annual report on king cetshwayo fresh ... report...1 annual report on king cetshwayo fresh produce...

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ANNUAL REPORT ON KING CETSHWAYO FRESH PRODUCE MARKET:

2017/2018 FINANCIAL YEAR

1. BACKGROUND

1.1. King Cetshwayo District Municipality (KCDM) established a Fresh

Produce Market with an intention to develop and expand the agricultural

sector and improve food security. The main attribute was to develop

Emerging Farmers and introduce them to markets.

1.2. KCDM Fresh Produce Market signed an MOU to supply vegetables to

the schools in all five Local Municipalities. The Fresh Produce Market is

expected to supply schools, and thereafter claim for produce supplied.

1.3. The Fresh Produce Market operations follows the value chain as

indicated below:

• Farmers: plough and produce for the Fresh Produce Market. Their

produce is bought and supplied to the schools.

• Transporters: are appointed by the Fresh Produce Market, to

collect fresh produce from the Market and the Market Hubs and

deliver fresh produce to the schools.

• Suppliers: are appointed by the Fresh Produce Market to supply

products in cases where local produce is not sufficient from local

farmers. These Suppliers buy Fresh Produce from existing Market

chains.

2. STRATEGIC GOALS

The following strategic goals were developed in a strategic review

session in January 2017 to guide performance of the Company.

Operations Unit mandate is based on the last three strategic objectives.

2

a. Sound Corporate Governance and administration;

b. Financial viability and stability

c. Reliable Quality Services and stakeholder focus

d. Broaden Market Access and Supply

e. Agrarian Socio-economic Development

3. DISCUSSION

The King Cetshwayo Fresh Produce Market’s mandate is to source fresh

produce from King Cetshwayo District Municipality farmers. However, the entity

still faces the challenge of not getting some commodities, such as carrots and

onions, within the District, but there is an improvement in the supply of fresh

produce by local farmers. There are a few farmers from iMlalazi and

Mthonjaneni local municipalities who have started to supply onions but the

volumes are still very low and inconsistent.

Fresh produce that cannot be sourced locally is augmented from the

neighbouring Districts (UMkhanyakude, Mzinyathi and Zululand) and other

suppliers (SMMEs).

The inability to source the full required quantities from the local producers has

compelled the entity to source the short produce from suppliers (SMMEs) who

source the produce from bulk markets and other farmers that require cash on

delivery.

The decrease in the availability from famers is caused by various factors, which

include:

• Unavailability of required resources for production

• Delayed payments from KCFPM, resulting in farmers missing the planting time

in a season, and demotivation

• Lack of Farmer Support and Development Programmes (Budget)

The NSNP menu of 2017/18 presented an increase in the grams of fresh produce

consumed by each learner per day per serving. This resulted in the upturn on

produce delivered to schools by UFPM on a weekly basis. The tables 2 and 3

illustrate the old menu versus the new menu.

3

Table 2 Table 3

New Menu (2017/18)

Commodity Primary Secondary

Butternut 60g 80g

Cabbage 80g 80g

Carrot 60g 80g

Beetroot 60g 80g

Tomato 5g 10g

Onion 5g 10g

PHOTOGRAPHIC EVIDENCE OF FRESH PRODUCE AND OPERATIONS

Figure 1: Farm visit and profiling butternut & tomatoes

Figure 2: Farm Visits and profiling

Old Menu (2016/17)

Commodity Primary Secondary

Butternut 40g 60g

Cabbage 40g 60g

Carrot 40g 60g

Beetroot 40g 60g

Tomato 5g 5g

Onion 5g 5g

4

Logistics Support and Operations

4. IMPROVEMENT PLAN

The Company has developed a farmer support and development programme aimed

at improving the consistent quality and diversified supply by the local farmers. The

details of the programme are entailed in the Company’s Farmer Support and

Development Programme Framework.

KCFPM Annual Performance Report 2017/2018 1 | P a g e

TABLE OF CONTENTS

Item Nº Title Page Nº 1. Organisational Performance Management System

Legislative Requirements 2 2. Introduction 2-3

3. Organisational Performance Management Processes 3-4

4. Auditing of Performance Information 4-5

5. Performance of External Service Providers 5-6 6.

7. Annual Organisational Performance Information 6-20 8. Annexure:

Organisational Performance Management Scorecard A


Organisational Performance Management System 1. Legislative requirements

The entity has adopted the Performance Management Framework that is approved and implemented by the parent municipality. In line with various Acts and Regulations on Performance Management System, the entity has aligned itself to fulfil the obligation as outlined in Section 40 of the Municipal Systems Act of 2000 (MSA) that the entity must establish mechanisms to monitor and review its Performance Management System’’, so as to measure, monitor, review, evaluate and improve performance at organisational, departmental and employee levels. In terms of Section 34 of the MSA a municipal entity must review its Annual Performance plan in accordance with an assessment of its performance measurements in terms of section 41. The entity will review the Key Performance Areas, Key Performance Indicators and Performance targets to align with the parent municipality’s developmental priorities and goals. This review will form the basis of the review of the Organisational Performance Management Scorecard and Performance Contracts of the Chief Executive Officer and all Managers reporting directly to him/her. The Municipal Planning and Performance Management Regulations (2001) stipulates that a “municipality’s performance management system entails a framework that describes and represents how the municipality’s cycle and processes of performance planning, monitoring, measurement, review, reporting and improvement will be conducted, organised and managed, including determining the roles of the different role players” (Chapter 3, Section 7, Municipal Planning and Performance Management Regulations, 2001). Section 46 of the Municipal Systems Act (ACT 32 of 2000) stipulates the following: Annual performance reports 46 (1) A municipality must prepare for each financial year a performance report

reflecting: (a) the performance of the municipality and of each external service

provider during the financial year;

(b) a comparison of the performances referred to in paragraph (a) with targets set for and performances in the previous financial year;

(c) measures taken to improve performance.

(2) An annual performance report must form part of the municipality’s annual

report in terms of Chapter 12 of the Municipal Financial Management Act. 2. Introduction

The 2017/2018 Performance Management Framework Policy together with the standard operating procedures were reviewed and adopted on 22 September 2017 for the 2017/2018 financial year. This report includes highlights from the key performance measures included in the Annual Performance Plan for the 2017/18 financial year. These priority measures constitute the Organisational Scorecard for 2017/2018.


At the end of quarter 4 (April to June 2018), 53.33% of priority performance measures have been met or exceeded this year-end target. Areas for improvement are shown in the Organisational Performance Scorecard for 2017/18. Accountable officials have provided commentary to put performance into context and identified actions that are taken to address under performance. 2017/2108 financial year proved to be a challenging year for the entity, but the entity managed to achieve just above half of the set targets. This achievement though not overwhelming, it is encouraging and provides room for vigour to perform better in the forthcoming years. The entity realises that continuous monitoring in terms of reviewing progress regularly is fundamental in achieving priorities and delivering value for money. Early investigation of variances enables remedial action to be taken where appropriate. The following graph indicates overall performance of the entity for the 2017/2018 financial year.

Figure 1: Overall Performance for 2017/2018

3. Organisational Performance Management Process Key performance indicators have been refined in support of the entity’s development priorities and objectives as set out in the Strategic Planning Document developed during the planning session held in February 2018. These priorities and objectives will remain for the duration of the Plan for consistency in measuring and reporting on long term strategies and projects. Measurable performance targets with regard to each of these development priorities and objectives were established. A process to ensure regular reporting is in place and is fed back to the Board. Individual agreements and performance plans were prepared in line with provisions prescribed in the Performance Regulations (Notice 805, published on 1 August 2006 in the official gazette). Performance Evaluation Panel was established in 2016/2017 for the assessment of the performance of the Chief Executive Officer as well as Managers directly accountable to the Chief Executive Officer.

