DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1

DIRCO Expenditure report DIRCO Expenditure report

2013/14 Quarter 4 2013/14 Quarter 4

2014/15 Quarter 1 2014/15 Quarter 1

Presentation to the Portfolio CommitteeDate 20 August 2014

Table of contents

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A. DIRCO report1. 2013/14 expenditure

2. Audit outcome

3. 2014/15 Quarter 1 Expenditure

B. African Renaissance fund (ARF)1. Budget allocation

2. List of Committed projects

3. Progress report

EXPENDITURE OUTCOME 2013/14

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Vote Expenditure as at 31 March 2014 2013/14

Adjusted Appropriation

Shifting of Funds

Virement Final Appropriation

Actual Variance Expenditure as %

R'000 R'000 R'000 R'000 R'000 R'000 %

Administration 1 327 802 - - 1 320 811 1 267 196 60 606 96%

International relations 2 761 000 - - 2 761 000 2 892 877 -132 877 100%

International cooperation 459 003 - (6 991) -

452 012 451 689 323 98%

Public diplomacy and protocol 254 468 - 6 991 261 459 281 553 -20 094 108%

International transfers 952 373 - - 952 373 977 981 -25 608 103%

Subtotal 5 754 646 - - 5 754 646 5 871 296 -116 650 102.0%

Compensation of employees 2 354 273 -7 936 - 2 346 337 2 433 799 -87 462 104%

Goods and services 2 049 009 132 018 -1 223 2 179 804 2 248 733 -68 929 103%

Interest and rent on land 57 - - 57 - 57 0%

Transfers & subsidies 965 831 -5 833 - 959 998 984 538 -24 540 103%

Payment for capital assets 385 476 -118 249 1 223 268 450 203 772 64 678 76%

Payment for financial assets - - - - 454 -454 0%

Total 5 754 646 - - 5 754 646 5 871 362 -116 650102.0%

2013/14 Expenditure Outcome• Programme 1: Administration –The increase in expenditure is due to the inflationary

adjustments mainly on office accommodation related to unitary fees for the Head Office Campus.

• Programme 2: International Relations – This is mainly attributable to the depreciation of the Rand against other major currency.

• Programme 3: International Cooperation –. The increase in expenditure is as a result of the higher operational cost as a result of the Rand depreciation.

• Programme 4: Public Diplomacy and Protocol –The overspending is attributed to the facilitation and provision of protocol services to the Heads of State/Government attended the State funeral of the former President Nelson Mandela.

• Programme 5: International Transfers –The overspending is as a results of foreign exchange rates losses in relations to the payment of membership fees and assessed contributions to United Nations, African Union and South African development Community.

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2013/14

AUDIT OUTCOME

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Analysis of Audit opinion over 5 yrs.

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Financial years 2009/10 2010/11 2011/12 2012/13 2013/14

Audit opinion Unqualified audit opinion

Unqualified audit opinion with additional matters

Unqualified audit opinion with additional

Unqualified audit opinion with additional matters

Qualified audit opinion

- Repeat findings on Assets Management

Matters - Non Existence- Completeness- Reconciliation not performed

Significant Improvements

Predetermined objectives

Predetermined objectives

- Predetermined objectives

AREAS OF IMPROVEMENT

Recurring findings:

1.Asset Management

2.Irregular expenditure

3.Non compliance – 30 days payment

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The Asset portfolio of the Department consists of the following:

• Immovable assets: Consist of Chanceries (Offices), Official Residences and staff accommodation

• Movable assets – Major (economic value over R5000): Consist of motor vehicle, office and domestic furniture, office and domestic equipment

• Movable assets – Minor (economic value less than R5000): Consist of office and domestic furniture, office and domestic equipment, audio visual and gardening equipment.

• Intangible Assets – Consist of software applications and patent.

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The Asset portfolio of the Department consists of the following:

DescriptionTotal Number of Assets

Total Number of Locations

Total Number of Custodians

Total valueR ’million

Immovable 135 94 75 5 126

Movable: Major 21 810 5 175 3 122 667

Intangible 44 4 3 27

Movable: minor 145 912 8 178 4 347 131

Grand Total 167 901 13 451 7 547 5 952

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Categories - Movable minor assets

Categories (National treasury description) Total Number of AssetsTotal value

R ’million

145 912 131

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1. MANAGEMENT OF ASSETS

Recurring Findings:•Existence: Assets not physically verifiable.•Completeness: Assets not recorded in the fixed asset register.•Reconciliations of:•Physical fixed assets on hand with assets recorded on the fixed assets register•Additions and disposals of fixed assets on the statement of financial performance versus the detail on Basic Accounting of System and HardCat• Complete reconciliation between the Asset management system and Basic Accounting of System.

