ANNUAL REPORT 200607

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• ANNUAL REPORT 2006/07
• REPORT TO SPORTS PORTFOLIO COMMITTEE
• 6 November 2007

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INTRODUCTION

• Merger of former SASC and SRSA
• Placements and secondments
• Different systems that had to be aligned
• Three Acting DGs (holding pattern)
• Moved to new offices
• Appointment of new staff members
• Period of consolidation

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CORPORATE SERVICES

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CLIENT SERVICES

• Financial support to SRSA clients (2006/07)
• Categories of support Administration,
  transformation, more medals and hosting.
• Other beneficiaries SAIDS, BSA, NGOs (Sports
  Trust, SCORE, LoveLife and Homeless World Cup)

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SRSA SUPPORT TO BSA SAIDS

• Ensuring that all documentation is in place for
  payments to be made including the EA to approve
  their strategic plan.
• Liaison in relation to the internal audit
  function and the audit process by the
  Auditor-General.
• Liaison with our HR and DPSA about the job
  evaluation and appointment process for the Chief
  Executive Officers.
• Liaison with the Public Entity Governance Unit in
  National Treasury about the governance standards
  expected of public entities.
• In relation to BSA, trying to assist with
  additional funding.

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FINANCE EXPENDITURE 2006/07
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FINANCE

• 2006/07 UNDERSPENDING AND REASONS
• An amount of R886 548 000 out of the final
  appropriation of R959 946 000 was paid out by
  year end. This represents 92.4 of the final
  appropriation
• Compensation of Employees under-spent due to
  vacancies, which were only filled from January
  i.e. SMS (CFO, CD Mass Participation, CD Client
  Support and Facilities). Most of the vacant posts
  were filled after the year under review.
• Goods and Services have under-spent due to
  operational costs budgeted for the additional
  employed personnel to be appointed.
• Payment for Capital Assets have under-spent due
  to a number of vacancies that were not filled as
  planned.

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FINANCE

• AUDIT OPINION
• In my opinion, except for the effects of the
  matters described in the basis for qualified
  opinion paragraphs, the financial statements
  presents fairly, in all material respects, the
  financial position of Sport Recreation South
  Africa as at 31 March 2007 and its financial
  performance and cash flows for the year ended, in
  accordance with the modified cash basis of
  accounting determined by the National Treasury,
  and in the manner required by the PFMA.

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FINANCE BASIS FOR QUALIFICATION

• Capital Assets
• Action
• All the assets from SASC have been captured on
  LOGIS asset register by the end of September
  2007.
• A follow up asset count was conducted during
  October 2007, to verify information on LOGIS
  system.
• Asset register reconciliation has been done and
  all asset have been properly classified.
• All payments of assets are verified by the asset
  management section to ensure that assets are
  properly classified.
• The department is now utilising an asset register
  that is downloaded from Vulindlela (BAS LOGIS
  interface), which is linked to LOGIS and is
  updated regularly.
• Intangible Assets
• Action
• The asset register reconciliation has been done
  and all asset have been properly classified and
  is reviewed on monthly basis.

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FINANCE BASIS FOR QUALIFICATION

• Employee Compensation ( Performance bonuses)
• Action
• An Irregular Expenditure have been recorded in
  the books of SRSA and the matter handed to Legal
  Services Unit to proceed with the recovery
  procedures.
• In future this will be avoided because the
  department has implemented the guided Employee
  Performance Management System (EPMDS).
  Performance bonus will be payable after
  assessments done as prescribed by the Department
  of Public Services and Administration
  guidelines.
• Employee Compensation (Transitional
  Allowances/Acting Allowances)
• Action
• An Irregular Expenditure have been recorded in
  the books SRSA and the matter handed to Legal
  Services Unit to proceed with the recovery
  procedures.
• In future this will be avoided because SRSA has
  implemented the Public Service Regulations
  Guidelines for handling Acting appointments and
  payment of acting allowances.

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FINANCE BASIS FOR QUALIFICATION

• Leases
• Action
• A leased asset register detailing all leased
  items including the dates that they were acquired
  and the date the lease expires, and company
  involved have been compiled and is monitored on
  monthly basis.
• Receivable for Departmental Revenue (Royalties)
• Action
• International Monitoring Group have been informed
  to monitor the usage of marks and recover
  royalties on quarterly basis.
• Receivables
• Action
• R154 981will be written off in the current
  financial year during year end processes.
• Disallowance miscellaneous account is being
  followed up on
• monthly basis.

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FINANCE BASIS FOR QUALIFICATION

• Accruals
• Action
• An effective Accruals System has been developed
  and implemented to ensure that a fair
  presentation of accruals in the AFS.
• Commitments
• Action
• Commitments register has been developed and
  implemented to monitor and evaluate commitments
  at the reporting date.
• Goods Services Special services ( Allowances
  to Athletes)
• Action
• A list of recipients has been requested from UP
  sports and SASCOC and random verification will be
  done.

