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It is indeed an honour for me as Executing Authority of Provincial

Treasury to present the Annual Report of the KwaZulu-Natal

Provincial Treasury for the year ended 31 March 2003. During the

past year we have had significant successes, which are highlighted in

this report. We are proud of these achievements which have taken

place during a difficult twelve months and indicate the flexibility and

adaptation of the team at Treasury. Our challenge lies in sustaining

the confidence and support of our internal and external clients and to

ensure that our vision of ensuring that the Rand goes the extra mile is

realised.

The staff at Provincial Treasury have shown continuous dedication

and diligence in carrying out their duties. I would like to extend my

most grateful thanks to the Head of Department, Mr Sipho Shabalala,

the entire senior management cadre and the teams they lead for

having served the Treasury, and therefore the Province, with distinction.

PM MILLER, MEC

Minister of Finance

For more copies of this document and information on

Kwazulu-Natal Provincial Treasury please contact the

Communications Unit:

P.O. Box 3613

Pietermaritzburg

3200

Tel: 033-897 4587

Fax: 033-897 4580

[email protected]

Contents

PART 1: Introduction .................... 1

PART 2: Departmental Performance .................... 4

PART 3: Report on Human Resources Management .................... 16

PART 4: Report of the Audit Committee .................... 29

PART 5: Report of the Auditor-General .................... 31

PART 6: Audited Annual Financial Statements .................... 33

1. Introduction

1.1 MISSION STATEMENT

“We the Provincial Treasury, pledge to provide the KwaZulu-Natal Provincial Government with

efficient and effective public finance support. This, we will achieve by adhering to the highest

standards in financial management, and by developing and implementing optimal systems and

processes.”

1.2 VISION STATEMENT

“We will help, support and ensure that your Rand goes the EXTRA MILE”.

1.3 INTRODUCTION BY THE HEAD OF THE DEPARTMENT

Provincial Treasury has continued to excel in achieving the strategic objectives

identified and thereby improving on the service delivery to our clients. The

focus of Treasury to continually lead and guide in the reforms being

undertaken in government presently, requires continuous efforts by our highly

trained and professional team. The needs of our clients require an ongoing

review of our strategic objectives and focusing our priorities on meeting these

requests. As a result we have a flexible multi-tasked team who is able to adjust

to the changing environment and thereby ensure that the reforms being

undertaken are achievable at an affordable price to government from a

financial, operational and managerial point of view.

Our achievements are based on the excellent relationship we have with other government

departments. Together we implement policies by using new methods that are practiccal and

effective. We can be proud as a province in that we are the leaders in procurement and internal

audit. We continue to lift the bar in both these disciplines and hopefully present best practice within

the public sector.

The department’s strategic direction which is dealt with in detail in section 2.2 highlights the pledge

we have made to continuously strive for improvement in all spheres of government where we, as

Treasury, play an important role.

MR DSD SHABALALAHead of Department

Provincial Treasury

1ANNUAL REPORT 2002/03

Mr DSD Shabalala

Head of Department

1.4 LEGISLATIVE MANDATE

The Public Finance Management Act (PFMA) and the Treasury Regulations have a direct influence on

the mandate of this department. Our mission statement pledges public finance support which is the

very core of this legislation. The reforms, in public finance, required by the PFMA need to follow

various phases before being effectively implemented.

Provincial Treasury is responsible for driving these reforms particularly in the areas of procurement,

financial and asset management and internal audit. In this respect new procurement legislation (the

KZN Procurement Act and Regulations) has been implemented in order to govern the provincial

procurement activities in terms of consistency, transparency and increased efficiencies.

The Bills of Exchange (Act 34 of 1964 as amended), Income Tax Act 58 of 1962 and the Banking Act

govern the management of the central banking account run by the department. The amendments to

this legislation have a major impact on our internal and external clients, which includes the general

public. It is for this reason that we have to adopt a proactive approach to amendments in order to

ensure smooth implementation of the necessary changes throughout the province.

The Prescription Act provides the outer limit within which debts can be collected. If these debts are

not collected, this law stipulates that debt prescribes and therefore must be written off.

The KwaZulu-Natal Internal Audit Act sets and drives the activities, the reporting framework and the

obligations of the Audit Committee through the Internal Audit Unit.

Human resources management is regulated through the Public Service Regulations, the Constitution of

the Republic of S. A., Act, No. 108 of 1996, Labour Relations Act, 66 of 1995, and the Department of

Public Service and Administration’s policy statements.

As stated above, the department is driving PFMA reforms through the implementation of legislation

which often highlights the need for review and amendments. Accordingly the department is currently

looking into amending the procurement legislation to further enhance the effectiveness of procuring

in government.

Other legislative mandates emanate from the following pieces of legislation:

Constitution Act, 108 of 1996; Criminal Procedures Act; National Prosecuting Act; Promotion of

Access to Information Act; Direct Charges Act, 2002; Division of Revenue Act; Appropriation Act;

Adjustments Appropriation Act; Provincial Tax Regulation Process Act (Act No. 53 of 2001);

Provincial Borrowing Powers Act; Intergovernmental Fiscal Relations Act (Act No. 97 of 1997)

1.5 INFORMATION ON MINISTRY

During the past year the Minister has placed great emphasis on overall management of provincial

spending. The main drive was to achieve spending within budget. This has borne fruit in that the

provincial debt of the past has been totally eradicated.

The past year has seen the shift in direction from spending within budget to obtaining maximum

value for each Rand spent. This has been driven by the Minister on two fronts. Firstly in the form of

selling the advantages to other Executing Authorities and their departments of using the Internal

Audit function as a management tool and secondly in streamlining the procurement function so as to

provide an inclusive procurement service and also to offer professional procurement advice to

departments where required.


Also during this past year three bills have been submitted to the legislature by the Finance Ministry.

These comprise the Direct Charges Bill, passed into law as the Direct Charges Act of 2002, Act 4 of

2002, The Adjustments Estimate Bill, passed into law as the Adjustments Appropriation Act of 2002,

and the KwaZulu-Natal Appropriation Bill, 2002.

In the period under discussion the Minister made two international visits. During June, 2002, the

Minister, on invitation, undertook an official visit to Xinavane in Maputo as representative of the

KwaZulu-Natal Government. The purpose of the visit was to witness the progress made in that area

by the Lebombo Spatial Development Initiative.

The second official trip abroad took place during September and was to Belgium as part of a

delegation of MECs and senior officials representing the Province of KwaZulu-Natal at the Liege

International Fair. Whilst in Europe the Minister attended meetings with senior representatives of

Siemens, Germany, suppliers of highly advanced medical equipment in the Inkosi Albert Luthuli

Hospital as well as AME International in Vienna, the information technology contractors for the same

hospital. Both these visits were in the company of the Provincial Minister of Health, Dr Z L Mkhize.

On the way back to South Africa the Minister stopped over in London at the invitation of the Lord

Mayor of the City of London (the financial hub of London), a reciprocal visit since the Minister had

hosted the Lord Mayor and party in KwaZulu-Natal.

1.6 SUBMISSION OF THE ANNUAL REPORT TO THE LEGISLATURE

I wish to table for the consideration of this House, the Annual Report for Vote 6: Provincial Treasury.

PM MILLER, MEC

Minister of Finance


2. Departmental Performance

2.1 FINANCIAL OVERVIEW

Provincial Treasury’s budget was driven by the strategic goals and objectives identified at the

beginning of the 2002/2003 financial year. The strategy underpins the delivery by the three main

divisions of the department namely Accounting Control, Budget and Procurement and Internal

Audit. The main theme of the financial management strategy for the year was the consolidation of

the financial management reforms introduced thus far.

As part of the consolidation process, Provincial Treasury continued during the year to identify and

clear the financial records of the previous financial years. These related to debts for both the

department and the Province. As a consequence there was improvement in collection of outstanding

debts as well as debts being written-off as irrecoverable based on the department’s debt write off

policy. These efforts are reflected in the net movement of R21million in accounts receivable.

The department reflects a net surplus of R629 million on the Income Statement (refer to part 6 of the

Audited Annual Financial Statements) which is made up of own revenue, collected during the year, of

R324 million (an increase of 20% on R270million: 2002) and R305 million of unspent voted funds.

The departmental vote carried an amount of R274 million for the provincial financial management

reserve for the 2002/03 financial year. These funds were not required to be distributed to provincial

departments during the year as sufficient funding was available from previous years’ surpluses and

additional funding was received from National Treasury to fund the adjustment estimates.

Appropriated by Vote R 397 162 000

Statutory amount R 526 000

Total R 397 688 000

Responsible MEC MEC of Finance

Administrating department Provincial Treasury

Head of Treasury Superintendent General: Provincial Treasury

Accounting officer Senior General Manager: Accounting Control

A total of R31million which remained unspent at year end is purely for the Provincial Treasury and

relates to a change in methodologies in particular projects that were undertaken during the year.

These are mentioned in more detail in 2.2 programme review. Provincial Treasury has submitted a

request for approval to roll-over the full amount of R31 million as these funds are crucial in the

continuation of driving financial management reforms in the province and in addition specific

commitments have been made in terms of this funding.

Revenue Collection

Provincial Treasury has continued to maximize returns on the short-term money market despite the

high movements in the working capital demanded by provincial departments. Interest to the value of

R286 million was earned during the year reflecting a 20% increase on the interest generated in

2002. An amount of R40 million was generated systematically through the writing back of stale

provincial cheques and the administrative charge on employee benefit deductions for the province.


2.2 PROGRAMME REVIEW

The department’s core functions are reflected in the aims and strategic objectives of the four

divisions. A detailed programme review provides insight into the achievements during the year and

the impact on each division’s budget.

2.2.1 Transverse Support

The aim of transverse support is to create an enabling environment

that will assist management of Provincial Treasury to provide optimal

service delivery through human capital by ensuring compliance with

all applicable personnel prescripts.

The strategic initiatives identified for 2002/03 were:

• To provide direct services (e.g. staffing payroll, labour relations) andstaff development programs responsive to the needs of the depart-ment and delivered at the highest possible standards of quality;

• To provide human resource infrastructure planning and consultancysupport throughout the department to help achieve organizationalimprovement;

• To ensure that the department fulfils its statutory and audit requirements and has inplace systems to monitor compliance and performance;

• To assist in ensuring that staff is appropriately skilled to provide high quality services tothe communities served;

• To create a working environment which is safe, secure and encourages all staff tocontribute to the best of their ability;

• Development and maintenance of an accurate employment equity plan; and

• Development and maintenance of a workplace HIV/Aids Programme.

These strategic initiatives are linked to the key focus areas of development of an integrated

approach to HR management and processes; development of strategic HR development

plan; to provide an effective labour relations management support in the department;

perform an assessment of skills required by the department.

The existing organisational structure is aligned to the core functions of the department. It is

the objective of the department to appoint professional and skilled staff. The structure has

facilitated the attraction to the department of a variety of skills and experience useful to the

changing environment in which we operate. Senior Managers in the department have been

afforded optimum delegations that enable them to operate their business units with the

required degree of independence from the Minister and the Head of Department.

The financial year end position is reflected in the table below:

Sub-ProgrammeAdjusted Estimates

R’000

Actual Expenditure

R’000

Surplus/(Deficit)

R’000

Minister 1 775 1 455 320

Head of Department 2 980 1 911 1 069

Human Resources 4 929 3 878 1 051

TOTAL 9 684 7 244 2 440

Comment:

R1 million was voted for as a transfer payment to fund African Opera. This amount has been

requested for roll-over due to the establishment of the trust only being finalised in the 2003/04

financial year. The remaining R1, 4 million surplus related to a provision for retrenchment costs

for excess officials identified as a result of implementing resolution No. 7 in the department.


Mr GS Chili

Manager:

Human Resource

Management &

Development

2.2.2 Budget and Procurement

The aim of budget and procurement is to achieve value-for-money in

the utilization of government resources. This we will do through constant

search for economies in expenditure, development of performance

orientation, explicit recognition of revenue constraints, and enforcement

of budget discipline and securing performance.

The strategic initiatives identified for 2002/03 were to:

Influence the rationalization of provincial programs and policies;

develop new relationship with departments based on trust, openness

and courtesy in service delivery; move the division out of the panoply of detailed controls to

a knowledge based centre devoted to strategic management; implement improved analytical

standards for fiscal monitoring and reporting; embark on intelligent decentralization and

enhance accountability within the division; recognize and reward performance, innovation,

and creativity.

The strategic initiatives are linked to the key focus areas which are listed as to:

• Manage the preparation, execution and monitoring of provincial budgets to support

explicitly formulated provincial policy priorities;

• Provide guidance and grant approvals (within delegated limits) to provincial departments

on the utilization of allocated financial resources;

• Manage the preparation, execution and monitoring of provincial infrastructure program;

• Manage the preparation, execution, and monitoring of provincial procurement plans;

• Report on provincial budgets, infrastructure program and procurement plans;

• Ensure compliance with national and provincial policies, legislation, regulations and

delegations;

• Manage the administrative and logistical support for provincial procurement processes;

• Formulate and provide advice to the Head of Department and the Minister on provincial

budgets, infrastructure provision, and procurement policies;

• Undertake regular monitoring and evaluation of departments’ strategic plans, outcome

measures and programs and report on them;

• Plan, implement and report on client satisfaction program; and

• Plan, execute, monitor, and report on municipal budgetary reforms.

Output and service delivery trends

Procurement in the Province is regulated by law. Prior to the passage of the Public Finance

Management Act (PFMA), the Tender Board Act of the Province regulated procurement. In

line with the reforms brought about by the passage of the PFMA, the Tender Board Act had

to be repealed. In order to deal with the transition, there was a need to use both pieces of

legislation.

On 30 June 2002 the KwaZulu-Natal Tender Board Act, 1997 was finally repealed, leaving

the KwaZulu-Natal Procurement Act, 2001 as the only valid procurement legislation in the

Province. This paved the way for several administrative actions aimed at fully implementing

the provisions of the Act, including the introduction of new standard tender forms, tender

conditions and preference point application forms. Procurement training workshops were

held on 23 and 24 October 2002, during which officials from all departments were trained on

the current procurement legislation and its implementation.


