLICIES for the year ended 31 March Prior period errors Prior period errors are omissions from, and misstatements in, the department s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that: a) was available when financial statements for those periods were authorised for issue; and b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud. Prior year errors are therefore corrected retrospectively 23 Non-adjusting events after the reporting date Events after the reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified: a. those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and b. those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date). 24 Agent-Principal arrangements A department is acting as a principal when it has the power to exercise beneficial control over an activity. A department has beneficial control when it has both the power to direct the activity, and the ability to benefit from that power. 87

91 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Annual Appropriation 1.1 Annual Appropriation Included are funds appropriated in terms of the Appropriation Act (and the Adjustments Appropriation Act) for National Departments (Voted funds) and Provincial Departments: 2013/ /13 Final Appropriation Funds Received Funds not requested/ not received Appropriation received R 000 R 000 R 000 R 000 Administration 110, ,077-89,492 Housing Needs, Research and Planning Housing Development, Implementation, Planning and Targets 51,850 51,850-45,143 1,174,824 1,174,824-1,037,890 Housing Asset Management 4,261 4,261-5,567 Total 1,341,012 1,341,012-1,178, Conditional grants Note 2013/ /13 R 000 R 000 Total grants received 30 1,126, , Statutory Appropriation 2013/ /13 R 000 R 000 Member of executive committee/parliamentary officers 1,682 1,652 Total 1,682 1,652 Statutory Appropriation received 1,682 1,652 88

92 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Departmental revenue Note 2013/ /13 R 000 R 000 Tax revenue Sales of goods and services other than capital assets Interest, dividends and rent on land 3.2 1,956 2,007 Sales of capital assets Transactions in financial assets and liabilities 3.4 1,430 1,498 Total revenue collected 3,551 3,712 Less: Own revenue included in appropriation Departmental revenue collected 3,551 3, Sales of goods and services other than capital assets Note 2013/ /13 3 R 000 R 000 Sales of goods and services produced by the department Sales by market establishment Total Interest, dividends and rent on land Note 2013/ /13 3 R 000 R 000 Interest 1,956 2,007 Total 1,956 2, Sale of capital assets Note 2013/ /13 3 R 000 R 000 Tangible assets Machinery and equipment Total Transactions in financial assets and liabilities Note 2013/ /13 3 R 000 R 000 Receivables - 1,498 Other Receipts including Recoverable Revenue 1,430 - Total 1,430 1,498 89

93 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Compensation of employees 4.1 Salaries Note 2013/ /13 R 000 R 000 Basic salary 92,984 84,935 Performance award 1,750 2,446 Service Based Compensative/circumstantial 3,684 3,824 Other non-pensionable allowances 18,297 17,506 Total 116, , Social contributions Note 2013/ /13 R 000 R 000 Employer contributions Pension 14,463 11,118 Medical 5,767 5,742 Bargaining council Total 20,252 16,880 Total compensation of employees 137, ,691 Average number of employees

94 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Goods and services Note 2013/ /13 R 000 R 000 Administrative fees Advertising Minor assets Catering Communication 4,036 3,892 Computer services Consultants, contractors and agency/outsourced services 5.3 1, Audit cost external 5.4 4,595 3,332 Fleet services 4,570 4,170 Consumables 5.5 2,800 2,160 Operating leases 5,010 6,338 Property payments 5.6 3,205 2,257 Travel and subsistence ,878 12,815 Venues and facilities Training and development 1, Other operating expenditure ,260 Total 47,746 39, Minor assets Note 2013/ /13 5 R 000 R 000 Tangible assets Machinery and equipment Total Computer services Note 2013/ /13 5 R 000 R 000 SITA computer services External computer service providers 1 - Total Consultants, contractors and agency/outsourced services Note 2013/ /13 5 R 000 R 000 Business and advisory services Legal costs Contractors Total 1,

95 5.4 Audit cost External Note 2013/ /13 5 R 000 R 000 Regularity audits 4,595 3,332 Total 4,595 3, Consumables DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 Note 2013/ /13 5 R 000 R 000 Consumable supplies Uniform and clothing Household supplies Building material and supplies 17 - Communication accessories IT consumables Other consumables - 63 Stationery, printing and office supplies 2,212 1,536 Total 2,800 2, Property payments Note 2013/ /13 5 R 000 R 000 Municipal services 2,316 1,798 Property maintenance and repairs Other Total 3,205 2, Travel and subsistence Note 2013/ /13 5 R 000 R 000 Local 17,817 12,712 Foreign Total 17,878 12, Other operating expenditure Note 2013/ /13 5 R 000 R 000 Professional bodies, membership and subscription fees 21 8 Resettlement costs Other Total 754 1,260 92