21,66%

31,66%

46,66%

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

Target exceeded Target met Target notachieved

KCFPM Overall Performance 2017/2018

2017/2018


The following diagram illustrates a summary of the newly developed performance management framework for King Cetshwayo District Municipality and its entity for performance measures and reporting adhering to the guidelines suggested by Kwa-Zulu Natal Province, Department of Cooperative Governance and Traditional Affairs, which the King Cetshwayo Fresh Produce Market will adhere to:

4. Auditing of Performance Information

The Municipal Systems Act 2000, Section 45 requires that the results of the performance measurements in terms of section 41 (1) c, must be audited as part of the internal auditing process and annually by the Auditor-General. All auditing must comply with section 14 of the Municipal Planning and Performance Management Regulations, 2001 (Regulation 796). Ngubane and Company were appointed by King Cetshwayo Fresh Produce Market to perform the Internal Audit function within the entity. As part of their scope, auditing of the Performance Management System and of Performance Information was performed and reports received for quarter 1 and 2 in terms of the following: Quarter 1 Review the functionality of the Performance Management System and management’s compliance thereto. Dated 30 April 2018 Quarter 2:


Review the functionality of the Performance Management System and management’s compliance thereto. Dated 30 April 2018 Quarter 3: The Internal Auditor is currently conducting quarter 3 Audit on the Performance Management System.

Quarter 4:

The Internal Auditor is currently conducting quarter 4 Audit on the Performance Management System.

5. Performance of External Service Providers

The monitoring of the service provider performance is ensured through the signing of Service Level Agreements. It is currently being done on a user department level. The end user department provides reports on performance of service providers through Board Committees.

The following are the service providers engaged in each business unit during the 2017/18 financial year on critical functional areas of the entity:


7. Annual Organisational Performance Information The Annual Performance Report for the 2017/2018 financial year has been completed and reflected in the Organisational Performance Scorecard in a table format (as prescribed by KZN CoGTA). The Organisational Performance Scorecard table will be presented to the Auditor General for auditing together with the Annual Financial Statements and Draft Annual Report. This Annual Performance Report should be read in conjunction with the Annual Report, including the Annual Financial Statements as well as the Auditor General Report on the Annual Financial Statements and Performance Information for 2017/2018. The colour coded system used to report performance is as follows:

ASSESSMENT OF EXTERNAL SERVICE PROVIDERS

No. Department External Service Provider

Service provided in terms of signed SLA

Performance Target / Time

frames

Assessment of Service Providers

Performance

PoE and corrective measure in case of under performance

Scoring Performance of the Service

Provider

Using 1-5 rating scale: 1=Poor; 2=Fair;

3=Good; 4=Very Good;

5=Excellent

1. FINANCIAL

SERVICES

MAKHEDA

BUSINESS

PROJECTS

The tender is for the

provision security

services at King

Cetshwayo Fresh

Produce Market

premises situated at

A1252, Ngwelezane,

Empangeni, 3880.

One security guard

during the day and

two security guards at

night and weekends.

01 July 2015

To

30 June 2016

A month to

month

contract was

entered into

after 30 June

2016.

The level of service by

the service provider

was satisfactory up to

the month of June

2018. We experienced

no problems

4

2. FINANCIAL

SERVICES

NGUBANE & CO The tender is for the

provision of internal

audit services.

Ngubane & Co

provides auditing

services on a quarterly

basis according to the

audit plan.

1 July 2017 –

30 June 2020

The service was

satisfactory, the late

appointment of

Internal auditors

adversely affected the

audit as a result

quarter 3&4 is still in

progress.

4

3. CORPORATE

SERVICES

RIS VEHICLE

HIRE

The tender is for the

provision of two

bakkies on a full

maintenance lease.

1 July 2016 –

30 June 2019

The service was

satisfactory up to 30

June 2018.

4


o Blue – Performance above 2% of the target o Green- Performance meets target o Amber- Performance less than 5% adverse target o Red – Performance more than 5% adverse target. The OPMS for 2017/2018 had 60 targets. Out of 60 targets, 32 targets were achieved. The breakdown of the indicators is as follows: Key Performance Area 1: Sound Corporative Governance and Administration:

Total Number of Targets

No. Of Targets Exceeded

No. Of Target Achieved

No. Of Target Not Achieved

Overall Percentage

9 1 1 7 22.22%

Key Performance Area 2: Reliable Quality Services and Stakeholder Focus:





Overall Percentage

5 0 3 2 60%

Key Performance Area 3: Broaden Market Access and Supply:

0

2

4

6

8

10

Total Number ofTargets

Target Exceeded Target Achieved Targets NotAchieved

0

1

2

3

4

5

6




Total Number

of Targets

No. Of Targets

Exceeded

No. Of Target

Achieved


Overall Percentage

12 7 2 3 75%

Key Performance Area 4: Financial Viability and Sustainability:





Overall Percentage

14 0 6 8 42.86%

Key Performance Area 5: Sound Corporate Governance and Administration:

0

2

4

6

8

10

12

14



0

2

4

6

8

10

12

14

16








Overall Percentage

16 1 7 8 50%

Key Performance Area 6: Agrarian Socio-Economic Development:





Overall Percentage

4 4 0 0 100%

For the 2017/2018-year end performance results and the final position of the municipal entity

shows that:

0

2

4

6

8

10

12

14

16

18



0

0,5

1

1,5

2

2,5

3

3,5

4

4,5




o 53.33% of measures have been met or exceed the year-end target o 46.66% of measures were not achieved at the end of this financial year.

The performance results for the organizational priorities can be summarized as follows:

Colour Coded Status 2017/2018 Performance

Blue – Exceeded target 21.66%

Green – Met target 31.66%

Amber – Missed target by up to 5%

0%

Red – Missed Target by more than 5 %

46.66%

7.1 Sound Corporative Governance and Administration

The achievement of this KPA is at 22.22% as a result of not having proper systems and procedures in place which is a consequence of not having an Organogram that directly translate the entity’s strategic goals. This, as it may be, shall be addressed during the development and approval of an Organogram reflecting capacity required by the entity in the next financial year.

7.2 Reliable Quality Services and Stakeholder Focus:

The KPA has notably performed well by achieving a 60% in the current financial year. The entity conducted a customer satisfaction survey on the quality of its produce and 80% of the customers were satisfied with the quality of the produce. However, the entity will continue to strive for a 100% satisfaction in the near future.

7.3 Broaden Market Access and Supply:

The overall score achieved for this KPA is 75% which is an exceptional performance considering that this KPA is the core function of the business. There were 67 small-scale farmers trained in production and marketing of produce which far exceeded the targeted number of 20 farmers. This was also attributed by the strategic partnerships that the entity has secured in the current financial year. The number of farmers accessing the market has considerably increased in this financial year.

7.4 Financial Viability and Sustainability:

The overall score for the KPA is 42.85% for the 2017/2018 financial year. The entity has experienced challenges in terms of revenue collections as well as debt collections in the current financial year. Furthermore, the entity had a challenge to source produce directly from farmers hence produce was therefore sourced from suppliers at higher prices. This has led to challenges with the creditors’ book. In the absence of the Chief Financial Officer the entity had could not develop sound financial systems and procedures which played a detrimental role in the non-achievement of this KPA. The entity has commenced with the process of recruiting a suitably qualified candidate to head the Financial Services Department. Revenue collected from customers during the 2017/2018 financial year was


R 22, 502 406.