Prof NK Kusi

Senior General

Manager: Budget &

Procurement

On 1 May 2002 the Provincial Suppliers Database was launched, with the primary objective

of assisting departments in the task of identifying suitable suppliers. At the time of launch,

930 suppliers were permanently registered. At last count, the number of registered

suppliers had grown to over 4050. The tremendous growth in the number of suppliers

wishing to register has placed increasing pressure on the capacity of the database – to the

extent that we have had to upgrade the entire database system. An extensive review has

become necessary to ensure that all needs are accommodated and a long-term solution

developed and implemented for the efficient selection and review of suppliers.

Another significant development in the Procurement Administration Office was the

establishment of the Compliance Monitoring Unit. All posts designated to this Unit were

filled by the beginning of January 2003, while to date a number of monitoring assessments

are being undertaken with completion dates falling into the new financial year.

For their part the budget reforms emphasised on improving synergies and alignment in the

planning, budgeting, monitoring and reporting processes in the accountability cycle. This

has led to important initiatives at both the administrative and executive level.

The provincial government’s planning and policy framework has been reviewed in its

entirety. As part of this process, the Provincial Cabinet has adopted a singular planning

calendar that includes both the strategic planning cycle and the budget cycle. Flowing from this

exercise is that Cabinet has resolved to convene two annual Cabinet Indabas each year to

provide strategic and policy direction to the provincial planning and budgeting processes.

In respect of expenditure monitoring and control, the

Budget Office continued to monitor provincial expen-

diture vigorously during 2002/03. Effective use of both

the Early Warning System (EWS) and close monitoring

and analysis of quarterly expenditure reports, as well as

quarterly bi-lateral meetings, alerted the Budget Office

early in the year to areas of potential over-spending

and unexpected expenditure pressures, especially in the

social sector departments. This early detection enabled

Provincial Treasury and the departments concerned to

take preventative action, and limit the extent of the

projected budget over-runs.

Two major projects which were anticipated to be under-

taken during 2002/03 but were delayed due to capacity

constraints, relate to:

The Provincial Own Revenue Project – a comprehensive

study of the existing sources of revenue with a view to

determining their proper bases, enhancing management

and collection systems, and determining the feasibility

of appropriate revenue retention and incentive schemes;

and the development of an Input-Output model of the

KwaZulu-Natal provincial economy. The model will

unravel the interdependencies and linkages within the provincial economy and help lay the

basis of informed policy intervention.

These two projects have been carried over to the new financial year.

One of the main challenges facing the Budget Office in the 2003/04 financial year is the

uncertain role that the Provincial Treasury will have in municipal finances. It is anticipated that

Provincial Treasury will be responsible for the monitoring, evaluation and reporting on the

state of municipal finances in the province, which would require the sourcing of relevant skills.


Managers: Budget Office

Managers: Procurement Office

The table below reflects the key output types identified and highlights the achievements of

2002/2003 and provides the targets for the forthcoming year.

Output Type Performance Measures

Performance Targets

2002/03

Est. Actual

2003/04

Estimate

Sub-Programme – Budget

Compilation of policy research

papers & analytical studies on

macro-economic & fiscal issues

Number of papers/reviews

completed

Compliance with target dates

Feedback with respect to

quality from clients

7 completed by

30 Nov 2002

Complete

Yes

Complete 8 major

research papers by

31 March 2004

Compilation of the province’s

main budget

Accurate documents

completed on time:

Treasury Guideline

Document

Budget Statement Format

MTEC document

Strategic Planning within the

Context of Performance

Budgeting

Printers Proofs of 2003/04

Budget Statements

Complete

Complete

Complete

Complete

As per 2004/05

National and

Provincial Budget

Planning Process

time-table

Budget management 4 Treasury Committee

meetings per annum

Detailed analytical

expenditure reports at the

end of each quarter

Accurate EWS Reports

submitted on time

Infrastructure Spending

Progress Reports at the end

of each quarter

First 2 meetings

held by Oct 02

First 2 reports

submitted by

end of Oct 02

Complete

Treasury Committee

meetings at end of

each quarter

Detailed report at end

of each quarter

EWS reports by the

22nd of each month

Detailed report at end

of each quarter

Adjustments Estimate Budget Accurate document finished

on time

Balanced Adjustments

Estimate for the province

Complete

Complete

Within the time limits

set by National

Treasury

Sub-programme – Procurement

Evaluation of departmental tender

submissions

Evaluation of draft tender

documents

Number of submissions

evaluated

Number of draft documents

evaluated

266

69

240

120

Develop and implement training

programme and convene training

sessions

Number of training sessions

held

03 03

Develop, implement and maintain

Suppliers Database

Number of registered

suppliers

13 881 20 000

Investigate alleged

non-compliance and perform

routine investigations

Number of reports generated 02 24

Arrange and administer general

provincial period contracts

Arrange and administer

participation in national contracts

Number of contracts 03

04

09

04



Sub-Programme

R’000

Adjusted Estimates

R’000

Actual Expenditure

R’000

Surplus/(Deficit)

R’000

Budget Office 13 515 5 310 8 205

Procurement Administration 6 451 5 395 1 056

TOTAL 19 966 10 705 9 261

Comment:

The total savings of R9 million was primarily due to projects being carried over to 2003/04.

In addition, certain posts were filled later in the year with savings resulting in personnel and

related administrative expenses.

The advertising of tenders was to a lesser extent than was anticipated and the establishment

of a Monitoring Compliance Unit which commenced functioning at a late stage in the year

also contributed to the savings in procurement.

2.2.3 Accounting Control

The aim of Accounting Control is to develop and implement financial

management systems, policies and procedures and to support the

organisation with an efficient corporate service.


• To review national (standards) discussion papers issued by theAccounting Standards Board (ASB) and coordinate provincialinputs to ensure application in the Province;

• To develop appropriate accounting policies and proceduresbased on shortcomings identified in both internal and externalaudit reports;

• To implement BAS per business plan within an 18-month cycle;

• To implement appropriate asset management inline with the accounting policy framework;

• To reduce internal cycle times in terms of procurement and registry services;

• To monitor compliance of public entities with PFMA requirements; and

• To develop appropriate tools for financial management in public entities requiringassistance.

These strategic initiatives are linked to the keywork focus areas which are:

• To provide financial management

support to clients;

• To provide financial accounting systems,

such as FMS, BAS, LOGIS, EFTS to

support financial management in the

Province;

• Provision of services such as

procurement, payments, IT, transport

and registry to the department;


Mrs C Coetzee

Senior General

Manager:

Accounting Control

Chief Financial Office

• Management of salary deduction pay-overs

and reconciliation of taxation liability; and

• Cash management of provincial cash

reserves held in the Exchequer Account.


One of the strategic objectives for the year was to

reduce cheque payments and its attendant

problems and move to a more stable system of

paying electronically. This required an iterative

process of informing departments and monitoring

the extent of their compliance. The year end

position reflected a significant decrease in the ratio of cheques to electronic payments from

73:27 to 28:72. The direct impact is reflected in the savings in bank charges of R610 000.

The phased move from the Financial Management System (FMS) to the Basic Accounting

System (BAS) which was anticipated to begin early in the year in fact only began incurring

expenditure in January 2003 once the initial project planning was complete. This led to a

significant amount of R18,2 million being requested for roll-over as the majority of the

spending is anticipated to be incurred during the 2003/

2004 financial year when all departments will be imple-

menting BAS. Departments of Health and of Education will

go live on 1 April 2004. BAS should bring many benefits to

the province in terms of the quality of the financial

information at its disposal. The new system provides

on-line access to financial management information which

can be analysed and managed on a day to day, real time

basis. This represents a major improvement from the

current system of lengthy paper reports based on often out-

dated information.


Corporate Services

Accounting Systems

Banking, Revenue and Asset Management




Performance Targets

2002/03

Est. Actual

2003/04

Estimate

Implementation of BAS No. of sites implemented per

project plan

Four departments

01/04/2003

All departments

excluding Health

and Education

Implementation of accounting

standards developed by ASB

No. of standards reviewed and

accepted

No standards

issued by ASB.

3 accounting

standards

To facilitate the process of EFT No. of payments processed

electronically vs number per cheque

72 : 28 90 : 10

Decentralise administration of

taxation i.r.o. Casual Labourers,

Committees and Commissions

No. of implementation sites To be undertaken

in new year

All departments

The financial year-end position is reflected in the table below:

Sub-Programme

R’000

Adjusted Estimates

R’000

Actual Expenditure

R’000

Surplus/(Deficit)

R’000

Chief Financial Office 18 002 16 620 1 382

Financial IT Systems 50 136 28 610 21 526

Revenue and Asset Management 16 174 13 246 2 928

Corporate Services 5 698 3 341 2 357

TOTAL 90 010 61 817 28 193

Comment:

A total savings of R 28,2 million was realised at year end primarily due to the phased

implementation of BAS requiring an amount of R 18,2 million to be rolled over. A further

savings of R610 000 related to reduction in bank charges as discussed above. Accounts

outstanding at year end of R4,1 million were requested for roll-over.

2.2.4 Internal Audit

The aim of internal audit is to provide an innovative cost-efficient and

value added internal audit service to client departments to ensure

good corporate governance in KwaZulu-Natal.


• To provide accounting officers and their senior management with

objectives assurance about the design and operation of control

systems and processes;

• To provide an independent evaluation of the reliability and

accuracy of financial information produced by the accounting

officers and senior management;

• To assist accounting officers and senior management in developing risk management

and monitoring strategies; and

• To assist accounting officers and senior management in developing fraud combating

strategies.


Mr VK Naicker

Senior General

Manager:

Internal Audit

These strategic initiatives are linked to the key focus areas which are:

• Regular and ongoing follow up with Accounting Officers to discuss the progress in

implementing previous recommendations;

• Develop plans to audit the effective implementation of recommendations in all

departments;

• Regularly scrutinize the Auditor-General’s reports for all departments and structure an

audit plan to assist in minimizing future queries and tightening the control environment;

• Conduct a thorough investigation into all departments to understand the strategic

objectives, major processes, activities and the relevant controls;

• Perform forensic investigations into areas identified by Accounting Officers and their

senior management, as well as the Internal Audit Unit;

• Perform internal audit assignments identified by Accounting Officers and their senior

management and by the Internal Audit Unit;

• Development and implementation of micro fraud prevention plan; and

• Performance reviews of the monthly management accounts.


A significant part of the 2002/2003 financial year was spent on generating an

understanding of the control environments of departments. This project was undertaken to

ensure compliance with section 3.1.10 of the Treasury Regulations. The project was

conducted in three distinct phases.

The first phase was to obtain an understanding of departments’ service delivery objectives.

This lays a good foundation for performance auditing. The second phase had to do with

the understanding of the programme

structures to ensure that the structures are

adequate to support the service delivery

objective of departments.

The third and final phase was to

understand the internal departmental

processes with a view to ensuring their

adequacy or otherwise. Once these

phases had been completed, workshops

were conducted with departments to

determine the inherent risks in the control

environment, including the risk of fraud.

The procurement of audit software will

realise improvements in methodologies

and costing of internal auditing to the state. The implementation of such best practices will

further enhance the capacity of the unit and diminish the reliance placed on external expertise

resources.




Managers: Internal Audit Office


Performance Targets

2002/03

Est. Actual

2003/04

Estimate

Strive for

improvement in

internal control in

client departments

Develop required

internal audit skills

among internal

auditors

Develop the

required skills in

risk analyst

specialists and

corporate

investigators

Number of audit assignments completed and

reports issued as per the annual audit plan

Number of workshops conducted per

department

Assess number of posts filled against

approved staff establishment

Internal training courses.

Client feedback and extent of reliance by

Auditor-General

No. of officials placed within TOPP

Programme

No. of officials completing 1st year of studies

Number of forensic audit assignments

completed and reports issued

Number of fraud prevention plans

developed & implemented

11

14

14

Two per staff member

-

4

-

14

14

To complete

scheduled audit

assignments by

31 March 2004

To complete

risk assessment

work-shops and

issue reports by

31 March each

year


Sub-Programme

R’000

Adjusted Estimates

R’000

Actual Expenditure

R’000

Surplus/(Deficit)

R’000

Internal Audit 21 524 18 555 2 969

Risk Management 8 797 6 590 2 207

TOTAL 30 321 25 145 5176

Comment:

The three-phased approach taken by Internal Audit resulted in a significant savings of

R5 million during 2002/03. This was due to the reduction in travelling and related subsistence

costs and utilisation of external resources. It is anticipated that the audit plan developed

based on the above-mentioned assessments will require the full allocation to be spent in the

ensuing year.

2.3 MEASURING THE SUCCESS OF ACHIEVING STRATEGIC OBJECTIVES

Provincial Treasury’s strategic plan identifies measurable objectives and expected outputs for the

department for the forthcoming period. These outputs are mapped according to the activities and

resources required to ensure success at the end of the period. In order to ensure that the outputs are

measurable qualitative and quantitative targets are set. The implementation of the department’s

objectives is actioned through the performance agreement signed by management.

Quarterly performance reviews are linked to the quarterly strategic reports submitted to the Budget

Office, thereby monitoring the implementation strategies and assessing the likelihood of achieving

the targets timeously.


2.4 LONG TERM COMMITMENTS

The department rents its premises and has signed a 10 year lease agreement which will expire in

May 2010. It is anticipated at this stage that we will remain in these premises until that time, however

a detailed assessment will be undertaken in the medium term once information regarding the

specific market is more realistic/measurable, suitable funds will then be made available in the

respective financial year.

The department has entered into service level agreements with SITA based on the provincial business

agreement. The aim of the agreement is to provide for effective procurement and management of

information technology in the province.

Medium term commitments are in the form of service lease agreements in the utilisation of office

equipment. The department is currently in the process of identifying the most cost-effective method

of undertaking business processes as part of the improvement of business process strategy and

underlying objectives as contained in the balanced score cards.

The condition of the capital stock (in the form of computer and office equipment, furniture and a

small pool of vehicles) is generally good as the stock is placed in a fairly stable environment where

few movements/changes are required. This further ensures the safety thereof and extends the

expected lifespan. A substantial portion of the vehicle fleet needs to be replaced in the 2002/2003

year, the replacement costs have been provided for in the MTEF. There is a shift from a large vehicle

fleet to a smaller fleet with a simultaneous increase in subsidised vehicles. This has been phased in

sync with the capacitating of Internal Audit who are the primary users of the vehicles.

The department has established the current status/condition of all computer equipment and is

formulating a replacement tool in line with the policy which will be utilised during the budgetary

process in determining accurately the replacement costs of computer equipment over the MTEF.