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1. MANAGEMENT OF ASSETS

Measure implemented:

•Updating of Assets Register – the measures as per the assets procedure have been updated to deal with timeous updating of the asset register.

•A directive has been issued to missions that all forms in relations to updating of the assets register must be included in the mission accounts pack as from July 2014.

•Decentralised the use of asset management system to missions.

•Verification of assets performed through the use of scanning devices.

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1. ASSETS MANAGEMENTMeasures implemented in first quarter•Implement Assets Management turnaround strategy which includes:

– Missions will send the data files to Head Office through the HUBS and get interfaced to HARDCAT to prevent human intervention.

– Asset catalogue is being developed with a full implementation 01 October 2014

– Corrective action is being implemented against officials who fails to implement the directives/procedure on assets procedures.

– CSM to functionally report to the CFO through the Foreign Service Administration office.

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2. IRREGULAR EXPENDITURE

Findings:•Goods and services procured without following supply chain management practice notes, policies and procedures as required by Treasury Regulation 16A6.1.

•Contracts and quotations awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed in order to comply with Treasury regulation 16A8.3.

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2. IRREGULAR EXPENDITURE

Measure implemented:

•Established (centralised approach) bid committees

• - Specification

• - Evaluation

• - Adjudication

•Updated Financial Delegation of Authority.

•Reviewed Supply Chain Management and Financial Management policies & Standard Operating Procedure’s

•Procurement being done in accordance with Demand Management Plan

•Implemented tracking system to identify deviations from 01 July 2014

•Implemented a quality assurance unit to perform pre and post checking of expenditure vouchers.

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3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD

Findings:

•Payments to suppliers not made within 30 days of receipt of invoice.

•This may also lead to the department being charged interest and penalties for late payment. It may also lead to fruitless and wasteful expenditure.

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3. NON COMPLIANCE WITH 30 DAYS PAYMENT PERIOD

Measure implemented:•Implemented a central point of receiving of all invoices at Head Office.

•Implemented an electronic invoice tracking system for Head Office.

•Developed the Service Delivery Improvement Plan.

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QUARTER 1: EXPENDITURE OUTCOME

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Vote Expenditure per programme (R’000)

Programmes Vote Appropriation Quarter 1

Projection Actual % of Actual to projection Variance

Administration 1 396 255 351 117 253 657 72.2% 27.8%International Relations 2 810 160 798 636 809 444 101.4% -1.4%International Cooperation 486 371 125 666 111 221 88.5% 11.5%Public Diplomacy and Protocol 317 249 152 328 68 545 45.0% 55.0%

International Transfers 744 289 62 772 92 409 147.2% -47.2%Total 5 754 324 1 490 519 1 335 276 89.6% 10.4% Economic Classification Compensation of employees 2 461 835 608 283 629 630 103.5% -3.5%Goods and services 2 120 789 701 664 526 168 75.0% 25.0%Transfer payments 745 723 62 784 94 333 150.3% -50.3%Payments for capital assets 425 977 117 788 85 144 72.2% 27.8%Total 5 754 324 1 490 519 1 335 276 89.6% 10.4%

Expenditure/projection as % of total budget 25.9% 23.2%

Vote Expenditure continued…

• Total expenditure for the Department as at the end of the first quarter amounts to R1.335 billion or 23.2% of the appropriation.

• This expenditure is 10.4% lower than the projected expenditure for the period.

• The low expenditure trend is mainly under Programmes 1 and 4. In terms of economic classification, the slow spending is visible mainly under goods and services as well as Payments for capital assets.

• The details of the variances are discussed under each Programme.

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Programme 1 – Econ Classification (R’000)

Programme 1 - Econ Class Prog Appropriation

Quarter 1


Econonic Classification Compensation of employees 357 265 90 315 85 994 95.2% 4.8%Goods and services 638 824 157 856 86 317 54.7% 45.3%Transfer payments 0 0 82Payments for capital assets 400 166 102 946 81 264 78.9% 21.1%Total 1 396 255 351 117 253 657 72.2% 27.8%

Expenditure/projection as % of total

budget 25.1% 18.2%

• Total expenditure for the Programme as at the end of the first quarter amounts to R253.7 million or 18.2% of the programme’s total appropriation. This expenditure is 27.8% lower than what had been projected for the period.

