1. A presentation to the Portfolio Committee on women in the Presidency – Parliament of RSA Annual Reporting on activities for 2013/14 Financial year 21 October 2014 Session 1

2. Introduction The Constitution of the Republic propagates and advances the values of openness and accountability, The PFMA bolstered further by provisions which under chapter 1 states that the object of the Act is to secure transparency, accountability and sound management of the resources Against the funds appropriated by Parliament in terms of the Appropriation Act of 2013/2014, the Commission presents spending and financial management activities in support of the 2013/2014 Annual Report (AR) tabled in Parliament in terms of section 55 of the PFMA This presentation should therefore be read together with the said AR and financial statement contained thereto (cross referencing to this thus made herein) 2

3. Contents Annual Financial Statements for the period ▫Financial performance Overview ▫Financial Position as at 31 March 2014 ▫Cashflow statement for the year ending Corporate Services – General Overview ▫Human Resources ▫Information and Communication technology ▫Corporate Communications ▫Risk Management PFMA and Audit Outcomes for the period to 31 March 2014 ▫Regularity Audit outcomes – 2013/2014 ▫Status on Audit issues and Action plans 3

4. Annual Financial Statements to 31 March 2014 4

5. The Net Results – Overview of financial performance The results for the full financial year reflect a net surplus of R2m (or 3 % of the allocation/budget). Other income mainly from interest received contributed to the surplus by R876, 654 whilst the remaining under- expenditure is attributable to savings from vacant positions During the financial year, under-expenditure on salaries(Compensation of Employees) of R4,6 m was utilised to defray spending pressures on goods and Services. This reallocation or adjustment to the budget were duly approved by the Accounting Officer and Executive Authority together with mid-term results 5 Expenditure lineBudgetAdjustment to budget Available budget Actual expenditure Under / (over) expenditure Income(63 080 000) - Other income -(876 654) 876 654 Operating expenditure 14 926 400 20 121 701(5 195 301) Other administrative expenses 3 673 600 1 273 751 2 399 849 Personnel costs 44 480 000 39 904 375 4 575 625 Finance costs - 13 542(13 542) Depreciation - 639 191(639 191) Operating surplus for the period to 31 March 2014 -2 004 093 2 004 093

6. Financial performance - Income Transfers from National Government were R63, 080, 000 compared to R59, 073, 000 (2012/13), a growth in allocation of 5.9% year on year Other sources of income were from interest on cash balances (R766, 866 and R109, 768 sundry sources mainly discretionary grants from Sector Education and Training Authority(SETA – Services) Total income was R64 million in 2013/2014 compared to R61m in prior period. Apart from the increase in allocation from the National Government realised in the current year, there R2, 2 million donor income recorded 2012/213 whilst none, whatsoever was recorded in the current year 6

7. Programme Expenditure- 2013/2014 7

8. Key Areas – Exceptions to Budgets – year to 31 March 2014 Service deliver was the highest spending programme at R33 million with spending variance of R349, 605 (or 1% of programme budget). This programme spending constituted 52% of the overall annual actual expenditure. This covers work performed on strategic objective 1, 2 and 3 as outlined in the APP Strategic Objective 4, representing the Commissioner and Corporate Services programmes spent a combined R29 million ▫Commissioners – R9, 4 million, under-spending its programme budget by R1,4 m mainly because of vacancies of Commissioners (COE) ▫Corporate Services – with a total spending of R20 m and an unfavourable variance of R580, 716 (3% of programme budget) Expanded explanations to budget variance enclosed in Annual financial Statements for the period and further in 19 therein 8

