1. Presentation to the Portfolio Committee 02 March 2011

2. AUDITOR GENERAL’S REPORT
Revenue collection on behalf of DHA
Suspension of Capital projects
Update on the Assets Register
Recording of information to Basic Accounting Systems
African Renaissance Fund 22

3. TRANSACTIONS WITH DHA
The Department collects revenue on behalf of the Department of Home Affairs (DHA).
DIRCO also incur expenditure for DHA officials stationed abroad.
Prior to the 2008/09 financial year, the offset principle was applied and net revenue paid to DHA.
During 2008/09 financial year, it was agreed that for fair accounting presentation receivables and payables will be separated and these will be shown separately in the books of DIRCO. 33

4. TRANSACTIONS WITH DHA cont.
The impact of the agreement on the 2009/10 DIRCO AFS was as follows:
Revenue collected since 2005 – R 1, 761 million
Payments made (R million)
Amounts due to DHA as at 31 March R million
Expenditure since – R 1, 051 million
Recoveries (R million)
Amounts due to DIRCO as at 31 March R million
The net effect is an amount of R185 million. 44

5. REVENUE COLLECTION ON BEHALF OF DHA cont.
Subsequently discussions held between NT, DHA and DIRCO.
With an approval of NT, separate bank accounts have been opened in all SA missions abroad.
A meeting was also held between the Department , NT and DHA on 14 September 2010 to try and resolve the prior years balances and the agreement was reached that the department must assist DHA to concentrate on expenditure that affects DHA vote.
NT and DHA agreed that for the 2010/11 FY DHA would pay DIRCO the amount owing.
It was further agreed that the bulk of the payments would take place during December 2010.
During December 2010 a team from both DIRCO and DHA was assigned to extract the supporting documentation to enable DHA to attend to the balances. 55

6. REVENUE COLLECTION ON BEHALF OF DHA cont.
Documents amounting to R650 million and R538 million for expenditure and revenue, respectively, has been retrieved and confirmed by both departments
DHA has paid an amount of R432 million.
DIRCO is in process of paying revenue amounting to R404 million to DHA during March 2011, according to the confirmations . 66

7. CAPITAL PROJECTS
According to DIRCO acquisition strategy, properties are acquired depending on available funding.
The capital budget is also utilised for the following:
Continue with construction projects already on progress; and
Undertake major renovations to state owned properties.
Presently the following projects are in progress:
Design and construction:
Abuja, Dar-es-Salaam, Lilongwe, Mbabane and Kigali.
Major renovations:
Washington, London, Copenhagen, Paris, The Hague, Tokyo, Brasilia and Juba. 77

8. CAPITAL PROJECTS
Should there be a need to slow a project down, it is done on completion of a phase (e.g. after design but before the start of construction) in order not to incur wasteful expenditure. However once in construction, the project cannot be stopped and must be completed.
To date no project that were in the construction phase have been suspended.
However the acquisition strategy has been spread over a longer period, as per the DIRCO’s asset management plan, in alignment to the funding made available to DIRCO. 88

9. ASSETS REGISTER DIRCO acquired HARDCAT asset register in 2004/05 FY.
DIRCO, in the 2004/05, 2005/06 updated the asset register with all the assets including those at missions abroad.
Since then, the asset register has been updated on a continuous basis.
Considering the findings of the AG in 2009/10 FY, DIRCO introduced quarterly physical verification of assets in 2010/11 FY.
The asset register is updated and reviewed on a monthly basis. DIRCO is working towards the daily updating of the asset register.
Daily engagement takes place between missions and HO regarding asset register.
The asset register is reconciled with accounting system on a monthly basis.
Written confirmation signed by the HOM is provided at year end to confirm that physical verification have been done. 99

10. MCS\FCS\BAS INTERFACE
Missions process the transaction on MCS.
At month end the cash book are forwarded to HO for interfacing into BAS.
Not all mission accounts are processed on BAS in the month in which the transactions occurred.
These mission accounts are processed in the following month.
Control measures exist to ensure that all mission accounts are processed on BAS.
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11. AFRICAN RENAISSANCE FUND
Cabinet has approved the establishment of SADPA to replace ARF.
It is planned that SADPA will come into existence in 2011/12 FY and the necessary capacity will be developed for this purpose.
Once SADPA is operational, the ARF will cease to exist.
It is therefore impractical to develop any new system for the ARF, this will be done for the SADPA.
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12. Thank you
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