PRESENTATION TO PORTFOLIO COMMITTEE ON DEFENCE ON DOD ANNUAL REPORT FY2005/06

1

• PRESENTATION TO PORTFOLIO COMMITTEE ON DEFENCE ON
  DOD ANNUAL REPORT FY2005/06
• 12 September 2006

2
Aim

• To present the DOD Annual Report FY2005/06
  before tabling in Parliament in terms of sec
  40(1)d read together with sec 65(1) a of Public
  Finance Act, 1999 (Act no1 of 1999)

3
Scope

• Introduction
• Changes to reporting format
• Annual Report performance against plan
• Report of the Auditor General FY2005/06
• Discussion

4
Introduction

• Emphasis of presentation is on outputs, actual
  performance and challenges
• Presentation contains both programme
  performance and the Report of the Auditor
  General
• Presentation on Annual Report performance
• Chapter 1 - Strategic direction
• Chapter 2 - Organisational Structure and
  Human Resources Management
• Chapters 3 to 11- Programme performance
• Presentation on Report of the Auditor General

5
Introduction (continued)

• Inputs from the Ministry and Portfolio
  Committee on Defence during the period under
  review incorporated into Annual Report
• Performance Information and Financial
  Regularity Audit related inputs from Office
  of Auditor-General also incorporated into
  Annual Report

6
Changes to Format of Report

• Reporting on output details changed from
  essay format to table format in line with
  DOD Strategic Business Plan
• Further changes have been effected in
  Quarterly Report
• Integrated report with both financial and
  non-financial information
• Alignment of Programmes articulated in ENE and
  DOD Strategic Business Plan FY2006/07
  mandate and core business

7
Performance Report Reporting per Programme
8
Chapter 3 Programme 1 Defence Administration

• Outputs
• Policy Advice Strategic Planning Reports,
  general Ministerial services, and specific
  operational outputs for Services and Divisions in
  the Department
• Departmental Direction
• Achievements
• Management related responsibilities have been
  carried out through out the period under review.
• This includes the following
• - inputs to the cabinet makgotla
• - Internal strategic advice and support
• - Defence Budget Vote
• - Representativeness of Military Legal
  Practitioners and within DOD
• SANDF Command and control
• Achievements
• Achieved objectives and targets
• Readiness of military capabilities maintained ito
  guidelines
• Operations successfully conducted
• Detail in Chapters 3 10

9
Chapter 3 Programme 1 Defence Administration
(continued)

• Policy and Planning
• Achievements
• Piloting of the Balanced Score Card
• Defence Policy such as the White Paper on
  Peace-keeping Missions, Review of the
• regulation of Foreign Military Assistance
  Act, Progress report on Defence Update
• Management of Cluster communication activities
• DOD Planning Framework
• DODW (restructuring)
• Bi/Multilateral Agreements and memoranda of
  understanding (Defence Diplomacy)
• Readiness of military capabilities
• Financial Services
• Achievements
• Corporate Budget management,
• Accounting and control
• Preparation of financial statements

10
Chapter 3 Programme 1 Defence Administration
(continued)

• Aqcuisition Services
• Achievements
• DODs Acquisition and Procurement in
  conjunction with Armscor was instrumental
• in concluding disposal contracts
• Management of Readiness of military
  capabilities
• The procurement of goods and services
  Payments to the value of RM872 was made in
  favour of Government orders
• Inspection Services
• Achievements
• The DOD audit process and the effective
  feedback to customers has improved.
• The quality certification in terms of SABS ISO
  9001 2000 received from external auditors
  justifies the fact.
• Amongst others, the DOD contributed and
  participated in the following
• South African and African Union task team to
  review 25 articles in the UN

11
Chapter 3 Programme 1 Defence Administration
(continued)

• Equal Opportunities and Affirmative Action
• Achievements
• Participation in the revision of the United
  Nations Comprehensive and Integral
• International Convention on the Protection
  and Promotion of the Rights and Dignity of
  Persons with Disability
• Launching and induction of the New
  Partnership for Africas Development
  (NEPAD) Gender Task Force
• Hosting of Africans Womens Peace Table
  Seminar to engender AU/NEPAD peace Agenda
• Support rendered towards the Celebration of
  the International Day of Disabled Persons
  (IDDP)
• Participation in profiling and creating
  visibility of the 16 Days of the Campaign on
  No Violence Against Women and Children