9. Spending details – 2013/2014 9 Cls Year Actuals Adjusted Budget 2013/14 Annual Budget 2013/2014 Actuals - as % of total Bad debts 90 244 - Bank Charges 42 652 48 278 51 6000% CAPEX -0% Compensation of Employees 39 904 540 40 921 581 44 479 97964% Computer Servicing, Internet & Website 873 432 980 825 639 9001% Courier Services 224 879 198 656 127 8000% Depreciation & Amortisation 639 191 -1% Employee Assistance Program 75 000 300 0000% Interest Paid on Bank overdraft 13 542 4270% Media Outreach - -0% Office Cleaning, Maintenance, Plants & Security 1 251 631 1 345 521 1 615 8212% Office Consumables 163 224 133 514 35 7000% Others - -0% Printing & Stationery 753 038 612 584 352 3001% Professional Services 5 115 258 5 862 583 4 032 2008% Report writing,Printing & Publishing 1 204 447 1 580 366 1 862 5002% Subscriptions 2 434 4 8680% Telecommunication Expenses 2 085 303 2 083 383 2 142 0003% Training and Development 271 174 650 000 0% Travel, Accomodation and Related Expenditure 7 822 093 6 665 906 4 134 10013% Vehicle expenses, maint, fuel and other 293 973 313 400 661 9000% Venues, Catering & Event Management 1 201 507 2 005 988 1 994 2002% Grand Total 61 952 561 63 482 880 63 080 000 85% of expenditure arose from COE (64%), Travel & accommodation(13%) and Professional Services (Auditing, consulting by third parties) at a combined 8% contribution to total spending

10. Expenditure by location/office R40 m spent at head office with minimal budget over-runR40 m spent at head office with minimal budget over-run R22m was total spending for 9 provincial officesR22m was total spending for 9 provincial offices 32% (R10, 5 m) on the core was spent at HQ. Since HQ is not only administration but includes Line functions – Service delivery departments32% (R10, 5 m) on the core was spent at HQ. Since HQ is not only administration but includes Line functions – Service delivery departments 10 Expenditure by location DataLocation Annual Budget 2013/2014 Actual Expenditure for the year Head OfficeProvincial Office Head OfficeProvincial Office Total 39 253 318 23 826 682 39 828 786 22 123 775 62%38%64%36% Head Office Data Programme Annual Budget 2013/2014 Actual Expenditure for the year Variance% Variance COMMISSIONERS: GOVERNANCE & SUPPORT 10 749 984 9 391 434 1 358 55013% CORPORATE SUPPORT SERVICES 19 361 454 19 942 170(580 716)(3%) SERVICE DELIVERY PROGRAM 9 141 879 10 495 182 (1 353 302)(15%) Grand Total 39 253 318 39 828 786(575 468)(1%)

11. Comments There was redirection of the budget; virements of savings on COE to defray some of the overspending lines under Goods and services The overall/net under-spending for the year was R1,1 m or 2% of the allocation/budget This together with other income (R876, 654) accounts for the net surplus reported for the year ended 31 March 2014 11 Expenditure per economic classification Data Economic Classification Annual Budget 2013/2014 Actual Expenditure for the year Variance% Var. Compensation of Employees 44 479 979 39 987 253 4 492 72610% Depreciation & Amortisation 639 191 -639 191 Goods & Services 18 600 021 21 326 117 -2 726 096-15% Grand Total 63 080 000 61 952 561 1 127 4392%

12. Financial Position – Status as at 31 March 2014 There are no solvency or liquidity challenges, the financial position remain strong. Planned recapitalization projects will however diminish the liquidity strength in the near term Non-current asset base at net carrying amounts estimated at R1, 5m compared to R1,7 m as at 31 March 2013. Net of Depreciation at R640, 000 and new assets purchased for R374,000 Current assets mainly cash (R19,4 m) more than 3 folds above the net asset situation and covers liabilities by more than 27% (R19, 4m v R15,3m) Included in cash balance, is the surplus to be utilised for the recapitalization of CGE assets (R8,5 m conditionally approved Treasury) Current liabilities R15,3 m (minus R8,5 m) = R7 m (Exchange R2 m, remainder is due to staff and payroll creditors(SARS, AF) 12

