NATIONAL TREASURY BRIEFING TO PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION National Treasury | 2 March 2011

The National Treasury is responsible for managing South Africa’s national government finances, and draws its mandate from Chapter 2 of the Public Finance Management Act, together with Chapter 13 of the Constitution The outcome of the Audit report for the 2009/10 have been presented previous to other Committees which include Portfolio Committee on Finance and Standing Committee on Public Accounts 2 Introduction

Unqualified but with matters of emphasis on: The irregular expenditure of R2.7 million relates to the previous financial year (2008/09) and not the year of review (2009/10) and has been recorded as such –Due to late extension of a contract of employment agencies providing short term contract staff on demand –To avoid interruption of service provision on existing assignments –On conclusion of new contracts there was an oversight in classifying these as such in the relevant year (2008/09) by line staff The matter was investigated and appropriate output with corrective action were implemented: –No employee personally benefitted from the incident –There was no financial loss to the state resulting from the occurrence –51 line staff were trained on the SCM processes and PFMA regulations –9 SCM staff members were formally trained on SCM processes and contract management 3 Outcome of the AG Audit report

Outcome of the AG Audit report- continued –Controls have been reviewed and tightened to detect and/or prevent recurrence –Contract management framework manual was developed and is being rolled out and this is partnered with Legal Services –The appointment and payments especially for employment agency is centralized with the process being monitored from the appointment until expiry of the contract –Early warning system has been implemented which includes 6 months notification prior to contract expiry –3 information sessions were held to sensitize on contract management and other SCM processes during the 2010/11 financial year and circulars issued –Contract review undertaken on a regular basis –Filing per supplier improved – contains valid contracts, tax clearance certificates and all relevant documentation for appointment and payment purposes –SCM project initiated on assessment of effectiveness and efficiency of SCM processes 4

Thank you 5