12
Chapter 3 Programme 1 Defence Administration
(continued)

• Government Information Technology Officer
• Achievements
• Departmental Enterprise Information System
  (DEIS) Framework was completed and
  promulgated
• Towards the Defence Information System
  Architecture (DISA), the following were
  completed
• Strategic studies in terms of MS Operating
  System vs. other Alternative
• and Advanced Encryption standards
• Defence Information and Communication
  Technology Architecture
• The DOD has registered with GARTNER for
  research regarding Information Systems
• The first draft of CMIS Regulatory Framework
  was completed

13
Chapter 3 Programme 1 Defence Administration
(continued)

• CORPORATE STAFF DIVISION
• Strategy and Planning
• Achievements
• Capacity building in accordance with
  Governments Plan of Action, Cluster
  objectives, military cooperation activities in
  Region, African Standby Force, SADCBRIG
• Participation in planning, reporting and
  budgeting process
• Implementation of new planning enabler tool
  (GEJIMA)
• Military Legal Service
• Achievements
• Improvement of representativeness in Military
  Legal Service appointed 3 black senior
  judges
• Senior Military Judges for 1st court case in
  DRC and the Sudan appointed
• Training of Military Legal Practitioners
  improved
• Challenges and Interventions
• Inadequate structures to be addressed as
  part of DODW process
• Lack of capacity and a loss of skills
  utilise Reserve Force members,
• awaiting appointments of new members

14
Chapter 3 Programme 1 Defence Administration
(continued)

• CORPORATE STAFF DIVISION (continued)
• Religious Services
• Achievements
• Support to deployed members and families.
• Programmes in Burundi, DRC, the Sudan.
• HIV programme within SANDF, training of SADC
  chaplains
• Defence Corporate Communication
• Achievements
• Alignment with national communication
  strategy.
• Facilitation of management of stakeholder
  relationships.
• Met growing demand for communication services
  and products.
• SA Soldier magazine won Government
  communication award

15
Chapter 3 Programme 1 Defence Administration
(continued)

• CORPORATE STAFF DIVISION (continued)
• Defence Corporate Communication(continued)
• Challenges and Interventions
• Inadequate structures addressed through the
  DODW process
• Lack of capacity and a loss of skills
  awaiting appointment of new members
• Defence Foreign Relations
• Achievements
• Placement of Defence Advisor at UN
• 27 Defence Advisors at 24 Missions
• Involvement in binational and multinational
  meetings
• Challenges and Interventions
• Inadequate structures addressed through the
  departmental restructuring process
• Lack of capacity and a loss of skills-
  awaiting appointment of new members

16
Chapter 3 Programme 1 Defence Administration
(continued)

• CORPORATE STAFF DIVISION (continued)
• Reserve Force Office
• Achievements
• Implementation of Res F Strategy.
• Actively engaged in facilitating Project
  PHOENIX with Services and Divisions
• Challenges and Interventions
• Council for the Support of National Defence
  inactive discussions
• with Chairperson of the Council and Chief of
  the SANDF

17
Chapter 4 Programme 8 Force Employment (Joint
Operations)

• Outputs
• Operational direction Special Operations
  Regional Security Support to the People Defence
  Capability
• Achievements
• All primary force employment commitments were met
  
• Promote Peace, Security and Stability in the
  Region and Continent
• Continued to provide forces for peace missions
  mandated by UN and AU
• SANDF forces deployed in DRC, Burundi,
  Ethiopia/Eritrea, Ivory Coast and Comoros with
  and expanded role of SANDF in the Sudan
  deployment
• More than 3000 members deployed externally
• Expertise of SANDF commended by MONUC
  Headquarters in DRC
• Support the People of South Africa
• Continued disengagement from internal operations
• Missions in support of SAPS
• Borderline control
• Rural safeguarding - Army Territorial Reserves
  continue to support during period of transfer to
  SAPS
• Support to Depts of Home Affairs and Agriculture

18
Chapter 4 Programme 8 Force Employment (Joint
Operations) (continued)

• Achievements
• To Enhance and Maintain Comprehensive Defence
  Capabilities
• Conventional force preparation activity
• Joint exercise INDLOVU, command post and field
  training exercises.
• Multinational exercises DESEX, OXIDE, THOKGAMA
• Special Operations
• Special Forces maintained its capability to
  react rapidly with flexibility
• Challenges and Interventions
• Health Rejuvenation - Military
  Skills Development System
• Lack of junior leaders
• Sustainment of long-term Peace Support Operations
  due to lack of qualified personnel Utilise
  Reserve Force members, rejuvenation through