13. Breakdown of non-current assets 13

14. Breakdown of current liabilities in balance sheet 14

15. Cashflow statement for the year ended31 March 2014 For all income, cash of R64 million was received added to R18 million at hand at the beginning of the financial year, bringing in cash available for use in the financial year at R82 million The CGE utilised for purposes of it’s operations, R62 million to pay employees and service providers for goods and services In the period, there was only R373, 839 cash outflow for purposes of acquisition of fixed assets – note 11 of the AFS provides further details As at 31 March 2014, the net cash held in the CGE bank account was R19, 4 million compared to R18 million at the beginning of the financial period This cash is available to service the current liabilities (R15, 4 million) as shown in the statement of financial position and will therefore be spend within the 12 months period of the 2014/2015 financial year, in the main for the ICT infrastructure and motor vehicle fleet acquisition (combined funded for R8, 5 m) 15

16. Corporate Services – An Overview 16

17. Corporate Services – HR – Personnel Costs Senior management and Commissioners constituted 17 of the 112 filled establishment and consumed about 26% of current year’s spending, Of the 49 officials in the highly skilled category to level 12, forty(40) are focussed on direct (Less administrative/managerial)/Core Service delivery roles 98 of the 110 funded positions were filled, in addition to 14 interns to the total cost of employees(COE) was R39, 9 million against a budget of R44, 5 million – Under-expenditure reported (refer to note 19 of the AFS). Recruitment to fill vacancies underway Annual performance bonus was paid to 64 officials in lieu of 2012/2013 (previous financial year’s performance) – R1, 350, 371 was paid out. A provision (R1,8 m – not paid out) was made for the 2013/2014 – refer to note 14 of the Annual Financial Statement for the same period 17

18. Corporate Services – HR (Leave) Against available leave days (accrued in the year, at 22 days per person per year = +/- 2100 for 98 persons for the year), 1645 annual leave days were taken at an average of 14, 7 days per person – a good measure in compliance to section 22. 23 of the Basic Conditions of employment Act. However, leave liability/provision at reporting time remains high at R1, 7 million due to accumulated days from previous cycle. The CGE leave policy has enabling provisions to remedy the situation during the 2014/2015 Financial year Sick leave taken was at an average of 3 days per person for the year In the overall, Senior managers and Commissioners took less leave than the average during the reporting period. Leave planning in the new year will seek to resolve this situation to ensure compliance (BCEA) and effectiveness in human resources management 18

19. Corporate services – HR ( Employment Equity) All employees (112 in the period) were from the designated group of previously disadvantaged (PDI’s – Black or women) 40 males compared to 72 females were employed – 62% skewed in favour of women. Where of the 72, sixty were African women There were 2 employees with disabilities. This represented 1,8 % of the establishment, marginally deviant from a two percent minimum target - The redress planned into the recruitment in the new year for the vacant/existing positions as part of the approved EE plan Representation of women at decision making level is strong with Commissioners ( 8 of 11 as at 31 March 2014) and SMS at 50/50 but led by female CEO 19

20. Corporate services – HR (Human Capital Management) 3 upward placements/promotions were made during the period – in the finance department and two provincial offices There has been disciplinary action taken against an employee on transgressions of financial misconduct (PFMA section 81) and is reportable to Parliament in terms of National Treasury Regulation (T.R. 4.3.1 & 4.3.2) – Termination took effect from January 2014 following a formal disciplinary process undertaken by management – There were no monies recoverable/ No direct claim from the former employee 38 employees were trained at the total cost of R271, 174 down from spending of R491, 679 in 2012/2013 year (Note 6 of AFS and table 12.3.14 of AR) 20

