1 PRESENTATION TO PORTFOLIO COMMITTEE ANNUAL REPORT 2007/08 The Department of Home Affairs.

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PRESENTATION TO

PORTFOLIO COMMITTEE

ANNUAL REPORT 2007/08

The Department of Home AffairsThe Department of Home Affairs

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Overview Presentation• Context of the Report: 2007/8

• Selected highlights from performance information

• Financial information

Structure of the presentation

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The Department received a disclaimer of opinion on its annual report for the 2007-08 financial year.

As explicitly stated in the Auditor-General (AG) and Audit Committee reports, the finding comes in spite of good progress made by the DHA in addressing a number of serious problems uncovered in previous audits.

Actions taken before the shortcomings could be addressed, included:

An eight week analysis of the status quo in DHA and solution design utilizing:

Report prepared by Support Intervention team (SIT)

Work dome by Fever Tree consultants

Detailed study of previous AG reports

Suspension of officials and hiring of temporary or short term replacements

Consultations with National Treasury Some of the improvements realised:

Improved contract management resulting in substantial savings Creation of Immigration Account Financial statements to resolve legacy problems that went

back decades Allocation of significant resourced time and levels to address revenue management, asset

management, risk management, etc

Introduction 1/2

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Although progress was made, the benefits of these initiatives could not be realised fully in the 2007 - 2008 financial year because of the deep-rooted and pervasive nature of the problems.

In the longer term, substantial investments in the development of human resources, systems and infrastructure will be required to achieve the desired standards of efficiency and service delivery.

Prognosis: we anticipate a continuation of qualified audits unless support is received from National Treasury and Department of Foreign Affairs in respect of:

Foreign component of revenue management

Immigration account

Introduction 2/2

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The context of the Annual Report: 2007/08

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What is the Department reporting against? 1/2

The Annual Report for April 2007 – March 2008 reports against:

A 3-year Strategic Plan that is organised under 6 high level integrated strategic objectives in support of government priorities

The Annual Performance Plan (APP) for the Department, which was amended to take account of the new projects and deliverables from the turnaround.

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What is the Department reporting against? 2/2

The Annual Report also reports against the audited financial statements of the DHA and GPW, including:

The Accounting Officer’s Report – DHA

The Accounting Officer’s Report – GPW

The Appropriation Account and related notes

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2007 – 2008: The Departmental context 1/3

The primary strategic goal is to transform the Department into a modern, efficient, cost-effective service organisation, that is responsive to the needs of South African citizens, residents and visitors.

The Minister and her cabinet colleagues mobilised a Support Intervention Team that in March 2007 produced a report that detailed the need for transformation.

The Minister launched a comprehensive and well-resourced Turnaround of the DHA in June 2007, with the support of National Treasury and a service provider (FeverTree/ AT Kearney).

Phase 1 was a six-month phase from June to December 2007. The aim was to identify and understand the problems and to design responses and solutions.

A major focus during Phase 1 was to also develop a new Vision and Design for the Department that was service and customer-focused.

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A number of “quick win” areas were identified in Phase 1. These areas were earmarked for immediate action and significant success was achieved in all these areas. Examples are improving the ID process and establishing a Large Account project.

Whilst Phase 1 was about understanding the problems, Phase 2 of the turnaround is about broad-based implementation of change. Phase 2 will run from Jan 2008 to December 2009.

A third phase, to embed and complete the implementation of the turnaround, will follow during 2010 and 2011. The entire DHA turnaround has a five-year planning horizon.

The Turnaround is intended to transform the Department with respect to four key areas: Service Delivery and Facilities, People and Organisational Structure, Corruption, Security and Risk and Information Technology (IT).

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The Strategic Plan for 2007/08 to 2009/10 was tabled in May 2007, prior to the commencement of the turnaround.

The projects from phase 1 (June to Dec 2007) and Phase 2 (Jan to Mar 2008) were later integrated into the planning of the DHA and resulted in the production of the revised APP.

The revised APP portrays a true reflection of what the DHA achieved and how funding was utilised.

The Portfolio Committee was informed of this in November 2007 and provided with a table of deliverables per project .

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Selected Achievements per Strategic Objective

PROGRAMME PERFORMANCE

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Performance against Strategic Objectives

Strategic Objective 1: To provide secure, efficient and accessible civic and related

services and products to citizens and legitimate residents within specified timeframes

Improved ID turnaround time from 127 days to approximately 60 days through the

transformation of ID processes and the roll-out of online verification.