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FINANCE INTERNAL CONTROLS

• Control Environment
• No formal risk assessment
• Action
• Risk assessment has been done and departmental
  Risk Framework has been compiled and is ready to
  be tabled for approval.
• No approved delegations
• Action
• The departmental delegations has been reviewed to
  enforce compliance and to give a clear guide to
  officials on thresholds (limits) financial
  transactions. A detailed procedure manual is
  being developed to assists non financial and
  financial officials in adherence to the
  prescribed legislation.
• No appropriate training programmes for employees
• Action
• Informal and formal training conducted per
  component.

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FINANCE INTERNAL CONTROLS

• Control Activities
• Lack of Assets Management
• Action All Assets are captured on LOGIS and
  proper asset register is maintained, monitored
  and reconciled on monthly basis. Draft Assets
  policy has been circulated for inputs from
  managers.
• No performance assessments
• Action 2006/07 performance assessments have
  been submitted and proper procedure for
  performance assessment are now followed.
  Performance Contracts have been entered and all
  necessary steps for performance assessment are
  followed.
• Transaction are not always authorized and
  performed in terms of prescribed legislation.
• Action The department has delegations but are
  reviewed to enforce compliance and to give a
  clear guide to officials on how to handle
  financial transactions. A detailed procedure
  manual will be developed to assists non
  financial and financial managers to adhere to the
  prescribed legislation.
• Lack of Human Resources strategy
• Action Human Resources strategy is in the
  process of being drafted to ensure that staff are
  properly trained, evaluated and motivated.

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FINANCE OTHER MATTERS

• Insufficient control over gifts/documentation
• Action Gift register is maintained, gifts are
  properly stored and the draft gift policy has
  been developed.
• Material non-compliance with applicable
  legislation
• Insufficient monitoring and reporting of
  Conditional Grant
• Action DORA reports for Mass Participation and
  2010 are submitted to Treasury monthly on the
  prescribed dates. Framework for monitoring has
  been developed by Internal Audit. All PIAs have
  been signed.
• Supply chain management
• Action Tender policies have been developed.
  Tender processes are properly adhered to and
  monitored on regular basis and adequate time is
  given to service providers to respond to adverts.
  Tender register is maintained and updated on
  regular basis and tender documents are properly
  filed.

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FINANCE OTHER MATTERS

• Lack of comprehensive approved policies and
  procedures over
• Inventory and assets
• Provision for irrecoverable debt
• Action
• Inventory and asset management policy has been
  updated and reviewed.
• The debt collection policy has been reviewed to
  include procedures for handling irrecoverable
  debt.
• SUMMARY
• Audit queries received 243
• Queries addressed 198
• Remaining queries will be addressed when
  compiling the
• next Annual Financial Statement.

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2010 STADIA CONSTRUCTION UPDATING

• General remarks
• The 2010 FIFA World Cup Unit applied to National
  Treasury to bringing forward R1, 905 billion to
  the 2007/08 financial year, due to the faster
  pace of construction. This request has been
  granted.
• The 2010 Unit together with National Treasury are
  monitoring and forecasting cost escalations
  during the construction programme.
• A number of host cities are faced with cost
  overruns. A situation where tender prices come in
  higher than budgets. Some of these cities have
  had to redesign some aspects in order to remain
  within budget.

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2010 STADIA CONSTRUCTION UPDATING

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2010 STADIA CONSTRUCTION UPDATING

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STADIA NOT OWNED BY GOVERNMENT

• Loftus Stadium
• A Memorandum of Understanding was signed between
  the City of Tshwane and the Blue Bulls Company
  giving the City to use the venue for the World
  Cup.
• Royal Bafokeng
• A Memorandum of Understanding was signed between
  the Rustenburg Municipality and the Royal
  Bafokeng Administration giving the Municipality
  to use the venue for the World Cup.
• Soccer City
• A process of transferring the land on which
  stadium stands to the Department of Public Works
  is underway. This land is then to be leased to
  the City of Johannesburg.

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2010 AUDIT QUERIES

• Monthly reports not submitted to National
  Treasury
• This issue has been rectified. Since April 2007
  monthly reports dealing with financial and
  technical performance of host cities are being
  submitted to National Treasury.
• Approved business plans from host cities not
  submitted
• At the time of the audit, the business plans
  were held at the Development Bank of Southern
  Africa as it was helping the host cities during
  the design phase of the project. These business
  plans are now in the offices of the 2010 Unit.

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2010 AUDIT QUERIES

• No evidence that coordinating committees were
  established by host cities
• In each host city there are site meetings that
  take place on a monthly basis. These meetings
  comprise representatives of the host city, the
  principal building contractors, the major
  sub-contractors, the consultants as well as staff
  from the 2010 Unit and its technical team. These
  meetings coordinate and deal with the
  construction programme, procurement of materials,
  staffing, financial issues as well as health and
  safety issues, among others. Minutes of these
  meetings are circulated to the 2010 Unit.

