1. Nols du Plessis National Treasury 26 October 2005

2. 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

3. The Constitution and Oversight

4. 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.”  Section 42(4) says that: “the NCOP represents the provinces to ensure that provincial interests are taken into account in the national sphere of government. It does this mainly by participating in the national legislative process and …”

5. PFMA requirements for tabling of Annual Reports

6. 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/MEC responsible for that Department/Public Entity an Annual Report on the activities of the Department/Public Entity  Section 65(1) of PFMA –the Minister/MEC 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/MEC 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

7. Proposed oversight process

8. Proposed Oversight Process Review of AG’s General Report Timely tabling process Late tabling process Preparation Phase Joint Workshops (provincial concurrent functions) Report Writing Phase Announcement 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-up Phase Preparation Phase Referral to Public Accounts Committee Annual Report Oversight Process Portfolio 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

9. Roles of Portfolio Committees and SCOPA

10. 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

11. 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

12. 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

13. Other role-players in Evaluation Process

14. Input by other role-players (1)  Auditor-General –Auditing of annual financial statements –Auditing of performance information –Audit on compliance with DORA  National Treasury –Annually prepare a Guide to the technical requirements for annual reports’ –In process to develop a framework for non financial information –Treasuries do prepare a consolidated report for Cabinet / Provincial EXCO’s / PCC on Audit Outcomes  Constitutional institutions –Provide inputs to the oversight hearings dealing with issues within their mandate

15. Input by other role-players (2)  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

16. Proposed phases during Evaluation Process

17. 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

18. 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

19. 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 –Compliance with the Division of Revenue Act –Comments on the pattern of spending –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

20. 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

21. 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

22. Conclusion

23. Aim of overseeing performance  To ensure that provincial interest are taken into account  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 service delivery be improved in future?