1. Economic Development Department Annual Financial Statements 2011/12
Presentation to the
Portfolio Committee
16 October 2012

2. Introduction
The information presented is based on 2011/12 Audited Annual Financial Statements 2

3. Presentation Outline Expenditure Overview of Expenditure
Context of Expenditure
Auditor-General Processes
- Auditor-General’s Reports
- Meetings with the Auditor-General
- Implementation of Commitments and Recommendations
Committee on Public Accounts’ Resolutions
2011/12 Budget Process
Overall Expenditure Per Programme
- Programme 1
- Programme 2
- Programme 3
- Programme 4
- Transfers to Entities
Overview of Revenue
Payments
Conclusion

4. EXPENDITURE

5. Overview of Expenditure
Expenditure was up by 44%, compared to the previous financial year
The total adjusted budget for 2011/12 financial year was R million, an increase of 33% compared to the previous financial year
Expenditure for 2011/12 was R million or 97% of the adjusted appropriation, compared to R400.6 million or 89% in 2010/11
Excluding transfers, expenditure was R 89.6 million or 81% of adjusted appropriation of R million, compared to R 44.2 million or 48% in 2010/11 5

6. Context of Expenditure
2011/12 was EDD’s second full year of operation as a separate vote
Still challenges experienced in recruiting suitably qualified and experienced staff
Compensation of employees is a major cost driver which accounts for lower expenditure 6

7. AUDITOR-GENERAL PROCESSES

8. Auditor-General (AG)’s Report
EDD maintained the status of an unqualified audit report
AG raised only one non-compliance matter:
Material misstatements of expenditure
Were subsequently corrected by the Department
A reduction from 6 non-compliance in 2010/11 to only 1 in 2011/12 8

9. AG’s Report (cont.)
2011/12 AG’s report suggests that EDD is free from the following forms of undesirable expenditures:
Irregular Expenditure
Unauthorised Expenditure
Fruitless and Wasteful Expenditure 9

10. Interactions with the AG:
Meetings with the AG
Interactions with the AG:
With Minister: 1 August 2011
2 July 2012
With the Accounting officer: 18 December 2011
24 March 2012
11 June 2012
3 July 2012
At these meetings commitments were made to address improvements in the internal control environment with the objective of achieving clean administration. 10

11. Meetings with AG (cont.)
With the Audit committee: 14 September 2011
24 March 2012
23 May 2012
Steering Committee Meetings: Every two weeks during the audit process 11

12. Implementation of Commitments and Recommendations
Below is the AG’s assessment of the progress on commitments made by the Minister, accounting officer and audit committee to address audit outcomes in the 2010/11 and 2011/12. 12

13. COMMITTEE ON PUBLIC ACCOUNTS RESOLUTIONS

14. Committee on Public Accounts Resolutions
EDD has never appeared before the Committee on Public Accounts and there are no resolutions from this Committee for EDD to implement 14

15. 2011/12 BUDGET PROCESS

16. 2011/12 Budget Process A strategic session was held in November 2011
Addressed by the Minister, and Chaired by the former DG
Considered strategic priorities of the Department
Guided by the National Treasury guidelines on budget and strategic process
Analysis of current spending trends was addressed 16

17. 2011/12 Budget Process (cont.)
Costing of cost drivers was done
Submitted all National Treasury prescribed budget documentation (including the ENE’s final chapter)
Based on the Strategic Plan, APP and organisational structure 17

18. 2011/12 Budget Process (cont.)
A budget was determined for three years, with line item expenditure projected for:
- Staffing
- Goods and services
- Capital expenditure
This became the basis for proposed baseline expenditure for the MTEF
Final budget allocation for the EDD was tabled by the Minister of Finance in February 2011 was R million 18

19. EXPENDITURE

20. Overall expenditure 20

21. Programme 1 Actual spending for Programme 1 at 31 March 2012 was
R 50.8 million or 88% of budget, compared to R 35 million or 78% in 2010/11
Expenditure increased by 46% over 2010/11
Under-spending mainly due to slow spending on capital assets 21

22. Programme 2
Actual expenditure for Programme 2 amounted to R 12.5 million or 77% of the budget, compared to R 6.6 million or 39% in 2010/11
Expenditure increased by 89% over 2010/11
Slow spending on this programme was due to slow rate of filling posts due to difficulty in employing appropriately skilled staff 22

23. Programme 3
Financial year expenditure for Programme 3 was R 501 million or 100% of the budget, compared to R 359 million or 95% in 2010/11
Expenditure increased by 40% over 2010/11
R million was transferred to EDD’s Public Entities 23

24. Programme 4
Spending for programme 4 was R 13.3 million or 62% of the budget, compared to R or 4% in 2010/11
Expenditure increased more than 20 fold
Slow spending on this programme was due to slow rate of filling posts due to difficulty in employing appropriately skilled staff 24

25. Transfers to Entities
The following Public Entities received transfers from EDD in the
2011/12 financial year 25

26. Transfers to Entities (cont.)
The following other Entities received transfers from EDD in the
2011/12 financial year 26

27. OVERVIEW OF REVENUE

28. Overview of Revenue
Revenue collection for 2011/12 totaled R million or 243%, compared to R 547 million or 238% in 2010/11
Main revenue generator for EDD is fines and penalties from the Competition Commission and Dividends from the IDC
The collected revenue is not availed for spending by the Department
Revenue is promptly surrendered to the National Revenue Fund (fiscal envelope) 28

29. PAYMENTS

30. Payments
In 2011/12, it took the EDD an average of 15 days to pay its creditors
From the date of receipt of invoice to that of payment
Maximum is 30 days per Treasury Regulation period
The EDD reduced its year-end accruals by 88% from 2010/11 to 2011/12 financial years
The Department has made a concerted effort to spend its budget in an economic, effective and efficient manner in view of the mandate of the Department 30

31. CONCLUSION

32. Concluding Remarks Executing Authority and Acting DG committed to:
Continuous improvements on internal controls
Ensuring that EDD obtains a clean audit report
Continue to meet the AG on a regular basis
Start the interim audit in October 2012 32

33. Thank you