1. SAMDI The SAMDI Annual Report Presentation to the Portfolio Committee October 2004

2. SAMDI General review of the state of financial affairs The strategic plan of SAMDI has been brought in line with the MTEF PSETA granted SAMDI provisional accreditation as a training provider. The Flemish government donated R10 million for the development of the IMDP The development of a master Systems Plan (MSP) in co- operation with SITA is underway. The indexing of documentation for an archiving system has been developed. A separate Supply chain Management directorate was created.

3. SAMDI Capacity constraints Cost recovery The implementation of the cost recovery strategy is still being hampered by slow-or non-payment by clients. Institutional Memory High staff turnover results in lost institutional memory Inadequate facilities SAMDI shares facilities with DPSA and is considering more suitable premises in Pretoria Financial management capability Lack of financial expertise in Generally Accepted Accounting Principles (GAAP). Internal control frameworks and financial accounting processes have not been developed properly yet. Potential moratorium on acquisition of a GAAP complaint financial accounting system by National Treasury

4. SAMDI Review of report of the Auditor-General In 2002/03 SAMDI Vote 12 received a qualified audit opinion and the Trading Entity received a disclaimer of opinion. In 2003/04 both entities received unqualified audit reports. The Auditor-General raised the following issues as “Emphasis of Matter” without qualifying the financial statements: - Expenditure allocation between Vote 12 and the Trading Entity - Weaknesses regarding Asset Management - Weaknesses regarding Accounts Receivable - Internal Audit was not fully functional - Non-compliance with statements of GAAP Impairment of fixed assets Measurement and recognition of financial instruments

5. SAMDI Review of the management letter issued by the Auditor-General (AG) The AG reviewed accounting records for both 2002/03 and 2003/04 due to the adverse audit opinions received in 2002/03 The number of management report items decreased from 65 in 2002/03 to 46 in 2003/04 Significant matters 27 (59%) 45 (69%) Housekeeping matters 19 (41%) 20 (31%) Total matters raised46 (100%)65 (100%)

6. SAMDI Review of operational results of Vote 12 Revenue Annual appropriation68,6m42,2m26,4m Donor funding28,5m 3,5m25,0m Other revenue 4,3m 3.1m 1,2m Total revenue101,4m 48,8m52,6m Expenditure Current expenditure65.3m15,1m50,2m Capital Expenditure 1,5m 0,6m 0,9m Transfer payments28,5m24,2m 4,3m Total expenditure95,3m39,9m 55,4m Net surplus6,1m8,9m9(2.8)M

7. SAMDI Review of cash flow results of Vote 12 Total 2003/042002/03 Cash generated by operations(1,2m) 1,0m(2,2m) Less capital expenditure(1,6m) (0,6m) (1,0m) Increase / (decrease) in cash(2,8m) (0,4m)(3,2m) Opening cash balance(1,1m) (4.3m) (1,1m) Closing balance(3,9m) (3,9m)(4,3m)

8. SAMDI Review of operational results of the Trading Entity Total2003/042002/03 Revenue Cost recovery24,4m14,2m10,2m Transfer payments28,5m24,2m 4,3m Other revenue 2,4m 0m 2,4m Total Revenue55,3m38,4m 16,9m Less expenditure Current expenses45,4m31,4m14,0m Add Interest received0,8m 0,7m 0,1m Net surplus10,7m 7,7m 3,0m

9. SAMDI Review of cash flow results of the Entity Total 2003/04 2002/03 Cash generated by operations 17,6m 13,6m 4,0m Opening cash balance 0,0m 4,0m 0,0m Closing cash balance 17,6m 17,6m 4,0m

10. SAMDI Key challenges The acquisition and implementation of a GAAP complaint financial accounting system. The automation of a costing model and pricing strategy for course delivered. Decentralisation of the budget to the respective units. Development of a proper internal control frameworks and financial accounting processes. Development of a proper monthly management reporting framework that is based on the accrual basis of accounting (GAAP). Retaining human resources with the financial skills needed to comply with the financial management framework developed by National Treasury.