PRESENTATION TO THE PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS

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PRESENTATION TO THE PORTFOLIO COMMITTEE ON
DEFENCE AND MILITARY VETERANS
13 October 2009
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Overview

• Introduction
• Expenditure analysis
• Programme performance
• Report of the Auditor-General on the financial
  statements of 2008/09
• Issue of concern
• Discussion

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Expenditure Analysis

• Expenditure trend 2006/07
  till 2012/13

The baseline allocation for the DoD increased
from R23.818b in 06/07 to R32.024b in 09/10, at
an average rate of 10.14. Over the MTEF period,
the slower average annual growth rate of 4.2 on
the Vote is mainly due to the gradual completion
of the Strategic Defence Procurement Programme.
Although there was a baseline efficiency saving
of R23.168m and foreign exchange rate adjustment
of R392.904 m in 08/09, the year on year growth
for 08/09 was 10.41.
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Expenditure Analysis

• Expenditure per programme for
  2008/09

Total expenditure at the end of March 2009 was
99.65 which represents an under expenditure of
R97.741 million, of which R96.732 million has
been requested for roll-over and R269 000 was
surrendered to the National Revenue Fund.
R82.154m was approved as a roll over for
upgrading the runway at the AFB Waterkloof. The
programmes that under spent were Military Health
Support and General Support by 0.01 per cent and
2.43 per cent respectively. All other programmes
have spent 100 per cent of their budgets.
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Expenditure Analysis

• Expenditure per economic classification
  for 2008/09

The total budget in respect of compensation of
employees was spent. Expenditure on goods and
services was 99.90 per cent. The balance of
R7.254 million was committed for the upgrading of
Defence buildings and infrastructure at the SA
Naval Base and has been included as part of the
roll over request. The saving of R268 000 on
transfer payments was surrendered to the NRF.
Expenditure on buildings and other fixed
structures was 84.08 per cent, due to the slower
than anticipated progress on the upgrading of the
runway at AFB Waterkloof which was also part of
the roll-over request .
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Performance Information

• Progress with APEX Priority 24 Military Skills
  Development System
• By the end of the financial year, there were 7
  357 MSDS members in the system of which 4 334
  were recruited during the period under review.

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Performance InformationIntakes since January
2003MSDS performance as at 01 Sept 2009
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Performance Information
Most of the departments actual achievements were
in line with the projected targets as was planned
for 2008/09. There were only 36 Defence
diplomatic missions against the target of 37. The
opening of offices in Canada has been postponed
indefinitely. The average number of personnel
deployed daily in external operations was 2 931,
which is mainly due to termination of operations,
scaling down of activities and reduction of
forces by the UN. The average number of personnel
deployed daily in internal operations was also
less than the projected target mainly due to the
SANDF Exit/SAPS entry strategy - gradual
withdrawal from borderline control. Five
additional new operations were executed in
support of other government departments on demand.
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Performance Information (Cont)
The number of flying hours in support of
operations was exceeded due to additional
requirements for Force Employment. The number of
sea hours spent on patrol in Republic of South
Africa maritime zone was less than the projected
target, this was due to the fact that
requirements were largely demand driven.
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Performance Information (Cont)
More active recruitment of members led to the
increase 7 553 more Reserves than projected.
Students qualified exceeded the projected
target. 6 Student at the SANDF War College did
not complete the course and 2 students at the
Warrant Officers Academy failed the course.
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Report of the Auditor-General on the financial
statements for 2008/09

• The DoD received a qualified audit opinion in
  2008/09 due to the following
• Tangible and intangible assets
• Lease commitments
• Irregular expenditure
• Goods and services Consultant expenditure
• Departmental revenue
• Accruals
• Will elaborate more when discussing recurrence
  of audit findings

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Report of the Auditor-General on the
financial statements for 2008/09 (Continue)

• Emphasis of matter due the following
• Irregular, fruitless and wasteful expenditure as
  procurement processes were not followed
• Other matters
• Lack of effective, efficient and transparent
  systems and internal controls regarding
  performance management
• Will elaborate more when discussing recurrence
  of audit findings

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Assessment of the recurrence of Audit Findings
from 2006/07 to 2008/09

• .

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Issue of concern

• Media reports on tender fraud
• Asset Management Qualified audit opinion for
  the past three years.
• Internal Controls Internal Audit Committee must
  be more vigorous in analysing financial
  management and systems in the department. The IAC
  must submit a report to the Portfolio Committee
  in this regard
• Performance information not reliable.

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Discussion