96 6. Payments for financial asset Note 2013/ /13 R 000 R 000 Debts written off Total Debts written off DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 Note 2013/ /13 6 R 000 R 000 Recoverable revenue written off Ex-employees debtors 9 - Total 9 - Other debt written off Suppliers 84 - Ex-employees debtors 27 - Total Total debt written off Transfers and subsidies 2013/ /13 R 000 R 000 Note Provinces and municipalities Annex 1A 154,038 - Departmental agencies and accounts Annex 1B Public corporations and private enterprises Annex 1C 4,261 5,567 Households Annex 1D 861, ,030 Total 1,019, , Expenditure for capital assets Note 2013/ /13 R 000 R 000 Tangible assets 13,784 7,159 Buildings and other fixed structures 27 5,222 3,179 Machinery and equipment 25 8,562 3,980 Intangible assets Software Total 14,633 7,159 93

97 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Analysis of funds utilised to acquire capital assets 2013/14 Voted funds Aid assistance Total R 000 R 000 R 000 Tangible assets 13,784-13,784 Buildings and other fixed structures 5,222-5,222 Machinery and equipment 8,562-8,562 Tangible assets Software Total 14,633-14, Analysis of funds utilised to acquire capital assets 2012/13 Voted funds Aid assistance Total R 000 R 000 R 000 Tangible assets 7,159-7,159 Buildings and other fixed structures 3,179-3,179 Machinery and equipment 3,980-3,980 Total 7,159-7, Cash and cash equivalents Note 2013/ /13 R 000 R 000 Consolidated Paymaster General Account 124,035 32,963 Total 124,035 32, Receivables Note 2013/ /13 R 000 R 000 R 000 R 000 R 000 Less than one year One to three years Older than three years Recoverable expenditure Staff debt Other debtors Total Total Total 94

98 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Recoverable expenditure (disallowance accounts Note 2013/ /13 10 R 000 R 000 SAL: Income Tax - 86 SAL: Tax Debt 2 1 P/P: Municipal Serv: Excl R&T - 58 Total Staff debt Note 2013/ /13 10 R 000 R 000 Employees Ex-Employees Total Other debtors Note 2013/ /13 10 R 000 R 000 Suppliers - 84 Total Voted funds to be surrendered to the Revenue Fund Note 2013/ /13 R 000 R 000 Opening balance 32, Transfer from statement of financial performance 123,699 32,924 Paid during the year (32,924) (652) Closing balance 123,699 32, Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund Note 2013/ /13 R 000 R 000 Opening balance 389 4,300 Transfer from Statement of Financial Performance 3,551 3,712 Own revenue included in appropriation - - Paid during the year (3,465) (7,623) Closing balance Payables current Note 2013/ /13 R 000 R 000 Clearing accounts Total 79-95

99 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Clearing accounts Note 2013/ /13 13 R 000 R 000 SAL: Income Tax 77 - SAL: Pension Fund 2 - Total Net cash flow available from operating activities Note 2013/ /13 R 000 R 000 Net surplus/(deficit) as per Statement of Financial Performance 127,250 36,636 Add back non cash/cash movements not deemed operating activities (21,627) (1,326) (Increase)/decrease in receivables current 112 (167) Increase/(decrease) in payables current 79 (16) Proceeds from sale of capital assets (62) (27) Expenditure on capital assets 14,633 7,159 Surrenders to Revenue Fund (36,389) (8,275) Surreders to RDP Fund/Donor - - Net cash flow generated by operating activities 105,623 35, Reconciliation of cash and cash equivalents for cash flow purposes Note 2013/ /13 R 000 R 000 Consolidated Paymaster General account 124,035 32,963 Total 124,035 32, Contingent liabilities Liable to Nature 96 Note 2013/ /13 R 000 R 000 Housing loan guarantees Employees Annex 2A Claims against the department Annex 2B 1,039 12,198 Total 1,346 12, Commitments Note 2013/ /13 R 000 R 000 Current expenditure Approved and contracted Capital expenditure Approved and contracted 1,073,772 1,031,360 Retention amounts 43,976 3,520 1,117,748 1,034,880 Total Commitments 1,117,753 1,034,880

