REPORT OF OVERSIGHT COMMITTEES REPORTING DIRECTLY TO … · The work of the Oversight Committee is guided mainly by the following legislation: ... plastering 80% complete as at 15

1

REPORT OF OVERSIGHT COMMITTEES REPORTING DIRECTLY TO THE COUNCIL allowed in terms of Section 8(1)(f)(b)(i) of the Rules and Orders for consideration by the Council Agenda of the Council Meeting of the CITY OF TSHWANE METROPOLITAN MUNICIPALITY which will be held in the Council Chamber, Sammy Marks Conference Centre, corner Madiba and Lilian Ngoyi Streets, Pretoria, on THURSDAY, 30 JUNE 2016, at 10:00 to consider the matter as set out in the agenda hereafter.

PAGES F. FROM THE SECTION 79 OVERSIGHT COMMITTEE:

FINANCE: 15 JUNE 2016 ……………………………………………… 4-39 ALDERWOMAN AWMK MOSUPYOE-LETSHOLO SPEAKER 24 June 2016

2

F. REPORT TO COUNCIL

The Speaker, in terms of Section 8(1)(f)(b)(i) of the Rules and Orders, proposes to Council that the reports contained in this agenda, from the Meeting of the Section 79 Oversight Committee: Finance held on 15 June 2016, be submitted for consideration, and subsequently requests the Chair of Chairs, Councillor RJ Kekana, to present the report to Council.

3

COUNCIL AGENDA: CITY OF TSHWANE METROPOLITAN MUNICIPALITY: 30 JUNE 2016 REPORT TO COUNCIL INDEX (The recommendations appear on the pages indicated in brackets)

Pages F. FROM THE SECTION 79 OVERSIGHT COMMITTEE:

FINANCE: 15 JUNE 2016

1. Office of the Speaker Annual performance report of the Section 79 Oversight Committee: Finance for the Financial Year 2015/16…………………………………..…. 4–39(31) (From the Section 79 Oversight Committee: Finance: 15 June 2016)

*******

4

COUNCIL AGENDA: CITY OF TSHWANE METROPOLITAN MUNICIPALITY: 30 JUNE 2016 REPORT TO COUNCIL JRK THEMA (012 358 1723) SECTION 79 OVERSIGHT COMMITTEE: FINANCE: 15 JUNE 2016 1. OFFICE OF THE SPEAKER

ANNUAL PERFORMANCE REPORT OF THE SECTION 79 OVERSIGHT COMMITTEE: FINANCE FOR 2015/2016 (From the Section 79 Oversight Committee: Finance: 15 June 2016)

1. PURPOSE

The aim of this report is to provide an overview and reflection on the performance of the Section 79 Oversight Committee: Finance for the period July 2015 to June 2016. Furthermore, this report will identify areas where there is a need for improvement in order to achieve the goals as set by the Committee in its process plan, as attached.

2. STRATEGIC OBJECTIVES This report addresses the following Strategic Objectives of the City of Tshwane:

Strategic Objective 4: “Promote good governance and an active citizenry”.

Strategic Objective 5: “Improved financial sustainability” 3. BACKGROUND

The Governance Model of the City of Tshwane as per Council resolution dated 9 June 2011, led to the re-establishment of Council Oversight Committees that were initially established through Section 80 of the Municipal Structures Act. The main objective of this process was to enhance efficiency, accountability and responsiveness. This Model focused on assigning different roles, to ensure clear separation of powers and functions between Council and the Executive, in order to enhance and strengthen Council’s oversight role. The activities conducted by the Section 79 Oversight Committee: Finance, are in accordance with the Governance Model. This report, in summary, highlights findings from meetings and inspections conducted by the Committee, in compliance with its oversight mandate, as per the provisions of its Terms of Reference.

4. DISCUSSION

The Section 79 Oversight Committee: Finance performs its functions in order to render an advisory legislative role to Council. In executing its duties, the Committee has a responsibility of promoting the principles of good governance and monitoring compliance with provisions of legislation governing local government, in particular, the Municipal Finance Management Act.

5

This report will cover information pertaining oversight activities conducted by the Committee for the period July 2015 to June 2016, including:

4.1 Supporting legislation; 4.2 Terms of reference; 4.3 Committee membership; 4.4 First quarter performance; 4.5 Second quarter performance; 4.6 Third quarter performance; 4.7 Fourth quarter performance; 4.8 Application of policies and By-Laws; 4.9 Analysis of the process plan; and 4.10 2015/16 Performance of the Department.