The 2002/03 saw a drive to replace all redundant furniture and to standardise the layouts utilised

throughout the department. This provides a professional environment in which interaction with our

clients is facilitated and provides an improved working environment for the staff.

2.5 CAPACITY CONSTRAINTS

The department began the year with 71 vacant posts, a figure which was revised in terms of changes

in organisational realignment, identification and placement of excess officials and the identification

of additional resources required in terms of improving the financial management of the province.

Despite the fact that the implementation of resolution 7 has delayed several appointments, the

department has to date, employed a number of middle managers in order to meet specific objectives

of the department namely:

a) The establishment of compliance unit in procurement to monitor contractor’s performance with

provincial government contracts;

b) To increase the capacity within internal audit thereby reducing reliance on external resources; and

c) To undertake revenue research and establish an infrastructure unit in the budget office.

The vacant posts remaining in the department are linked to the internal audit risk management unit

(newly created) and budget and procurement analysts and specialists. The process of filling these

positions is anticipated to be completed by December 2003.


2.6 DISCONTINUED ACTIVITIES – DELISTING OF PUBLIC ENTITIES

The previous financial statements included the operating costs associated with the Tender Appeals

Tribunal. Subsequent to the department’s request, this board has been de-listed from Schedule 3 of

the PFMA and the department no longer has schedule 3 public entities.

2.7 CORPORATE GOVERNANCE ARRANGEMENTS

The department functions with a three division system with each division managed by a Senior

General Manager who is also a programme manager for that division. The Head of Department is

not the Accounting Officer of the Department in order to enable him to account for the provincial

budget. There are responsibility managers under each of the programme managers. The

Accounting Officer is assisted by a Chief Financial Officer who is responsible for finances of the

Department. Each of the levels have been delegated specific responsibilities for accounting

purposes. The management structure described above ensures that there are adequate controls in

place to fix accountability and to ensure that managers are empowered to undertake all facets of

management possible.

The provincial internal audit unit is situated within Provincial Treasury and has grown substantially

over the past three years in terms of size and capacity. The continued partnership between Intergritas

Consortium and the unit has ensured the transfer of skills and the exchange of best practices. The

unit recently acquired Team-mate software which will improve on the turnaround time of audits and

investigations and thereby ensure an efficient service to the provincial departments.

The unit focused on a control environment assessment which will form the basis of the audit plan for

the forthcoming year. An additional outcome of the assessment was the development of a fraud

prevention plan based on the nature and type of risks associated with the department. Briefing

sessions have been held by the Unit with departmental managers to communicate the process and

the results. Management has been requested by the Head of Department to provide a detailed plan

that will ensure that all risks have been identified and that sufficient strategies are in place to mitigate

those risks.

2.8 PROGRESS WITH FINANCIAL MANAGEMENT IMPROVEMENT

The department continues to identify areas of improvement in terms of business processes within the

department. In the area of financial management, this department is expected to be the leader in

identifying areas of improvement and providing best practice solutions. The reforms mentioned in

the preceding paragraphs highlight the achievements during the year in terms of budgeting,

procurement, internal audit and financial management. The focus in the forthcoming period will be

on asset management, capital infrastructure, revenue collection and growth and development

models for the province.

2.9 APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements set out on pages 33 to 64 have been approved by the Accounting

Officer.

Carol CoetzeeAccounting Officer

31/5/2003


3. Report on Human Resource Management

The statistics and information published in this part of the annual report are required in terms of regulation

III J.3 of the Public Service Regulations and have been prescribed by the Minister for the Public Service and

Administration for all government departments within the Public Service.

The statistical tables provide high-level information on key human resource issues. The information aims to

empower legislatures, the media, the public and other key stakeholders to monitor whether departments:-

• Are exercising the powers granted under Public Service and Public Finance legislation in a responsible

manner,

• Are achieving national transformation priorities established by the Cabinet, for example, affirmative action.

1 – SERVICE DELIVERY

All departments are required to develop a Service Delivery Improvement Plan. The following table reflects

the components of the SDI plan as well as progress made in the implementation of the plans.

FINANCIAL YEAR 2002/03TABLE 1.1 – Main Service for Service Delivery Improvement and Standards

Main Services Actual Customers Standard of ServiceActual Achievement

Against Standards

Develop an integrated

approach to Human Resource

Management and Processes.

Department officials

Ex-officials.

Review Human Resource

management tools so as to

ensure conformity with all the

latest Human

Resource/Development

prescripts.

Draft Employment Equity Plan

HIV/AIDS Policy

Draft Human Resource Plan.

Develop a strategic Human

Resource

Development plan.

Department officials. Perform an assessment of skills

within Provincial Treasury.

A detailed skills assessment

was undertaken

Bursaries were issued, as well

as training conducted on an

adhoc basis in the absence of a

training programme.

Enhance knowledge and

understanding about Provincial

Treasury and the services it

provides through effective

communication within and

outside the department.

Department officials,

Other government

departments, private sector

organizations

General Public.

Improve the existing

communication strategy.

Increasing accessibility to the

departmental website, training

on the use of the website,

improved the number of

documents on the website.

To provide an effective,

professional legal advisory

service to the department.

Departmental officials. Provide timeous and accurate

advise on legal matters.

Reduction and ultimate

elimination of default

judgments.

To provide an effective labour

relations management support

to the department.

Departmental officials. Improve management of labour

relations processes.

Thirteen Departmental Task

Team meetings, eleven of

twelve excess officials

absorbed, four disciplinary

cases, two of which have been

resolved.


TABLE 1.2 – Consultation Arrangements for Customers

Type of Arrangement Actual Customer Actual Achievements

Forum meetings Representatives of different departmental

forums and Organized Labour

Finalisation of Human Resource Policies,

Finalisation of Human Resource queries.

Circulars Departmental Officials Keeping customers abreast on latest developments.

Appointments with Human

Resource Practitioners

Departmental Officials Finalisation of Human Resource queries.

Meetings with Managers Managers Finalisation of Human Resource queries.

TABLE 1.3 – Service Information Tool

Provincial Treasury has a fully operational web-site providing significant information on our core services and mandated

legislature. Furthermore we have a dedicated help-line to assist in all procurement matters. Our internal publication is issued

monthly and has now been incorporated into the web-site.

2 – EXPENDITURE

Departments budget in terms of clearly defined programmes. The following tables summarise final audited

expenditure by programme (Table 2.1) and by salary bands (Table 2.2). In particular, it provides an

indication of the amount spent on personnel costs in terms of each of the programmes or salary bands

within the department.

TABLE 2.1 – Personnel costs by programme, 2002/03

Programme

Total

Expenditure

(R’000)

Personnel

Expenditure

(R’000)

Training

Expenditure

(R’000)

Professional

and Special

Services

(R’000)

Personnel cost

as a percent of

total

expenditure

Average

personnel cost

per employee

(R’000)

Transverse Support 8 019 4 994 39 521 60% 192

Budget & Procurement 10 411 7 859 214 410 75% 117

Accounting Control 62 215 15 535 69 34 144 25% 134

Internal Audit 25 145 9 203 738 11 806 37% 153

Special Functions 12 791 - - - - -

TOTAL 118 581 37 591 1 060 46 881 32% 148

The Department’s personnel costs represent 32% of the total expenditure of the Department. The average cost peremployee is R148 000 and is based on a staff complement of 244 filled posts. An average cost for the programmeTransverse Support is high due to the inclusion of the Head of Department.

TABLE 2.2 – Personnel costs by salary bands, 2002/03

Salary bandsPersonnel Expenditure

(R’000)

% of total personnel

cost

Average personnel cost

per employee (R’000)

Lower skilled (levels 1–2) 25 0.07% 25

Skilled (level 3–5) 3 974 10 57% 67

Highly skilled production (levels 6–8) 14 334 38 13% 133

Highly skilled supervision (levels 9–12) 9 927 26 41% 163

Senior and Top management (levels 13–16) 9 331 24 82% 373

TOTAL 37 591 100% -

50% of the personnel costs reflect the salaries of the management team (from level 9 to 16).


The following tables provide a summary by programme (Table 2.3) and salary bands (Table 2.4), of

expenditure incurred as a result of salaries, home owners allowances (HOA) and medical aid. In each case,

the table provides an indication of the percentage of the personnel budget that was used for these items.

TABLE 2.3 – Salaries, Home Owners Allowance and Medical Aid by programme, 2002/03

Programme

Salaries Home Owners Allowance Medical Aid

Amount

(R’000)

% of personnel

costs of

programme

Amount

(R’000)

% of personnel

costs of

programme

Amount

(R’000)

% of personnel

costs of

programme

Transverse Support 4 304 86.18% 57 1.14% 174 3.48%

Budget & Procurement 6 702 85.28% 121 1.54% 365 4.64%

Accounting Control 11 274 72.57% 337 2.17% 849 5.47%

Internal Audit 7 590 82.47% 118 1.28% 405 4.40%

TOTAL 29 870 79.46% 633 1.68% 1 793 4.77%

Actual salaries (less all other costs to the employer) represents 79,46% of the total personnel cost, with HOA and medicalaid representing a total of 6,45% of the total personnel cost. A minimum amount of R1 000 was incurred for overtimeduring the year.

TABLE 2.4 – Salaries, Home Owners Allowance and Medical Aid by salary bands, 2002/03

Salary Bands

Salaries Home Owners Allowance Medical Aid

Amount

(R’000)

% of personnel

costs of salary

bands

Amount

(R’000)

% of personnel

costs of salary

bands

Amount

(R’000)

% of personnel

costs of salary

bands

Lower skilled 21 84 00% 0 1.20% 1 4.00%

Skilled 3 224 81.13% 45 1.13% 196 4.93%

Highly skilled production 11 235 78.38% 276 1.93% 748 5.22%

Highly skilled supervision 7 734 77.91% 167 1.68% 446 4.49%

Senior and Top management 7 656 82.05% 145 1.55% 402 4.31%

TOTAL 29 870 79.46% 633 1.68% 1 793 4.77%

3 – EMPLOYMENT AND VACANCIES

The tables in this section summarise the position with regard to employment and vacancies.

The following tables summarise the number of posts on the establishment, the number of employees, and

the vacancy rate. This information is presented in terms of three key variables: programme (Table 3.1),

salary band (Table 3.2). Table 3.3 provides establishment and vacancy information for the key critical

occupations of the department.

In terms of current regulations, it is possible to create a post on the establishment that can be occupied by

more than one employee. Therefore, the vacancy rate reflects the percentage of posts that are not filled.

TABLE 3.1 – Employment and vacancies by programme, 31 March 2003

Programme Number of posts Number of posts filled Vacancy Rate

Transverse Support 30 26 13.33%

Budget & Procurement 67 52 22.39%

Accounting Control 140 116 17.14%

Internal Audit 80 60 25.00%

TOTAL 317 254 19.87%

No additional posts to the establishment were created during the year.


A total of 63 posts representing 19% of the establishment were vacant at year end. A substantial portion of thesevacancies relate to new units established in internal audit and budget office. Majority of these posts (49) are at middlemanagement as indicated in the table below.

TABLE 3.2 – Employment and vacancies by salary bands, 31 March 2003

Salary band Number of posts Number of posts filled Vacancy Rate

Lower skilled (Level 1–2) Permanent 4 4 0%

Skilled (Level 3–5), Permanent 70 56 19.18%

Highly skilled production (Level6–8), 137 108 21.17%

Highly skilled supervision (Level 9–12), 78 61 21.79%

Senior and Top management (Level 13–16), 28 25 10.71%

TOTAL 317 254 19.87%

The table below reflects the vacancies at the various occupational levels in the department.

TABLE 3.3 – Employment and vacancies by critical occupation, 31 March 2003

Critical occupations Number of posts Number of posts filled Vacancy Rate

Administrative related 26 19 26.92%

Bus and heavy vehicle drivers 3 3 0%

Communication and information related 1 0 100.00%

Finance and economics professionals 1 0 100.00%

Financial and related professionals 35 29 17.14%

Financial clerks and credit controllers 73 64 12.33%

Food services aids and waiters 1 1 0%

General legal administration & rel. professionals 1 1 0%

Head of Department/Chief Executive officer 1 1 0%

Household food and laundry services related 1 1 0%

Cleaners in offices 1 0 100.00%

Human Resource & Organisational Development & related prof 69 52 24.64%

Human Resource Clerks 12 10 16.67%

Human resources related,

Library mail and related clerks

2

2

1

2

50.00%

0%

Logistical support personnel 8 7 12.50%

Messengers porters and deliverers 4 4 0%

Other administrat& related clerks and organizers 32 25 21.88%

Other occupations 1 1 0%

Risk Management and security services 2 2 0%

Secretaries & other keyboard operating clerks 14 8 42.86%

Senior Managers 27 23 14.81%

TOTAL 317 254 19.87%

4 – JOB EVALUATION

The Public Service Regulations, 1999 introduced job evaluation as a way of ensuring that work of equal valueis remunerated equally. Within a nationally determined framework, executing authorities may evaluate orre-evaluate any job in his or her organisation. In terms of the Regulations all vacancies on salary levels 9 andhigher must be evaluated before they are filled. This was complemented by a decision by the Minister for thePublic Service and Administration that all SMS jobs must be evaluated before 31 December 2002.


The following table (Table 4.1) summarises the number of jobs that were evaluated during the year underreview. The table also provides statistics on the number of posts that were upgraded or downgraded.

TABLE 4.1 – Job Evaluation, 1 April 2002 to 31 March 2003

Number of posts Number of Jobs Evaluated % of posts evaluated by salary bands

Lower skilled 1

Skilled 73 1 1.37%

Highly skilled production 137 4 2.92%

Highly skilled supervision 78 13 16.67%

Senior Management Service Bands A 20 7 35.00%

Senior Management Service Bands B 4 0 0.00%

Senior Management Service Bands C 3 0 0.00%

Senior Management Service Bands D 1 0 0.00%

TOTAL 317 25 7.89%

A total of 25 posts were evaluated of which 4 (at Level 6–8) were upgraded as a result. The evaluation unit anticipates toincrease this number substantially in the forthcoming year.

The following table provides a summary of the number of employees whose own positions were upgradeddue to their post being upgraded. The number of employees might differ from the number of postsupgraded since not all employees are automatically absorbed into the new posts and some of the postsupgraded could also be vacant.