100 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Accruals 2013/ /13 R 000 R 000 Listed by economic classification 30 Days 30+ Days Total Total Goods and services 1,158 1,158 3,531 Transfers and subsidies 5,160 5,160 12,289 Total 6,318 6,318 15,820 Note 2013/ /13 R 000 R 000 Listed by programme level Administration 860 3,059 Housing Needs, Research and Planning Housing Dev, Implementation, Planning and Targets 5,278 12,449 Total 6,318 15,820 Note 2013/ /13 R 000 R 000 Confirmed balances with other departments Annex ,269 Total 62 1, Employee benefits Note 2013/ /13 R 000 R 000 Leave entitlement 8,814 7,409 Service bonus (Thirteenth cheque) 4,035 3,502 Performance awards 2,376 2,446 Capped leave commitments 6,589 6,542 Total 21,814 19,899 97

101 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Lease commitments 20.1 Operating leases expenditure 2013/14 Specialised military equipment Land Buildings and other fixed structures Machinery and equipment Total Not later than 1 year - - 7, ,926 Later than 1 year and not later than 5 years , ,874 Later than five years Total lease commitments , , /13 Specialised military equipment Land Buildings and other fixed structures Machinery and equipment Total Not later than 1 year - - 5, ,893 Later than 1 year and not later than 5 years - - 8, ,258 Later than five years Total lease commitments ,843 1,308 15,151 The Department has material leasing arrangements for the renting of buildings in Mbombela, Kaeweldorp for the Ehlanzeni district office and Msukaligwa, 11 de Clerq str for the Gert Sibande district office Finance leases expenditure 2013/14 Specialised military equipment Land Buildings and other fixed structures Machinery and equipment Total Not later than 1 year Later than 1 year and not later than 5 years Later than five years Total lease commitments /13 Buildings Specialised military equipment Land and other fixed structures Machinery and equipment Total Not later than 1 year Later than 1 year and not later than 5 years Later than five years Total lease commitments

102 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Accrued departmental revenue Note 2013/ /13 R 000 R 000 Other 4,178 4,397 Total 4,178 4, Analysis of accrued departmental revenue Note 2013/ /13 R 000 R 000 Opening balance 4,397 5,099 Less: amounts received 640 1,400 Add: amounts recognised Closing balance 4,178 4,397 These amounts reflected is money to be received from National Department of Human Settlements of cases by the Special Investigations Unit (SIU) for households who obtained housing subsidies fraudulently. 22. Irregular expenditure 22.1 Reconciliation of irregular expenditure Note 2013/ /13 R 000 R 000 Opening balance Add: Irregular expenditure relating to current year Irregular expenditure awaiting condonation 1, Analysis of awaiting condonation per age classification Current year Prior years Total 1, Details of irregular expenditure current year Incident Contravention of Public Service Act Permanent appointment for foreign employee Contravention of Public Service Act Employee exceeded retirement age Contravention of Procurement processes Contravention of Public Service Act Employee acting for more than two financial years Disciplinary steps taken/criminal proceedings The matter is currently with the Internal Audit for investigations The matter is currently with the Internal Audit for investigations The matter to be forwarded to the Internal Audit for further investigations The matter to be forwarded to the Internal Audit for further investigations 2013/14 R Total

103 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Fruitless and wasteful expenditure 23.1 Reconciliation of fruitless and wasteful expenditure Note 2013/ /13 R 000 R 000 Opening balance - - Fruitless and wasteful expenditure relating to current year 10 - Fruitless and wasteful expenditure awaiting resolution Analysis of awaiting resolution per economic classification 2013/ /13 R 000 R 000 Current 10 - Total Analysis of Current year s fruitless and wasteful expenditure Incident Penalty interest charged by Wesbank First Auto Mpumalanga CC Disciplinary steps taken/criminal proceedings The matter is currently with Internal Audit for investigations 2013/14 R 000 Total Related party transactions During the year the Department received services from the Department of Public Works Roads and Transport which are related to the Department. The Department of Human Settlements occupies part of Building 6 and 7 at the Government Complex in the Province free of charge, which is provided by the Department of Public Works Roads and Transport. During the year under review, the Department received services for the Audit Committee and Internal Audit through the shared services in the Office of the Premier. The services were free of charge to the Department. During the year under review, the Department received services for the Information Technology from the Provincial Department of Finance for the shared services for data lines and support. The services were free of charge to the Department. 25. Key management personnel No. of 2013/ /13 Individuals R 000 R 000 Political office bearers 1 1,712 1,695 Officials: Level 15 to ,231 1,287 Level 14 (incl. CFO if at a lower level) 6 4,155 4,213 Total 7,098 7,