An electronic tracking system for ID applications, Track and Trace, was rolled out in more than

250 offices. ID track and trace functionality caters for the recording of progress of ID

applications from end to end. SMS verification was introduced to inform clients of where their

ID applications were at each stage, including when and where to collect the documents.

Productivity in key ID process bottleneck area was improved by approximately 300% through

implementation of operations management principles.

A backlog of more than 236 000 records in Fingerprint verification section was eliminated.

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Strategic Objective 1: To provide secure, efficient and accessible civic

and related services and products to citizens and legitimate residents

within specified timeframes

Backlog in Fingerprint Capturing brought down from 495 000 to 97 000.

The implementation of the new Coat of Arms in South African passports

and travel documents.

Implementation of a new contact centre solution that led to the general

improvement in the handling of customer calls to the toll free number. 80%

of calls are being answered within 20 seconds.

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Strategic Objective 1: To provide secure, efficient and accessible civic and related

services and products to citizens and legitimate residents within specified timeframes

ID Process Transformation

– Four fingerprint scanning machines were added to increase throughput.

– 400 front office staff members were trained on how to use a Q&A checklist to improve quality of applications.

– A single courier service was put in place to pick up and drop off ID applications and completed ID books.

– Four pilot projects, with redesigned front-end ID process using online fingerprint verification capabilities, were rolled out.

– A new end-to-end ID process – with 15 steps instead of more than 80.

22 million birth, marriage and death records sorted and indexed at end of 2007/08.

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Strategic Objective 2: To manage migration effectively by enabling the movement of

skilled workers into the country and efficiently and securely facilitating the entry, stay

and exit of visitors.

Completion of the 2010 FIFA World Cup user requirements to enable process

re- engineering.

Establishment of a Large Account Unit to fast track various work permits. 4 Pilot Large Accounts were successfully serviced and 1801 permits were issued.

(Anglo American = 469, Arcelor Mittal = 611, Lafarge = 403 and Gautrain (Bombela) = 318

1 133 quota work permits were issued to foreigners with scarce and critical skills in 2007/08. This is a marked improvement on the 194 issued in the previous year.

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Strategic Objective 3: To determine the status of asylum seekers and manage refugee

affairs in accordance with international treaties and the bill of rights as enshrined in the

constitution

Refugee Affairs capacity strengthened by appointment of four directors and two deputy

directors to head Reception Centres and the appointment of 191 officials.

A new Refugee and Deportation System (biometric system) developed and pilot testing done.

Marabastad - infrastructure, equipment and systems were vastly improved.

Counter Xenophobia unit was part of task team that dealt with attacks in Atteridgeville and

distributed “Stop Xenophobia” pamphlets in a door-to-door awareness campaigns.

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Strategic Objective 4: To foster domestic, regional and international co-operation

towards improved economic growth and development, including events with strategic

importance to the country.

MOU on visa waiver for diplomatic and official passport holders signed with India, Tanzania and Sudan.

Training provided for immigration officials from Rwanda and DRC.

Visa agreements were concluded with Korea, Tanzania and Vietnam with respect to diplomatic and official passport holders and with Belarus for ordinary passports.

Facilitation of Movement Agreement with Lesotho signed.

One Stop Border Post Agreement with Mozambique signed.

Repatriation of Records Agreement concluded with Namibia (NPR records).


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Strategic Objective 5: To deliver the department’s mandate effectively by implementing a

new organisational model that is characterised by caring officials who serve with

professionalism and by effective governance and operational control

The implementation of a new operating model for the Department as well as the new

organizational structure, including footprint recommendations and staff numbers.

A nationwide survey of clients was conducted that informed organisational design.

A high level plan to transform the Department in line with the new operating model was

developed and agreed.

A new governance structure was recommended and implementation began with a revised

Executive Committee and establishing an Operations Committee.

A draft policy and legislative conceptual framework was developed.


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Strategic Objective 6: To create an enabling environment by putting in place support

services that are effective, efficient, integrated and that prevent corruption.

Finance and Risk

All six previous audit reports were categorized and key risks and issues prioritized.

A strategy was developed to deal with risks at Rosslyn Document Archive Depot.

Cash handling machines were piloted in four offices, with revenue collection.

An Asset Register was compiled.

New tender and contract management process finalised:

• New and improved SLAs were negotiated with a number of key suppliers.

• Cost savings of R68m on the remainder of the Lindela (Deportation Centre) contract.