TABLE 4.2 – Profile of employees who’s positions were upgraded due to their posts beingupgraded, 1 April 2002 to 31 March 2003

Beneficiaries African Asian Coloured White Total

Female 2 1 - 1 4

Male 1 - - 2 3

TOTAL 3 1 0 3 7

The following table summarises the number of cases where remuneration bands exceeded the gradedetermined by job evaluation. Reasons for the deviation are provided in each case.

TABLE 4.3 – Employees who have been granted higher salaries than those determined by jobevaluation, 1 April 2002 to 31 March 2003

Occupation Number of employees Job evaluation level Remuneration level

Financial & Related Professionals

Financial & related Professionals

5

2

10

12

11

13

TOTAL 7

Percentage of total employment (254) 2,9%

Restructuring of department that results in a small number of highly specialised and skilled professional posts. Suchposts that do not require control over human or financial resources are penalised as compared to the traditionalmanagement posts. Due to the prevailing circumstances, even if re-evaluated the same results will be yielded

TABLE 4.4 – Profile of employees who have been granted higher salary bands than thosedetermined by job evaluation, 1 April 2002 to 31 March 2003

Beneficiaries African Asian Coloured White Total

Female 2 1 - 1 4

Male 1 - - 2 3

TOTAL 3 1 0 3 7


5 – EMPLOYMENT CHANGES

This section provides information on changes in employment over the financial year. Turnover rates provide

an indication of trends in employment profile of the department. The following tables provide a summary of

turnover rates by salary band (Table 5.1) and by critical occupations (Table 5.2).

TABLE 5.1 – Annual turnover rates by salary band

Salary Band

Employment at

beginning of

period

Appointments and

transfer into the

department

Terminations and

transfers out of

the department

Turnover

rate

Lower skilled 1 - - -

Skilled 62 - 3 -4.84%

Highly skilled production 102 10 4 5.88%

Highly skilled supervision 60 4 3 1.67%

Senior Management Service Bands A 18 2 2 0%

Senior Management Service Bands B 4 - - -

Senior Management Service Bands C 2 - - -

Senior Management Service Bands D 1 - - -

TOTAL 250 16 12 1.60%

TABLE 5.2 – Annual turnover rates by critical occupation

Occupation:

Employment at

beginning of

period

Appointments and

transfer into the

department

Terminations and

transfers out of

the department

Turnover

rate

Administrative 7 1 - 14.29%

Bus and heavy vehicle drivers 1 - - -

Finance and Economics related 13 - 1 -7.69%

Financial and related professionals 53 6 2 7.55%

Financial clerks and credit controllers 80 - 2 -2.50%

Food service aids and waiters 2 - - -

Human Resources & organisational development &

related

7 7 1 85.71%

Human Resources clerks 10 - 1 -10.00%

Human Resources related 2 - - -

Language practitioners interpreters & other comm. 1 - - -

Library mail and related clerks 5 - 1 -20.00%

Light vehicle drivers 1 - - -

Logistical support personnel 2 - - -

Material-recording and transport clerks 2 - - -

Messengers porters and deliveries 4 - - -

Other administrative & related clerks and organizers 26 - 1 -3.85%

Secretaries & other keyboard operating clerks 9 - 1 -11.11%

Senior Managers 25 2 2 0%

TOTAL 250 16 12 1.60%


Table 5.3 identifies the major reasons why staff left the department.

TABLE 5.3 – Reasons why staff are leaving the department

Termination Type Number % of total

Death 1 8.33%

Resignation 7 58.33%

Dismissal – operational changes 1 8.33%

Discharged due to ill-health 1 8.33%

Retirement 2 16.67%

TOTAL 12 100.00%

The table below (Table 5.4) highlights the promotions per critical occupation and per salary band (Table 5.5)

TABLE 5.4 – Promotions by critical occupation

Occupation:

Employees

at beginning

of period

Promotions

to another

salary level

Salary level

promotions as a

% of employees

by occupation

Promotions to

another notch

within a salary

level

Notch promo-

tions as a % of

employees by

occupation

Administrative 7 2 0.80 % - -

Bus and heavy vehicle drivers 1 - - - -

Finance and Economics related 13 - - - -

Financial and related professionals 53 12 4.80% 2 0.80%

Financial clerks and credit controllers 80 6 2.40% 7 2.80%

Food service aids and waiters 2 - - - -

Human Resources & organisational

development & related

7 2 0.80% 1 0.40%

Human Resources clerks 10 - - 2 0.80%

Human Resources related 2 2 0.80% - -

Language practitioners interpreters & other comm. 1 - - - -

Library mail and related clerks 5 2 0.80% - -

Light vehicle drivers 1 - - - -

Logistical support personnel 2 - - - -

Material-recording and transport clerks 2 - - - -

Messengers porters and deliveries 4 - - - -

Other administrative & related clerks & organizers 26 - - 3 1.20%

Secretaries & other keyboard operating clerks 9 1 0.40% - -

Senior Managers 25 1 0.40% 10 4.00%

TOTAL 250 28 11.20% 25 10.00%

A total of 28 internal promotions took place during the year highlighting the emphasis being placed on empowering ourstaff. In addition 25 staff members received a progression in salary notch during the year.


TABLE 5.5 – Promotions by salary band

Salary BandEmployees

1 April 2002

Promotions

to another

salary level

Salary bands

promotions as a

% of employees

by salary level

Promotions to

another notch

within a salary

level

Notch

promotions as

a % of

employees by

salary bands

Lower skilled 1 - - - -

Skilled 62 - - 4 1.60%

Highly skilled production 102 8 3.20% 10 4.00%

Highly skilled supervision 60 19 7.60% 1 0.40%

Senior and Top management 25 1 0.40% 10 4.00%

TOTAL 250 28 11.20% 25 10.00%

6 – EMPLOYMENT EQUITY

Table 6.1 indicates the status of our department as at year end per gender and race groups.

TABLE 6.1 Total number of employees (including employees with disabilities) in each of thefollowing occupational categories:

Occupational categoriesMale Female

TotalAfrican Coloured Indian White African Coloured Indian White

Professionals qualified &

experienced specialists

5 - - - 1 - 1 1 8

Skilled technical &

academically qualified worker

68 2 8 23 63 8 21 53 246

TOTAL 73 2 8 23 64 8 22 54 254

Of the total 254 employees 91% can be classified as the target group affirmative action attempts to address. Femalerepresentivity is at 58% of the total work force. 20% of the employees are classified as “professionals” being indicative ofour objective in ensuring suitably qualified expertise exist in order to support and advise our clients.

TABLE 6.2 Recruitment for the period 1 April 2002 till 31 March 2003

Occupational BandsMale Female

African Coloured Indian White African Coloured Indian White Total

Top Management - - - - - - - - 0

Senior Management - - - - - - - - 0

Professionally qualified and

experienced specialists and

mid-management

- - 1 - 1 - - - 2

Skilled technical and

academically qualified

workers, junior management,

supervisors, foreman and

superintendents

4 - - - 4 - - - 8

Semi-skilled and discretionary

decision making

- - - - - - 0

TOTAL 4 0 1 0 5 0 0 0 10

Of the 10 recruitments made during the year, 100% represented “PDI’s”. However, as indicated in table 6.3 theterminations during the year resulted in a loss of 12 staff members of which 11 were PDI’s. These were a result ofresolution No. 7 where matching and placing identified the gap in terms of our resources and our core business activites.


TABLE 6.3 Terminations for the period 1 April 2002 till 31 March 2003

Occupational BandsMale Female


Senior Management - - - - - - 2 - 2

Professionally qualified and experienced

specialists and mid-management

1 - - 1 - - 1 - 3

Skilled technical and academically

qualified workers, junior management,

supervisors, foreman and superintendents

2 - - - - 1 - 1 4

Semi-skilled and discretionary decision

making

1 - - - - - 1 1 3

TOTAL 4 0 0 1 0 1 4 2 12

Significant emphasis has been placed on building and retaining our staff. 129 staff members were recipients of skillsdevelopment objectives as indicated in the table below.

TABLE 6.4 Skills development

Occupational categoriesMale Female


Legislators, senior officials and managers 3 - 1 1 - - - - 5

Clerks 20 30 1 2 29 2 16 24 124

TOTAL 23 30 2 3 29 2 16 24 129

7 – PERFORMANCE REWARDS

To encourage good performance, the department has granted the following performance rewards during theyear under review. The information is presented in terms of race, gender, and disability (Table 7.1), salarybands (Table 7.2), critical occupations (Table 7.3) and by salary band for Senior Management (Table 7.4).

TABLE 7.1 Performance rewards by race, gender and disability, 1 April 2002 to 31 March 2003

Beneficiary Profile Cost

Number of

beneficiaries

Number of

employees

% of total within

groupCost (R’000)

Average cost per

employee

African - - - - -

Male 2 72 2.8 37 18 500

Female - - - - -

Asian - - - - -

Male 1 8 12.5 7 7 000

Female 1 22 4.5 4 4 000

Coloured - - - - -

Male 1 2 50 8 8 000

Female 1 8 12.5 5 5 000

White - - - - -

Male 5 23 21.7 38 7 600

Female 7 53 13.2 89 12 714

Employees with a disability - - - - -

TOTAL 18 188 9.6 188 10 444

18 officials received performance rewards during the period of which 15 were below SMS level.


TABLE 7.2 – Performance rewards by salary bands for personnel below Senior ManagementService, 1 April 2002 to 31 March 2003

Salary Bands Beneficiary Profile Cost

Number of

beneficiaries

Number of

employees

% of total within

salary bandsTotal Cost (R’000)

Average cost per

employee

Lower skilled 1 5 20 5 5 000

Skilled 5 58 8.6 34 6 800

Highly skilled production 7 121 5.8 69 9 857

Highly skilled supervision 2 48 4.2 33 16 500

TOTAL 15 232 6.5 141 9 400

TABLE 7.3 – Performance rewards by critical occupations, 1 April 2002 to 31 March 2003

Critical Occupations Beneficiary Profile Cost

Number of

beneficiaries

Total

employees

per catagory

% of total within

occupation

Total Cost

(R’000)

Average cost

per employee

Bus and heavy vehicle drivers 1 0 0 7 7 000

Financial and related professionals 3 2 150 49 16 333

Financial clerks and credit controllers 4 0 0 37 9 250

Food service aids and waiters 1 0 0 5 5 000

Human Resources & organisational

development & related

2 0 0 16 8 000

Human Resources clerks 1 0 0 9 9 000

Other administrative & related clerks and

organizers

2 1 200 14 7 000

Secretaries & other keyboard operating clerks 1 0 0 4 4 000

Senior Managers 3 0 0 46 15 333

TOTAL 18 3 600 187 10 389

TABLE 7.4 –Performance related rewards (cash bonus), by salary band for Senior ManagementService

Salary Band

Beneficiary Profile

Number of beneficiaries Total Cost

(R’000)

Average cost

per employee

% of SMS

wage bill

Personnel

Cost

SMS (R’000)Number of

beneficiaries

Number of

employees

% of total

within band

Band A 2 15 13.3 18 900 0.3 5 301

Band C 1 2 50.0 28 2 800 1.5 1 929

TOTAL 3 17 17.6 46 1 533 0.6 7 230

8 – FOREIGN WORKERS

The department currently employs two foreign nationals at senior management level. No additional

appointments were made during the year.


9 – LEAVE UTILISATION FOR THE PERIOD 1 APRIL 2002 TO 31 MARCH 2003

The Public Service Commission identified the need for careful monitoring of sick leave within the public

service. The following tables provide an indication of the use of sick leave (Table 9.1) and disability leave

(Table 9.2). In both cases, the estimated cost of the leave is also provided.

TABLE 9.1 – Sick leave, 1 April 2002 to 31 March 2003

GRADE

(SALARY BAND)Total days

Per cent

certification

Number of

Employees

using sick leave

% of total

employees

using sick leave

Average per

employee

Estimated Cost

(R’000)

Lower skilled 30 56.7 5 2.4 6 4

Skilled 399 59.4 51 24.8 8 67

Highly skilled

production

786 60.6 107 51.9 7 229

Highly skilled

supervision

191 64.4 32 15.5 6 96

Top and Senior

management

34 67.6 11 5.3 3 49

TOTAL 1 440 60.8 206 100 7 445

As indicated above, the majority of the workforce taking sick leave is the highly skilled production level which

account for 43% of total staff compliment.

TABLE 9.2 – Disability leave (temporary and permanent), 1 April 2002 to 31 March 2003

GRADE (SALARY BAND)Total days

taken

Per cent

certification

Number of

Employees

using disability

leave

% of total

employees

using disability

leave

Average per

employee

Estimated Cost

(R’000)

Lower skilled - - - - - -

Skilled 89 100 6 25 15 14

Highly skilled production 217 100 12 50 18 56

Highly skilled supervision 133 100 6 25 22 57

Top and Senior management - - - - - -

TOTAL 439 100 24 100 18 127

Table 9.3 summarises the utilisation of annual leave. The wage agreement concluded with trade unions in

the PSCBC in 2000 requires management of annual leave to prevent high levels of accrued leave being paid

at the time of termination of service.

TABLE 9.3 – Annual Leave, 1 April 2002 to 31 March 2003

GRADE (SALARY BAND) Total days taken Number of employees in grade Average per employee

Lower skilled 83 4 21

Skilled 1 110 70 16

Highly skilled production 2 767 137 20

Highly skilled supervision 910 78 12

Top and Senior management 387 28 14

TOTAL 5 328 317 17


Average leave taken was 17 days per employee. This does indicate that the balance of leave was required to

be taken before June 3003. The following table summarise payments made to employees as a result of

leave that was not taken.

TABLE 9.4 – Leave payouts for the period 1 April 2002 till 31 March 2003

REASONTotal Amount

(R’000)

Number of

Employees

Average per

employee

Capped leave payouts on termination of service for 2002/03 28 2 14 000

Current leave payout on termination of service for 2002/03 23 4 5 750

TOTAL 51 6 8 500

10 – HEALTH PROMOTION AND HIV/AIDS PROGRAMME

TABLE 10.1 – Details of Health Promotion and HIV/AIDS Programmes

Question Yes No Details, if yes

1. Have you designated a member of the SMS to implement the provisions contained in

Part VI E of Chapter 1 of the Public Service Regulations, 2001? If so, provide her/his

name and position.