4.1 SUPPORTING LEGISLATION

The work of the Oversight Committee is guided mainly by the following legislation:

Constitution of the Republic of South Africa, Act 108 of 1996;

Local Government Municipal Systems Act, Act 32 of 2000;

Local Government Municipal Structures Act, Act 117 of 1998;

Local Government Municipal Finance Management Act, Act 56 of 2003; and

Intergovernmental Relations Framework Act, Act 13 of 2005.

In order to align with the new section of the law that informed the establishment of Oversight and Standing Committees, Council adopted terms of reference for each Committee. The Terms of Reference below are for the Finance Section 79 Oversight Committee:

4.2 TERMS OF REFERENCE

Specific Functions The Section 79 Oversight Committee: Finance has three functions namely: 1. Scrutinising reports in relation to its core function referred to it by Council emanating

from the Executive Mayor and/or Mayoral Committee and advising Council;

2. an oversight role in relation to its core function on the performance of the executive on behalf of Council; and

3. in relation to its core function, an advisory legislative role.

4.3 COMMITTEE MEMBERSHIP

In line with the Municipal Systems Act 59 (1)(2)(3) as approved by Council, the following amendments were made on representation of the Democratic Alliance Councillors.

DA COUNCILLOR REPLACEMENT

EFFECTIVE DATE

Khumalo, Z Roos, A 14 January 2016

Campbell, AW. Smith, F 08 October 2015

6

The representation of political parties in the Oversight Committee is determined in the manner outlined in the terms of reference quoted herein and below:

(Unaltered) F1. MEMBERS In terms of Section 79(1)(b) the Council “may appoint” the members from among the Council’s members (ordinary Councillors). In accordance with the Hare Quota in conjunction with the Largest Remaining Formulae, Section 79 Committees comprise of 20 members (Chairperson included), proportionally composed as follows:

AFRICAN NATIONAL CONGRESS (ANC)

DEMOCRATIC ALLIANCE (DA)

AFRICAN CHRISTIAN DEMOCRATIC PARTY (ACDP)

KEKANA,RJ (CHAIRPERSON) DLAMINI, BL FLEMING, DL KATAKE, NS LEBESE, OS MAREDI, F MATHENJWA, N MORUDU, MGR NGWENYA, C RAMMUSHI, J ZITHA, P

ROOS, A

FOURIE, ML MIDDELBERG, L OSMAN, A SMITH, F RAMOHOEBO, R VAN DEN HEEVER, C VISSER, G

KISSOONDUTH, A

4.4 First Quarter Performance

The Committee executed the following activities in this quarter to comply with the oversight mandate:

Meeting - 16 July 2015;

Meeting - 13 August 2015; and

Inspection-in-Loco – 10 September 2015. 4.4.1 Oversight Committee meetings

In the 1st quarter, the Committee held two meetings on 16 July 2015 and 13 August 2015. Below are the reports which were presented by the department and discussed. Status of the resolutions of these meetings is fully outlined in the attached Annexure A on resolution tracking.

7

a) 16 JULY 2015 COMMITTEE MEETING

Item Department Title of the report Author/ Initiator

Resolutions

1. Finance 2014/15 FY Annual performance report: Finance Oversight Committee & Draft Process Plan 2015/2016

JRK Thema

1. That cognizance be taken of the contents of this report.

2. That the Department of Finance submit a quarterly report to the Finance Oversight Committee on:

o Progress made in addressing challenges identified in Call Centres, Customer Care Walk-in Centres and Municipal Stores as reflected in this report.

o Funded and filled positions, to realise the strategic objectives of the City.

o Implementation of the Regionalisation Model, outlining funding and resources allocated, in order to accelerate service delivery.

o The interventions by Supply Chain Division to improve procurement processes and contractor management.

o That the provision of the legislation contained in the report be considered and complied with

o That the Departments submit presentations and reports to the Committee, in line with the provisions of the Rules and Orders By-law and Circular 9 Report Flow.

8

o That the challenges on page 31 (items 4.7 and 4.8) be removed and included in a separate Annexure to this report under the heading “Policies and By-Laws approved by Council that relates to the Oversight Committee: Finance.

o That for future references

the subject “Policies approved” by Council be included in the draft Programme/Business Plan for the City of Tshwane

That regarding the quarterly report on the Finance Oversight Committee, the following also be included in the draft Programme/Business Plan:

o Progress made in addressing challenges identified in Call Centres, Customer Care Walk-in Centres and Municipal Stores as reflected in this report.

o Funded and filled positions, to realize the strategic objectives of the City.

o Implementation of the Regionalization Model, outlining funding and resources allocated, in order to accelerate service delivery.

o The interventions by Supply Chain Division to improve procurement processes and contractor management.