104 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Movable Tangible Capital Assets MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening balance Curr Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 MACHINERY AND EQUIPMENT 21,565-8,742 1,257 29,050 Transport assets 9,910-6, ,109 Computer equipment 7,069-1, ,177 Furniture and office equipment 4, ,929 Other machinery and equipment TOTAL MOVABLE TANGIBLE CAPITAL ASSETS 21,565-8,742 1,257 29, Additions ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Cash* Noncash** (Capital Work in Progress current costs and finance lease payments) Received current, not paid (Paid current year, received prior year) Total R 000 R 000 R 000 R 000 R 000 MACHINERY AND EQUIPMENT 8, ,742 Transport assets 5, ,179 Computer equipment 1, ,300 Furniture and office equipment Other machinery and equipment TOTAL ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS 8, ,

105 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Disposals DISPOSALS OF MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Sold for cash Transfer out or destroyed or scrapped Total disposals Cash Received R 000 R 000 R 000 R 000 MACHINERY AND EQUIPMENT 235 1,022 1, Transport assets Computer equipment Furniture and office equipment Other machinery and equipment TOTAL DISPOSAL OF MOVABLE TANGIBLE CAPITAL ASSETS 235 1,022 1, Movement for 2012/13 Opening balance Curr Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 MACHINERY AND EQUIPMENT 18,405-4,205 (1,045) 21,565 Transport assets 9,066 (2) 1,819 (973) 9,910 Computer equipment 5,629 (1) 1,472 (31) 7,069 Furniture and office equipment 3, (41) 4,337 Other machinery and equipment TOTAL MOVABLE TANGIBLE CAPITAL ASSETS 18,405-4,205 (1,045) 21,

106 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Minor assets MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED AS AT 31 MARCH 2014 Specialised military assets Intangible assets Heritage assets Machinery and equipment Biological assets Total R 000 R 000 R 000 R 000 R 000 R 000 Opening balance - 1-5,701-5,702 Curr Year Adjustments to Prior Year balances Additions Disposals (494) - (494) TOTAL MINOR ASSETS - 1-5,800-5,801 Number of R1 minor assets Number of minor assets at cost TOTAL NUMBER OF MINOR ASSETS Specialised military assets Intangible assets Heritage assets Machinery and equipment Biological assets Total

107 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED AS AT 31 MARCH 2013 Specialised military assets Intangible assets Heritage assets Machinery and equipment Biological assets Total R 000 R 000 R 000 R 000 R 000 R 000 Opening balance - 1-5,355-5,356 Curr Year Adjustments to Prior Year balances (2) - (2) Additions Disposals (236) - (236) TOTAL MINOR ASSETS - 1-5,701-5,702 Specialised military assets Intangible assets Heritage assets Machinery and equipment Biological assets Number of R1 minor assets Number of minor assets at cost TOTAL NUMBER OF MINOR ASSETS Total 104

108 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Intangible Capital Assets MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening balance Current Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 SOFTWARE TOTAL INTANGIBLE CAPITAL ASSETS Additions ADDITIONS TO INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Cash Non-Cash (Development work in progress current costs) Received current year, not paid (Paid current year, received prior year) Total R 000 R 000 R 000 R 000 R 000 SOFTWARE TOTAL ADDITIONS TO INTANGIBLE CAPITAL ASSETS Movement for 2012/13 MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2013 Opening balance Current Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 SOFTWARE TOTAL INTANGIBLE CAPITAL ASSETS