X Mr G S Chili

HRM & D: Manager

2. Do you have a dedicated unit or have you designated specific staff members to

promote the health and well being of your employees? If so, indicate the number of

employees who are involved in this task and the annual budget that is available for

this purpose.

X Mrs FTC Hlangu

No. of employees =1

Budget: R20 000

3. Have you introduced an Employee Assistance or Health Promotion Programme for

your employees? If so, indicate the key elements/services of this Programme.

X

4. Have you established (a) committee(s) as contemplated in Part VI E.5 (e) of Chapter 1

of the Public Service Regulations, 2001? If so, please provide the names of the

members of the committee and the stakeholder(s) that they represent.

X

5. Have you reviewed the employment policies and practices of your department to

ensure that these do not unfairly discriminate against employees on the basis of their

HIV status? If so, list the employment policies/practices so reviewed.

X HIV/AID Policy

Recruitment Policy

Employment Equity Plan

6. Have you introduced measures to protect HIV-positive employees or those perceived

to be HIV-positive from discrimination? If so, list the key elements of these measures.

X **

7. Do you encourage your employees to undergo Voluntary Counselling and Testing? If

so, list the results that you have achieved.

X Results not known

8. Have you developed measures/indicators to monitor & evaluate the impact of your

health promotion programme? If so, list these measures/indicators.

X

** Key Elements are as follows:

• Comparisation of employees should they become infected with HIV/AIDS as a result of an occupational accident.

• Medical status of an infected official shall be kept confidential and shall not be used to unfairly discriminate.

• Applicants/candidates shall not be discriminated against in terms of recruitment and selection purposes.

11 – LABOUR RELATIONS

Labour Relations in general has been managed effectively with the major objective of creating, maintaining

and promoting sound labour relations withing the department. Three grievance cases have been dealt with

effectively even though two of them have resurfaced and are being dealt with accordingly. On the discipline

aspect, various cases have been dealt with. Seven cases were discussed varying from negligence, fraud and

incompetence. 5 resulted in written warnings, 1 being a final warning, 1 was withdrawn and the other

dismissed. Two other cases are still receiving attention such that a Medical Practitioners opinion is still

awaited on one of those cases whilst a submission is to be made to the Head of Department in respect of the

other case. One individual was suspended during the year for 90 days.


The KwaZulu-Natal Appeals Authority had two cases to decide during the course of the year for which they

upheld the dismissal decision in respect of one case and ruled for a final warning in respect of the other.

The KwaZulu-Natal Provincial Treasury, like other Government Departments, had to implement Resolution

7 of 2002 which relates to the transformation and restructuring of the Public Service. In terms of Resolution

7 of 2002, the Departmental Task Team was set up and 13 (thirteen) meetings were held and consequently

the problem of all excess officials was addressed with the exception of two officials who are in the process of

being addressed as well.

The KwaZulu-Natal Employment Equity Consultative Forum has also been set up in terms of the Employment

Equity Act to help this Department meet the statutory obligations as set out in the Act.

No collective agreements were entered into duirng the year and no strike actions were taken during the

reporting period.

12 - SKILLS DEVELOPMENT

The department has undertaken an extensive review of the existing skills vis-à-vis the skills required in order

to meet the strategic objectives of the department. We have stressed the importance of improving the level of

skills thereby ensuring promotability and therefore retention of our staff. Sufficient funds are set aside for

both formal and informal training and the department encourages further education through the provision

of bursaries.

13 – INJURY ON DUTY

There were no instances of injuries on duty during the reporting period.

14 – UTILISATION OF CONSULTANTS

TABLE 14.1: Report on consultant appointments using appropriated funds

Project TitleTotal Number of consultants

that worked on project

Duration

Work daysContract Value

Integritas * Approximately 40 260 R11,6 million

BAS ** Approximately 10 90 R1,2 million

FinMIP II Approximately 18 260 R4.5 million

Asset Management Two 30 R200 000

* Intergritas represents a consortium of consulting/accounting firms. The following three companies have PDI status and

received a specific proportion of the total fee as reflected in the table below:

% of total fee

MSGM 6.06

NSM 2.44

Ngubane and Co. 8.65

** BAS project is contracted through National Treasury.


4: Report of the Audit Committee

REPORT OF THE AUDIT COMMITTEE ON VOTE 6 – PROVINCIAL TREASURY

We are pleased to present our report for the financial year ended 31 March 2003.

Audit Committee Members and Attendance:

The audit committee consists of the members listed hereunder and met 4 times as per its approved terms of

reference.

Name of Member Number of Meetings Attended

JTM Edwards 4

BP Campbell 4

BS Khuzwayo 4

R Morar 4

DSD Shabalala 3

RW Green-Thompson 1

RK Sizani 1

Audit Committee Responsibility

The Audit Committee reports that it has complied with its responsibilities arising from section 38 (1)(a) of the

PFMA and Treasury Regulation 3.1.13. 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 it’s responsibilities as contained therein.

The effectiveness of internal control

Our review revealed that the department has implemented sound systems of internal control for major areas

of its operations. Fundamental weaknesses in such systems of internal control that were identified by Internal

Audit have been raised with the Provincial Treasury.

The committee has only reviewed the design of the systems of internal control as implemented by management.

The effective operation of such systems will be the focus of the committee in the 2003/2004 financial period.

The quality of in year management and monthly/quarterly reports submitted in terms of the Actand the Division of Revenue Act

The Committee cannot at this stage comment on the content and quality of monthly and quarterly reports

prepared and issued by the Accounting Officer and the Department during the year under review.

Evaluation of Financial Statements

The Audit Committee has

• Reviewed the audited annual financial statements to be included in the annual report;

• Taken into consideration the Auditor-General’s management letter and management response;

• Reviewed changes in accounting policies and practices;

• Reviewed significant adjustments resulting from the audit.


The Audit Committee concurs and accepts the conclusions of the Auditor-General on the annual financial

statements and is of the opinion that the audited annual financial statements be accepted and read together

with the report of the Auditor-General.

R MORARChairperson of the Audit Committee

05/08/2003


5: Report of the Auditor-General

REPORT OF THE AUDITOR-GENERAL TO THE KWAZULU –NATAL PROVINCIAL LEGISLATURE ON THE FINANCIAL STATEMENTS OF VOTE 6 –

PROVINCIAL TREASURY FOR THE YEAR ENDED 31 MARCH 2003

1. AUDIT ASSIGNMENT

The financial statements as set out on pages 33 to 64 for the year ended 31 March 2003 have been

audited in terms of section 188 of the Constitution of the Republic of South Africa, 1996 (Act No.108

of 1996), read with sections 3 and 5 of the Auditor-General Act, 1995 (Act No.12 of 1995). These

financial statements, the maintenance of effective control measures and compliance with relevant

laws and regulations are the responsibility of the accounting officer. My responsibility is to express an

opinion on these financial statements, based on the audit.

2. NATURE AND SCOPE

The audit was conducted in accordance with Statements of South African Auditing Standards. Those

standards require that I plan and perform the audit to obtain reasonable assurance that the financial

statements are free of material misstatement.

An audit includes:

• financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

Furthermore, an audit includes an examination, on a test basis, of evidence supporting compliance

in all material respects with the relevant laws and regulations which came to my attention and are

applicable to financial matters.

I believe that the audit provides a reasonable basis for my opinion.

3. AUDIT OPINION

In my opinion, the financial statements fairly present, in all material respects, the financial position of

the Provincial Treasury at 31 March 2003 and the results of its operations and cash flows for the year

then ended, in accordance with prescribed accounting practice.

4. EMPHASIS OF MATTER

Without further qualifying the audit opinion expressed above, attention is drawn to the following matters:

4.1 Matters affecting the financial statements

The amount reflected in the balance sheet for Provincial Treasury, which is disclosed under

current assets, is stated as R484 752 000. This is approximately R166 000 more than our audit

working papers, which reflect an amount of R484 586 000.


A U D I T O R - G E N E R A LA U D I T O R - G E N E R A L

4.2 Matters not affecting the financial statements

4.2.1 Uncleared electronic funds transfer

An amount of R161 256,96 shown as an uncleared electronic transfer, has been

reflected on the paymaster general bank reconciliation since the 2000/2001 financial

year-end.

Despite numerous correspondences between Provincial and National Treasury, this

matter has to date not been resolved.

4.2.2 Fixed assets

The fixed asset register maintained by the department does not have unique asset serial

numbers for certain assets. We were thus unable to perform a physical verification of

these assets.

A physical verification of all assets was not performed by the department during the

current year. This was due to the deficiencies of National Treasury’s asset management

software, which has resulted in a contravention of the KwaZulu-Natal Provincial

Treasury practice note 6.

4.2.3 Payment to KwaZulu Transport (KZT)

During the 1998/1999 financial year an amount of approximately R29 million was

expensed through the Department of Economic Affairs and Tourism as a grant payment

to KwaZulu Transport on a form code 1084 dated 1 December 1998.

Cabinet resolution 287 dated 27 September 1998, stated, inter ail that authority was

obtained for the provision of approximately R15 million for interim funding of the

KwaZulu Transport operation as well as approximately R14 million for the settlement

of the Unbind Loan.

Under Department of Finance Authority minute FT11/1/1/4 dated 24 November

1998, authority was granted for the payment of approximately R29 million, subject to

the signature of a loan agreement between the Department of Finance and KwaZulu

Transport. However, management responded that due to administrative error and

oversight the loan agreement was not signed.

Cabinet has appointed a three-person committee to take the report and resolve the

issues to a satisfactory conclusion.

4.2.4 Prior years unauthorised expenditure

Prior years unauthorised expenditure of R130 114 078,23 had not yet been approved

as at 31 March 2003.

5. APPRECIATION

The assistance rendered by the staff of the Provincial Treasury during the audit is sincerely appreciated.

B.R. WHEELER

for Auditor-General

Pietermaritzburg

31/07/2003


6: Audited Annual Financial Statements

1. Statement of Accounting Policies and Related Matters ....................... 34–36

2. Income Statement ....................... 37

3. Balance Sheet ....................... 38

4. Statement of Changes in Equity ....................... 39

5. Cashflow Statement ....................... 40

6. Notes to the Financial Statements ....................... 41–48

7. Disclosure Notes to the Annual Financial Statements ....................... 49–50

8. Annexure 1: Statement of Conditional Grants ....................... 51

9. Annexure 2: Statement of Financial Guarantees ....................... 52–53

10. Annexure 3: Physical Asset Movement Schedule ....................... 54

11. Appropriation Statement ....................... 55–62

12. Notes to Appropriation Statement ....................... 63–64


KWAZULU-NATAL PROVINCIAL TREASURYVOTE 6

STATEMENT OF ACCOUNTING POLICIES AND RELATED MATTERSfor the year ended 31 MARCH 2003

The financial statements have been prepared in accordance with the following policies, which have been

applied consistently in all material respects, unless otherwise indicated. However, 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, Act 1 of 1999 (as

amended by Act 29 of 1999), the Treasury Regulations for Departments and Constitutional Institutions

issued in terms of the Act and the Division of Revenue Act, Act 5 of 2002.

1. Basis of preparation

The financial statements have been prepared on a modified cash basis of accounting, except where

stated otherwise. The reporting entity is in transition from reporting on a cash basis of accounting to

reporting on an accrual basis of accounting. Under the cash basis of accounting transactions and

other events are recognised when cash is received or paid. Under the accrual basis of accounting

transactions and other events are recognised when incurred and not when cash is received or paid.

2. Revenue

Voted funds are the amounts appropriated to a department in accordance with the final budget

known as the Adjusted Estimates of National/Provincial Expenditure. Unexpended voted funds are

surrendered to the National/Provincial Revenue Fund.

Interest and dividends received are recognised upon receipt of the funds, and no accrual is made for

interest or dividends receivable from the last receipt date to the end of the reporting period. They are

recognised as revenue in the financial statements of the department and then transferred to the

National/Provincial Revenue Fund.

3. Donor aid

Donor Aid is recognised in the income statement in accordance with the cash basis of accounting.

4. Current expenditure

Current expenditure is recognised in the income statement when the payment is made.

5. Unauthorised, irregular and fruitless and wasteful expenditure

Unauthorised expenditure means:

• the overspending of a vote or a main division within a vote, or

• expenditure that was not made in accordance with the purpose of a vote or, in the case of a main

division, not in accordance with the purpose of the main division.

Unauthorised expenditure is treated as a current asset in the balance sheet until such expenditure is

recovered from a third party or funded from future voted funds.

Irregular expenditure means expenditure, other than unauthorised expenditure, incurred in contra-

vention of or not in accordance with a requirement of any applicable legislation, including:

• the Public Finance Management Act,

• the State Tender Board Act, or any regulations made in terms of this act, or

• any provincial legislation providing for procurement procedures in that provincial government.


Irregular expenditure is treated as expenditure in the income statement.

Fruitless and wasteful expenditure means expenditure that was made in vain and would have been

avoided had reasonable care been exercised. Fruitless and wasteful must be recovered from a

responsible official (a debtor account should be raised), or the vote if responsibility cannot be

determined.

6. Debts written off

Debts are written off when identified as irrecoverable. No provision is made for irrecoverable amounts.

7. Capital expenditure

Expenditure for physical items on hand on 31 March 2003 to be consumed in the following financial

year, is written off in full when they are received and are accounted for as expenditure in the income

statement. Physical assets acquired are expensed i.e. written off in the income statement when the

payment is made.

8. Receivables

Receivables are not normally recognised under the cash basis of accounting. However, receivables

included in the balance sheet arise from cash payments that are recoverable from another party.

Receivables for services delivered are not recognised in the balance sheet as a current asset or as

income in the income statement, as the financial statements are prepared on a cash basis of

accounting, but are disclosed separately in the notes to enhance the usefulness of the financial

statements.

9. Payables

Payables are not normally recognised under the cash basis of accounting. However, payables

included in the balance sheet arise from cash receipts that are due to either the Provincial/ National

Revenue Fund or another party.

10. Provisions

A provision is a liability of uncertain timing or amount. Provisions are not normally recognised under

the cash basis of accounting, but are disclosed separately in the notes to enhance the usefulness of

the financial statements.

11. Lease commitments

Lease commitments for the period remaining from the accounting date until the end of the lease

contract are disclosed as a note to the financial statements. These commitments are not recognised

in the balance sheet as a liability or as expenditure in the income statement as the financial

statements are prepared on the cash basis of accounting.