21. Corporate Services – Information technology Information and Communication Technology services at the Commission stagnated pending a total revamp of the environment; from reconfiguration of the Governance Framework, through to the replacement of the old and obsolete hardware and software resources A project is already underway in the new financial year where the feasibility evaluation has been completed, ICT strategy and implementation being finalised internally already at the time of reporting. The conceived project plan is estimated to cost R4, 2 m The project is funded from Conditional grant from National treasury – refer to note 15 and 24 of the AFS) All processes and protocols followed in the planning and rollout are consistent with the guidelines proclaimed by DPSA 21

22. Corporate Services – Communications The unit employed 2 officials for the period under review The unit provided alternative channels to deliver the CGE services, leveraging the traditional outreach, advocacy and information dissemination methods. This was done through the use of multiple platforms, ranging from broadcasting, print media to social media The total expenditure for the unit in the period was recorded at R3,1 million With the reach and coverage of audience, it is submitted the unit delivered added value to the work of the CGE 22

23. Corporate Services – Risk Management Policies, management structures and processes in place complying to the requirements of section 38 of the PFMA Refer to chapter 14 of the 2013/2014 Annual Report on approach and philosophy followed by the Commission The overall risk exposure is within the acceptable levels except on ICT and some internal control focus areas. Obsolete technology impacting information security plus weaknesses in SCM, also highlighted in the report of AGSA The CGE financial instruments do not have exposure to credit, currency or price risk and have limited exposure to interest rate risk because of the amounts of cash currently held in the current bank account 23

24. Risk management - Dashboard Significant Risk areas by category as of 31 March 2014 Number of Risks Average of Inherent Risk Average of Residual Risk Financial management and controls 7 20 13 Information and communication Technology 5 20 14 Strategic and critical objectives 13 21 11 Overall assesment25 21 12 Legend -risk tolerence rating grid Broad tectical intervention by managementExposure ratingOverall assessment Assurance on the identified controls will be validated by internal Audit Unit Low – from 1 -5Acceptable Management have reviewed risks and assessed the exposure against the risk appetite. It is considered that at this level of exposure effective internal control measures must be implemented by management Medium – from 6-12Acceptable with caution Management will implement corrective actions urgentlyHigh – From 12.5 – 25Unacceptable 24

25. Fraud, Contingencies and litigation No instances of fraud were detected or reported to management during the period under review No new litigation matters. CGE v Gasa and Axolute v CGE are the only litigation matters still to go on trial or to which the CGE is exposed A contingent asset in the form of a receivable is specifically disclosed in the AFS and been followed up with the insurer 25

26. Audit and PFMA outcomes 26

27. Regularity Audit Outcomes 2013/2014 Unqualified opinion on AFS Weaknesses currently addressed in n terms of the Audit action plans developed subsequent to receipt of management letter of the 2013/2014 regularity audit read Apart from summary on the left of slide, detailed action plans have been developed, implemented and tracked by oversight structures/leadership of the CGE on a continuous basis Supply Chain management Capabilities – capacity building in terms of improving processes and systems (std checklists, registers, regular reviews, etc), building competencies through training (School of Governance – Officials and bid committee members trained respectively in December 2013 and August 2014 Behaviour – Consequence management in line with section 81-83 of the PFMA Oversight and Governance - Regular reporting and tracking of the implementation of audit action plans Information Technology Governance framework revised, consistent with recommended practice, compliant to the AGSA recommendations Information security – Business Continuity, Passwords protocols and other best practice intervention will be implemented in the new environment 27

28. Audit status 28 Unfavourable Favourable 2013/2014 unpublish ed as restricted by PFMA. 2013/14 Matters of emphasis Contingent liability due to claim under litigation estimated to R814, 000 2013/14 Compliance with laws and Regulations issues SCM – needs vast improvements Irregular, fruitless and wasteful expenditure reduced materially reduced 2013/14 Matters of emphasis Contingent liability due to claim under litigation estimated to R814, 000 2013/14 Compliance with laws and Regulations issues SCM – needs vast improvements Irregular, fruitless and wasteful expenditure reduced materially reduced

29. Thank you Q&A 29