7.5 Good Governance and Public Participation:

The achievement for this KPA is at 50% in 2017/2/018 financial year. Three strategic partnerships were secured in 2017/2018 which contributed to the achievement of this KPA through other programmes being implemented and support provided to small-scale farmers within the district.

7.6 Agrarian Socio-Economic Development: This KPA achieved an overwhelming 100% in 2017/2018 financial year which denotes commitment of the entity to develop its local community more particularly in the upliftment of Youth and Women operating farming enterprises.

Further to this, the entity has created 4656 job opportunities in 2017/2018 which far exceeded the targeted figure of 1392.

NON ACHIEVEMENTS FOR THE 2017/2018 FINANCIAL YEAR

The organisation achieved 32 targets out of a total of 60 targets; which means that out of 60 targets 28 targets were not achieved. The table below provides an analysis of targets which were not achieved inclusive of reasons for non-achievements and measure for improvement:


Key Performance Area 1: Sound Corporative Governance and Administration:

Strategic Goal of KCFPM

Objective Strategy Performance Indicator

Annual Target

Actual Achievement

Responsible Department

Sound Corporative Governance and Administration

To improve institutional systems and organisational design

1.1.1 Date of the approval of the Organogram by the Board by 30 June 2018

31 March 2018

None Corporate Services

Reasons for non-achievement: Resignation of Senior Management (CEO & CFO) and lack of capacity of remaining staff

Measures for improvement: To include policy reviews in the Management scorecards for 2018/2019 financial year



Annual Target

Actual Achievement




1.1.2 Date of the 2017/18 Work Place Skills Plan (WSP) developed and approved by the Board by 30 June 2018

30 June 2018


Reasons for non-achievement: Non-existence of corporate services department and experienced HR officials.

Measures for improvement: Ensure establishment of the Corporate services department and allocate budget for WPS for 2018/2019



Annual Target

Actual Achievement




1.1.3 Number of Minimum Competency Requirements (MCR) developed after each quarter and submits to the

4 None Corporate Services


parent Municipality.

Reasons for non-achievement: Non-existence of corporate services department and experienced HR officials.

Measures for improvement: Ensure establishment of the Corporate services department and allocate budget for WPS for 2018/2019



Annual Target

Actual Achievement



To provide innovative administrative, corporate memory and ICT

1.2.1 Number of policies reviewed and approved by the Board by 30 June 2018

7 1 Corporate Services

Reasons for non-achievement: Resignation of Senior Management (CEO & CFO) and lack of capacity of remaining staff

Measures for improvement: To include policy reviews in the Management scorecards



Annual Target

Actual Achievement




1.2.3 Date of the development of an outbound agrological system compliant with food safety requirements by 30 June 2018

30 June 2018


Reasons for non-achievement: Budget Constraints and lack of capacity

Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to conduct this study.



Annual Target

Actual Achievement




1.2.5 Number of training or workshop conducted on OHS to all staff by 30 June 2018.

2 1 Corporate Services

Reasons for non-achievement: Measures for improvement:


OHS training and workshop are conducted by the District according to their annual plan. Hence this is beyond the entity's control.

To align the entity’s OHS plan with the district's OHS annual plan for training and workshops in 2018/2019



Annual Target

Actual Achievement




1.2.6 Date for the registration of the KCFPM as an accredited food supply and food handling institution by 30 June 2018

30 June 2018


Reasons for non-achievement: There is a sewer pipe that runs across the market hall where the produce is kept.

Measures for improvement: Engage with the local municipality on the rerouting of the sewer pipe that runs across the market hall floor.

Key Performance Area 2: Reliable Quality Services and Stakeholder Focus:



Annual Target

Actual Achievement


Reliable Quality Services and Stakeholder Focus

To ensure efficient operations management

2.1.2 Percentage of supply and distribution of produce to clients in line with service level agreements (SLA)

90% 78% Operations

Reasons for non-achievement: Shortage of produce from the targeted farmers within the district as well the cost of fruits.

Measures for improvement: To commission a study on the available produce and farmers within the district in order to develop a production and distribution plan for 2018/2019.



Annual Target

Actual Achievement



To ensure food safety and improved quality of produce

2.2.2 Percentage of customer satisfaction by conducting customer satisfaction survey on delivery time frames

70% 60% Operations

Reasons for non-achievement: Measures for improvement:


Shortage of produce from the farmers and cash flow challenges. Inability to provide fruits on weekly basis as the fruit purchase price is high.

To develop and support farmers with inputs and to negotiate with DoE on the revised rate per learner to be able to supply fruits.

Key Performance Area 3: Broaden Market Access and Supply:



Annual Target

Actual Achievement



To increase the number of farmers accessing the market and diversified product offering

3.3.3 Date of the approval of the agro-processing business plan by 31 December 2017

31 December 2017

None Operations

Reasons for non-achievement: The Board took a resolution to remove this indicator due to lack of resources.

Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to develop the plan.



Annual Target

Actual Achievement




3.3.5 Number of report submitted on the feasibility study conducted on Commission Market within the Northern KZN

1 None Operations

Reasons for non-achievement: Not achieved due to budgetary constraints

Measures for improvement: To be removed in 2018/2019 scorecard as the entity does not have the resources to conduct the feasibility study on Commission Market.



Annual Target

Actual Achievement




3.3.6 Date of submission of the business plan for the nursery funding by 30 June 2018

31 March 2018

None Operations

Reasons for non-achievement: Not achieved due to budgetary constraints

Measures for improvement:


To be removed in 2018/2019 scorecard as the entity does not have the resources to develop a business plan for the nursery.

Key Performance Area 4: Financial Viability and Sustainability:



Annual Target

Actual Achievement


Financial Viability and Sustainability

Ensure efficient and effective budget management

4.2.3 Percentage of all internal audit queries responded to within five working days

100% 80% Finance Services

Reasons for non-achievement: There was no system to manage received queries and submitted responses hence requests were responded to manually therefore cannot clearly determine the percentage of achievement.

Measures for improvement: To ensure that a proper recording of requests and responses is kept.



Annual Target

Actual Achievement



To Obtain a clean audit 2016/2017

4.3 Unqualified Audit opinion

Unqualified Audit opinion

Qualified Audit opinion

Finance Services

Reasons for non-achievement: AG identified fraud indicators in the Audit report which led to a qualified opinion

Measures for improvement: Fraud and Prevention Policy was developed for the entity to ensure that staff is aware of fraudulent transaction and transgression.



Annual Target

Actual Achievement



To implement an effective and efficient Supply Chain Management

4.4.2 Percentage reduction on WUIF expenditure by 5% of the annual budget by 30 June 2018

Unqualified Audit opinion

Qualified Audit opinion

Finance Services

Reasons for non-achievement: Due to there being no procurement plan in place the entity had to purchase its produce from well-established suppliers at high prices.

Measures for improvement: To ensure that procurement plan is prepared and adhered to.




Annual Target

Actual Achievement



Ensure efficient control of all Entity assets including revenue

4.5 100% GRAP Compliance on all assets of the entity


Reasons for non-achievement: Lack of skill and capacity of finance employees.

Measures for improvement: Ensure that responsible staff member is capacitated and regular review is conducted on a quarterly basis.