109 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Immovable Tangible Capital Assets MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening balance Curr Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 BUILDINGS AND OTHER FIXED STRUCTURES Other fixed structures TOTAL IMMOVABLE TANGIBLE CAPITAL ASSETS Additions ADDITIONS TO IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Cash Non-cash (Capital Work in Progress current costs and finance lease payments) Received current, not paid (Paid current year, received prior year) Total R 000 R 000 R 000 R 000 R 000 BUILDING AND OTHER FIXED STRUCTURES Other fixed structures 5,222 - (5,222) - - TOTAL ADDITIONS TO IMMOVABLE TANGIBLE CAPITAL ASSETS 5,222 - (5,222)

110 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March Disposals DISPOSALS OF IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Sold for cash Transfer out or destroyed or scrapped Total disposals Cash Received R 000 R 000 R 000 R 000 BUILDINGS AND OTHER FIXED STRUCTURES Other fixed structures TOTAL DISPOSALS OF IMMOVABLE TANGIBLE CAPITAL ASSETS Movement for 2012/13 MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2013 Opening balance Curr Year Adjustments to prior year balances Additions Disposals Closing Balance R 000 R 000 R 000 R 000 R 000 BUILDINGS AND OTHER FIXED STRUCTURES - - 3,179 (3,179) - Other fixed structures - - 3,179 (3,179) - TOTAL IMMOVABLE TANGIBLE CAPITAL ASSETS - - 3,179 (3,179) - 29 S42 Immovable assets Assets subjected to transfer in terms of S42 of the PFMA 2013/14 Number of assets Value of assets R 000 BUILDINGS AND OTHER FIXED STRUCTURES Other fixed structures - - TOTAL

111 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 Assets subjected to transfer in terms of S42 of the PFMA 2012/13 Number of assets Value of assets R 000 BUILDINGS AND OTHER FIXED STRUCTURES 5 3,179 Other fixed structures 5 3,179 TOTAL 5 3,

112 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March STATEMENT OF CONDITIONAL GRANTS RECEIVED GRANT ALLOCATION SPENT 2012/13 NAME OF DEPARTMENT Division of Revenue Act/ Provincial Grants Roll Overs DORA Adjustments Other Adjustments Total Available Amount received by department Amount spent by department Under / (Overspending) % of available funds spent by department Division of Revenue Act Amount spent by department R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 % R 000 R 000 Human Settlements Development Grant 1,123, ,123,766 1,123,766 1,012, ,270 90% 965, ,065 Housing Disaster Relief Grant (COGTA) ,136 15,136 Housing Disaster Relief Grant 566-1,764-2,330 2,330 2, % - - 1,124,332-1,764-1,126,096 1,126,096 1,014, ,270 90% 980, ,

113 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 1A STATEMENT OF CONDITIONAL GRANTS PAID TO MUNICIPALITIES GRANT ALLOCATION TRANSFER SPENT 2012/13 NAME OF MUNICIPALITY Division of Revenue Act Roll Overs Adjustments Total Available Transfer Funds Withheld Re-allocations by National Treasury or National Department Amount received by municipality Amount spent by municipality % of available funds spent by municipality Division of Revenue Act R 000 R 000 R 000 R 000 R 000 % R 000 R 000 % R 000 Steve Tshwete ,000 25,000 24, Victor Khanye ,647 55,647 55, Goven Mbeki Municipality ,841 31,841 31, Emalahleni ,050 42,050 42, , , ,

114 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 1B STATEMENT OF TRANSFERS TO DEPARTMENTAL AGENCIES AND ACCOUNTS TRANSFER ALLOCATION TRANSFER 2012/13 DEPARTMENT/ AGENCY/ ACCOUNT Adjusted Appropriation Roll Overs Adjustments Total Available Transfer % of Available funds Transferred Appropriation Act R 000 R 000 R 000 R 000 R 000 % R 000 SABC Mbombela Municipality % %

115 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 1C STATEMENT OF TRANSFERS/SUBSIDIES TO PUBLIC CORPORATIONS AND PRIVATE ENTERPRISES TRANSFER ALLOCATION EXPENDITURE 2012/13 NAME OF PUBLIC CORPORATION/PRIVATE ENTERPRISE Adjusted Appropriation Act Roll Overs Adjustments Total Available Transfer % of Available funds Transferred Capital Current Appro-priation Act R 000 R 000 R 000 R 000 R 000 % R 000 R 000 R 000 Public Corporations Housing Associations 4, ,261 4, % - - 5,567 TOTAL 4, ,261 4, % - - 5,