19
Chapter 4 Programme 8 Force Employment(Joint
Operations) (continued)
External Force Employment Achievements 2005/06
Mission No of Troops Mandays No of Rotations/Log Runs Average Cost of Operation
DRC Op MISTRAL Op TEUTONIC I Op TEUTONIC II Op TEUTONIC III 1 326 56 70 2 482 165 20 440 25 550 144 2 per year 2 per year 4 log runs pm Rm342 Rm8 Rm49,6 R507 000
Burundi Op FIBRE 940 342 635 2 per year Rm316
Eritrea Ethiopia Op ESPRESSO 5 1 1 825 365 1 per year R600 661 R122 000
Liberia Op MONTEGO 2 365 1 per year R153 600
The Sudan Op CORDITE 395 365 1 per year Rm70
Ivory Coast Op PRISTINE 45 16 425 2 per year Rm13
Comoros Op TRITON 372 5 475 Duration of election Rm13
20
Chapter 5 Programme 2 Landward Defence

• Outputs
• Capabilities in infantry armour artillery air
  defence artillery engineer operational
  intelligence general training command and
  control
• Achievements
• Project VISION 2020
• Rejuvenation of SA Army Military Skills
  Development System
• Met Short-term Force Employment requirements
• Provided 2 Reserve Force companies for deployment
  in DRC
• Challenges and Interventions
• Affordablility of SA Army reprioritise vs
  operating budget increase Will table a paper in
  2006 indicating the requirement for additional
  funds/reprioritisation
• State of facilities DOD/PWD repair and
  maintenance programme (RAMP) to be executed
• Prime mission equipment Investigation in terms
  of priority needs underway
• Ammunition - Investigation underway to
  revitalise Defence Related Industry support
• Revitalisation of SA Armys Technical Support
  Corps capability Utilise Reserve Force members
  and considering allowances and incentives still
  to be approved
• Outflow of skilled personnel - Engineer Corps
  Utilise Reserve Force members and considering
  allowances and incentives still to be approved

21
Chapter 6 Programme 3 Air Defence

• Outputs
• Operational direction Helicopter capability Air
  transport and maritime capability Air combat
  capability Operational support and intelligence
  Command and control capability Command post
  Base support capability Education, training and
  development capability and Technical support
  services capability
• Achievements
• Met majority of Short-term Force Employment
  requirements
• HR transformation - increased numbers of black
  candidates for training, MSDS
• Participated in silver anniversary of Zimbabwean
  Air Force
• Challenges and Interventions
• Deteriorating aircraft systems knock on effect
  - reduced flying reduced training, motivations
  for additional funding
• Critical skills and experience shortages
  incentive schemes for technical personnel
  instituted
• Significant levels of under-funding Applied for
  additional funding
• Impact of delay in A109 and temporary withdrawal
  of Hawk Extended use of Alouette helicopters
• SAAF force preparation and force employment
  funded at cost of longer term needs air base
  maintenance, aircraft spares purchases, vehicle
  renewal, infrastructure maintenance Applied for
  additional funding, Internal repriotising of
  funds, consideration of outsourcing basic
  helicopter training

22
Chapter 7 Programme 4 Maritime Defence

• Outputs
• Capabilities in Maritime combat Maritime
  Logistic Support Maritime Training and Maritime
  Base Support
• Achievements
• Met Short-term Force Employment requirements
• Received 1st frigate SAS AMATOLA
• Operational Boat Squadron prepared to become
  Naval Reaction Force
• Integration of Strategic Defence Packages
  progressing well
• SA Navy unique codification capability interim
  measure
• Challenges and Interventions
• Current funding level - maintained only
  facilities required for force preparation In
  process of upgrading facilities
• Loss of technical skills and expertise, (SAN
  Dockyard) Recruitment of personnel

23
CHAPTER 8 PROGRAMME 5 MILITARY HEALTH SERVICE

• Outputs
• Military Health Support Specialist/tertiary
  Health Service Product Support capability
  Product and Base Support capabilities Military
  Health Training capability
• Achievements
• Surgeon Generals intent gave new direction
• Met most of Short-term Force Employment
  requirements
• Supported all operations (402) and exercises
• 1 Military Hospital for UN/AU and VIPs
• Improvements Internal patient care and
  treatment. Reduced referrals to private sector.
  Use of Essential drug list, reduced costs
• Execise WAYSIDE Chemical, Biological Radiation
  defence exercise with Tshwane Emergency Service