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2010 AUDIT QUERIES

• Quarterly reports do not cover specific outputs
  as identified in Govenment Gazette no. 29470
• Detailed design and bill of quantities for 5 new
  stadia complete
• All designs were completed during the planning
  phase and serve as a guide for the contractor
  during construction. The bills of quantities for
  the 5 new stadia were developed at the start of
  the construction phase. These bills of
  quantities are in place and material procurement
  is based on them.
• Procurement processes and tenders awarded for
  the construction of 5 new stadia complete.
• Each host city has established tender committees
  to adjudicate on tenders. The Principal Building
  Contractors have been appointed in all the 5 new
  stadia and have started construction.
  Subcontract tenders are awarded in each phase of
  the construction programme.
• Contracts for the construction of 5 new stadia
  signed.
• Funding agreements were signed between the
  Department of Sport and Recreation and the host
  cities before the construction process started.

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2010 AUDIT QUERIES

• Detailed design and Bills of Quantities for the
  upgrade of 5 existing stadia complete.
• All the host cities where upgrading is taking
  place have completed their designs and have
  developed Bills of Quantities. This happened
  during the second quarter of 2007/08 financial
  year.
• Procurement processes and tenders awarded for the
  upgrade of 5 existing stadia
• The 5 host cities upgrading existing stadia have
  tendered and awarded the main contract.
• Contracts for the upgrade of 5 existing stadia
  signed.
• Principal Building Contractors have been
  appointed and contract signed with them.
  Construction in these stadia started in the
  second quarter of this financial year.

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2010 AUDIT QUERIES

• Detailed stadium development plans were not
  completed or attached to signed contracts
• The stadium development plans could not be
  attached to signed contracts because these were
  not yet developed as the Principal Building
  Contractors had not been appointed at the time of
  the audit. These construction programmes are
  now in place, and the 2010 Unit has copies and
  uses them to monitor both technical and financial
  progress.
• In some instances payments to host cities were
  made on faxed copies of contracts
• This issue has been rectified where it happened.
  All funding agreements are in the original form
  and are kept by the Chief Financial Officer.

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ZONE VI

• Three Provinces put in a bid to host the 2008
  Zone VI Youth Games.
• Allocated to North West.
• Hosting protocol signed.
• LOC established with full time project office.
• LOC Board appointed.
• Hosting the Chef de Missions of the participating
  countries in November 2007.

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WHITE PAPER / SPORTS PLAN

• Approval by Acting DGs, Deputy Minister
  Minister (15 June) of
• Action Plan
• Stakeholders to be consulted
• SRSA White Paper Workshop (18 July)
• External Stakeholders White Paper Workshop (2
  August)
• Steering Committee meetings 12 Oct 9 Nov
• Way forward Finalise framework (present to
  Portfolio Committee other stakeholders)
• Prepare 1st draft

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POLICIES

• Policies in draft 16
• Policies in process of finalisation 6
• Policies approved by Management 7
• Policies received from Provinces 13
• In process of identifying gaps
• Database developed

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MINISTERS OFFICE

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MINISTERS OFFICE

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DEPUTY MINISTERS OFFICE

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DEPUTY MINISTERS OFFICE

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CHALLENGES (1)

• Funding R20,3m for federations and SASCOC is
  not enough if we are to assist in transformation
  at all levels and contribute to sports tourism by
  hosting events in the country. We have raised
  this with Treasury in terms of increasing the
  allocation to SRSA next financial year.
• Club development Capacity of the provinces is a
  problem as the same person is doing mass
  participation (Siyadlala and school sport) as
  well as club development so delivery is not
  happening to the spending and impact level we
  require. We are working with the provinces to
  address this.

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CHALLENGES (2)

• Education and training getting sports service
  providers accredited by THETA to empower
  particularly federations to do their own training
  is a slow and complex process such that many NFs
  give up - we have raised this with THETA to
  address.
• International liaison moving the Government to
  Government agreements from paper to reality as
  many agreements are not active - we are auditing
  and reviewing all agreements and developing a
  policy outlining the strategic intent behind
  signing each one going forward.

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CHALLENGES (3)

• Facilities While we are working to get
  municipalities to include sports facilities in
  their IDPs, they are not implemented as they are
  not a funding priority - to achieve this, more
  funding needs to be given to the municipalities
  or the BSRP needs to be re-introduced (a Cabinet
  memo is in process on the BSRP idea)
• Facilities The audit has proven a difficult task
  as only 50 of municipalities responded to the
  questionnaire indicating that they either do not
  have capacity, some do not know what facilities
  they have or are simply not interested - the
  directorate has now undertaken a lengthy process
  of contacting each municipality to follow up.

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• THANK YOU