116 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 1D STATEMENT OF TRANSFERS TO HOUSEHOLDS TRANSFER ALLOCATION EXPENDITURE 2012/13 HOUSEHOLDS Adjusted Appropriation Act Roll Overs Adjustments Total Available Transfer % of Available funds Transferred Appropriation Act R 000 R 000 R 000 R 000 R 000 % R 000 Transfers Human Settlements Development Grant 971, , ,789 89% 965,127 Housing Disaster Relief (COGTA) ,136 H/H: Donations & Gifts H/H Empl S/Ben: Leave Gratuity % 646 H/H Empl S/Ben: Injury on Duty Total 971, , , ,

117 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 1E STATEMENT OF ACTUAL MONTHLY EXPENDITURE PER GRANT Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Total Grant Type R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 Human Settlements Development Grant 1,099 5,056 71,738 38,588 50,900 78, ,113 94,569 99,663 75, , ,919 1,014,826-1,099 5,056 71,738 38,588 50,900 78, ,113 94,569 99,663 75, , ,919 1,014,

118 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 2A STATEMENT OF FINANCIAL GUARANTEES ISSUED AS AT 31 MARCH 2014 LOCAL Guarantor institution Guarantee in respect of Original guaranteed capital amount Opening balance 1 April 2013 Guarantees draw downs during the year Guarantees repayments/ cancelled/ reduced/ released during the year Revaluations Closing balance 31 March 2014 Guaranteed interest for year ended 31 March 2014 Realised losses not recoverable i.e. claims paid out R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 Standard Bank Housing Loans Nedbank Ltd Housing Loans First Rand Bank Ltd Housing Loans Peoples Bank Ltd Housing Loans First National Bank Ltd Housing Loans Mpumalanga Finance Company Housing Loans Old Mutual Housing Loans TOTAL

119 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 2B STATEMENT OF CONTINGENT LIABILITIES AS AT 31 MARCH 2014 Nature of Liability Liabilities incurred during the year Liabilities paid/ cancelled/ reduced during the year Liabilities recoverable (Provide details hereunder) Opening Closing Balance Balance 1 April March 2014 R 000 R 000 R 000 R 000 R 000 Claims against the department Civil Projects Engineers Tukiso Tsepo 11,159-11, Karabo Developers Mr J vd Merwe Noko Multi-Media Subtotal 12,198-11,159-1,

120 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 3 INTER-GOVERNMENT PAYABLES GOVERNMENT ENTITY DEPARTMENTS Current Department of Public Works Roads and Transport Confirmed balance outstanding Unconfirmed balance outstanding TOTAL 31/03/ /03/ /03/ /03/ /03/ /03/2013 R 000 R 000 R 000 R 000 R 000 R Department of Justice and Constitutional Development 41 1, KZN Department of Social Development Thembisile Hani Local Municipality Rural Development and Land Reform Subtotal 62 1, , ,

121 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 4 INVENTORY Inventory Note Quantity 2013/14 Quantity 2012/13 R 000 R 000 Opening balance Add: Additions/Purchases - Cash , ,189 (Less): Disposals (223) (68) - - (Less): Issues (22 085) (2,625) (30 748) (2,203) Add/(Less): Adjustments Closing balance Housing Inventory Note Quantity 2013/14 Quantity 2012/13 R 000 R 000 Opening balance , ,125 Add: Additions/Purchases - Cash , ,273 (Less): Issues (14 297) (591,216) - - Closing balance , ,

122 DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 UNAUDITED ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014 ANNEXURE 5 MOVEMENT IN CAPITAL WORK IN PROGRESS MOVEMENT IN CAPITAL WORK IN PROGRESS FOR THE YEAR ENDED 31 MARCH 2014 Opening balance Current Year Capital WIP Completed Assets Closing balance R 000 R 000 R 000 R 000 BUILDINGS AND OTHER FIXED STRUCTURES Dwellings Non-residential buildings Other fixed structures - 5,222-5,222 TOTAL - 5,222-5, and Wages

123 PART D: HUMAN RESOURCE MANAGEMENT ANNUAL FINANCIAL STATEMENTS 120