Annual Report 2014/15 - PowerPoint Presentation

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Annual Report 2014/15

Portfolio Committee on Human Settlements

14

October 2015Slide2

Presentation contents

1. Opening Remarks, Highlights and Overview :

Rev. Dr. V. Mehana (Board Chair)

2. Divisional Highlights : Mr. Themba Mthethwa (Chief Ombud)2.1 Adjudication and Governance2.2 Corporate Services2.3 Company Secretariat2.4 Internal Audit 2.5.1 Chief Ombud’s Office – Risk Management2.5.2 Chief Ombud’s Office – Performance Information2.6 Chief Financial Officer : Mr. Themba Mabuya (CFO)3. Future Operational Outlook : Mr. Themba Mthethwa (Chief Ombud)4. Closing Remarks : Rev. Dr. V. Mehana (Board Chair)

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1. Opening Remarks, Highlights and Overview

Rev. Dr. V. MehanaBoard Chairperson

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Highlights for the year

CSOS

Head Office

and first

2 Regional offices established, 3rd Regional office being finalised at year endFirst employee appointed in April 2014, and 18 staff appointed at year end, including the Chief Ombud and the Executive Management teamInitial organisational structure developed and approved by the Board Dispute Resolution model developed and approved by the Board

Key

operating policies, processes and procedures

developed and approved by the Board

CSOS legislative mandate

explored, elaborated and concretised Regulations draft, including the CSOS funding model, commencedUnqualified Audit opinion on Annual Report

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A year of Design, Planning and Capacity building – A complex environment

CSOS mandate new and unprecedented in SA- no operational baselines to work with

New Service –

potential demand could hopelessly overwhelm planned capacity - Budget issue for staffing and client facilities in the future may arise

Mandate overlaps with other departments Department of Rural Development and Land Reform has custody of the governance documentation for example – Negotiation on the transfer of the governance documentationCSOS mandated to be self-funding, means there will be levies to the community schemes – Sustainability and cross-subsidisation (poor subsidising the rich)No database of community schemes and their valuation in SA. Database needs to be created from scratch – Planning issue and IT systems issueCorrection: P.23: The first CSOS board was appointed by Hon. Minister Tokyo Sexwale (not Hon. Minister Lindiwe Sisulu)05Slide6

2. Operational Highlights:

Mr. T. MthethwaChief Ombud

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Annual Report Format:

based on the CSOS Divisional structure – All page numbers

refer to CSOS Annual Report 2014/15

Adjudication and Governance

(pp. 14 – 17)Adjudication (end-to-end Dispute Resolution processes)Includes Regional Ombuds’ officesCorporate Legal Services (incl. contracts drafting)Research (knowledge development)Corporate Services (pp. 17 – 18)Facilities ManagementInformation Technology Marketing and Communications (incl. Stakeholder Relations)Human Capital Management (pp.29 – 30

)

Chief Financial Officer

(pp.38 – 65)

Company Secretariat

(pp.23 -26)Internal Audit (pp. 35 – 37)Chief Ombud’s officeRisk Management (p. 27)Strategic Planning and Reporting (pp.18 – 21)

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2.1 Adjudication and Governance

(p. 14 – 17)

The CSOS was not yet formally able to accept applications for dispute resolution during the year, as the relevant Acts required a Presidential proclamation – still pending

A comprehensive Dispute Resolution model was

developed and approved during the year (see page. 15)Intensive work to draft the required Regulations was commenced in the last quarter (Q4), with the appointment of the Adjudicator General and other key staff members. The Regulations were subsequently submitted and approved for publicationIntensive work was done on developing the CSOS funding model, which was subsequently approved during the current financial year. That schedule of levies and other charges is attached to the Regulations as an AnnexureA fair trickle of applications were received by the CSOS, even though the Service is not formally open. Dispute resolution activity at Conciliation level was conducted (see performance stats on pages 16 – 17)

Regulations were published in the Government Gazette on 02 October 2015, and are currently in the public comment window period of 30 days