24
CHAPTER 8 PROGRAMME 5 MILITARY HEALTH
SERVICE(continued)

• Challenges and Interventions
• Lack of health care professionals on all levels,
  particularly operational emergency care
  practitioners recruitment of professionals,
  MSDS
• Institute for Aviation Medicine funding for
  health equipment Centrifuse addressed with
  assistance of SA Air Force, replacement being
  addressed

25
CHAPTER 9 PROGRAMME 6 DEFENCE INTELLIGENCE

• Outputs
• Defence intelligence and counter intelligence
• Achievements
• Achieved objectives and targets as planned
• Publication of Defence Intelligence Estimate as a
  major input to National Intelligence Estimate
• Positive feedback from national clients Defence
  Intelligence supports national intiatives on
  African continent, level of assessment national
  benchmark
• Support to SANDF operations/exercises as required
• Challenges and Interventions
• Lack of personnel recruitment within the SANDF
• Defence Intelligence Headquarters facility
  Discussions with Chief of Logistics

26
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT

• Outputs
• Joint Logistic Service Command and Management
  information Systems Human Resource Support
  Centre Joint Training Military Police Service
  Corps British Peace Support Training Team
• Joint Support Office
• Office converted to Chief of Human Resources
  Office
• Command and management Information Systems
• Achievements
• Met Short-term Force Employment requirements
• Participation in joint/multinational exercises,
  Exercise Combined ENDEAVOUR
• 2 Signals Regiment maintained HF radios donated
  to Mozambique and Swaziland
• Challenges and Interventions
• Changing organisation Part of DOD restructuring
  exercise (DODW)
• ICT obsolescence and new legislation with
  inadequate funds
• Lack of funds to replace and sustain operational
  ICT capability

27
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT
(continued)

• DOD Logistic Agency
• Achievements
• Good progress with migration of fragmented log
  info systems to OSIS
• Training of MSDS members in all logistic related
  fields
• Land claims - Walmansthal and Boschoek land
  returned
• 600 tons unserviceable ammo demolished at Vastrap
  Weapon Range
• Good progress with capturing of assets in
  register
• Succesful purchasing of material handling
  equipment
• Successful verification of handing and taking
  over process between old/new SA contingents in
  DRC (Op MONUC/MISTRAL)
• Challenges and Interventions
• Maintenance backlog of facilities addressing
  backlog with available funds
• Asset accounting management system not fully
  compliant with GRAP working towards compliance
• Backlog in disposal of redundant and
  unserviceable ammo, disposal plant dispose as
  current facilities can manage
• Training Insitutions non-alligment with SAQA,
  lack of competent ETD practitioners,
  deteriorating facilities Alignment of training
  and registering in process
• DOD Air Supply Unit deteriorating facilities
  and lack of equipment Unit to be transferred to
  the SA Army
• DOD restructuring process DODW process to
  finalise matter of Materiel/Logistics

28
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT
(continued)

• Land Restitution by the DOD FY2005/06
• Land restored 104 657 hectares
• Land to be restored 53 578 hectares
• Claimants requested alternative compensation 413
  hectares
• Claimants accepted alternative land 5 485
  hectares
• Court ruled that land should not be restored 158
  000 hectares
• Information on new claims 3 705 hectares

29
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT
(continued)

• Human Resources Support Centre
• Achievements
• Administration of MEM candidates
• Recruitment of 14 548 candidates for 6 MSDS
  intakes
• Administration to transfer 146 SANDF members to
  SAPS
• NSF pension project 11 558 application forms
  forwarded to GEPF, Administration of Military
  Veterans 5 000 names verified
• Challenges and Interventions
• Departmental restructuring DODW process
• Joint Training
• Achievements
• Compliance with SAQA
• Skills Development Act progressing well in DOD
• Youth Foundation 243 learners with 98 pass
  rate. 238 learners employed in DOD
• Training Institutions presented 118 programmes
  for 2 276 learners, 89 learners completed
• SA National Defence College 72 learners from 75
  
• SA National War College 96 learners from 100
• Military Acadamy 306 learners from 350

