Standing Committee on Appropriations 17 September DOJCD The
Standing Committee on Appropriations - 17 September DOJ&CD
The Accounting Officers Responsibility for Budget and Expenditure control n Effective and appropriate steps to prevent any unauthorised, irregular and fruitless and wasteful expenditure. (section 38 (1) PFMA) n Take effective and appropriate steps to prevent any overspending of the department or a main division within the vote. . (section 39 (1) PFMA) n Must settle all contractual obligations and pay all money owing, including inter departmental claims within the prescribed or agreed period. (section 38 (1) PFMA) n The accounting officer of an institution must ensure that internal procedures and internal control measures are in place for payment approval and processing. These internal controls should provide reasonable assurance that all expenditure is necessary, appropriate , paid promptly and is adequately recorded and reported (Treasury Regulations Chapter 8) 2
Budget and expenditure outcomes 3
Non payment of services providers within 30 days of receipt of invoice Invoices paid after 30 250 000 202 670 200 000 150 000 114 672 92 627 100 000 80 014 59 676 50 000 34 699 19 779 45 973 20 957 19 317 16 484 11 028 19 509 июл-12 авг-12 сен-12 окт-12 ноя-12 дек-12 янв-13 фев-13 мар-13 апр-13 май-13 июн-13 июл-13 4
Amounts paid within 30 days versus 30+ days from July 2012 until July 2013 paid within 30 days paid + 30 days 777 914 739 993 633 270 478 625 383 872 381 333 316 914 297 434 360 885 344 205 297 918 220 704 202 670 114 672 80 014 34 699 41091 41122 41153 59 676 19 779 41183 20 957 41214 16 484 11 028 217 284 92 627 19 509 45 973 19 317 41244 41275 41306 41334 41365 41395 41426 41456 89, 6% of payments in the last 13 months was paid within the 30 day directive (R 5, 4 billion against total payments of R 6, 083 billion). 5 August 2013 - 92% of payments were made within 30 days
Analysis of payments July 2013 6
Analysis of payments July 2013 – Reasons for Non Payment 7
Analysis : Major reasons for non payment • The DOJ&CD footprint that includes over 700 courts, state attorney and masters offices where services are contracted and payments effected in a decentralised manner– a total of nearly 1000 cost centres in metropolitan and rural areas, • The DOJ&CD financial operations model of decentralised delegation and payments – at court level with limited capacity in financial management competing with capacity requirements to provide legal services, • Voluminous Services – In any given day invoices are issued for transcription services across all courts, across the country whilst sheriff’s services are also contracted on a daily basis. This explains the large number of invoices, 8
Analysis : Major reasons for non payment • Tax compliance matters – In compliance with financial directives and audit risk the department is not paying for services if no valid tax certificate is presented. The non-submission of tax clearance certificates is particularly prevalent in the sheriffs industry, • Supporting documentation – this is particularly relevant to the Department of Public Works (DPW) in relation to payments for leases, municipal rates and taxes and accommodation charges. My department continuously engages DPW on this issue and will open the department to a substantial audit finding if we pay without supporting documentation. Please note that my department’s total budget provision is R 695 million to be paid on a quarterly basis ( thus the periodic spike in outstanding accounts), and • Account validation In relation to security services (R 700 million). Validation at court level of control sheets and claims to be consolidated at regional and national offices level is a lengthy process. 9
Measures introduced to address this requirement n Establishment of a Creditors Division (18 officials appointed in 2010) to monitor and follow-up on outstanding invoices. - in the past 13 months 87, 6 per cent of a total of 183 890 invoices were paid within 30 days n Centralisation of the receipt of invoices at National Office n Creating a Creditors Database Management System n Monthly reconciliations and communication with all managers within Do. J&CD n Escalation of non- compliance to Executive management and EXCO 10
Budget and expenditure pressures – The impact of budgets cuts whilst expected to expand services n Unfunded prioritised and emerging priorities and mandates – special courts (sexual offences) n In year pressures – transport/fuel n Security – departments, entities(NPA) and stakeholders (Judiciary and magistracy) n Commission's of enquiry n Increases in municipal charges/ leases expenditure above budget growth (property management)- at an average of 15, 2% against budget growth of 5, 6% n Roll over of expenditure – Accruals n National Treasury assistance through virement approvals to address spending pressures 11
Property Management Growth and Impact of resourcing of other programmes In the last 3 years the department re prioritised R 215 million (inclusive of cash flow management) away from other programmes to fund the escalation in municipal charges and leasing cost 12
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