Annual Target

Actual Achievement



Ensure effective Revenue enhancement and Expenditure Management

4.6.1 Percentage of revenue collected by 30 June 2018


Reasons for non-achievement: Scarcity of produce led to under revenue collection as a result of short deliveries.

Measures for improvement: Engage stakeholders to ensure farmer development in order to alleviate shortages on the supply of fresh produce.



Annual Target

Actual Achievement




4.6.2 Number of days for the payment of creditors

30 Days 120+ Days Finance Services

Reasons for non-achievement: Not achieved due to cash flow challenges that the entity is faced with.

Measures for improvement: To put pressure on DoE to pay their debt on timeously and regularly as they are the only client that the entity has currently and source for more clients in 2018/2019.



Annual Target

Actual Achievement




4.6.3 Number of days to collect debts

30 Days 60 Days Finance Services

Reasons for non-achievement: There are challenges with DoE as they are the entity's sole client and delays payments

Measures for improvement: To put pressure on DoE to pay their debt timeously and regularly as they are the only client that the entity has currently

Key Performance Area 5: Sound Corporate Governance and Administration:




Annual Target

Actual Achievement


Sound Corporate Governance and Administration

To improve corporate image and communication with all entity stakeholders

5.2 Date of the approval of the Communication and Marketing Strategy

30 June 2018

None Communication and Marketing

Reasons for non-achievement: Budget Constraints and lack of capacity.

Measures for improvement: To be developed in 2018/2019.



Annual Target

Actual Achievement



To strengthen corporate governance structures and responsibilities

5.3.1 100% Compliance with Companies Act

100% 70% CEO

Reasons for non-achievement: Due to there being no Company Secretary, the entity has been challenged with issues of compliance with the Companies Act.

Measures for improvement: To develop a Compliance Risk Management Plan as well as the Compliance Monitoring Plan



Annual Target

Actual Achievement



To improve the Board's accountability and sustainable reporting

5.4.3 Percentage of Board resolutions implemented quarterly

100% 28% CEO

Reasons for non-achievement: No monitoring of the resolutions since there had been no Company Secretary appointed.

Measures for improvement: Appointment of the Company Secretary and development of a resolution track schedule that will be a standing item at Board Meetings to provide progress to the Board on resolutions take previously.



Annual Target

Actual Achievement




To ensure full and effective oversight in all corporate affairs

5.5.2 Percentage achievement of the entity strategic goals and objectives

80% 52% CEO

Reasons for non-achievement: There was no in-year monitoring of predetermined objectives nor quarterly reviews conducted to ensure that the strategic goals and objectives as set out in the OPMS are achieved.

Measures for improvement: Performance Management Framework will be adhered to ensure that systems of monitoring performance are put in place and quarterly reviews are conducted as prescribed.



Annual Target

Actual Achievement



To monitor financial management controls and compliance with all applicable legislation and legislations and policies

5.6.1 Percentage of all audit conducted as per the approved 2017/2018 Audit Plan

70% 42% CEO

Reasons for non-achievement: The appointment of the Internal Auditors was in February 2018.

Measures for improvement: The appointment is for a 3 year period from 2017/2018 to ensure that the audits as per the audit plan are conducted timeously.



Annual Target

Actual Achievement



To improve monitoring of strategic and operational risks of the organisation

5.7.1 Date of the approval of the Risk Management Strategy

30 June 2018

None CEO

Reasons for non-achievement: Lack of Capacity in the Management function within the entity.

Measures for improvement: To develop the Risk Management Strategy by 31 March 2019



Annual Target

Actual Achievement


Sound Corporate Governance

To coordinate, manage and

5.8.1 Number of performance

3 None CEO


and Administration

monitor corporate and individual performance

agreements signed

Reasons for non-achievement: Not achieved due to lack of capacity to assist with Performance Management.

Measures for improvement: To source the services of a skilled Performance Management personnel.



Annual Target

Actual Achievement



To coordinate, manage and monitor corporate and individual performance

5.8.2 Number of quarterly reviews conducted per quarter

4 1 CEO

Reasons for non-achievement: The Performance Evaluation Committee did not sit due to there being no performance plans in place.

Measures for improvement: Ensure quarterly sittings of the Performance Evaluation Committee by drafting meeting schedule annually.

The following table reflects the organisational performance targets and achievements as reflected in the Annual Performance Plan.

Demand BaselineAnnual

Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual

Quarter 4

1.1.1 Date of the approval of the organogram by the

Board by 30 June 2018 Date N/A N/A 31-Mar-18 31-Mar-18 Not Achieved

Resignation of Senior Management

(CEO & CFO) and lack of capacity of

remaining staff

To include policy reviews in the

Management scorecards for

2018/2019 financial year

1.1.2

Date of the 2017/18 Work Place

Skills Plan (WSP) developed and approved b the

Board by 30 June 2018 Date N/A N/A 30-Jun-18 30-Jun-18 Not Achieved

Non existence of corporate services

department and experienced HR

officials.

Ensure establishment of the

Corporate services department and

allocate budget for WPS for

2018/2019

1.1.3

Number of Minimum Competency Requirements

(MCR) developed after each quarter and submit to

the parent Municipality.Number N/A N/A 4 1 1 1 1 Not Achieved

Non existence of corporate services

department and experienced HR

official/s.

Ensure establishment of the

Corporate services department and

allocate budget for WPS for

2018/2019

1.2.1Number of policies reviewed and approved by the

Board by 30 June 2018Number N/A N/A 7 1 2 2 2 1 Not Achieved

Resignation of Senior Management

(CEO & CFO) and lack of capacity of

remaining staffTo include policy reviews in the

Managemnet scorecards

1.2.2 Number of new policies approved by the Board by

30 June 2018Number N/A N/A 2 2 0 Not Achieved

Policies were prepared and

submitted to Human Resource and

Remuneration Committee, however

they were not approved by the

Board

Submit the new policies to the Board

for approval

1.2.3

Date of the development of an outbound

agrological system compliant with food safety

requirements by 30 June 2018

Date N/A N/A 30-Jun-18 30-Jun-18 Not AchievedBudget Constraints and lack of

capacity

To be removed in 2018/2019

scorecard as the entity does no have

the resources to conduct this study.

1.2.4Number of accredited training conducted on food

safety and food handling for operations staff. Number N/A N/A 1 1 1 Achieved

1.2.5Number of training or worshop conducted on

OHS to all staff by 30 June 2018. Date N/A N/A 2 1 1 0 1 0 Not Achieved

OHS training and workshop are

conducted by the District according

to their annual plan. Hence this is

beyond the entity's control

To align the entity's OHS plan with

the district's OHS annual plan for

training and workshops in 2018/2019

1.2.6

Date for the registration of the KCFPM as a an

accredited food supply and food handling

institution by 30 June 2018

Date N/A N/A 30-Jun-18 30-Jun-18 Not Achieved

There is a sewer pipe that runs

across the market hall where the

produce is kept.

Engage with the local municipality

on the rerouting of the sewer pipe

that runs across the market hall

floor.

2.1.1

Number of Standard

Operating Procedures Developed by 30 June

2018Number N/A N/A 3 1 1 1 1 1 1 Achieved

2.1.2

Percentage of supply and distribution of produce

to clients in line with service level agreements

(SLA)Percentage N/A N/A 90% 90% 83% 90% 86% 90% 86% 90% 57% Not Achieved

Shortage of produce from the

targeted farmers within the district

as well the cost of fruits.

To commision a study on the

available produce and farmers within

the district in order to develop a

production and distribution plan for

2018/2019.