30
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT
(continued)

• Military Police Agency
• Achievements
• Met Short-term Force Employment requirements
• Establishment of a nodal point on
  Anti-criminality
• Challenges and Interventions
• Procurement of main equipment Procurement
  process commenced
• Service Corps
• Achievements
• MOD instruction halted migration of Svc Corps,
  awaiting final decision on mandate and role
• Assisted Project MILITARY VETERANS (national and
  regional level)
• Centre for Advance Training facility.
  Accommodation built for 94 using German Donor
  funding
• Conversion training for SANDF members to transfer
  to SAPS

31
CHAPTER 10 PROGRAMME 7 JOINT SUPPORT
(continued)

• Service Corps (continued)
• Challenges and Interventions
• Termination of German donor funding and training
  assistance impact on techinal training Budget
  re-prioritisation for FY2006/07
• Closing of Mankwe base and transfer to SAPS
  necessitate a regional office in Potchefstroom
  Investigation underway
• British Peace Support Training Team
• Achievements
• Support to Joint Operation Division/Joint
  Training
• Mission ready training to all rotating forces
• UK Funding of class room facilty at Mobilisation
  Centre and Peace Mission Training Centre
  according to the Memorandum of Understanding

32
CHAPTER 11 PROGRAMME 9 Special Defence Account

• Outputs
• Acquisition, procurement and project Management
  Armour systems Artillery systems
• Achievements
• Successful participation and certification of 4
  Rooikat armoured car systems in operational tests
  and evaluation of systems
• Successful handing over, naming and
  commissioning of SAS Amatola
• Successful preparation for the handing over of
  SAS Isandlwana SAS Spioenkop and SAS Mendi
• Delivery of multi-purpose harbour tenders to the
  SA Navy
• Timeous upgrade of 85 of the vehicles
• Successful identification of preferred bidder and
  approval as well as initiation of negotiations
  with regards to the acquisition plan for Tactical
  Intelligence Systems

33
CHAPTER 11 PROGRAMME 9 Special Defence
Account (continued)

• Challenges and Interventions
• The problem experienced on the upgrade of C130
  aircraft fleet had a fundamental impact on the
  project EBB timescale
• Revision of requirements at a late stage delayed
  closure of project ENLACE

34
Concluding Remarks

• Re-organising of programmes
• Reporting format is currently undergoing some
  improvements so as to further inculculate good
  corporate governance rooted in efficiency,
  effectiveness and value for money

35

• QUESTIONS

36

• Annual Report FY2005/06
• Report of the
• Auditor-General

37
Aim

• Presentation on
• the audit qualifications and emphasis of matter
  items on the annual report for FY 2005/06

38
Scope

• Findings FY05/06 GDA Qualifications.
• Findings FY05/06 GDA Emphasis of Matter.
• Findings FY05/06 SDA Emphasis of Matter.
• Qualifications Functional and User Breakdown.
• Emphasis of Matter Functional and User
  Breakdown.
• Root Causes.
• Clean Audit Strategy.
• Strategic Corrective Measures.
• Operational Corrective Measures.
• Findings FY04/05 Action Plans.

39
Findings General Defence AccountQualifications
FY05/06
Unqualified Audit Reports FY99/00 , FY00/01
FY01/02 Qualified Audit Reports from FY02/03 to
FY05/06 Refer Slides 4 5 for qualifications
40
Findings General Defence AccountEmphasis of
Matter (EoM) FY05/06
41
Findings General Defence AccountEoM (Continued)
42
Findings General Defence AccountEoM (Continued)
GDA 01/02 02/03 03/04 04/05 05/06
Information systems audit - - EOM EOM EOM
Intellectual property - - EOM EOM EOM
Personnel expenditure Commuted overtime EOM - EOM EOM -
Personnel expenditure Employment equity - - - EOM -
43
Findings Special Defence AccountEoM
44
Findings General Defence AccountQualifications
Functional User Breakdown
GDA 05/06 System Owner System User Nature of Finding
Travel and Subsistence Q CFO Serv Divs System deficiency in the FMS
Departmental Revenue Q CFO Serv Divs Insufficient reconciliation, review procedures and non-compliance with policies and procedures
Housing Loan Guarantees Q C HR Serv Divs Lack of independent management reconciliation and review
Rank Review Audit Q C HR Serv Divs Re-ranking was granted without the predetermined criteria being met, leading to irregular expenditure
45
Findings General Defence AccountEoM Functional
User Breakdown
D Deviations received from National Treasury
46
Findings General Defence AccountEoM Functional
User Breakdown
47
Findings General Defence AccountEoM Functional
User Breakdown
48
Findings General Defence AccountEoM Functional
User Breakdown
49
Findings General Defence AccountEoM Functional
User Breakdown
50
Findings General Defence AccountEoM Functional
User Breakdown
51
Findings Special Defence AccountEoM Functional
User Breakdown
52
AnalysisRoot causes attributed to the
qualification