9

3. That the following reports/ presentations originally submitted by Councillor ML Fourie be included in the draft Programme/ Business plan:

Supply Chain Management: Monthly

Analysis of creditor payments: Monthly:

o Overdue o Creditors paid

Tenders awarded and deviations.

Contract management.

Revenue Management: Monthly

o Age analysis of Debtors per Region/Ward/Suburb

o Credit control activities per Region/Ward/Suburb

o The following information should be included in the report:

o Number of electricity cut-offs instructions

o Number of successful electricity cut-offs.

o Number of electricity cut-offs not possible and reasons for failure to implement.

o Number of legal/authorised electricity re-connections.

o No responses to credit control actions.

o Cash Flow: Monthly o Budget control: Quarterly o Operating expenditure:

Actual v/s Budget o Capital expenditure;

Actual v/s Budget o Unauthorized expenditure o Fruitless and Wasteful

expenditure o Irregular expenditure o Monitoring of Legislative

Reporting Requirements and compliance: Monthly

10

o Customer Care and Call

Centre performance: Quarterly

o Human Resources: Quarterly

o Staffing and vacancies per staffing level.

o Training o Suspensions o Disciplinary actions

9. That the starting time of

meetings in the draft Programme/Business Plan be corrected to reflect the agreed time of 12:00 and that the dates of monthly Oversight meetings be included in the draft Programme/Business Plan

b) 13 AUGUST 2015 COMMITTEE MEETING

4.4.2 Inspection-in-Loco

The Committee conducted one Inspection-in-Loco during the first quarter of the 2015/16 financial year, on 10 September 2015 with a view to check whether the City’s capital projects are in line with the SDBIP. Zithobeni Sports Stadium, Refilwe Sports Stadium and Cullinan Library Park are capital projects which were visited by the Committee in Region 5 & 7. Through thorough discussions, the Committee decided not to visit the New Gazankulu Clinic due to the geographical distance, only Region 5&7 were visited. According to the 2014/15 SDBIP the Cullinan Library Park project only began in the third quarter of the 2014/2015 financial year.

a) Findings of the Inspection-in-Loco at Cullinan Library Park:

Item Department Matters

Considered

Author/ Initiator

Findings from the inspection

Resolutions

1. Sports and

Recreation

Inspection- in-

loco: Cullinan

Library Park

JRK Thema

Start Date:

12/05/14

Expected

completion:

22/10/15

That a financial

breakdown of costs for

the Cullinan Library and

ground works be

provided as well as a

breakdown of costs for

11

Budget Allocated

2014/15:

20 Million

Milestone/Status:

-Phase 1 bulk

earthworks

completed on 30

March 2015

-Relocation of

electrical cables in

progress as at 15

September 2015

-All concrete works

completed.

Brickwork and

plastering 80%

complete as at 15

September 2015.

-Mechanical

connections 40%

at 21 September

2015.

-Completion of

building structure.

65% at 30

September 2015.

-Internal/external

finishes to the

main building in

progress

-Practical

completion of the

external works at

30 October 2015

-General progress

was at 65%.

the upgrading of the

Zithobeni and Refilwe

stadiums.

12

Challenges at Cullinan Library Park: a) Delaying of vital construction information by the City of Tshwane’s architectural

services official servicing the project:

Programme: The delayed information provided by the architect to the professional team has interrupted the contractor to adhere to work according to the programme and timeframes. Budget: The contractor had to be granted various extensions of time with cost and this has a negative impact on the project. b) Budget shortfall: The project was exposed to the possibility of not having sufficient funds to be completed. Should the insufficiency persist, it could delay the completion of the project. c) Breakdown in negotiations between the sub-contractors and the main

contractor with regard to 25% local expenditure as per the Council resolution: Through back and forth negotiations with the local community, subcontractors, main contractor and interventions of the Tshwane’s Department, the project lost a total of 35 days due to stoppages caused by local community’s dissatisfaction of the project role. The Council resolution requires that 25% of the projects’ budget be spent on utilising local laborers, machinery and sub-contractors and this was the source of the conflict.

b) Findings of Inspection-in-Loco at Refilwe Stadium


Considered

Author/ Initiator


Resolutions

2. Sports and

Recreation

Inspection- in-

loco: Refilwe

Sports Stadium

JRK Thema

Handover date:

22/05/2015

Expected completion

date:30/06/ 2016

Budget Allocated:

- R15 000 000

allocated

for 2015/16.

