HET PRESENTATION TO THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING (PCHET) PARLIAMENT OF SOUTH AFRICA, CAPE TOWN 20 MARCH 2013

Agenda: 2011/12 Annual Report 1.AG findings 2.Progress Report HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

AUDITOR – GENERAL’s REPORT Qualified opinion – Confirmation of the completeness and accuracy of the balance of contracted grant commitments HET 2011/12 ANNUAL REPORT

PROGRESS ON QUALIFIED OPINION Contracts register reviewed and updated accordingly – i.e. All contracts captured and updated on the register. A schedule of commitments is produced monthly based on the contracts register to reflect the extent of contractual commitments at the reporting period. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

Emphasis of Matter: Predetermined Objectives; Usefulness of information; Compliance with laws and regulations; Internal Control. HET 2011/12 ANNUAL REPORT

EMPHASIS OF MATTERS: PREDETERMINED OBJECTIVES:ITEM 13. USEFULNESS OF INFORMATION – Measurability (14):- A total of 43% of the indicators relevant to the selected objectives were not well defined. Progress : The indicators were revisited and modified to provide clear definitions for ease of reference and understanding for the users of the reports. The new Strategic Plan (2012/13) was also developed on the same basis to ensure that the SMART principles are adhered to. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

EMPHASIS OF MATTERS: PREDETERMINED OBJECTIVES:ITEM 13. ACHIEVEMENT OF PLANNED TARGETS (16):- 31 only 14 targets were achieved during the year. Progress: 14 of the 17 targets were achieved except the following:- o Tracking System dependent on DHET’s system; o PhD’s – 1 out of 21 applicants met criteria; o Business Schools – Dependent on the establishment of the Retail Chair HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

MATERIAL ADJUSTMENTS TO THE ANNUAL PERFORMANCE REPORT(item 17 ):- Material adjustments in the annual performance report resulting in 83% of the indicators and 86% of the reported targets not being consistent with the Objectives. Progress: The adjustments were done at year end to reflect correctly in annual report. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

COMPLIANCE WITH LAWS AND REGULATIONS:- The financial statements were not prepared in accordance with the requirements of section 55(1) of the PFMA. Material misstatements relating to operating Lease commitments and Exchange and non- exchange transactions were identified by the auditors but were subsequently corrected by Management. Progress: Quarterly AFS prepared to ensure compliance in preparation for the year end; Lease commitments have been rectified to be in line with the lease contracts. Exchange and non-exchange payables have been reclassified and presented as they should in the monthly reports and the AFS HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

PROCUREMENT AND CONTRACT MANAGEMENT:- Goods and Services with transactions above R500K procured without inviting competitive bids :- Progress: The SETA has put in measures to ensure compliance i.e. All procurement above R500k are procured on competitive bids. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

PROCUREMENT AND CONTRACT MANAGEMENT (Cont). Record of all approved deviations to be kept in a deviations register. Recent deviation with regard to bursary administration was duly approved by the Accounting authority and communicated to the AG and National Treasury. All irregular expenditure which was reported in the 2012/13 AFS as having not being approved by the delegated authority, have since been presented for condonation by the Accounting Authority which has been granted. The condonation will be reported in the 2012/13 AFS. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

PROCUREMENT AND CONTRACT MANAGEMENT(cont.) Quotations were awarded to bidders based on points given for criteria that differed from those stipulated in the original invitation for quotations:- Progress: The process has now been automated such that the system issues RFQ’s according to the threshold, thus reflecting the correct point for evaluation. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

PROCUREMENT AND CONTRACT MANAGEMENT (cont.):- Quotations were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the State:- Progress: All Suppliers registered on the Database are requested to complete the relevant form and information updated on a quarterly basis or as and when the need arises. All RFQ invitation include all SBD documents and request for a valid TCC and BBBEE Certificates. The SBD 4.1 (declaration of interest form) is requested at point of RFQ as a standard procedure. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

EXPENDITURE MANAGEMENT:- The accounting authority did not take effective steps to prevent irregular expenditure and fruitless and wasteful expenditure as required by section 51(1) (b)(ii) of the PFMA Progress: Tax Clearance certificates are requested at RFQ stage Monitoring of all general goods and services contracts to avoid unapproved overruns. Lease agreements – To adhere to Treasury regulations by going out on tender where practicably possible, and Deviations are recorded and approved by the delegated authority HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

Expenditure Management (cont.):- Processes have been revised to ensure accurate reporting in the AFS i.e. To address the question of understated accruals, all invoices are routed to the finance department directly by the providers. Policies and processes have been reviewed to address all the shortcomings identified during the audit. HET PROGRESS REPORT ON THE AG’S FINDINGS FOR THE 2011/12 FYR

HET Thank You