• Non-compliance with policies and procedures
  (internal controls).
• Lack of independent review and reconciliations
  (internal controls).
• Lack of skilled, competent and trained staff.
• - The lack of an appropriate integrated
  computerized system, which if implemented, will
  enable the DOD to be more efficient in the
  management of the department. In addition, an
  integrated computerized system will ensure
  compliance with the requirements set by Treasury.

53
Clean Audit Strategy

• No Qualifications / Matters Emphasised
• Clear Significant Findings ? Avoid Matters
  Emphasised
• Clear Matters Emphasised ? Avoid Qualifications
• Effective
  Ineffective
• - Detects
  CONTROL - Discover
• - Prevent
  - Correct
• Pro-Active
  Re-Active
• - Risk Identified PROBLEM
  - Adverse Finding
• - Strategy
  - Corrective Plan

END
WAYS
54
Clean Audit StrategyMeasures
MEANS

• Legally Enforceable Prescripts
• - Directives
• Instructions
• Publications
• Supportive Information System
• Enhance Legacy Modules
• Integrate Legacy Modules
• IFMS

55
Clean Audit StrategyMeasures (Continued)
MEANS

• Supportive Capacity
• - Structure
• Establishment
• Delegations
• Training
• Compliance / Accountability
• Control System Reviews
• Enforce Compliance
• Accountability Letters
• Financial Misconduct Procedures

56
Clean Audit StrategyMeasures (Continued)
MEANS

• Audit Committee Focus on
  ICS
• Internal Audit Risks
  and Findings

57
Strategic Corrective Measures

• Fin Pers Proc Log
  Info Servs/
• ICS ICS ICS
  ICS ICS Divs
• Prescripts
• Info System
• Capacity
• Internal Control
• Compliance
• Accountability

58
Operational Corrective Measures

• - Detailed corrective measures per control
  system
• - Detailed corrective measures per budget
  authority for compliance