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2.2 Corporate Services

(p.17 – 18)

Facilities Management

Intensive work was done to secure office space for the Head Office in Johannesburg, as well as 3 Regional Offices in GP, KZN, and WC

Refurbishment and fittings were organised and installed as appropriateIT ManagementThe key Financial modules of the ERP system were implementedThe scoping of the other modules, which includes HRIS, Payroll, CRM, Case Management and Document Management modules was commencedMarketing and CommunicationsA number of media touchpoints and industry stakeholders were engaged during the period (see page 18), resulting in raised awareness of the CSOS, and triggering an interest in the ServiceHuman Capital ManagementAn initial organogram was developed and approved during the period

(see page 29)

The initial recruitment netted a total of 18 staff members during the year

There was a 56% female representation in the staff makeup at year end

Subsequent recruitment of the approved organogram has been slowed down and re-prioritised during the current financial year due to budget constraints

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2.3 Company Secretariat

(p.23 – 26)

In addition to 2 Executive Directors, the Board was constituted of 7 Non Executive Directors, incl. the Chairperson, until 20 June 2014, when one Non Executive Directors resigned. That Non Executive Directors was not replaced as the Board was still quorate

The Board approved a Code of Ethics policy during the year, thus enhancing its good governance

The Board operated through 4 sub-committees during the year as shown in the reportThe Board met 6 times during the year (incl. special meetings), and there were 14 sub-committees meetings Board attendance and sub-committee attendance was sufficient to form a quorum in all meetings The tenure of the current Board expires on 31 December 2015. The ministerial process for the appointment of the next Board is currently ongoing

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2.4 Internal Audit

(p.35 – 37)

Audit and Risk Committee (ARCO) exercised oversight over all audit matters

ARCO operated as a full sub-committee with a Charter, reporting to the Board

ARCO was generally satisfied with the quality of performance information and quarterly financial statements reporting, but noted room for improvement, which is being attended toARCO reviewed and subsequently approved the 2014/15 annual financial statements (AFS) for submission to the Auditor General. ARCO also approved the audited AFS There was no Internal Audit activity during the year due to capacity constraints: Internal Audit Manager only appointed on 01 April 2015

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2.5.1 Chief Ombud’s Office – Risk Management

(p.27)

Risk Management Framework was developed and appro

v

edLimited risk assessment done due to staff capacity shortage: Acting Risk Manager only appointed on 01 April 2015Fraud prevention strategy was developed . No fraud cases were identifiedCompliance Framework targeted for 2015/16Audit and Risk Committee exercised keen oversight over the entity Risk areas identified in the APP during the year – no risks elements actually materialised during the yearRisk management initiatives are being implemented throughout the CSOS during the current financial year 1

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2.5.2 Chief Ombud’s Office

– Performance Information

(p.18 - 21)

Number of Targets

4Targets achieved

2 (50%)

Targets not achieved

2

Reason for non- achievement of targets

Time lags due to process issues

Mitigation Required

Targets have subsequently been achieved during 2015/16

Number of Targets

3

Targets achieved

0 (0%)

Targets not achieved

3

Reason for non- achievement of targets

Time lags due to process issues

Mitigation Required

2 targets subsequently achieved in 2015/16. One still outstanding due to process issues with the Deeds Registry, but on track for delivery during this year

Number of Targets

26

Targets achieved

16 (62%)

Targets not achieved

10

Reason for non- achievement of targets

Time lags due to process issues

Mitigation Required

4 targets subsequently achieved in 2015/16, 6 are on track for delivery during the current financial year

SO 3: ENSURE THAT CSOS IS MANAGED IN AND EFFICIENT AND EFFECTIVE

MANNER

SO

2: TAKE

CUSTODY AND CONTROL OF COMMUNITY SCHEMES GOVERNANCE

DOCUMENTATION

SO 1: RESOLVED COMMUNITY SCHEMES

DISPUTES

Overall Achievement is 55%

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2.6 Chief Financial Officer

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Annual Financial Statements

2.6.1 Statement of Financial Position (Balance Sheet) –

(p.38)