2.2.1 Percentage of customer satisfaction by conducting

customer satisfaction survey on produce qualityPercentage N/A N/A 80% 50% 0 80% 36% Not Achieved

Customers were not satisfied with

the quality of the produce by the

market

To improve on the quality of the

produce by the market

2.2.2Percentage of customer satisfaction by conducting

customer satisfaction survey on delivery time

frames

Percentage N/A N/A 70% 50% 0 70% 60% Not Achieved

Shortage of produce from the

farmers and cashflow challenges.

Inability to provide fruits on weekly

basis as the fruit purchase prise is

high.

To develop and support farmers with

inputs and to negotiate with DoE on

the revised rate per learner to be

able to supply fruits.

Reasons for non-achievement Measures for Improvement Annual

AchievementFinancial Implication

OP

MS

Ind

icat

or

No

.

Ou

tco

me

9

Performance Indicator Unit of MeasureResponsible

Department

IMP

LE

ME

NT

ED

DIF

FE

RE

NT

IAT

ED

AP

PR

OA

CH

TO

FIN

AN

CIA

L P

LA

NN

ING

AN

D S

UP

PO

RT


Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual

Quarter 4Reasons for non-achievement Measures for Improvement

Annual


OP

MS

Ind

icat

or

No

.

Ou

tco

me

9


Department

2.2.3

Number of reports submitted to the Operations

Committee on the quality of produce (including

condemned products) Number N/A N/A 4 1 1 1 1 1 0 1 0 Not Achieved

3,1

Number of small-scale farmers and emerging

producers trained in the production and marketing

of produce by 30 June 2018

Number N/A N/A 20 5 26 5 41 5 0 5 0 Exceeded

3.2.1

Number of engagement meetings held with

potential clients by 30 June 2018 Number N/A N/A 8 2 0 2 2 2 0 2 1 Not Achieved

3.2.2

Number of engagement meetings held with

farmers within local municipalities by 30 June

2018Number N/A N/A 4 1 2 1 3 1 0 1 2 Exceeded

3.2.3

Number of farmer/producer database developed

in five local municipalities by 30 June 2018 Number N/A N/A 20 75 29 75 29 75 29 75 29 Exceeded

3.2.4

Number of farmers/producers profiled by 30 June

2018 Number N/A N/A 20 5 10 5 8 5 6 5 1 Exceeded

3.3.1

Percentage of new farmers accessing the

services of the market by 30 June 2018 Percentage N/A N/A 20 5 10 5 8 5 6 5 1 Exceeded

3.3.2Number of open day market weeks conducted by

30 June 2018Number N/A N/A 1 1 1 Achieved

3.3.3Date of the approval of the agro-processing

business plan by 31 December 2017Date N/A N/A 31-Dec-17 31-Dec-17 0 Not Achieved

The Board took a resolution to

remove this indicator due to lack of

resources


scorecard as the entity does not

have the resources to develop the

plan.

3.3.4Number of supply agreements concluded by 30

June 2018Number N/A N/A 1 1 1 Achieved

3.3.5

Number of report submitted on the fasibility study

conducted on Commission Market within the

Northern KZN

Number N/A N/A 1 1 0 Not AchievedNot achieved due to budgetary

constraints



have the resources to conduct the

feasibility study on Commision

Market.

IMP

LE

ME

NT

ED

CO

MM

UN

ITY

WO

RK

PR

OG

RA

MM

E A

ND

CO

OP

ER

AT

IVE

S S

UP

PO

RT


Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual


Annual


OP

MS

Ind

icat

or

No

.

Ou

tco

me

9


Department

3.3.6Date of submission of the business plan for the

nursery funding by 30 June 2018Date N/A N/A 31-Mar-18 31-Mar-18 Not Achieved

Not achieved due to budgetary

constraints



have the resources to develop a

business plan for the nursery.

3.4.1 Percentage of produce sourced from local farmers Percentage N/A N/A 60% 60% 62% 60% 62% 60% 68% 60% 99% Exceeded

4.1.1Number of financial reports submitted to parent

municipality Number N/A N/A 4 1 1 1 1 1 1 1 1 Achieved

4.1.2

Date of submission of the Mid-Year Adjusted

Budget and the Mid-Year Performance

Assessment reports parent municipality by 20

January 2018

Date N/A N/A 20-Jan-18 20-Jan-18 20-Jan-18 Achieved

4.1.3

Date of submissino of the 2016/2017 Annual

Financial Statements to parent municipality and

Auditor-General by 31 August 2017

Date N/A N/A 31-Aug-17 31-Aug-17 31-Aug-17 Achieved

4.1.4

Date of submission of the 2016/2017 Annual

Report to parent municipality by 31 December

2017

Date N/A N/A 31-Dec-17 31-Dec-17 Not Achieved

4.2.1Date of approval of the 2018/2019 Budget by the

BoardDate N/A N/A 31-May-18 31-May-18 31-May-18 Achieved

4.2.2Percentage of quarterly spending against

approved 2017/2018 budgetPercentage N/A N/A 100% 15% 3% 15% 2% 70% 6% 100% 108% Achieved

4.2.3Percentage of all internal audit queries responded

to within five working daysPercentage N/A N/A 100% 100% 80% 100% 80% 100% 80% 100% 80% Not achieved

There was no system to manage

received queries and submitted

responses hence requests were

responded to manually therefore

cannot clearly determine the

percentage of achievement.

To ensure that a proper recording of

requests and responses is kept.

4,3 Unqualified Audit opinion AG Opinion N/A N/AUnqualified

Opinion

Unqualified

Opinion

Qualified

OpinionNot achieved

AG identified fraud indicators in the

Audit report which led to a qualified

opinion

Fraud and Prevetion Policy was

developed for the entity to ensure

that staff are aware of fraudulent

transaction and transgression.

4.4.1Percentage of produce procured from black

owned businessesPercentage N/A N/A 80% 20% 20% 20% 20% 20% 20% 20% 20% Achieved

4.4.2Percentage reduction on WUIF expenditure by

5% of the annual budget by 30 June 2018Percentage N/A N/A 5% 5% 0% 5% 0% 5% 0% 5% 0% Not achieved

Due to there being no procurement

plan in place the entity had to

purchase its produce from well-

established suppliers at high prices.

To ensure that procurement plan is

prepared and adhered to.

4,5100% GRAP Compliance on all assets of the

entityPercentage N/A N/A 100% 100% 60% 100% 60% 100% 60% 100% 60% Not achieved

Lack of skill and capacity of finance

employees.

Ensure that responsible staff

member is capacited and regular

review is conducted on a quarterly

basis.

4.6.1 Percentage of revenue collected by 30 June 2018 Percentage N/A N/A 95% 95% 100% 95% 100% 95% 76% 95% 75,85% Not achieved

Scarcity of produce led to under

revenue collection as a result of

short deliveries.

Engage stakeholders to ensure

farmer development in order to

alleviate shortages on the supply of

fresh produce.

4.6.2 Number of days for the payment of crediotrs Number N/A N/A 30 days 30 days 120+ 30 days 120+ 30 days 120+ 30 days 120+ Not achieved

Not achieved due to cashflow

challenges that the entity is faced

with.

To put pressure on DoE to pay their

debt on timeously and regularly as

they are the only client that the

entity has currently. Source for more

clients in 2018/2019.