12. Accruals

This amount represents goods/services that have been delivered, but no invoice has been received

from the supplier at year end, OR an invoice has been received but remains unpaid at year end.

These amounts are not recognised in the balance sheet as a liability or as expenditure in the income

statement as the financial statements are prepared on a cash basis of accounting, but are however

disclosed.


13. Employee benefits

Short-term employee benefits.

The cost of short-term employee benefits is expensed in the income statement in the reporting period

that the payment is made. Short-term employee benefits, that give rise to a present legal or

constructive obligation, are deferred until they can be reliably measured and then expensed. Details

of these benefits and the potential liabilities are disclosed as a note to the financial statements and

are not recognised in the income statement.

Termination benefits

Termination benefits are recognised and expensed only when the payment is made.

Retirement benefits

The department provides retirement benefits for its employees through a defined benefit plan for

government employees. These benefits are funded by both employer and employee contributions.

Employer contributions to the fund are expensed when money is paid to the fund. No provision is

made for retirement benefits in the financial statements of the department. Any potential liabilities

are disclosed in the financial statements of the National/Provincial Revenue Fund and not in the

financial statements of the employer department.

Medical benefits

The department provides medical benefits for (certain/all) its employees through defined benefit

plans. These benefits are funded by employer and/or employee contributions. Employer contributions

to the fund are expensed when money is paid to the fund. No provision is made for medical benefits

in the financial statements of the department.

Retirement medical benefits for retired members are expensed when the payment is made to the

fund.

14. Recoverable revenue

Recoverable revenue represents payments made and recognised in the income statement as an

expense in previous years, which have now become recoverable from a debtor due to non-

performance in accordance with an agreement. Repayments are transferred to the Revenue Fund as

and when the repayment is received.

15. Comparative figures

Where necessary, comparative figures have been adjusted to conform to changes in presentation in

the current year. The comparative figures shown in these financial statements are limited to the

figures shown in the previous year’s audited financial statements and such other comparative figures

that the department may reasonably have available for reporting.



INCOME STATEMENTfor the year ended 31 March 2003

Note 2002/03

R’000

2001/02

R’000

REVENUE

Voted funds 424,104 144,834

Charge to Provincial Revenue Fund 1 423,578 144,308

Statutory appropriation 2 526 526

Non voted funds 330,066 270,026

Other revenue to be surrendered to the Revenue Fund 3 330,066 270,026

TOTAL REVENUE754,170 414,860

EXPENDITURE

Current 114,614 98,826

Personnel 4 37,591 33,001

Administrative 5 7,295 5,676

Inventories 6 1,161 952

Machinery and Equipment 7 650 464

Land and buildings 8 2,762 0

Professional and special services 9 46,881 45,072

Miscellaneous 10 5,483 5,194

Special functions: authorised losses 11 12,791 8,467

Capital 3,967 2,018

Administrative 5 530 0

Machinery and Equipment 7 3,437 2,018

TOTAL EXPENDITURE 118,581 100,844

NET SURPLUS FOR THE YEAR 635,589 314,016



BALANCE SHEETas at 31 March 2003

Note 2002/03

R’000

2001/02

R’000

ASSETS

Current assets 1,703,526 2,033,826

Unauthorised, fruitless and wasteful expenditure 12 130,362 131,370

Cash and cash equivalents 14 1,068,981 1,259,696

Receivables 15 19,431 40,499

Provincial Treasury 484,752 602,261

TOTAL ASSETS1,703,526 2,033,826

LIABILITIES

Current liabilities 565,565 1,957,444

Voted funds to be surrendered 16 430,493 1,357,686

Revenue funds to be surrendered 17 85,773 281,516

Bank overdraft 18 35,502 146,504

Payables 19 13,797 171,738

Non current liabilities 1,091,674 0

Voted funds not received 16 1,091,674 0

TOTAL LIABILITIES 1,657,239 1,957,444

NET ASSETS 46,287 76,382

EQUITY 46,287 76,382

Recoverable revenue 46,287 76,382

TOTAL EQUITY 46,287 76,382



STATEMENT OF CHANGES IN NET ASSETS/EQUITYfor the year ended 31 March 2003

Note 2002/03

R’000

2001/02

R’000

Recoverable revenue

Opening balance 76,382 29,838

Transfer to Revenue Fund (19,976)

Debts written off (12,791)

Debts raised 2,672 46,544

Closing balance 46,287 76,382

TOTAL EQUITY 46,287 76,382



CASH FLOW STATEMENTfor the year ended 31 March 2003

Note 2002/03

R’000

2001/02

R’000

CASH FLOWS FROM OPERATING ACTIVITIES

Net cash flow generated by operating activities 20 639,556 316,034

Cash generated to decrease working capital 21 (136,873) (728,599)

Voted funds surrendered 16 (305,523) (43,990)

Revenue funds surrendered 17 (330,066) (270,026)

Unauthorised expenditure approved 1,008 1,227,148

Net cash flow available from operating activities (131,898) 500,567

CASH FLOWS FROM INVESTING ACTIVITIES 3,967 2,018

Capital expenditure 5, 7 3,967 2,018

Net cash flows from operating and investing activities (135,865) 498,549

CASH FLOWS FROM FINANCING ACTIVITIES (61,357) (130,433)

Voted funds be surrended 22 164,481 (373,691)

Revenue funds to be surrended 22 (195,743) 196,714

Decrease in recoverable revenue (30,095) 46,544

Net decrease in cash and cash equivalents (197,222) 368,116

Cash and cash equivalents at beginning of period 1,715,453 1,347,337

Cash and cash equivalents at end of period 23 1,518,231 1,715,453



NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2002/03

R’000

2001/02

R’000

1 CHARGE TO PROVINCIAL REVENUE FUND

1.1 Included in the funds are specifically and exclusively appropriated for Provincial Treasury

Programmes Total

Appropriation

2002/03

Actual Variance

over/(under)

Total

Appropriation

2001/02

Transverse Support 9,684 8,019 1,665 8,103

Budget Office 19,964 10,411 9,553 4,241

Accounting Control 90,010 62,215 27,795 106,524

Internal Audit 30,322 25,145 5,177 25,440

Financial Management 273,598 0 273,598 0

Special Functions Authorised 0 12,791 (12,791) 0

TOTAL 423,578 118,581 260,807 144,308

1.2 Refer to Appropriation Statement

1.3 Conditional grants

Capacity building Annexure 1 0 603

Logis Annexure 1 1,301 1,301

1.4 A decision was taken by the National Teasury to suspend LOGIS implementation, until futher investigations were carriedout to ensure that LOGIS meets the PFMA requirements in terms of the principles of asset management.

2 STATUTORY APPROPRIATION

526 526

526 526

An additional appropriation of R36 000 was approved after the appropriation of Adjustment Estimates.

3 OTHER REVENUE TO BE SURRENDERED TO REVENUE FUND

Stale cheques written back 18,100 10,348

Interest received 283,748 237,266

Other 2,778 88

Commission 25,004 22,069

Game licenses 29 29

Housing rent recoveries 23 73

Loss control 93 0

Patient’s fees 35 0

Refunds previous year 8 0

Rent for parking 32 13

Salaries overpaid previous financial year (24) 43

Study loans 240 92

Subsidised motor scheme and subsidised transport 0 5

330,066 270,026




2002/03

R’000

2001/02

R’000

3.1 No gifts, donations or sponsorships were received by the department

3.2 Gifts, donations and sponsorships received in kind

Received from Nature

Corporate Network Systems Printer 0 2

0 2

4 PERSONNEL

Current expenditure

Appropriation to Executive 562 526

Basic salary costs 24,408 21,248

Pension contributions 3,667 3,215

Medical aid contributions 1,793 1,538

Other salary related costs 7,161 6,474

Total Personnel Costs 37,591 33,001

Average number of employees 244 253

5 ADMINISTRATION

Current 7,295 5,676

Capital – computer software licenses 530 0

Total administration 7,825 5,676

6 INVENTORIES

Current expenditure

Inventories purchased during the year

Printing and Publication 410 422

Stationery 711 499

Uniform & protect clothing 0 8

Other 40 23

Total cost of inventories 1,161 952

7 MACHINERY AND EQUIPMENT

Current (Rentals, maintenance and sundry) 650 464

Total current expenditure 650 464

Capital 7.1 3,437 2,018

Total current and capital expenditure 4,087 2,482




2002/03

R’000

2001/02

R’000

7.1 Capital machinery and equipment analysed as follows:

Computer equipment (hardware and software) 2,444 1,248

Furniture and office equipment 778 376

Other machinery and equipment 5 25

Transport 210 369

3,437 2,018

8 LAND AND BUILDINGS

Current expenditure

Leasehold improvements 219 0

Rental 2,543 0

Total current expenditure 2,762 0

9 PROFESSIONAL AND SPECIAL SERVICES

Current expenditure

Auditors’ remuneration 3,282 3,210

Contractors 2,105 4,896

Consultants and advisory services 15,872 16,155

Commissions and committees 212 394

Computer services 24,509 20,177

Other 901 240

Total Professional and special services 46,881 45,072

10 MISCELLANEOUS

Current Expenditure

Claims against state 11 0

Bank charges 5,472 5,194

Total miscellaneous expenditure 5,483 5,194

11 SPECIAL FUNCTIONS: AUTHORISED LOSSES

Other material losses written off 11.1 12,081 92

Debts written off 11.2 710 8,375

12,791 8,467

11.1 Other material losses written off in income statement in current period

Nature of losses

Supplies and equipment deficits 0 13

Other 0 9

Vehicle collisions and damages 37 10

Vehicle theft 71 60

Miscellaneous losses 11.1.1 11,973 0

Claims against the State 11 0

12,081 92




2002/03

R’000

2001/02

R’000

11.1.1 Miscellaneous Losses

Claims Recoverable 10,561 0

Cheque Fraud 956 0

Orders Payable 320 0

Dishonoured Cheques 134 0

PS medical scheme 2 0

11,973 0

11.2 Debts written off

Nature of debts written off

Arrear pension 235 3

Breach of contract 0 5

Cheque fraud 6 5,040

Housing Debts 0 5

Interest 0 381

Interface persal transactions 0 27

Leave without pay 453 3

Other staff related debt 1 4

Subsistence and travel 13 2,877

Salary overpayment 2 27

Tax debt 0 3

710 8,375

11.3 Details of special functions (thefts and losses) – Per Programme

Transverse Support 5 58

Budget Control 38 26

Accounting Control 12,725 8,380

Internal Audit 23 3

12,791 8,467

12 UNAUTHORISED, FRUITLESS AND WASTEFUL

EXPENDITURE DISALLOWED

Unauthorised expenditure 12.1 130,114 131,114

Thefts and losses awaiting approval 12.3 248 256

130,362 131,370

12.1 Reconciliation of unauthorised expenditure balance

Opening balance 131,114 1,358,262

Recovered/Approved by Parliament (1,000) (1,227,148)





2002/03

R’000

2001/02

R’000

12.2 Unauthorised expenditure – Previous Year

Education and Culture 852 852

Main Responsibility 37,863 38,863

SA Revenue Service Interest 18,733 18,733

Transport 3,218 3,218

Welfare & Population Development 69,448 69,448

130,114 131,114

12.3 Thefts and losses awaiting approval

Vehicle collisions and damage 79 49

Vehicle thefts and losses 114 185

Supplies and equipment losses 20 22

Other revenue 2 0

Other 33 0

248 256

13 ANALYSIS OF SURPLUS

Voted funds to be surrendered to the Revenue Fund 305,523 43,990

Non voted funds 330,066 270,026

Other revenue to be surrendered to the Revenue Fund 330,066 270,026

Total 635,589 314,016

14 CASH AND CASH EQUIVALENTS

Exchequer 1,068,979 1,259,695

Cash on hand 2 1

1,068,981 1,259,696

15 RECEIVABLES – CURRENT

Staff debtors 15.3 4,036 583

Other debtors 15.4 15,395 39,916

19,431 40,499

15.1 Amounts of R 790,925.71 (2002:R248,901.00) included above may beconsidered as irrecoverable and will be written off in the next financial year.

15.2 Age analysis – receivables current

Less than one year 261 6,457

One to two years (List material amounts) 3,608 6,746

More than two years (list material amounts) 15,562 27,296

19,431 40,499




2002/03

R’000

2001/02

R’000

15.3 Staff debtors

Contract breach study 57 216

Debt: BOC 100% Housing 29 37

Debt employee miscellaneous 0 10

Debtor debt 199 245

Debts personal 4 10

Disallowance control account 10 10

Housing guarantee payment 4 5

Persal disallowance control: current 0 2

Persal disallowance control: previous 1 10

Loan: subsidised motor transport new 13 13

Subsistence and travel control account 49 16

Salary reversal control account 0 9

Rent 1 0

Tax: persons-persal records 3,669 0

4,036 583

15.4 Other debtors

Cheque Fraud 15,010 16,484

Claims Recoverable from Provincial and National Department 0 10,365

Cancelled Cheques - Reissued 89 15

Disallowance Implementation 36 36

Dishonoured Cheques 59 222

Journal Suspense 0 360

Medical Aid 0 6,608

Official Association 0 76

Other 0 7

Regional Services Account 0 4,924

Small Funds 14 18

Suppliers Disallowance Control 0 801

UIF 1 0

PP Control 175 0

Tax:persons not on persal 11 0

15,395 39,916

16 VOTED FUNDS TO BE SURRENDERED

Opening balance 1,357,686 1,731,377

Transfer from Income Statement 305,523 43,990

Surplus to be surrendered – Other Departments 562,461 463,487

Less:Not received by departments (437,491) 0

Less:Amounts not received in previous years (1,091,674) 0

Paid previous years (266,012) (881,168)

Closing balance 430,493 1,357,686




2002/03

R’000

2001/02

R’000

17 REVENUE FUNDS TO BE SURRENDERED

Opening balance 281,516 84,802

MEDVAS to be surrendered 14,547 0

MEDVAS not surrendered – previous year (6,190) 0

Transfer from Income Statement 330,066 270,026

Other revenue to be surrendered – other departments 755,385 719,902

Paid during the year (1,014,225) (793,214)