Cash and Cash equivalents (Current Assets) at year end R28,9 million, matched by accumulated surplus (Liabilities) of R30,2 million

Other smaller items of note are the PPE (Assets) amount of R1,694 million, being the assets acquired to set up the offices. These are matched the amounts owed to suppliers, at year amounting to R682,000There were no other major assets or debts accumulated, hence the majority of assets remained in Cash and Cash equivalents at year end15Slide16

Annual Financial Statements (continued)

2.6.2 Statement of Financial Performance (Income Statement) –

(p.39)

This statement again shows the source of the CSOS funding as almost exclusively the Government Grant of R40 millionA small amount of interest was earned on Cash Balances in the bank during the year (R1 million)Some Ups and Downs on Working Capital items netted an outflow of R937,000Most of the money was used to recruit and pay staff, followed by the payment of other operational Goods and ServicesThere was an amount of R17, 3 million that was uncommitted in the prior year, and had to be returned to National Treasury. That transfer back to National Treasury was done during the yearThe acquisition of office furniture, equipment, and to refurbish and fit the office spaces procured during the year cost R1,832,000 in cash paymentsThe cost of IT software licenses and IT modules amounted R197,000 in cash at year endAll in all, there was a Cash and Cash Equivalents of R28, 993 at year end

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Annual Financial Statements (continued)

2.6.3 Statement of Cash Flows –

(p.40)

The CSOS was funded exclusively by a Government Grant of R40 million during this year

This money was used to commence the recruitment of staff (R5,67 million), and to defray other operational expenses (R5 million)A small amount of interest was earned on Cash Balances in the bank during the year (R1 million)There was an amount of R30,2 million that was reported as a surplus at year endThis amount was subsequently committed to set up projects , subject to the approval of the National Treasury (see page 65 for the projects list)17Slide18

Annual Financial Statements (continued)

2.6.4

Statement of Changes in Net Assets

–

(p. 41)This statement shows that the only item of movement in reserves was the uncommitted surplus funds of R16, 9 million and R30,2 million in 2013/14 and 2014/15 respectivelyThe uncommitted surplus in 2013/14 was transferred back to National Treasury during the year as shown2.6.5 Statement of comparison of Budget and Actual Costs – (p. 42)This statement shows that the Government Grant of R40 million was budgeted and received, indicating good alignment between the entity and DepartmentHowever, it shows that the CSOS spent R10, 8 million compared to the plan of R40 million, hence the surplus of R30, 2 million at year end. As indicated, that surplus was committed at year end, subject to the approval of National Treasury

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3. Future Operational Outlook

Mr. Themba MthethwaChief Ombud

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Future Operational Outlook and MTSF contribution

2014/15 was a year of Design, Planning, and Capacity building

Head Office and 2 Regional Offices established, 3

rd

Regional Office achieved after year endInitial staff recruitedBudget constraints became a reality due to delays in Regulations and thus Income generation2015/16 Capacity building continues, and operational set up ongoingLow level operations commenced (Conciliation only)Income generation still not going to be realised2016/17Income generation to commence by the 2nd halfIncreased operational experience will be accumulatedFurther expansion into other Regions where need is determinedCommencement of Education and Training rollouts 2017 – 2019Expansion of the operations into more Regions and Provinces, based on demandIncreasing income generation capabilities allow for improved scale and profile of the CSOSExtensive Education and Training programmes in Community Schemes, and in the public domain

MTSF OUTCOME

8:

Sustainable

Human Settlements and Improved Quality of Household

LifeThe CSOS education campaigns and Dispute Resolution service will radically reduce the negative perceptions of communal living, and will promote Community Schemes as a viable tenure option in South Africa

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4. Closing Remarks

Rev. Dr. V. MehanaBoard Chairperson

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Thank you