R79 750 (0.5%) actual

expenditure until 31/08/

2015. R14 920 250

(99.5%) remaining

Milestone/Status:

- 30/09/ 2014:

approval of

consulting team.

That a financial

breakdown of

costs for the

Cullinan Library

and ground works

be provided as

well as a

breakdown of

costs for the

upgrading of the

Zithobeni and

Refilwe stadiums.

13

Challenges at Refilwe Stadium: The following challenges together with the interventions took place:

Reduction in 2015/16 budget allocation resulting in contractual challenges;

Adjustment budget applied;

Six months delay in appointment of consultants and contractors by SCM division;

Departmental top management and MMC intervention took place;

Detailed planning and costing completed in one month to expedite project

implementation; and

Removal of existing structures that were not included in the drawings caused

unnecessary delays.

- October to

November 2014:

site survey, BoQ

and estimates, site

briefing, PSC,

procurement status

etc. 15/12/ 2014:

tender advertised

and site briefing

session with

contractors.

- June to May 2015:

implementation of

appointments.

- 20 June to 22/05/

2015- commence

with construction

- June 2016:

completion of all

works and site

handover.

14

c) Findings of Inspection-in-Loco at Zithobeni Stadium


Considered

Author/ Initiator


Resolutions

1. Sports and

Recreation

Inspection- in-

loco: Zithobeni

Sports Stadium

JRK Thema

Handover date:

22 May 2015

Expected completion

date: 18 May 2016

Budget Allocated:

- R15 000 000

allocated for 2015/16

- R354344 (2.3%)

actual expenditure

until 3/08/ 2015

- R14 645 656 (97.7%)

Remaining

- Milestone/Status

Site establishment/

clearance 27/08/2015

- Boundary wall:

18/09/2015

- Guardhouse, ticket

booth: 25/09/ 2015

- Refuse area: 25/09/15

- Buildings under

pavilion: 12/12/2015

- Field earthworks, S/W

system:12/12/ 2015

- Soccer field, athletics

track: 26/03/2016

- Road works and

paving: 26/03/2016

That a financial

breakdown of costs

for the Cullinan

Library and ground

works be provided

as well as a

breakdown of costs

for the upgrading of

the Zithobeni and

Refilwe stadiums.

15

- Pavilion Extension:

29/04/2016

- Landscaping:

18/05/ 2016

Challenges at Zithobeni Stadium: The following challenges together with the interventions took place:

Reduction in 2015/16 budget allocation resulting in contractual challenges;

Adjustment budget applied;

Six months delay in appointment of consultants and contractors by SCM division;

Departmental top management and MMC intervention took place;

Detailed planning and costing completed in one month to expedite project implementation;

Removal of existing structures that were not included in the drawings caused unnecessary delays.

In this Inspection- in- loco the Committee resolved as follows: That a financial breakdown of costs for the Cullinan Library and groundworks be provided as well as a breakdown of costs for the upgrading of the Zithobeni and Refilwe stadiums.

4.5 SECOND QUARTER PERFORMANCE The Committee executed the following activities in this quarter to comply with the oversight mandate:

Meeting - 8 October 2015;

Meeting - 12 November 2015 (cancelled);

No meeting scheduled for December 2015.

4.5.1 Oversight Committee meetings In the 2nd quarter of 2015/16 Financial Year, the Committee held two meetings on 8 October 2015 and 12 November 2014. The reports below were presented by the department and discussed in the meetings held.

16

a) 8 October 2015 meeting:

b) 12 November 2015 Meeting: Councillor Oscar Mathafa was appointed by the Chairperson and Speaker to act as Chairperson of the Committee for the day, wherein the Rules and Orders By-Law, Section 4 (2) was contravened by the appointment. The meeting was aborted due to diverse interpretation of the said clause by various members of the Committee.

Item Department Matters considered

Author/ Initiator

Resolutions

1.

Department of

Finance

Challenges identified

at municipal stores

during the oversight

committee

inspections-in-loco

DCM: Dr.Ndivho Lukhwareni

That the Deputy City

Manager prepares a

proper report and

come and present the

report in person.

That an official letter,

signed by the

Chairperson of the

Oversight Committee:

Finance be directed to

the Office of the

Deputy City Manager

regarding the stores.