• Reasons for the low spending:

– ICT projects– payments relating to ICT contracts that were not processed in the first quarter as it was planned.

– Foreign fixed assets management – low expenditure trend is due to slow progress in the construction of Dar es Salaam and renovations projects in The Hague. This is a result of adverse site conditions.

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Programme 1 continued….

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Programme 2: International Relations (R’000)

Programme 2 Prog Appropriation

Quarter 1


Africa 861 929 521 167 220 653 87.9% 12.1%

Asia and middle east 685 957 212 022 234 969 110.7% -10.7%Americas and caribbean 493 518 129 761 133 563 102.9% -2.9%

Europe 768 756 205 686 220 532 107.2% -7.2%

Total 2 810 160 798 636 809 444 101.4% -1.4%

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Programme 2 - Econ Class

Prog Appropriation

Quarter 1


Compensation of employees 1 690 624 417 595 441 263 105.7% -5.7%Goods and services 1 094 773 366 776 363 511 99.1% 0.9%Transfers and subsidies 1 393 0 1 567Payments for capital assets 23 370 14 265 2 966 20.8% 79.2%Total 2 810 160 798 636 809 444 101.4% -1.4%

Expenditure/projection as % of programme budget 28.4% 28.8%

• Total expenditure for the Programme as at the end of the first quarter amounts to R809.4 million or 28.4% of the programme’s total appropriation.

• The expenditure is 1.4% higher than what had been projected due to foreign exchange losses.

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Programme 3: International Cooperation (R’000)

Programme 3Prog

Approriation

Quarter 1

Projection Actual % of Actual to projection

Variance

Global system of governance 267 747 65 762 62 422 94.9% 5.1%

Continental cooperation 142 070 40 737 28 290 69.4% 30.6%

South-south cooperation 7 402 1 942 1 585 81.6% 18.4%

North-south dialogue 69 152 17 225 18 924 109.9% -9.9%

Total 486 371 125 666 111 221 88.5% 11.5%

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Programme 3 - Econ Class Prog Approriation

Quarter 1


Variance

Compensation of employees 288 923 68 939 71 571 103.80% -3.80%Goods and services 196 592 56 134 39 035 69.10% 30.90%Transfer and subsidies 0 0 42 Payments for capital assets 856 593 569 95.95% 4.22%Total 486 371 125 666 111 221 88.50% 11.50%


Programme 3 - Econ Class Prog Approriation Quarter 1


• This expenditure is 11.5% lower than projected expenditure for the period.

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Programme 4: State Protocol and Public Diplomatic

Programme 4 Prog Approriation

Quarter 1


Variance

Public Diplomacy 61 473 18 290 12 764 69.80% 30.20%Protocol Services 255 776 134 038 55 781 41.60% 58.40%Total 317 249 152 328 68 545 45.00% 55.00%Economic Classification Compensation of employees 125 023 31 434 30 802 98.00% 2.00%Goods and services 190 600 120 308 37 305 30.90% 69.10%Transfer and subsidies 41 252 234 92.86% 7.69%Payments for capital assets 1 585 334 203 60.80% 39.20%Total 317 249 152 328 68 545 45.00% 55.00% Expenditure/projection as % of programme budget 48.00% 21.60%

Programme 4 Prog Approriation Quarter 1


• Expenditure for this programme is 55.0% lower than what had been projected for the period.

• Slow spending is attributable to the expenditure relating to 2014 Presidential Inauguration due to non submission of claims by other departments:

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Programme 5: International Transfers

Programme 5 Prog Approriation

Quarter 1


Departmental agencies 285 560 0 0 0 0Membership contribution 458 729 62 772 92 409 147.2% -47.2%

Total 744 289 62 772 92 409 147.2% -47.2%

Economic Classification

Transfer payments 744 289 62 772 92 409 147.2% -47.2%

Total 952 373 62 772 92 409 147.2% -47.2%


• Total expenditure for the Programme as at the end of the first quarter amounts to R92.4 million or 9.7% of the Programme’s total appropriation.

• This expenditure is 47.2% higher than what had been projected for the period mainly due to due to foreign exchange losses.

• In total the projected foreign exchange losses in the first quarter is estimated at R121 million.