Paid during the year – Previous year (275,326) 0


18 BANK OVERDRAFT

Paymaster-General Account 35,502 146,504

19 PAYABLES – CURRENT

Advances received 19.1 7,560 7,560

Other payables 19.2 6,237 164,178

13,797 171,738

19.1 Advances received

LOGIS 7,500 7,500

Asset Management 60 60

7,560 7,560

19.2 Other payables

Claims Recoverable from Provincial and National Department 47 0

Contract Deposits 2 0

Deduction code missing account 0 803

Deduction disallowance account 0 333

Emolument attachment orders 307 25

National Treasury 0 158,404

Other sundry creditors 0 5

PAYE 0 3,619

Pension 1,614 960

Receipt/Journal Suspense 29 0

Regional Services Account 50 0

UIF 0 29

Medical 633 0

Official Associations 3,527 0

Insurance 3 0

Deductions State Debt 19 0

Personnel club 2 0

Tax:comm/togt-dept :Welfare 4 0

6,237 164,178




2002/03

R’000

2001/02

R’000

20 NET CASH FLOW GENERATED BY OPERATING

ACTIVITIES

Net surplus as per Income Statement 635,589 314,016

Adjusted for items separately disclosed 3,967 2,018

Purchase of capital equipment 3,967 2,018

Net cash flow generated by operating activities 639,556 316,034

21 CASH GENERATED TO DECREASE WORKING CAPITAL

Decrease in current receivables 21,068 66,657

Decrease in current liabilities (157,941) (795,256)

(136,873) (728,599)

22 VOTED FUNDS AND REVENUE FUNDS SURRENDERED

Voted funds surrendered (164,481) 373,691

Revenue funds surrendered 195,743 (196,714)

31,262 176,977

23 CASH EQUIVALENTS

Exchequer 1,068,981 1,259,696

Overdraft (35,502) (146,504)

Provincial Treasury 484,752 (146,504)

1,518,231 1,715,453



DISCLOSURE NOTES TO THE ANNUAL FINANCIAL STATEMENTS

These amounts are not recognised in the financial statements, and are disclosed to enhance the usefulness of the financialstatements and to comply with the statutory requirements of the Public Finance Management Act, Act 1 of 1999 (as amended byAct 29 of 1999), the Treasury Regulations for Departments and Constitutional Institutions issued in terms of the Act and theDivision of Revenue Act, Act 5 of 2002.

24 CONTINGENT LIABILITIES

Liable to Nature Note 2002/03

R’000

2001/02

R’000

Housing loan guarantees Employees Annexure 2 653 800

25 COMMITMENTS

Current expenditure 1,595 0

Approved and contracted/ordered 1,595 0

Capital expenditure 365 0

Approved and contracted/ordered 365 0

Total Commitments 1,960 0

26 ACCRUALS

Listed by standard Item

Personnel Expenditure 45 15

Admin Expenditure 92 354

Stores and Inventory 127 14

Equipment 110 255

Land & Building 10 0

Professional & Special 2,542 990

Miscellaneous 0 6

2,926 1,634

ACCRUALS AND COMMITMENTS listed by programme level

Transverse Support 87 244

Budget Office 209 31

Accounting Control 4,126 524

Internal Audit 464 835

4,886 1,634

NOTE : 2001/02 figures relate to subsequent payments.

27 EMPLOYEE BENEFITS

Leave entitlement 593 7,242

Thirteenth cheque 1,057 384

Performance bonus 309 0

1,959 7626


KWAZULU-NATAL PROVINCIAL TREASURY

VOTE 6

DISCLOSURE NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2002/03

R’000

2001/02

R’000

28 LEASES

28.1 Operating leases

Land & Buildings – Broll Property 26,106

1 year 2,604

2 to 5 years 12,077

> 5 years 11,425

26,106

28.2 Office equipment leases 528

29 RELATED PARTY TRANSACTIONS

The department does not have any related party transactions

30 KEY MANAGEMENT PERSONNEL

Remuneration

Minister 1 562 526

Head of Department 1 698 653

Senior General Managers 3 1,105 931

General Managers 3 958 902

Managers 15 4,927 4,971

Total 23 8,250 7,803

31 INVENTORIES ON HAND AT YEAR END

Stationary on hand at historic cost 92

92



STATEMENT OF CONDITIONAL GRANTS RECEIVED BY PROVINCIAL DEPARTMENTSas at 31 March 2003

ANNEXURE 1

NAME OF GRANT GRANT ALLOCATION CAPITAL

EXPENDITURE

CURRENT

EXPENDITURE

Division of

Revenue

Act

Adjustment

Estimates

Roll

Overs

Total

Available

(1)

Actual Unspent Actual Unspent

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

1. Logis and VulindlelaImplementation

0 0 1,302 1,302 0 0 0 1,302

2. Capacity building 0 0 603 603 350 0 253 0

TOTAL 0 0 1,905 1,905 350 0 253 1,302

1. A decision was taken by the National Treasury to suspend Logis implementation until further investigations were carriedout to ensure that Logis would meet the PFMA requirements in terms of asset management and accrual accounting.A request has been made to convert the conditional grant to a BAS conditional grant to ensure successful implementationthroughout the province.



STATEMENT OF FINANCIAL GUARANTEESissued as at 31 March 2003

ANNEXURE 2

DOMESTIC/ FOREIGN (provide separate returns)

Guaranteed

institution

Guarantee

in respect of

Guaranteed

capital

amount

Opening

balance as at

31/03/2002

Guarantees

raised

during the

year

Guarantees

repaid

during the

year

Closing

balance as at

31/03/2003

Guaranteed

capital

amount

outstanding

as at

31/03/2003

Absa B S Mkhize 94,133 18,826 0 0 18,826 91,785.92

Absa C v Rensburg 115,000 17,791 0 0 17,791 103,141.97

Absa CJ Venter 188,000 37,600 0 0 37,600 171,893.82

Absa D M Mohapi 113,000 22,600 0 0 22,600 105,697.25

Absa K Pillay 204,500 40,900 0 0 40,900 166,401.39

Absa ML du Toit 166,000 25,039 0 0 25,039 166,414.82

Absa N M Ndlovu 100,000 20,000 0 0 20,000 91,522.00

Absa P J Mahlaba 179,000 32,631 0 32,631 0 -

Absa PS Shabalala 89,000 17,800 0 0 17,800 50,304.20

Absa S Bishop 51,827 14,200 0 14,200 0 -

Absa S P Mafu 47,588 12,269 0 12,269 0 -

Absa SP Sharpley 200,000 36,082 0 0 36,082 247,919.82

TOTAL 1,548,048 295,738 0 59,100 236,638 1,195,081.19

FNB BMK Mthembu 105,000 19,172 0 0 19,172 103,000.00

FNB C D Govender 104,000 20,800 0 0 20,800 79,261.52

FNB K A Nel 160,000 29,180 0 29,180 0 -

FNB RY Bezuidenhout 92,000 18,400 0 0 18,400 89,465.54

FNB S E Flett 79,000 15,800 0 0 15,800 71,237.30

FNB S Maduray 90,000 17,791 0 0 17,791 76,169.62

FNB SG Zulu 80,000 16,000 0 0 16,000 74,904.65

FNB SR Madondo 71,000 14,200 0 0 14,200 66,876.81

FNB T S Cembi 126,000 24,400 0 0 24,400 104,211.31

FNB ZHS Mkhize 54,900 10,980 0 0 10,980 48,222.82

TOTAL 961,900 186,723 0 29,180 157,543 713,349.57

Ithala B A Mkhize 75,403 6,962 0 6,962 0 -

Ithala B T Nxumalo 50,927 5,093 0 5,093 0 -

Ithala I T Madonsela 35,146 2,850 0 2,850 0 -

Ithala T B Ngema 52,338 6,532 0 6,532 0 -

TOTAL 213,814 21,437 0 21,437 0 -

NBS S D Zuke 73,500 14,700 0 14,700 0 -

TOTAL 73,500 14,700 0 14,700 0 -


Guaranteed

institution

Guarantee

in respect of

Guaranteed

capital

amount

Opening

balance as at

31/03/2002

Guarantees

raised

during the

year

Guarantees

repaid

during the

year

Closing

balance as at

31/03/2003

Guaranteed

capital

amount

outstanding

as at

31/03/2003

Nedbank C B Pover 110,000 0 22,000 0 22,000 110,800.00

Nedbank R Sivnath 95,000 0 19,000 0 19,000 95,153.80

TOTAL 205,000 41,000 0 41,000 205,953.80

Perm P N Moloi 140,000 26,074 0 26,074 142,248.52

TOTAL 26,074 26,074 0 26,074 142,248.52

Permanent J I Mhlongo 147,000 29,400 0 0 29,400 144,532.32

Permanent TC Lengana 107,560 21,160 0 21,160 0 -

Permanent V D Mungwe 114,000 22,800 0 0 22,800 112,855.00

Permanent VM Simpson 137,000 16,066 0 16,066 0 -

TOTAL 505,560 89,426 0 37,226 52,200 257,387.32

Saambou A Shangase 85,792 17,158 0 17,158 0 -

Saambou L S Mathe 107,800 19,517 0 19,517 0 -

Saambou SB Bentley 119,500 23,900 0 23,900 0 -

TOTAL 313,092 60,575 0 60,575 0 -

Standard CL Makhanya 90,000 14,000 0 0 14,000 99,925.19

Standard CN Sithole 66,524 13,304 0 13,304 0 -

Standard L R Nhlangulela 127,000 25,400 0 0 25,400 132,489.55

Standard M J Mayisela 180,000 36,000 0 0 36,000 164,347.48

Standard TA van Wyhe 102,000 18,200 0 0 18,200 96,536.97

Standard P P Mkhize 139,000 27,800 0 0 27,800 136,151.68

Standard S Govender 158,000 18,136 0 0 18,136 140,769.22

TOTAL 862,524 152,840 0 13,304 139,536 770,220.09

GRAND TOTAL 4,109,106 750,801 41,000 138,810 652,991 3,284,240.49



STATEMENT OF FINANCIAL GUARANTEESissued as at 31 March 2003

ANNEXURE 2 (Cont’d)


PHYSICAL ASSET MOVEMENT SCHEDULE

ANNEXURE 3

Opening

Balance

Additions Disposals Transfers

in

Transfers

out

Closing

Balance

MACHINERY ANDEQUIPMENT

0 3,968 0 0 0 3,968

Computer equipment 0 2,016 0 0 0 2,016

Furniture and office equipment 0 778 0 0 0 778

Other machinery and equipment 0 5 0 0 0 5

Computer software 0 958 0 0 0 958

Transport assets 0 210 0 0 0 210

0 3,968 0 0 0 3,968

MACHINERY ANDEQUIPMENT

0 2,018 0 0 0 2,018

Computer equipment 0 1,248 0 0 0 1,248

Furniture and office equipment 0 376 0 0 0 376

Other machinery and equipment 0 25 0 0 0 25

Transport assets 0 369 0 0 0 369

0 2,018 0 0 0 2,018



APPROPRIATION STATEMENTfor the year ended 31 March 2003

2002/03 2001/02

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

1.0 Transverse Support 9,684 0 9,684 7,457 2,227 77% 8,103 7,009

Current 9,346 0 9,346 7,267 2,079 78% 7,898 6,870

Capital 338 0 338 190 148 56% 205 139

2.0 Budget Office 19,966 0 19,966 10,411 9,555 52% 4,241 3,803

Current 19,568 0 19,568 10,102 9,466 52% 4,046 3,608

Capital 398 0 398 309 89 78% 195 195

3.0 Accounting Control 90,010 0 90,010 62,215 27,795 69% 106,524 60,994

Current 87,713 0 87,713 60,089 27,624 69% 102,586 59,971

Capital 2,297 0 2,297 2,126 171 93% 3,940 1,023

4.0 Internal Audit 30,321 0 30,321 25,145 5,176 83% 25,441 19,972

Current 28,564 0 28,564 23,801 4,763 83% 25,182 19,335

Capital 1,757 0 1,757 1,344 413 77% 259 637

5.0 Financial Management 273,598 0 273,598 0 273,598 0% 0 0

Current 273,598 0 273,598 0 273,598 0% 0 0

Capital 0 0 0 0 0 0% 0 0

6.0 Minister 526 0 526 562 (36) 107% 526 598

Current 526 0 526 562 (36) 107% 526 598

7.0 Special Functions 0 0 0 12,791 (12,791) 0% 0 8,467

Current 0 0 0 12,791 (12,791) 0% 0 8,467

Capital 0 0 0 0 0 0% 0 0

TOTAL 424,105 0 424,105 118,581 305,523 28% 144,834 100,844

DIRECT CHARGE

AGAINST THE

PROVINCIAL

REVENUE FUND

2002/03 2001/02

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Equitable Share 424,105 0 424,105 118,581 305,523 28% 144,834 100,844

State Debt Costs 0 0 0 0 0 0% 0 0

TOTAL 424,105 0 424,105 118,581 305,523 28% 144,834 100,844


2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 419,314 0 419,314 114,613 304,702 27% 140,235 98,826

Personnel 40,781 0 40,781 37,591 3,190 92% 35,640 32,475

Transfer payments 0 0 0 0 0 0 0 0

Other 378,533 0 378,533 77,022 301,512 20% 140,595 66,351

Capital 4,790 0 4,790 3,969 821 83% 4,599 2,018


Acquisition of capital

assets4,790 0 4,790 3,969 821 83% 4,599 2,018

TOTAL 424,105 0 424,105 118,581 305,523 28% 144,834 100,844

.

