1. Presentation to the Portfolio Committee: Water & Environment Presentation by Mr P R Botha Acting Chief Financial Officer 26 - 27 January 2011 Financial matters: Main Exchequer Account

2. Financial performance by 31 December 2010 per programme Economic classificationAdjusted Budget 2010/11 2010/11 Actual R’000 % spent Available Budget Programme 1: Administration967 498563 66458403 834 Programme 2: Water Management402 939218 83454184 105 Programme 3: National Water Resources Infrastructure 2 238 2321 725 96277512 270 Programme 4: Regional Management4 354 3422 481 073571 873 259 Programme 5: Water Sector Regulations240 18282 47034157 712 TOTAL8 203 1935 072 003623 131 190 2

3. Economic classificationAdjusted Budget 2010/11 2010/11 Actual R’000 % spentAvailable Budget Compensation of Employees1 166 181716 68463449 497 Goods and Services2 564 6421 340 849521 223 793 Interest and Rent on land-705-(705) Theft and Losses-92-(92) Transfers and Subsidies3 353 5422 976 12989377 413 Payments for Capital Assets1 118 82837 54431 081 284 Total8 203 1935 072 003623 131 190 Financial performance by 31 December 2010 per classification 3

4. Overview of spending trends per programme in 2009/10 Economic classificationAdjusted Budget 2009/10 2009/10 Actual R’000 % spentAvailable Budget Programme 1: Administration812 541503 57662308 965 Programme 2: Water Resource Management4 121 0032 821 689681 299 314 Programme 3: Water Services2 840 4581 702 350601 138 108 TOTAL7 774 0025 027 615652 746 387 4

5. Reason for under disbursement Employee Wellness Project amounting to R6 million started later than anticipated, most of the payments are expected to be disbursed in the last quarter of the financial year Climate Survey Programme which was put on hold, however the approval is now granted and the expenditure is expected to be disbursed in the last quarter of the financial year. Delays in approving Training and Development Plan attributed to under spending of R7 million in Chief Directorate : Human Resource Management Unfilled vacant posts contributed to under expenditure in all the programmes, plans have been put in place to fast track filling of vacant posts Delays by the Department of Public Works in submitting outstanding invoices in respect of office accommodation and municipal services. 5

6. Reason for under disbursement (Cont.) Delays by service providers in submitting invoices for goods and services already rendered, follow ups are being made with respective service providers to fast track the expenditure and avoid expenditure spike in March 2011. Delays in certifying invoices for goods and services that has been rendered. The expenditure is expected to increase as soon as parliament approve Acid Mine Drainage plan. Delays by municipalities in appointing Implementing Agents in respect of Refurbishment of Waste Water Treatments Plants Incorrect submission of payment certificate which prolong the payment period in respect of Accelerated Community Infrastructure Project. Protracted delays in finalizing transfer of staff to various municipalities Late redistribution of Masibambane budget allocation received as additional funding from National Treasury. 6

7. Unavailability of material which had to be ordered from overseas in respect of Regional Bulk Infrastructure Delays in appointing Mechanical and Electrical contractors by municipalities. Delays in obtaining approval of terms of reference for various projects to strengthen the use of water efficiency, upgrading of Water Use License Authorisation Tracking System. 7 Reason for under disbursement (Cont.)

8. Rollovers Description of ServicesAmount Requested R’000 Amount Approved R’000 Office Space in Limpopo3 5470 Water Allocation Reform for evaluation of water use license application backlog 7 830 Water Services Operating Subsidy Grant10 000 Working for Water programme to settle damages claims4 127 National Youth Services3 2110 Revision of National Water Resource Strategy4 100 8

9. Description of ServicesAmount Requested R’000 Amount Approved R’000 Hartbeespoort Dam Remediation project to clean the rivers feeding the dam 9 500 Rain Water Harvesting Tanks6 3680 Accelerated Community Infrastructure Programme43 444 Accelerated Community Infrastructure Programme (Amount of R26,52 million has been rolled over to Department of Human Settlement – Vote 30 page 281) 31 5200 TOTAL123 63679 001 9 Rollovers cont…