IMP

LE

ME

NT

ED

CO

MM

UN

ITY

WO

RK

PR

OG

RA

MM

E A

ND

CO

OP

ER

AT

IVE

S S

UP

PO

RT

IMP

RO

VE

D F

INA

NC

IAL

AN

D A

DM

INIS

TR

AT

IVE

CA

PA

CIT

Y


Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual


Annual


OP

MS

Ind

icat

or

No

.

Ou

tco

me

9


Department

4.6.3 Number of days to collect debts Number N/A N/A 30 days 30 days 43 days 30 days 43 days 30 days 45 days 30 days 60 days Not achieved

There are challenges with DoE as

they are the entity's sole client and

delays payments.

To put pressure on DoE to pay their

debt timeously and regularly as they

are the only client that the entity has

currently.


Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual


Annual


OP

MS

Ind

icat

or

No

.

Ou

tco

me

9


Department

5.1.1Number of strategic partnership agreement signed

by 30 June 2018Number N/A N/A 1 3 1 1 Exceeded

5.1.2

Quarterly reports on existing strategic partnership

programmes implemented Number N/A N/A 4 1 1 1 1 1 1 1 1 Achieved

5.1.3

Number of funding secured by 30 June 2018 for

KCFPM future Development Plans Number N/A N/A 1 1 1 Achieved

5,2

Date of the approval of the Communication and

Marketing Strategy Date N/A N/A 30-Jun-18 N/A N/A N/A 30-Jun-18 Not Achieved Budget Constraints and lack of

capacityTo be developed in 2018/2019

5.3.1

100% Compliance

with Companies Act Percentage N/A N/A 100% 100% 100% 100% 100% Not Achieved

Due to there being no Company

Secretary, the entity has been

challenged with issues of

compliance with the Companies Act

To develop a Compliance Risk

Management Plan as well as the

Compliance Monitoring Plan

5.3.2 Date of annual returns submission Date N/A N/A 30-Sep-17 30-Sep-17 01-Sep-17 Achieved

5.4.1Number of Board Meetings held during the

2017/2018 financial yearNumber N/A N/A 4 1 6 1 4 1 4 1 2 Exceeded

5.4.2Number of Board Committee meetings held during

2017/2018 financial yearNumber N/A N/A 4 1 1 1 1 1 1 1 1 Achieved

5.4.3Percentage of Board resolutions implemented

quarterlyPercentage N/A N/A 100% 100% 25% 100% 36% 100% 52% 100% Not Achieved

No monitoring of the resolutions

since there had been no Company

Secretary appointed

Appointment of the Company

Secretary and develop a track

schedule that will be a standing item

at Board Meetings to provide

progress to the Board on

resolutions take previously.

5.5.1

Percentage of compliance on the submission of

compliance reports to parent muncipality and the

Boars

Percentage N/A N/A 100% 100% 100% 100% 100% 100% 100% 100% 100% Achieved

5.5.2

Percentage achievement of the entity strategic

goals and objectives Percentage N/A N/A 80% 80% 80% 80% 80% 53% Not Achieved

There was no in-year monitoring of

predetermined objectives nor

quarterly reviews conducted to

ensure that the strategic goals and

objectives as set out in the OPMS

are achieved.

Performance Management

Framework will be adhered to

ensure that systems of monitoring

performance are put in place and

quarterly reviews are conducted as

prescribed.

5.6.1Percentage of all audit conducted as per the

approved 2017/2018 Audit Plan Percentage N/A N/A 70% 70% 85% 70% 85% 70% 70% Not Achieved

The appointment of the Internal

Auditors was in February 2018.

The appointment is for a 3 year

period from 2017/2018 to ensure that

the audits as per the audit plan are

conducted timeously.

GO

OD

GO

VE

RN

AN

CE

AN

D P

UB

LIC

PA

RT

ICIP

AT

ION


Target

Target

Quarter 1

Actual

Quarter 1

Target

Quarter 2

Actual Quarter

2

Target

Quarter 3

Actual

Quarter3

Target

Quarter 4

Actual


Annual


OP

MS

Ind

icat

or

No

.

Ou

tco

me

9


Department

5.7.1Date of the approval of the Risk Managemnet

StrategyDate N/A N/A 30-Jun-18 30-Jun-18 Not Achieved

Lack of capacity in the Management

function within the entity

To develop the Risk Management

Strategy by 31 March 2019

5.7.2Number of Risk Management Reviews conducted

in 2017/2018 financial yearNumber N/A N/A 2 1 1 1 Not Achieved

5.8.1Number of performance agreements signed

Number N/A N/A 3 3 Not Achieved

Not achieved due to lack of capacity

to assist with Performance

Management

To source the services of a skilled

Performance Management

personnel.

5.8.2

Number of quarterly reviews conducted per

quarter Number N/A N/A 4 1 1 1 0 1 0 1 0 Not Achieved

The Performance Evaluation

Committee did not sit due to there

being no performance plans in

place

Ensure quarterly sittings of the

Performance Evaluation Committee

by drafting meeting schedule

annaully

6,1

Number of job opportunities created in 2017/2018

financial year Number N/A N/A 1392 348 1164 696 1164 1044 1164 1392 1164 Exceeded

6.2.1

Number of Youth operated farming enterprises

supported Number N/A N/A 8 2 2 2 2 22 Exceeded

6.2.2

Number of Woman operated farming enterprises

supported Number N/A N/A 8 2 2 2 6 2 31 Exceeded

6,3 Number of cooperatives supported Number N/A N/A 4 1 1 8 1 1 18 Exceeded

IMP

LE

ME

NT

ED

CO

MM

UN

ITY

WO

RK

PR

OG

RA

MM

E A

ND

CO

OP

ER

AT

IVE

S

SU

PP

OR

T

KING CETSHWAYO FRESH PRODUCE MARKET

AUDIT RESPONSE PLAN

FINANCIAL YEAR: 2017/18

A: BASIS FOR DISCLAIMER OF OPINION

Nature of Audit Query Audit QueryAudit Response (Quarter

1)

Audit Response

(Quarter 2)

Audit

Response

(Quarter 3)

Audit

Response

(Quarter 4)

Purchasing of Fresh Produce and Distribution Cost

Unable to obtain sufficient

appropriate audit evidence that

purchasing of produce and

distribution cost had been

properly accounted for, due to

poor status of accounting

records and non- submission

of information to support this

amount.

Audit action

Ensure that all accounts are

reconciled on a monthly

basis and filling system is

developed.

Responsible person: Acting

CFO

Target Date: 31 January

2019

In progress - An Acting

CFO from the parent

municipality has been

appointed, internal

controls are being

developed as well as the

filling systems to ensure

that records are kept in

an orderly manner.

Monthly reconciliation of

accounts will be

implemented

immediately.

Payables from exchange transactions


appropriate evidence that

payables from exchange

transactions had been properly

accounted for, due to the poor

status of the accounting

records.

Audit action

To ensure that all

invoices are delivered to

finance. The invoice be

captured in the system

upon receipt.

Responsible person:

Acting CFO

Target Date: Immediately

On going - For the Q3

commencing in January

2019 all invoices will only

be delivered to finance.

POD's will be delivered to

KCDM satellite offices.

An invoice register to

record invoices upon

receipt has been

developed. PODs will be

matched to invoices

before payment.

Property, Plan and Equipment



management had properly

accounted for property, plant

and equipment due to the non-

submission of information to

support and adjustment made

during the year to property,

plant and equipment

amounting to R847 323.00

Audit action

To ensure that general

ledger is reconciled with

the fixed assets register

on a monthly basis to

ensure proper allocation.

Payments relating to the

purchase of assets to be

filed separately.