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PROPERTIES MANAGEMENT

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Property AcquisitionsProperty Portfolio Abroad:

• Consist of Chanceries, Official Residences and staff accommodation

• Present ownership status: 135 State Owned and approximately 700 rented properties

• DIRCO rental budget in excess of R 500 million per annum

Property Acquisition Strategy:• Aims to increase state owned property portfolio and reduce operational lease budget via strategic acquisitions of properties abroad• Strategy focuses on whole life cycle of property - acquisitions,

long term maintenance, renovations/refurbishment and disposals • Consideration will be given to grouping projects to achieve

economies of scale and render projects more attractive for investment purposes

Property Acquisition Strategy

• Acquisition mechanisms: •Development of state owned land and purchasing of properties

• Funding mechanism: •In principle approval has been received from National Treasury to enter into finance leases

Property Acquisition Strategy• Work done to date: Draft acquisition strategy submitted to National Treasury and

comments received;

Motivation for priority projects submitted as part of MTEF submission;

• Way forward: Finalise high level strategy by end of the third quarter.

Engaging professionals for the preparation of costed feasibility studies – including legal, financial and technical due diligence as well as the development of a standard design for all facilities, taking into account issues of maintenance and sustainability.

African Renaissance Fund (ARF)Quarter 1: 2014/15

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African Renaissance Fund

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2014/15 Appropriation

Cash available as at 31 April 2014 Commitments withdrawals Available funds

ARF FINANCIAL REPORT FOR THE FINANCIAL YEAR 2013/2014 277 560 1 864 871 555 168 - 1 587 263

Cash and expenditure

PROJECT DESCRIPTIONAPPROVED

AMOUNT PER CONCURRENCE

OPENING BALANCE AS AT 1

APRIL

AMOUNT SPENT TO DECEMBER 2013 (CURRENT YEAR)

AMOUNTS PAID OUT OF DIRCO

ACCOUNT (CURRENT YEAR)

BALANCE

R'000 R'000 R'000 R'000 R'000Amount owed to Related Party Annexure 3 34 206 5 369 28 837

Government of Malawi 229 148 92 055

92 055 South Africa’s Intervention in Sahel Region 250 000 133 667 19

133 648

Government of Guinea-Rice Production, waste management and Technical assistance 172 327 69 157 777 68 380

South African participation in the upcoming AU Election observer mission 17 000 13 570

13 570

ARF Financials

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PROJECT DESCRIPTIONAPPROVED

AMOUNT PER CONCURRENCE

OPENING BALANCE AS AT 1

APRIL


AMOUNTS PAID OUT OF DIRCO

ACCOUNT (CURRENT YEAR)

BALANCE

DPSA DRC Census 10 000 1 772 1 772 Madagascar Election Support 16 585 474 474Humanitarian Assistance to Niger 96 000 5 099 5 099 Saharawi 52 000 10 000 10 000

International Diplomatic Training Programme (IDTP) 13 600 2 843

2 843

Humanitarian Assistance to Somalia 17 900 67 67VIP Protection Training to the Democratic of Republic of Congo Protection Unit-SAPS 648 648

The Cuba Economic Aid Package 100 000 100 000 100 000

IGM Expansion project (Madagasca) 41 100 41 100

Emergency Assistance Aid Congo 10 700 21 21

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PROJECT DESCRIPTION APPROVED AMOUNT PER CONCURRENCE

OPENING BALANCE AS AT 1 APRIL


AMOUNTS PAID OUT OF DIRCO ACCOUNT

(CURRENT YEAR) BALANCE

R'000 R'000 R'000 R'000 R'000

Independent Electoral Commission – Democratic of Republic of Congo 1 200 262 262

Government of Comoros – Electoral assistance projects 37 871 5 084 5 084

Sudan Elections 4 000 827 827

Guinea- Museum Project in Kindia 5 000 5 000 5 000Timbuktu Manuscript Project 20 000 2 928 2 928

African Capacity Building Foundation(ACBF) 3 900 2 422 2 422 University of South Africa (UNISA) 27 000 2 023 2 023Democratic Republic of Congo Mission 34 900 34 900

SAPS to Purchase Riot Equipment – DRC 24 000 24 000

United Nations Mission in Liberia for the rebuilding of the Liberian National Police) 7 500 7 141 7 141 African Ombudsman Research Centre (AORC) 21 200 14 100 14 100Mozambique – Operation BAPISA 13 008 13 008 13 008Cuban Medical Brigade 24 000 5 369 5 369 -

TOTAL 1 149 939 555 168 6 165 5 369 543 634

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Thank you

Documents

DIRCO Expenditure report 2013/14 Quarter 4 2014/15 Quarter 1