• Further potential cost savings of up to R40m with other key suppliers was identified.


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Strategic Objective 6: To create an enabling environment by putting in place

support services that are effective, efficient, integrated and that prevent corruption

Information Services

IT projects and the architecture to support new operating model

requirements were agreed to.

Upgrade of HANIS (Home Affairs National Identification System) to new

technology (HANIS Tech Refresh).

Master Information Systems Plan and Enterprise Architecture updated.

Development of Refugee and Deportation System.


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Strategic Objective 6: To create an enabling environment by putting in place

support services that are effective, efficient, integrated and that prevent corruption

Corporate Services

Performance agreements improved and aligned with the revised APP.

70% functionality of PERSAL achieved to ensure improvement on

turnaround time in processing certain HR transactions.

Meetings with union leadership were held and a joint statement of shared

intent as well as a turnaround accord was put on the table.


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Strategic Objective 6: To create an enabling environment by putting in place support

services that are effective, efficient, integrated and that prevent corruption

Internal Audit

Audit charter approved.

Comprehensive Internal Audit procedure manual adopted.

Co-sourcing agreement in place to increase audit scope and coverage.

Enterprise-wide risk management facilitated.

Preliminary risk assessment conducted as part of turnaround.

Top ten risks prioritised and management strategies developed.


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Strategic Objective 6: To create an enabling environment by putting in

place support services that are effective, efficient, integrated and that

prevent corruption

Counter Corruption and Security Services

High risk offices identified and 36 offices evaluated.

Prevention workshops conducted in all provinces.

53 Workshops on security policy conducted nationally.

Pre-employment screening of 490 prospective employees conducted.

Security evaluation conducted on 84 existing accommodation.


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FINANCIAL INFORMATION

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Financial Overview• The financial year turnaround began in

earnest in November 2007

• Weekly operational meetings were held with the auditors and the turnaround team

• Monthly executive meetings were held with the Auditor General executive

• The Information Systems budget was re-prioritized in the year under review.

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Financial Overview• The department began an Asset take

exercise in February 2008

• Completed backlog of Senior Management Service members performance reviews from as far back as 2003/04

• Negotiated R68million savings on the Deportation Holding Facility Contract.

• So in 5 months what have we resolved?

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Previous Areas of Concern Raised by the AG

• Reporting of Fraud & Error in the financial statements• Completeness of Accruals • Completeness of Commitments• Clearing of Inter-responsibility & suspense accounts• Balancing of voted funds to the National Revenue Fund• Disclosure of Irregular expenditure• Incurring of Fruitless & wasteful expenditure• No Fixed Asset Register• Accuracy of Cashflow Statement• No Immigration Account Financial Statements

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SUMMARY OF EXPENDITURE FOR 2007/08 PER PROGRAMME

Rand thousand

FINAL APPRO-

PRIATION

EXPENDI-TURE AS AT 31

MARCH 2008

UNDER/ (OVER-

SPENDING)

% OF BUDGET SPENT

1. ADMINISTRATION 1 177 423 1 090 502 86 921 92,6

2. CIVIC AND IMMIGRATION SERVICES

1 728 807 1 536 557 192 250 88,9

3. TRANSFERS TO AGENCIES

614 668 614 668 – 100,0

TOTAL 3 520 898 3 241 727 279 171 92,1

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SUMMARY OF EXPENDITURE FOR 2007/08 PER ECONOMIC CLASSIFICATION

Rand thousand

FINAL APPRO-

PRIATION

EXPENDI-TURE AS AT 31

MARCH 2008

UNDER/ (OVER-

SPENDING)

% OF BUDGET SPENT

COMPENSATION OF EMPLOYEES

1 120 191 1 086 974 33 217 97,0

GOODS AND SERVICES 1 420 682 1 281957 138 725 90,2

FINANCIAL TRANSACTIONS IN ASSETS AND LIABILITIES

– 26 708 (26 708) –

TRANSFERS AND SUBSIDIES 626 117 625 797 320 99,9

PAYMENT OF CAPITAL ASSETS

353 908 220 291 133 617 62,2

TOTAL 3 520 898 3 241 727 279 171 92,1

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Detail of Over/Underspending

Rand thousand

UNDER/ (OVER-

SPENDING)

COMPENSATION OF EMPLOYEES 33 217 Underspending can mainly be attributed to the slow filling of vacant posts due to finalisation of the organisational structure and outstanding claims regarding foreign missions

GOODS AND SERVICES 138 725 Underspending is mainly due to the Smart ID Card which did not materialise, as well as the Passport System for which only preparations for implementation has been done.