59
Findings General Defence AccountQualifications
Corrective Measures
GDA 05/06 Responsibility Time Frame (Months)
Travel and Subsistence Q CFO 12
Departmental Revenue Q Serv Divs 36
Housing Loan Guarantees Q C HR 12 24
Rank Review Audit Q C HR 12
60
Findings General Defence AccountEoM
Corrective Measures
GDA 05/06 Responsibility Time Frame (Months)
Regional Services Council levies EoM CFO 12
Land and buildings EoM C Log 60
Gifts, donations and sponsorships EoM Serv Divs 12 - 24
Compensation of employees Schedule name lists EoM Serv Divs 12 - 24
Personnel expenditure Unrealistic establishment EoM C HR 60
IGDOD No reliance on audit work EoM IGDOD 36
61
Findings General Defence AccountEoM
Corrective Measures (Continued)
GDA 05/06 Responsibility Time Frame (Months)
Operating lease commitments EoM C Acq Proc 12 - 24
Prepayments and advances EoM CFO 12
Local and foreign aid received in kind EoM CPP 12 -24
National Conventional Arms Control Committee EoM SecDef (DCAC) 12
Service Corps EoM CCS 12
Information systems audit EoM CCMIS 60
62
Findings General Defence AccountEoM
Corrective Measures (Continued)
GDA 05/06 Responsibility Time Frame (Months)
Operating lease commitments EoM C Acq Proc 12 - 24
Prepayments and advances EoM CFO 12
Local and foreign aid received in kind EoM CPP 12 -24
National Conventional Arms Control Committee EoM SecDef (DCAC) 12
Service Corps EoM CCS 12
Information systems audit EoM CCMIS 60
Intellectual Property EoM C Acq Proc 60
63
Findings Special Defence AccountEoM
Corrective Measures
SDA 05/06 Responsibility Time Frame (Months)
Classification of the SDA EoM CFO 12
Cash and bank management weaknesses EoM CFO 12
Compliance Programme no signed constitution EoM Sec Def (DCAC) 12
No control for amendments to the suppliers master file EoM CFO 12
64
Findings GDA FY04/05Qualification Action Plans
GDA 01/02 02/03 03/04 04-05
Departmental revenue EOM EOM Q Q
Summary of Findings
Completeness of revenue could not be confirmed due to Insufficient independent management reconciliation / reviews Non-compliance with policies procedures
Action Plans
Revenue Management Forum under control of Director Budgeting established w.e.f. 1 Feb 05. DOD busy benchmarking with National Treasury and other government departments on tariff management. Level 4 commanders are continuously trained to comply with the Revenue Management DODI by FMD (CDAcc). DOD is budgeting for revenue other than the vote, focusing currently on disposal of equipment. Improvement objective for 1 Apr 06 is to include all other income, e.g. flights against Repayment.
65
Findings GDA FY04/05Qualification Action Plans
GDA 01/02 02/03 03/04 04/05
Receivables - - - Q
Summary of Findings
Validity and accuracy of amount could not be confirmed Original amounts of debtors were amended when new FMS Debtors Subsystem was implemented Weaknesses in internal controls over management of receivables
Action Plans
Department in the process of addressing the system error and the adjustments will be followed up in the next audit cycle.
66
Findings GDA FY04/05Qualification Action Plans
GDA 01/02 02/03 03/04 04/05
Irregularities and losses - - Q Q
Summary of Findings
Inconsistent application of policies and procedures resulting in Internal control weaknesses and Inability to verify completeness accuracy of the amount disclosed
Action Plans
DOD Instruction is in the process of being reviewed to enhance accountability. Monthly forum has been established for cash losses w.e.f. 1 Jan 05. A computerized loss control process being investigated to ensure complete reporting. Staff visits are conducted by FMD and C Log to ensure that losses are properly administrated.
67
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Accruals EOM EOM Q D
Summary of Findings
Understatement of Accruals according to approved NT policy. Amount only included goods services for which invoices were received but were unpaid at year-end.
Action Plans
DOD met with NT on 2005-07-14 to discuss matter NT suggested Govt. Depts. have full time staff to deal with Asset Management and Conversion from cash to accrual basis of accounting Workshops to start end of August Structure and plans should be in place by 2005-12-31
68
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Physical asset and software and other intangible asset movement schedules - EOM Q D
Summary of Findings
Details were limited to additions .
Action Plans
DOD met with NT on 2005-07-14 to discuss matter NT suggested Govt. Depts. have full time staff to deal with Asset Management and Conversion from cash to accrual basis of accounting Workshops to start end of August Structure and plans should be in place by 2005-12-31
69
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Goods services - - - D
Summary of Findings
This amount included capital expenditure iro machinery and equipment Capital expenditure on machinery and equipment was not disclosed
Action Plans
DOD met with NT on 2005-07-14 to discuss matter NT suggested Govt. Depts. have full time staff to deal with Asset Management and Conversion from cash to accrual basis of accounting Workshops to start end of August Structure and plans should be in place by 2005-12-31
70
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Management of inventories, machinery and equipment EOM Q EOM EOM
Summary of Findings
Internal control weaknesses as policies procedures not adequately complied with Lack of supervision at operational and unit level Failure to submit stock-taking certificates Unapproved discrepancy vouchers Disposal plans for excessive stock not on schedule Deficient security internal controls over administration of vehicles and weapons Documents not submitted for audit as ASB Jhb. burnt down Control weaknesses iro 5 foreign operations
Action Plans
Responsibility and accountability for Asset Management in process of being transferred back to the Service Chiefs. C Log is currently negotiating the handing and taking over with Service Chiefs. A Resource Management Programme has been implemented to properly train Officers Commanding at level 4 regarding their responsibilities.
