1. Department of Environmental Affairs Turnaround Strategy Briefing Portfolio Committee
FINANCIAL REPORTING CONSIDERATIONS & OTHER 6 NOVEMBER 2018
Ms Nosipho Ngcaba
Director-General
Department of Environmental Affairs
6 November 2018

2. OVERVIEW # Topic Slide # 1. AUDIT AND MANAGEMENT REPORT DASHBOARD 3 2.
IMPROVEMENTS (EPWP)
4-5 3.
CONSOLIDATION PROCESS
6-7 4.
ACTION PLAN FOR AGSA AUDIT REPORT
8-11 5.
CONSEQUENCE MANAGEMENT 12 6.
GREY AREAS AND OTHER 13

3. AUDIT AND MANAGEMENT REPORT DASHBOARD#
SUBJECT MATTER
#OF FINDINGS
CLASSIFICATION PER MANAGEMENT REPORT
MATTERS AFFECTING AUDIT REPORT
OTHER IMPORTANT MATTERS
ADMINISTRATIVE MATTERS 1.
EPWP 6 2.
SUPPLY CHAIN MANAGEMENT (SCM) 10 4 2 3.
PERFORMANCE INFORMATION 12 3 7 4.
INFORMATION TECHNOLOGY (IT) 5.
FINANCE 1 6.
HUMAN RESOURCES (HR)

4. IMPROVEMENTS (EPWP)
Environmental Programmes (EP) panel of auditors – to enhance quality and consistency in approach
Expanded Public Works Programme (EPWP) workshops, i.e. training of panel of auditors and implementing agents (on project AFS template, infrastructure work in progress, directly attributable costs, monthly reporting, use of practical examples)
Procedures as guidelines to be given to auditors & implementing agents (supported by accountants) – to enhance consistency and quality audits
Deadline for completion of final project AFS template – mid April penalties for non- adherence (consequence management)
Interim audit, interim quarterly AFS, interim consolidation on 9 months data, final consolidation on 12 months data
The Department follows a methodical approach in terms of the consolidation, a prescribed set of procedures to serve as a reasonability test (refer to slides 6 &7 )

5. IMPROVEMENTS (EPWP)
Roles and responsibilities with timelines of all role-players, e.g. Project Managers, refined to ensure better governance on the projects (project managers to assess validity of project milestones, monthly reporting, monthly bank statements, minimising prepayments)
Interest accrued by implementing agent ring fenced/ surrendered to DEA
Project AFS template enhanced and simplified - AG to endorse project AFS template

6. CONSOLIDATION PROCESS
A combined final EP consolidation will be submitted by the service provider Deloitte.
The EP consolidation will include a cover page summarising the financial statement line items required by DEA Finance; being:
Revenue – Advances from DEA, other sources of revenue and interest income;
Balances as per Commitment Report (Advances);
Management fees, EPWP wages, outsourced services and total expenditure;
Expenditure for capital assets + PPE note;
Bank statement balance (show interest separately);
DEA unspent amount; and
Work-in-progress (WIP) - directly attributable costs

7. CONSOLIDATION PROCESS
Reasonability test procedures by Deloitte as the service provider include:
Comparing bank balance to bank statement (all bank accounts), mapping trial balance to notes and face of financial statements, recalculating unspent amount, review and comparison of project details tab to financials; review of audit report etc.

8. ACTION PLAN FOR AGSA AUDIT REPORT QUALIFICATIONS AREAS (Audit Report)
AG FINDINGS
ACTION PLAN
TIMELINES
Goods and services - Management fees not disclosed separately
Project AFS breakdown,
invoice to support management fees and project managers to assess validity of project milestones
31 March 2019
Expenditure for capital assets
Project AFS breakdown supported by appropriate asset register controls
Immovable tangible capital assets infrastructure (WIP)
EPWP workshops/ training,
directly attributable costs defined in project AFS template

9. ACTION PLAN FOR AGSA AUDIT REPORT QUALIFICATIONS AREAS (Audit Report)
AG FINDINGS
ACTION PLAN
TIMELINES
Accrued departmental revenue, i.e. interest
Project AFS breakdown
Monthly reporting
Interest ring fenced/ surrendered to DEA
31 March 2019
Receivables / loans (Green Fund)
Finance to reflect the figures in interim financials
31 October 2018
Payables (Green Fund)
Prepayments not disclosed
Commitments overstated
Commitment Report controls enhanced
Prior period error
Effected in Interim financials

10. ACTION PLAN FOR AGSA AUDIT REPORT QUALIFICATIONS AREAS (Audit Report)
AG FINDINGS
ACTION PLAN
TIMELINES
Irregular expenditure
Enhanced procurement planning to minimise deviations,
rotation process to be documented, consequence management at projects for non-adherence to SCM
Effective immediately
Fruitless and wasteful
Disclosure in line with Accounting Manual for Departments
Performance Information variance reasons do not have adequate supporting documentation
Enhance reporting controls,
quarterly interrogation of variance analysis, portfolio of evidence kept per variance
31 March 2019

11. ACTION PLAN FOR AGSA AUDIT REPORT NON - COMPLIANCE (Audit Report)
AG FINDINGS
ACTION PLAN
TIMELINES
Material amendments to AFS and Performance Information and irregular expenditure not disclosed/ prevented
Enhanced monitoring of existing internal controls around AFS and Performance Information preparation and disclosure of irregular expenditure
Effective immediately

12. CONSEQUENCE MANAGEMENT
Management to adopt a strict approach in terms of governance on the projects (e.g., monthly bank statements, quarterly AFS, etc.)
Penalties effected for non-adherence (to e.g., Memorandum of Agreement)

13. GREY AREAS AND OTHER
Green fund, Eco-furniture, Working on Fire - meeting with National Treasury and AGSA
AGSA to endorse Project AFS template
Capital assets – (is inclusive of what specifically) – separate meeting with AGSA
Directly attributable costs per AFS template defined – AGSA to endorse
National Treasury and AGSA
The action plan from Performance Information, SCM and IT
DEA Internal audit unit to monitor and evaluate action plan
Other