FINANCIAL TRANSACTIONS IN ASSETS AND LIABILITIES

(26 708) Includes mainly thefts and losses, relating to amounts that should have been written off as far back as 2002.

TRANSFERS AND SUBSIDIES 320 Underspending is mainly due to earmarked funds for payment of employees initiated severance packages

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Detail of Over/Underspending

Rand thousand

UNDER/ (OVER-

SPENDING)

PAYMENT OF CAPITAL ASSETS 133 617 Underspending due to construction of new buildings which did not materialise as well as re-classification of expenditure to current for maintenance and repair on lease buildings by the Department of Public Works. Departmental vehicles purchased were not delivered before year end and hence could not be paid for.

TOTAL 279 171

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The 2007/08 Audit Opinion• The following 6 challenges still remain with the

department.– Completeness of Revenue– Auditability of the Fixed Asset Register– Completeness of the Lease Register– Supporting documentation for Government Garage

Expenditure– Supporting documentation for the Immigration

Account & classification of such expenses– Clearing of Receipt & Deposit accounts

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Responding to Audit Opinion

Revenue accounting and collections• In addressing the completeness of Revenue, foreign revenue

processes need to be separated from local revenue processes• Local revenue being addressed by Standard Operating Procedures

(SOP’s), uniform front office receipting registers, automated cash handling devices and interface into BAS.

• BAS to be rolled out to all front offices as well as SCOA Ver3• Project commenced with IMS to register and reconcile all Passenger

carrier fines in the Penalty Case System• For Foreign revenue agreement must be reached with Dept of

Foreign Affairs based on National Treasury guidance.• The department is not present at all Missions hence supervision is

weak and not within the department’s control• Our plan is to put the receipting solution at all foreign missions• Local revenue - 18 months more, Foreign revenue - 36 months

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Assets and the accounting thereof• A number of the points raised by the auditors in their report have

already received attention, and exceptional progress is being made.• The R 392 million worth of assets which could not be verified

have subsequently been analysed and corrected as follows:o R 125 million of Work-in-Progress has been correctly classifiedo R 11.8 million Internet charges incorrectly allocated to Fixed

Assets will be corrected in the 2008/9 financial yearo R 53 million CPI adjustments, foreign exchange adjustments and

retention fees on original invoices, which have subsequently been allocated to the original physical asset to which they relate

o R 85 million of IT related invoices have been matched with the physical assets

o The vehicles on the Department’s asset register have all subsequently been confirmed as belonging to the Department.

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Assets and the accounting thereof…..• Complete the matching of Invoices to IT assets in the

asset register

• Update the asset management policy

• Maintain the Asset register going forward

• Train asset management staff in Standard Operating Procedures over assets

• Perform interim & final annual asset count

• Dispose of all assets that do not have economical use and value

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Maintenance of a Lease register

• The historical lease register in the department reflected only certain leased property

• An exercise has begun to update the lease register with all leases in the department, inclusive of IT, vehicles and other leased items

• Our plan is to have this register completed by December 2008

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• Government Garage– Still remains a challenge within the department– Department failed to produce 44 pieces of supporting

documentation, mostly petrol slips– After year end we have confirmed additional

transportation officers to strengthen the process– We are working in conjunction with Government

Garage & Auditor General to secure all supporting documentation & acceptable evidence respectively.

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• Payables and classification errors– Working with the Department of Foreign Affairs on

availing supporting documents to clear the payables account.

– May require National Treasury intervention to assist if the Department of Foreign Affairs confirms no supporting documentation available

– The most likely difference in the foreign allowance account is R14million, we are scanning general ledger accounts to correct mis-posted journals.

– Approving of journals is being reviewed by senior management.

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• Cash & Cash Equivalents– The department has 38 suspense accounts of

these 6 relating to receipting & deposits have not been cleared by year end.

– Weekly trial balance meeting have been instituted to check and confirm status of all control accounts.

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Siyabonga

Dankie

Thank You

Realeboga

1 PRESENTATION TO PORTFOLIO COMMITTEE ANNUAL REPORT 2007/08 The Department of Home Affairs.

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Transcript of 1 PRESENTATION TO PORTFOLIO COMMITTEE ANNUAL REPORT 2007/08 The Department of Home Affairs.