Responsible person:

Acting CEO


2019

In progress - Assets

verification has

commenced, thereafter

will be reconciled to the

ledger. Interim AFS will

be prepared and audited

by Internal Auditors.

General Expenses

Unable to account to obtain

sufficient appropriate audit

evidence that general

expenses had been properly

accounted for, due to poor

status of the accounting

records and non-submission of

information to support this

amount.

Audit action

Ensure that all accounts are

reconciled on a monthly

basis and filling system is

developed.


CEO


2019

In progress - An Acting

CFO from the parent


appointed, internal

controls are being

developed as well the


that records are kept in a

safe place and orderly

manner. Furthermore

accruals will be done on

a monthly basis and

reconciliation thereon.

Progress will be reported

in a Q3. Interim AFS will

be prepared and audited

by IA.

Cash and Cash Equivalent

Unable to account and to

obtain sufficient appropriate

audit evidence that

management had properly

accounted for cash and cash

equivalent and to confirm cash

and cash equivalents by

alternative means.

Audit action

The matter raised in the

audit finding has already

been resolved in November

2017. In year 1718

monthly bank

reconciliations were

performed and the closing

balance for the bank

statement and the

cashbooks were in balance.


CEO

Target Date: Monthly

In progress. Bank

reconciliation are being

done on a monthly basis.

Value Added Tax Receivable



VAT receivable had been

properly accounted for, due to

poor status of the accounting

records.

Audit action

To ensure that general

ledger and SARS

reconciliations are

performed on a monthly

basis and returns are

submitted in the respective

months.


CEO

Target Date: 25 February

2019

In progress- A

reconciliation of SARS

and ledger to be started

immediately and would

reported in a 3 Q.

Fruitless and Wasteful Expenditure


evidence that fruitless and

wasteful expenditure disclosed

in the financial statements had

been properly accounted for,

due to the status of the

accounting records and non-

submission of information.

Audit action

To ensure that fruitless

and wasteful expenditure

register is prepared,

reviewed, authorised and

reported on a monthly

basis.

Responsible person:

Acting CEO


2019

In progress - To review

the current registers to

ensure compliance of the

requirements of MFMA.

Monitoring and review to

begin in quarter three.

B: OTHER MATTERS

Annual Performance Report

Annual performance report of

the municipal entity was not

prepared as required by

section 46 of the MSA 32 of

2000. and s121(4)(d) of

MFMA.

Audit action

To ensure that performance

reviews are conducted on

quarterly basis.


CEO

Target Date: 28 February

2019

In progress - Parent


approached to assist with

this function as the entity

do not have the capacity.

To commence in the third

quarter.

Compliance with LegislationNon-compliance with specific

matters in key legislation.

Audit action

To prepare a checklist on

all legislation compliance

requirements and to

ensure that reviews are

performed on monthly

basis.

Responsible person:

Acting CEO


2019

In progress - Verification

of all compliance related

matter will be conducted

immediately in Q3 to

establish which periods

need to be updated.

Annual Financial Statements

Financial statements not

prepared in all material respect

in accordance with the

requirements of section122(1)

of the MFMA. Material

misstatements of non-current

assets/current assets/

liabilities/expenditure/disclosur

e items identified by the

auditors in the submitted

financial statements.

Audit action

To ensure compliance

with MFMA when

preparing financial

statements

Responsible person:

Acting CEO

Target Date: 31 March

2019

In progress - To ensure

that interim AFS are

prepared in accordance

with MFMA and audited

by Internal auditors.

Expenditure Management

Reasonable steps not taken to

ensure that the municipality

implements and maintains an

effective system of

expenditure control as required

by section 99(2)(a) of the

MFMA.

Audit action

To develop expenditure

management system

according to the

requirements of MFMA.


CEO


2019

In progress - All invoices

to have relevant

supporting documents, all

payment certificates to

be authorised and

captured in the system

before payment and be

paid within 30 days. Filing

system to be

documented and

improved, single person

be appointed who will be

responsible for document

management and a

register for documents to

be developed.

Asset Management

Effective system of internal

control for assets was not in

place as required by section

96(2)(b) of the MFMA.

Audit action

To develop asset

management control

system in accordance with

MFMA.


CEO


2019

In progress - Verification

of all compliance related

matter will be conducted

immediately in third

quarter to establish which

periods need to be

updated.

Strategic and Performance Management

The entity's performance for

the financial period under

review was not reported

against any measurable

performance objectives set in

terms of the service delivery

agreement or other agreement

with the parent municipality as

required by 121(4)(d) of the

MFMA.

Audit action

To ensure that service level

agreement with set

objectives by the parent

municipality is entered into

and to develop an annual

performance plan for 2019.


CEO


2019

In progress - Parent


approached to assist with

this function as the entity

does not have the

capacity. To commenced

in third quarter.

Procurement and Contract Management

Sufficient appropriate evidence

could not be obtained that

contracts were awarded only

to bidders who submitted a

declaration on whether they

were employed by the state or

connected to any person

employed by the state as

required by SCM regulation

13(c ).

Audit action

To ensure that all bidders

and suppliers sign

declaration forms.


CEO


In progress - A checklist

will be developed to

ensure that SCM officials

verify that the forms are

completed in full. This will

commence in quarter

three. The database will

be advertised and all

suppliers documents will

be checked for

completeness.

Internal Control Deficiencies

Leadership failed to exercise

adequate oversight over the

compilation of credible and

reliable financial and

performance reporting

including the compliance with

key legislation relating to

expenditure management,

assets management,

consequence management,

strategic planning and

performance management as

well as procurement and

contract management.

Management did not have

proper record management

system to support collection,

collation, verification, storing

and reporting of credible and

reliable annual financial

statements, annual

performance report and

compliance with key supply

chain management legislation.

Audit action

Audit response plans be

monitored on a monthly

basis.

Farmers development plan

be developed to assist with

carrying out of activities as

proposed in the

development strategy.

Workshop be cordinated to

present a turnaround

strategy and Corporate

Governance.

Site visit to Fresh produce

market.

Strict monitoring plan be

implemented to ensure

systems control are taken

care of.


CEO


In progress - In third

quarter, the parent

Municipality has

appointed MM as an

administrator. An Acting

CFO from the parent

Municipality has been

appointed, internal

controls are being

developed as well as

standard procedures and


that records are kept in

an orderly manner.

Monthly reconciliation of

accounts will be

implemented immediately

in third quarter. The

internal control must

cover : Fresh produce

order, Receipt, Dispatch,

Receipt at school, signed

POD, return to KCFPM,

bill, credit control, invoice,

receipt DOE payment.

2017/2018 AUDIT RESPONSE PLAN –AUDIT REPORT KING CETSHWAYO DISTRICT MUNICIPALITY Type of Opinion Current Year : Unqualified Type of Opinion Previous Year : Unqualified

Nature Of Audit Query

Audit Query Audit Response (Quarter 1)

Audit Response Progress (Quarter 2)



STRATEGIC PLANNING AND PERFORMANCE MANAGEMENT

The service delivery and budget implementation plan (SDBIP) for the year under review did include monthly revenue projections by source of collection and the monthly operational and capital expenditure by vote, as required by section 1 of the MFMA.