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 1,504 1,504 1,162 342 77% 1,196 952

Personnel 40,781 40,781 37,591 3,190 92% 35,640 33,001

Administrative 9,169 9,169 7,825 1,344 85% 8,489 5,676

Equipment 4,424 4,424 4,087 337 92% 5,177 2,482

Land and buildings 3,881 3,881 2,761 1,120 71% 0 0

Professional and special

services355,131 355,131 46,881 308,250 13% 88,438 45,072

Transfer payments 1,000 1,000 0 1,000 0 0 0

Miscellaneous 8,214 8,214 5,483 2,731 67% 5,894 5,194

Special functions 0 0 12,791 (12,791) 0 0 8,467

TOTAL 424,105 0 424,105 118,581 305,522 28% 144,834 100,844



APPROPRIATION STATEMENTfor the year ended 31 March 2003 (Cont’d)


APPROPRIATION STATEMENTDETAIL PER PROGRAMME 1: TRANSVERSE SUPPORT for the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

1.1 Minister 1,775 0 1,775 1,668 107 94% 1,784 1,668

Current 1,760 0 1,760 1,656 104 94% 1,768 1,650

Capital 15 0 15 12 3 80% 16 18

1.2 Head of the

Department

2,980 0 2,980 1,911 1,069 64% 0 0

Current 1,853 0 1,853 1,873 (20) 101% 0 0

Capital 127 0 127 38 89 30% 0 0

Transfer Current 1,000 0 1,000 0 1,000 0 0 0

1.3 Human Resource

Management

4,929 0 4,929 3,878 1,051 79% 6,319 5,341

Current 4,733 0 4,733 3,738 995 79% 6,130 5,220

Capital 196 0 196 140 56 72% 189 121

Minister

Current 526 526 562 (36) 107% 526 598

TOTAL 10,210 0 10,210 8,019 2,191 79% 8,630 7,607

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 9,872 0 9,872 7,829 2,043 79% 8,425 7,475

Personnel 5,749 0 5,749 4,994 755 87% 6,106 5,617

Transfer payments 1,000 0 1,000 0 1,000 0 0 0

Other 3,123 0 3,123 2,835 288 91% 2,319 1,858

Capital 338 0 338 190 148 56% 205 132



assets338 0 338 190 148 56% 205 132

TOTAL 10,210 0 10,210 8,019 2,191 79% 8,630 7,607

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 151 0 151 179 (28) 119% 140 143

Personnel 5,749 0 5,749 4,994 755 87% 6,106 5,617

Administrative 2,116 0 2,116 1,981 135 94% 1,924 1,547

Equipment 416 0 416 344 72 83% 357 239

Land and buildings 0 0 0 0 0 0 0 0


services778 0 778 521 257 67% 103 62

Transfer payments 1,000 0 1,000 0 1,000 0 0 0

Miscellaneous 0 0 0 0 0 0 0 0

Special functions 0 0 0 0 0 0 0 0

TOTAL 10,210 0 10,210 8,019 2,191 79% 8,630 7,607



APPROPRIATION STATEMENTDETAIL PER PROGRAMME 2: BUDGET OFFICEfor the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

2.1 Budget Contol 13,515 0 13,515 5,310 8,205 39% 4,241 3,803

Current 13,273 0 13,273 5,095 8,178 38% 4,046 3,608

Capital 242 0 242 215 27 89% 195 195

2.2 Procurement * 6,451 0 6,451 5,101 1,350 79% 0 0

Current 6,295 0 6,295 5,007 1,288 80% 0 0

Capital 156 0 156 94 62 60% 0 0

TOTAL 19,966 0 19,966 10,411 9,555 52% 4,241 3,805

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 19,568 0 19,568 10,102 9,466 52% 4,046 3,361

Personnel 8,691 0 8,691 7,859 832 90% 3,214 3,067


Other 10,877 0 10,877 2,243 8,634 21% 832 294

Capital 398 0 398 309 89 78% 195 444



assets398 0 398 309 89 78% 195 444

TOTAL 19,966 0 19,966 10,411 9,555 52% 4,241 3,805

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 568 568 391 177 69% 344 209

Personnel 8,691 8,691 7,859 832 90% 3,214 3,067

Administrative 1,489 1,489 1,263 226 85% 267 255

Equipment 645 645 488 157 76% 315 203

Land and buildings 439 439 1 438 0% 0 0


services8,133 8,133 410 7,723 5% 101 71

Transfer payments 0 0 0 0 0 0 0

Miscellaneous 0 0 0 0 0 0 0

Special functions 0 0 0 0 0 0 0

TOTAL 19,966 0 19,966 10,411 9,554 52% 4,241 3,805

* In 2001/02 Procurement was under Programme 3: Accounting Control.



APPROPRIATION STATEMENTDETAIL PER PROGRAMME 3: ACCOUNTING CONTROL for the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

3.1 Revenue & Assets Management 16,174 0 16,174 13,247 2,927 82% 13,610 13,056

Current 16,103 0 16,103 13,201 2,902 82% 13,595 13,038

Capital 71 0 71 46 25 64% 15 18

3.2 Systems Control 50,136 0 50,136 28,610 21,526 57% 24,373 22,923

Current 49,358 0 49,358 27,322 22,036 55% 24,229 22,768

Capital 778 0 778 1,288 (510) 166% 144 155

3.3 Chief Financial Office 18,002 0 18,002 16,924 1,078 94% 63,118 20,273

Current 16,921 0 16,921 16,269 652 96% 59,930 19,643

Capital 1,081 0 1,081 655 426 61% 3,188 631

3.4 Corporate Services 5,698 0 5,698 3,434 2,264 60% 0 0

Current 5,331 0 5,331 3,297 2,034 62% 0 0

Capital 367 0 367 137 230 37% 0 0

3.5 Procurement 0 0 0 0 0 0 5,425 4,742

Current 0 0 0 0 0 0 4,832 4,523

Capital 0 0 0 0 0 0 593 219

TOTAL 90,010 0 90,010 62,215 27,797 69% 106,524 60,994

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 87,714 0 87,714 62,215 25,498 71% 102,584 59,971

Personnel 16,562 0 16,562 15,534 1,028 94% 18,362 17,372

Transfer payments 0 0 0 0 0 0% 0 0

Other 71,152 0 71,152 46,682 24,470 66% 84,222 42,599

Capital 2,296 0 2,296 0 2,296 0% 3,940 1,023


Acquisition of capital assets 2,296 0 2,296 0 2,296 0% 3,940 1,023

TOTAL 90,010 0 90,010 62,215 27,797 69% 106,524 60,994

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 544 0 544 430 114 79% 553 482

Personnel 16,562 0 16,562 15,534 1,028 94% 18,362 17,372

Administrative 2,574 0 2,574 1,981 593 77% 3,329 2,310

Equipment 1,568 0 1,568 1,880 (312) 120% 4,260 1,377

Land and buildings 3,442 0 3,442 2,760 682 80% 0 0

Professional andspecial services

57,106 0 57,106 34,144 22,961 60% 74,130 34,258


Miscellaneous 8,215 0 8,215 5,484 2,731 67% 5,890 5,194

Special functions 0 0 0 0 0 0% 0 0

TOTAL 90,010 0 90,010 62,215 27,797 69% 106,524 60,994



APPROPRIATION STATEMENTDETAIL PER PROGRAMME 4: INTERNAL AUDIT for the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

4.1 Internal Audit 21,524 0 21,524 18,555 2,969 86% 21,567 17,132

Current 19,820 19,820 17,261 2,559 87% 21,359 16,512

Capital 1,704 1,704 1,294 410 76% 208 620

4.2 Risk Management 8,797 0 8,797 6,590 2,207 75% 3,874 2,841

Current 8,744 8,744 6,540 2,204 75% 3,823 2,823

Capital 53 53 50 3 94% 51 17

TOTAL 30,321 0 30,321 25,145 5,176 83% 25,441 19,972

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 28,564 0 28,564 23,801 4,763 83% 25,182 19,335

Personnel 9,780 0 9,780 9,203 577 94% 7,958 6,945


Other 18,784 0 18,784 14,598 4,186 78% 17,224 12,390

Capital 1,757 0 1,757 1,344 413 76% 259 638



assets1,757 0 1,757 1,344 413 76% 259 638

TOTAL 30,321 0 30,321 25,145 5,176 83% 25,441 19,972

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 241 241 161 80 67% 110 118

Personnel 9,780 9,780 9,203 577 94% 7,958 6,944

Administrative 2,990 2,990 2,600 390 87% 2,907 1,553

Equipment 1,795 1,795 1,375 420 77% 354 675

Land and buildings 0 0 0 0 0 0 0


services15,516 15,516 11,806 3,710 76% 14,112 10,682




TOTAL 30,321 0 30,321 25,145 5,176 83% 25,441 19,972



APPROPRIATION STATEMENTDETAIL PER PROGRAMME 5: FINANCIAL MANAGEMENT for the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

5.1 Subprogramme 1 273,598 0 273,598 0 273,598 0 0 0

Current 273,598 0 273,598 0 273,598 0 0 0

Capital 0 0 0 0 0 0 0 0

TOTAL 273,598 0 273,598 0 273,598 0% 0 0

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 273,598 0 273,598 0 273,598 0 0 0

Personnel 0 0 0 0 0 0 0 0


Other 273,598 0 273,598 0 273,598 0 0 0

Capital 0 0 0 0 0 0 0 0



assets0 0 0 0 0 0 0 0

TOTAL 273,598 0 273,598 0 273,598 0% 0 0

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 0 0 0 0 0 0 0

Personnel 0 0 0 0 0 0 0

Administrative 0 0 0 0 0 0 0

Equipment 0 0 0 0 0 0 0

Land and buildings 0 0 0 0 0 0 0


services273,598 273,598 0 273,598 0 0 0




TOTAL 273,598 0 273,598 0 273,598 0% 0 0



APPROPRIATION STATEMENTDETAIL PER PROGRAMME 6: SPECIAL FUNCTIONS for the year ended 31 March 2003

2002/03 2001/02

PROGRAMME PER

SUBPROGRAMME

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

6.1 Subprogramme 1 0 0 0 12,791 (12,791) 0 0 8,467

Current 0 0 0 12,791 (12,791) 0 0 8,467

Capital 0 0 0 0 0 0 0 0

TOTAL 0 0 0 12,791 (12,791) 0% 0 8,467

2002/03 2001/02

ECONOMIC

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Current 0 0 0 12,791 (12,791) 0 0 8,467

Personnel 0 0 0 0 0 0 0 0


Other 0 0 0 12,791 (12,791) 0 0 8,467

Capital 0 0 0 0 0 0 0 0



assets0 0 0 0 0 0 0 0

TOTAL 0 0 0 12,791 (12,791) 0% 0 8,467

2002/03 2001/02

STANDARD ITEM

CLASSIFICATION

Adjusted

Appropriation

R’000

Virement

R’000

Revised

Allocation

R’000

Actual

Expenditure

R’000

Savings

(Excess)

R’000

Expenditure as

% of revised

allocation

Revised

Allocation

R’000

Actual

Expenditure

R’000

Inventories 0 0 0 0 0 0 0 0

Personnel 0 0 0 0 0 0 0 0

Administrative 0 0 0 0 0 0 0 0

Equipment 0 0 0 0 0 0 0 0

Land and buildings 0 0 0 0 0 0 0 0


services0 0 0 0 0 0 0 0


Miscellaneous 0 0 0 0 0 0 0 0

Special functions 0 0 0 12,791 (12,791) 0 0 8,467

TOTAL 0 0 0 12,791 (12,791) 0% 0 8,467



NOTES TO THE APPROPRIATION STATEMENT

1 Detail of current and capital transfers as per Appropriation Act (after Virement):

Detail of these transactions can be viewed in note 11 (Transfer payments) 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 (Charge to National/Provincial Revenue Fund) to the annual financialstatements.

3 Detail of special functions (thefts and losses)

Detail of these transactions per programme can be viewed in note 13.5 (Details of special functions) to the annualfinancial statements.

4 Explanations of material variances from Amount Voted (after virement):

4.1 PER PROGRAMME:

Programme 1: A total of R2,1 million underspending relates to R1 million allocation for the transfer payment to the

Philharmonic Trust which can only be expended once the trust has been established. R 0.7 million related to personnel

which firstly were appointed later than anticipated and secondly three positions remain vacant.

Programme 2: A total of R8,3 million underspending, R8,3 million related to professional and special services. A number

of projects to be undertaken by the Budget Office only started just before the end of the year as a number of changes in

functions and the unit itself took place during the year. The remaining surplus relates to personnel expenditure which

reflects the vacant positions either filled late during the year or are still in the process of being filled. The introduction of

the resolution hampered the filling of vacancies as these posts are below level 13 and required additional procedures to be

undertaken.

Programme 3: A significant underspending of R27 million was reflected for the year. The strategy adopted to implement

BAS in a phased approach has extended the duration of the project over 20 months rather than in one financial year. The

expenditure of R 22 million has been applied for roll-over. An additional R4,1 million has been applied for rollovers for

work-in-progress at year end. The remaining underspending related to a provision of R1million for the potential

retrenchment packages for excess officials. There has been a savings in miscellaneous is due to the use of EFT which

reduces the number of cheques significantly and therefore a reduction in bank charges. An amount of R2 million was

allocated for write offs which are reflected under Theft and Losses.

Programme 4: A total of R5,1 million was recorded at year end. The majority related to professional and special services

where limited audits were undertaken and instead the focus shifted to control environment assessments which would form

the basis of the 2003/04 audit plan and would result in the risks assessment and fraud prevention plans for each

department. The approach resulted in reduced assistance from Intergritas and decreased traveling and associated costs.

Programme 5: The financial management reserve was established in line with National Treasury who maintains a reserve

for contingency planning. Additional funding required by provincial departments during the adjustment estimates was

funded from effiency gains realised during the past three fianncial years.

4.2 PER STANDARD ITEM:

Personnel: Expenditure

Total savings of R3m is attributable to the 56 funded vacant posts valued of R631k per month which has been delayed dueto resolution No.7.

In addition an amount of R1,2m has been set aside for retrenchment package

Administrative: Expenditure

The savings of R1,3m is due to the reduction in S & T claims because Internal Audit concentrated on performing controlenviroment assessments as discussed above.

There was less advertising of Tenders than was anticipated

The establishment of the Monitoring Compliance Unit commenced functioning at a late stage in the year.

Advertising of vacant posts was sgnificantly less due to the extensive processes required by the resolution.

Stores & Inventory

The saving of R341k is due a reduction in the costs of printing and stationary in the department.


Equipment

The savings of R441k is attributable to equipment and furniture which was ordered before year end but had not beenreceived. Application has been made for rollover of funds.

Land & Building

The savings of R1m is due to work in progress relating to aditional accommodation in Treasury House and renovations forProcurement Advisory office

These funds will have to be rolled over.

Professional and special service

The savings of R24,8m is attrbutable to the following: Phased approach of BAS and delay in the projects to beubdertaken by Budget Office (revenue and Social Matrix),

Delay in finalising certain audit projects and thus reducing consultant fees.

Transfer payments

Savings of R1m will be transferd to the Philamonic Trust once established.

Miscellaneous

Overexpenditure of R9.7m is attributable to the debts and claims recoverable for R12,4m written off during the course ofthe year.


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