10. Additional funds recommended by the National Treasury Description of ServicesAmount Approved R’000 Adjustment for wage agreement settlement30 600 Drought Relieve for Western Cape92 000 TOTAL122 600 10

11. Earmarked funding Description of Earmarked Projects2010/11 R’000 Learning Academy20 000 Property Management - Rental of Buildings156 000 Additional Capacity – Human Resources7 000 Working for Water668 583 Working on Fire207 923 Funding to replace of donor funding200 000 Bulk infrastructure893 000 Water Services Operating Subsidy807 682 Construction of Water Services Scheme191 942 Compliance Monitoring & Enforcement5 000 Total5 446 905

12. Initiatives to improve financial matters The Finance Branch has developed a Financial Management Improvement Plan to address shortcomings on financial matters 12

13. Financial improvement plan initiatives Assets : Immovable assets Finding : AG was unable to verify the existence and completeness of immovable tangible capital assets as the final asset register was not provided in time Action implemented : Perform frequent asset verification Monthly meetings with WTE asset team Meetings with relevant stakeholders responsible refinement process on the immovable Meetings with relevant stakeholders 13

14. Assets : Moveable assets Finding : Closing balance and additions of movable tangible capital assets as disclosed in the AFS do not agree to the balance in the asset register Action implemented : Monthly performance of asset reconciliations between Asset Register and Trial Balance and to ensure sign-off by relevant Chief Directors Financial improvement plan initiatives 14

15. Irregular Expenditure Finding : Proper procurement processes had not been followed The Accounting Officer did not implement and enforce controls to prevent the occurrence of irregular expenditure Action implemented : Awareness conducted to sensitise departmental officials Issue a circular to articulate the processes to be followed once irregular expenditure discovered was issued to officials Reporting tool to report irregular expenditure was issued Financial improvement plan initiatives 15

16. Performance information Finding : The Department’s strategic plan is not consistent with the MTE estimates as required by the Treasury Regulation 5.2.2 (a) Action Implemented : A matrix is compiled to compare the Strategic plan with the MTE Financial improvement plan initiatives 16

17. Internal control action Implemented : A report on challenges experienced with the preparation of the AFS were compiled Prepare an action plan for the preparation of IFS/AFS including a process of pre-auditing inputs All policies were work shopped with the regional officials Financial improvement plan initiatives 17

18. Allocation MTEF 2011 - 2014 Description of items2011/12 (R’000) 2012/13 (R’000) 2013/14 (R’000) Administration920,399944,285994,402 Water Sector Management699,726778,953666,212 Water Infrastructure Management2,607,9632,658,0703,039,102 Regional Implementation and Support 5,091,6135,653,3075,981,880 Water Sector Regulation112,370116,097121,792 International Relations26,11127,41127,878 TOTAL9,458,18210,178,12310,831,266 18

19. Allocation MTEF 2011 - 2014 Description of items2011/12 (R’000) 2012/13 (R’000) 2013/11 (R’000) Goods and Services - Exchequer Funds2,842,6313,319,8913,283,413 Compensation of employees1,186,9221,262,9151,338,269 Transfers and subsidies3,317,1533,336,6703,758,070 Provinces and municipalities561,515592,253624,827 Departmental agencies and entities2,53,5422,525,8452899,366 Households59,59625,94730,688 Foreign governments and organisations180,600180,625190,529 Universities and non-profit organization11,90012,00012,680 19

20. Allocation MTEF 2011 - 2014 Description of items2011/12 (R’000) 2012/13 (R’000) 2013/11 (R’000) Payments for capital assets2,111,4762,258,6472,451,514 Buildings and other fixed assets384,424226,160246,232 Machinery and equipment1,712,3472,017,0222,189,007 Software and intangibles14,70515,46516,275 TOTAL 9,458,18210,178,12310,831,266 20

21. Thank you