Audit action

The SDBIP will be amended and send to the Council for approval to include the monthly revenue projections by source of collection as part of the annexures of SDBIP item. Responsible Official

Mr. S. Gumede / Mr C Mmaratel Target Date

28 February 2019

Audit action

The SDBIP was updated to include the monthly revenue projections by source of collection and monthly operational and capital expenditure by vote as required by section 1 of the MFMA and was submitted to Performance Audit Committee on the 19 December 2018. Responsible Official

Mr. S. Gumede / Mr C Mmaratel Target Date

28 February 2019

Audit action Report Progress on action at the end of quarter 3 Responsible Official Target Date

Audit action Report Progress on action at the end of quarter 4 Confirm resolution of query [100% resolution or not] Responsible Official Target Date

Report of the Performance Audit

Committee for the 2017/2018

Financial Year

Report of the Performance Audit Committee for the 2017/2018 Financial Year.

King Cetshwayo District Municipality established the Performance Audit Committee in terms of

the provisions of the regulation 14(2) (c) of the Local Government: Municipal Planning and

Performance Regulations. The Performance Audit Committee main function is to assist Council

and the accounting officer in fulfilling oversight responsibilities concerning the integrity control and

accounting functions.

1. Composition of the Performance Audit Committee (PAC)

i. Regulation 14 (2) (c) states that the Performance Audit Committee must be

constituted and appointed by Council and be constituted by at least two

independent members who are not associated with the municipality and by a

Councillor;

ii. The regulations further states that one of the members of the performance audit

committee must be an expert on performance management issues;

iii. King Cetshwayo District Municipality Performance Audit Committee comprises of

the following members;

Member Qualification Designation

Mr Z Mzimela Chartered Accountant ( SA) Chairperson

Prof. JLW de Clercq PhD in Philosophy Member

Cllr DJ Ndimande Certificate in Management Development Member

2. Role and Objectives

2.1 The Performance Audit Committee is an independent advisory committee appointed by

the Council established to create an extended channel of communication in support to the

Executive Committee between Council, management and the auditors, both internal and

external. It provides a forum for discussing organisational performance in terms of the

IDPs as well as for Section 54/56 employees. This committee has a reporting

responsibility directly to the Accounting Officer and to Council via the Executive

Committee.

2.2 The primary objective of the Performance Audit Committee is to advise Council, the

political office-bearers, the accounting officer and the management staff of the municipality

on matters relating to Organisational and Individual Performance.

.

3. Responsibilities

The Performance Audit Committee is responsible for performing the following activities:

• Review at least six monthly and annual performance reports;

• Review the municipality’s performance management system and make recommendations

to Council;

• Submit a performance audit report to Council at least twice during a financial year;

• Ensures focus on economy, efficiency, effectiveness and impact in so far as the key

performance indicators and performance targets are concerned;

• Assess whether the key performance indicators are sufficient;

• Assess the reliability of performance information reported;

• Commission in-depth performance investigations where there is continued poor

performance;

• Review the PMS in the context of economy, efficiency, effectiveness and impact of the

municipality’s key performance indicators and performance targets.

• Assess whether the performance measurement and reporting process is carried out in

accordance to the provisions contained in Chapter 3 of the Local Government: Municipal

Performance Regulations for Municipal Managers and Managers directly accountable to

Municipal Managers, 2006 dated 1 August 2006.

Effectiveness of the Performance Audit Committee

i. In terms of the Performance audit committee charter, the performance audit committee

must hold a meeting at least once a quarter to consider issues pertaining to the

performance affairs of the municipality; review and assess the qualitative aspects of

performance reports, the processes that manage performance management,

government and compliance within the applicable legislation.

During the 2017/2018 financial year there were five (5) regular meetings and two

(2) special meeting. The table below refers;

Members Attendance to Performance Audit Committee Meetings Special PAC Meetings

29/08/2017 06/10/2017 19/01/2018 15/03/2018 19/06/2018 02/02/2018 02/05/2018

Mr Z

Mzimela

X X X X X X X

Prof. JLW

de Clercq

X X X X X

Cllr DJ

Ndimande

X X X X X X X

ii. The chairperson of the performance audit committee also serves a member of the

municipality’s Performance Evaluation Committee whose task and responsibility is

to evaluate the performance of the Municipal Manager and the managers directly

reporting to the Municipal Manager (Section 54 and 56 Managers). The

performance evaluation committee holds its meeting once a quarter, the table

below comprises of meetings held in the 2017/2018 financial year;

Date Quarter under Review

23 February 2018

Quarter 1 Evaluation for the 2017/2018 financial year

Quarter 2 Evaluation for the 2017/2018 financial year

12 September 2018 Quarter 3 Evaluation for 2017/2018 financial year

Proposed date 19 December

2018

Final Assessments for 2017/2018 financial year

There has been a notable challenge in the sitting of the Performance Evaluation

Committee meetings due to the failure of the Performance Evaluation Committee

to meet on a quarterly basis in order to assess the performance of the Municipal

Manager and the managers directly reporting to the Municipal Manager (Section

54 and 56 Managers). In particular, evaluations for the 4th Quarter of the 2017/2018

financial year remains outstanding.

The Performance Audit Committee’s oversight function is hampered due to the

consequential effect resulting in the failure of the Performance Evaluation

Committee’s ability to meet on a regular basis to evaluate performance and make

recommendations on performance results within applicable timeframes. Failure to

organize quarterly meetings on time for the PAC is concerning and requires

improvement.

The internal auditors are responsible for auditing the performance of the Municipal

Manager and the managers directly reporting to the Municipal Manager (Section 54

and 56 Managers) on a quarterly basis, the reports emanating from the quarterly audits

are presented to PAC on a quarterly basis for deliberation and recommendation. We

note with concern that some of the issues raised by Auditor General were not brought

to our attention by the Internal Auditors during the auditing of the 2017/2018 financial

year as some of the issues could have been identified earlier in order to avoid

numerous findings.

iii. In the course of performing its function, the Performance Audit Committee

considered and reviewed reports issued by internal audit on the audit of

achievement regarding OPMS, SDBIP and IPMS.

iv. The Performance Audit Committee notes the progress and performance made by

the municipality towards the achievement of the predetermined objectives in the

2016/2017 financial year however there is room for improvement.

Effective Governance concerns

• Management reports requested by the Performance Audit Committee often do not

address the specific concerns raised by the Committee, with key challenges and /

or specific measurable actions not being included in reports submitted. The effective

turnaround time frame in addressing specific issues is noted and remains lengthy

especially in the Technical Services Department. The performance indicators for the

senior managers seem to be operational than strategic. This is a concern which

needs to be addressed in preparation for the new financial year.

The Supply Chain Management regarding the cancellations and the slow pace in

awarding of tenders remains a major challenge as it impacts the service delivery to

the communities that we serve. This contributed significantly to non-spending

especially from the Technical Services Department for the better part of the year.

A major concern of the committee which has been raised numerously is the

filling of key positions taking longer than reasonable time, thus affecting or

impacting service delivery. The vacancies at the Top management (Municipal

Manager, DMM Technical Services and DMM Planning& Economic Development) for

most part of the year under review were a serious concern for the Committee. Although

Council made it utmost best to fill these positions the better part of the year remained

vacant, however we do note and applaud that all vacant positions for Top Management

have been filled.

The viability / sustainability of the Fresh Produce Market (KCFPM) remains a major

concern where a detailed analysis of current operations together with a business plan

for the market remains outstanding.

Conclusion

The performance audit committee concurs and accepts the Auditor General’s conclusions on the

municipality’s compliance with legislation and achievement of predetermined objectives.

The performance audit committee further notes the matters highlighted by the Auditor General

and endeavours to rectify the material finding raised in relation to the Service Delivery Budget

and Implementation Plan and going forward will ensure stricter compliance.

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