National Treasury11 March 2008

Overview of Presentation

The Constitution and oversight

PFMA requirements for tabling of annual reports

Proposed oversight process

Roles of Portfolio Committees and SCOPA

Other role-players in evaluation process

Proposed phases during evaluation process

Conclusion

The Constitution and Oversight

The Constitution and Oversight

Section 55(2) says the National Assembly:

“must provide for mechanisms to ensure that all executive organs of state in the national sphere of

government are accountable to it; and to maintain oversight of the exercise of national executive

authority, including the implementation of legislation; and any organ of state.”

Section 92(3)(b) requires that:

“Members of Cabinet must provide Parliament with full and regular reports concerning matters

under their control.”

PFMA requirements for tabling of Annual Reports

PFMA requirements for tabling

Section 40(1)(d) & 55(1)(d)

– The Accounting Officer/Authority must submit within five months of the end of the

financial year to the Minister responsible for that Department/Public Entity an Annual

Report on the activities of the Department/Public Entity

Section 65(1) of PFMA

– the Minister responsible for a department or public entity must table in the relevant

legislature within one month after the Accounting Officer/Authority received the audit

report the annual report, financial statements and audit report

Section 65(2)(a) of PFMA

– a Minister who fails to table an annual report for an entity by 30 September (6

months after year end) must table a written explanation in the legislature setting out

the reasons why the report was not tabled and indicating when the report will be

tabled

Proposed oversightprocess

Proposed Oversight Process

Review of AG’s General Report

Timely tabling process

Late tabling process

Preparation PhaseJoint

Workshops(provincial concurrent

functions)

Report Writing PhaseAnnouncement of

completion of tabling process

Annual Report Tabling Processes

Referral to Portfolio Committees

Tabling of Oversight Reports

Ongoing Oversight Processes

Timeline

30 September

First two weeks in October

Third week in October

First week in November

Second week of November

Follow-upPhase

Preparation Phase

Referral to Public Accounts Committee

Annual Report Oversight ProcessPortfolio Committee

process

Public Accounts Committee

process

Day of Delivery

Tabling of a weekly

update of outstanding

Annual Reports

Recommendations for the

preparation of the Finance Bill

Before 31 March

Hearings Phase

Last week in October

Roles of Portfolio Committees and SCOPA

Role of the Public Accounts Committee

Specialised role of ‘protector of the public purse’

Focus on the following:

(i) The General Report of the Auditor General

(ii) Financial probity (e.g. fraud)

(iii) Compliance with the PFMA and associated Treasury Regulations

(iv) The interrogation of over-expenditure (relative to appropriations), and other

instances of unauthorised expenditure

(v) The interrogation of fruitless and wasteful expenditure

(vi) The functioning of internal control and risk management systems

(vii) Supply chain management and procurement, particularly large tenders, large

capital projects and Public Private Partnership deals

(viii) The disposal of significant state assets, and any major financial or related

losses suffered by government

(ix) Corporate governance of departments and public entities

Role of Portfolio Committees

Close accountability loop by exercising oversight of service delivery

Focus on the following:

(i) The technical quality of the annual reports

(ii) Whether reports cover all performance targets set out in strategic/corporate

plans;

(iii) The quality of the performance information

(iv) The economy, efficiency and effectiveness of service delivery as measured

by the performance indicators or by the AG in a performance audit, or by way

of other information

(v) The implementation of the entity’s service delivery improvement plan;

(vi) Evaluating management’s explanations why service delivery was not in line

with targets set in the strategic plans and budgets;

(vii) Investigating under or over expenditure, the impact on service delivery and

the measures taken to comply with the Budget

Links between Committees

Committees need to share information to improve the overall effectiveness of

oversight

Portfolio committees in the various clusters should consider holding joint hearings

The public accounts committee should provide information on key issues raised in

the AG’s General Report to the other committees

Portfolio committees may consider appointing rapporteurs to brief the public accounts

committee on important issues it has identified in its oversight process

Other role-players in Evaluation Process

Input by other role-players (1)

Auditor-General

– Auditing of annual financial statements

– Auditing of performance information

– Performance audits of selected entities

National Treasury

– Annually prepare a Guide to the technical requirements for annual reports’

– Framework for managing programme performance information

– National Treasury (Budget Analyst) can provide departmental specific information

Constitutional institutions

– Provide inputs to the oversight hearings dealing with issues within their mandate

Input by other role-players (2)

Departments with public entities– Produce an overview of the performance of the various public entities within the

Minister’s portfolio Committee researchers

– Be familiar with the challenges, policies and other developments– Review strategic plans, budgets, in-year reports and previous annual reports– Monitor developments in their area of focus on an ongoing basis– Talk to the relevant treasury, auditors and other stakeholders

Stakeholders and the public– Request subject experts to evaluate entities’ performances

Accounting Officers– Written explanation to Minister on poor audit outcomes – Corrective steps– Preparation of annual reports should be part of annual performance evaluation

process Executive Authorities

– Minister should approve corrective steps– Annual report must be used to assess performance of accounting officers

Proposed phases during Evaluation Process

Oversight preparation phase

Start preparations well before 30 September

Committee staff must ensure:

– members have access to all relevant documents

– identify and contact subject experts for hearings

Members’ preparations:

– read all relevant documents

– review current year’s performance compared to outcome of previous oversight

process

– consult with subject experts and other stakeholders

– prioritise issues and questions

Committee should meet prior to hearing to:

– identify key issues

– identify what they want to get out of the hearing

– prioritise certain key questions

Oversight hearings phase

Options for structuring the oversight hearings:

1. A presentation by the Minister and/or the accounting officer and then a page-

by-page review of the annual report

2. A presentation by the Minister and/or the accounting officer followed by a

presentation by a designated member of the committee dealing with key

issues as identified by the Committee, followed by a question and answer

session

3. A presentation by the Minister and/or the accounting officer followed by inputs

by invited experts or stakeholder organisations, followed by a question and

answer session.

4. A presentation by the Minister and/or the accounting officer followed by a full-

scale public hearing, followed by a question and answer session

Oversight report-writing phase

Each portfolio committee should prepare an Oversight Report for each

entity they oversee

Oversight Reports should deal with:

– Compliance with the tabling deadlines

– Compliance with the technical requirements for annual reports

– The usefulness of the General Information section

– Comments on the entity’s reported performance

– Comments on the entity’s human resource situation and policies

– Key issues that the committee would like to draw to the entity’s attention as

regards its performance

– Recommendations in relation to any of the issues noted above

Tabling of Oversight Reports

Oversight Reports should be tabled in the House

In certain circumstances the House may consider debating certain issues contained

in the Reports

Once accepted, Reports should be sent to the relevant Minister for response to

resolutions

Follow-up phase

Legislatures need to put in place systems to manage and track resolutions

Aim of such systems

– to bring resolutions regularly to the attention of Ministers

– to ensure that Ministers respond to resolutions

– to ensure issues raised in resolutions get resolved

Conclusion

Aim of overseeing performance

To test whether the annual report is an accurate record of the entity’s

performance

To evaluate whether the reported performance is in line with the entity’s

strategic plans and budgets

To evaluate whether performance is acceptable given the operating

environment

To assess how the entity might improve on its performance in future

Focus is on:

How can the entity deliver services better in future?

“Accountability Instruments”

Strategic / Corporate plans

Estimates of National Expenditure

Guide for the preparation of Annual Reports

Guide to understand oversight reports of Departments

Audit Report issued by external Auditor

General Report of the Auditor-General on Audit Outcomes