71
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Land and buildings EOM EOM EOM EOM
Summary of Findings
Facility register incomplete Deterioration of buildings Uninhabitable buildings were occupied Insufficient supporting documents
Action Plans
Responsibility and accountability for Asset Management in process of being transferred back to the Service Chiefs. C Log is currently negotiating the handing and taking over with Service Chiefs. A Resource Management Programme has been implemented to properly train Officers Commanding at level 4 regarding their responsibilities.
72
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Gifts, donations and sponsorships - - EOM EOM
Summary of Findings
Completeness of gifts /donations made/received in kind could not be verified. Policies and procedures pertaining to these items were not followed
Action Plans
DODI approved in Dec 04 for implementation on 1 Apr 05. System Owners were tasked to ensure compliance.
73
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Personnel expenditure Leave credits and administration EOM EOM Q EOM
Summary of Findings
Internal controls are inadequate Conversion of leave credits from calendar days to working days on PERSOL for SANDF members Leave application forms not captured filed timeously Non-submission of leave files for audit purposes Leave registers not kept as prescribed
Action Plans
New computerised leave system was implemented for PSAP in 2004. New system for DAP to be fully implemented by 1 Sep 05. Leave credits will now be calculated programmatically, thus ensuring more accurate figures. Controls were built in to prevent members from exceeding their annual leave entitlement. Responsibilities and accountability for leave administration is in the process of being handed back to Service Chiefs.
74
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Personnel expenditure Commuted overtime EOM - EOM EOM
Summary of Findings
Internal control weaknesses Management policies and procedures not followed / adequate Supporting documents not on file Overtime incorrectly recorded in attendance registers
Action Plans
CSANDF instructed SG in Mar 05 to comply with the prescripts. DODI 66/2002 (revision) is at the Military Bargaining Council where after it will be implemented. DOD is considering implementing a non-pensionable allowance.
75
Findings General Defence AccountEmphasis of
Matter
GDA 01/02 02/03 03/04 04/05
Personnel expenditure Employment equity - - - EOM
Summary of Findings
Lower structure of the DOD is predominantly African Senior and Middle Management and professional staff are predominantly White
Action Plans
Each Service / Divisional Chief to adhere to Departmental plans
76
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Personnel expenditure Unrealistic Establishment - - - EOM
Summary of Findings
Achievement of the HR Strategy 2010 goal of 70 000 employees is not realistic There has been an increase of 1056 employees to 76 969 members
Action Plans
MEM has been implemented effective July 2005
77
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Operating lease - - - EOM
Summary of Findings
Completeness of operating lease commitments could not be confirmed Insufficient reconciliation between DOD registers and suppliers
Action Plans
C Log to implement controls
78
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Foreign aid received in kind EOM EOM EOM EOM
Summary of Findings
No system for recording collation of such assistance Completeness accuracy of AFS cannot be confirmed
Action Plans
DODI on Donations approved, awaiting DODD to be signed. DOD in process of implementing the control systems required by the policy.
79
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
National Conventional Arms Control Committee - EOM EOM EOM
Summary of Findings
Uncertainty regarding access to third party information No Constitution in place No Inspectorate in place yet DCAC on suspension pending an investigation Unable to complete the compliance audit, placing a limitation of scope on the audit
Action Plans
Ex post facto delegation by Minister still outstanding. No Constitution or Term of Reference in place yet NCACC decided not to compile a constitution or term of reference. Act DCAC confirmed that they are in the process of establishing the Inspectorate.
80
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Service Corps - EOM EOM EOM
Summary of Findings
MOD reconsidering the intended migration of the Service Corps based on the formulation of alternatives to be presented to the COD for approval Conclusion of the issue is important as it has remained outstanding for 6 years. SCOPA also raised a concern iro the progress
Action Plans
Minister indicated that Service Corps. will not migrate
81
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Information systems audit - - EOM EOM
Summary of findings
Lack of control over database administrators No reliance placed on general controls iro CALMIS Significant control weaknesses that could compromise data integrity were found Inadequate process control design non-adherence to approved procedure Weaknesses iro the SLA between DOD and SITA due to lack of policies and supporting documents
Action Plans
GITO confirmed that controls over and passwords for database administrators were implemented. Compliance by Services will be monitored.
82
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Intellectual property - - EOM EOM
Summary of Findings
DOD scrutinising the promulgated policy to determine process to be implemented Until implementation of the processes, it is not possible to perform an audit in this area
Action Plans
Policy was promulgated w.e.f. 1 Apr 05. System will be audited by AG in 05/06 financial year.
83
Findings GDA FY04/05Emphasis of Matter Action
Plans
GDA 01/02 02/03 03/04 04/05
Rank review audit - - - EOM
Summary of Findings
Unavailability of supporting documents led to the audit of the rank adjustment process not being completed
Action Plans
D Fac to respond to AG request for information