2. Economic Development

Tshepo 10000 SED: Themba Mhlekwa

That cognizance be taken of the above presentations and that electronic versions of the presentations be forwarded to members of the Committee in order to interrogate the matters in future

3. Department of

Finance

Presentation on the

turnaround strategy

in the Supply Chain

Division

Bongani Mntambo

That cognizance be taken of the above presentations and that electronic versions of the presentations be forwarded to members of the Committee in order to interrogate the matters in future

17

4.6 THIRD QUARTER PERFORMANCE 4.6.1 OVERSIGHT COMMITTEE MEETINGS


Meeting - 14 January 2016;

Meeting - 11 February 2016; and

Meeting – 10 March 2016. The Section 79 Oversight Committee meetings are held on a monthly basis as per the approved Annual Council Calendar. In this quarter, three (3) meetings were held as mentioned above of which the focus was to assess the performance of the department and to determine adherence to the Service Delivery and Budget Implementation Plan (SDBIP) by the Department. The details of these meetings are as follows:

a) 14 January 2016 Committee meeting:

Item Department Matters Considered

Author/ Initiator

Resolutions

1. Department of Finance

Supply Chain Management performance (Tenders over R10m)

Bongani Mntambo

That the matter be

further discussed in

the next meeting

and that accurate

information

regarding the

questions posed by

Councillors, be

given at the

meeting.

18


Author/ Initiator

Resolutions


Current staffing of the Finance Department

Bertha Maleka

That the

presentation

regarding the

organisational

structure of the

Finance Department

inclusive of

divisions,a

breakdown of

staffing levels as

well as challenges

experienced be

presented at the

next meeting of the

Oversight

Committee.

That feedback be

given at the next

meeting regarding

the skills and

capacity levels of

staff in order to

determine if they

comply with the

minimum competent

levels required by

the National

Treasury.


Analysis of Debtors per region

Ronny Shilenge

That this presentation be presented at the next meeting.

19


Author/ Initiator

Resolutions

4. Finance Oversight Committee

Mid Term Performance Report of the Committee

JKR Thema That cognisance be taken of the contents of this report. That the Finance Department allocate sufficient budget for capital projects. That the Rules and orders Bylaw need to be complied with as well as be reviewed to avoid diverse interpretation of the clauses and avoid wasteful expenditures


Progress report on Call Centres

Mankiti Khaebane

That feedback be given at the next meeting regarding, inter alia, a dedicated priority line for Councillors and a query resolution report.

6. Office of the Speaker

Section 79 Oversight Committee: Finance-First Quarter Performance Report of the 2015/16 Financial Year

JRK Thema Chairperson ruled that this item be dealt with during the discussion of the Mid-Term Performance report.

b) 11 February 2016 Committee meeting:


Author/ Initiator

Resolution


Financial Performance on Opex and Capex

ED: Nthabiseng Mokete

That a complete

report be submitted

at the next meeting,

bearing in mind that

the report might

already have served

before Council.

20

b) 10 March 2016 Committee meeting:


MLAP, State of controls and Risk management within finance

ED: Dyalan Pillay

That cognisance be

taken of the

presentation on

Management Letter

Action Plan (MLAP),

State of Controls

and Risk

Management within

Finance.

That the mid-term

progress report on

the findings of the

Auditor General

Management letter

be further discussed

at the next meeting.


Indigent Budget ED: Nthabiseng Mokete

That the report

regarding the

debtor’s analysis be

extended to include

the arrear accounts

of the formal

indigent.

Item Department Matters considered Author/ Initiator

Resolutions


Staffing Matters: Group Financial Services

Bertha Maleka The Councillors

adopted the

presentation.


Priority line for Councillors Acting SED: Mankiti Khaebane

That cognizance be taken of the presentation.

3.

Department of Finance

Debtors Ageing report

ED:Chris Thipe

That cognizance be taken of the presentation.

21

4.7 FOURTH QUARTER PERFORMANCE


Meeting - 8 April 2016 (rescheduled from 7 April 2016);

Meeting - 12 May 2016; and

Meeting - 10 June 2016.


Age analysis per (Service CAT)

ED:Chris Thipe That cognizance be taken of the presentation.


Debtors summary: Age analysis comparison

ED:Chris Thipe That cognizance be taken of the presentation.


Regional Operational Centre Department Progress report on Regional Municipal Stores on findings by Section 79 Oversight Committee of Finance.

ED: Frans Manganye

That cognisance be taken on the actions taken to correct and improve the status of Regional Municipal Stores in all Regions of the City as per findings of Section 79 Oversight Committee on Finance during the respective Inspections-in-loco during January 2015 to June 2015. That cognisance be taken that the affected and responsible departments will continue working on the areas where improvement is not yet satisfactory.

22

As per approved Annual Calendar, the Committee was scheduled to hold its meeting on 7 April 2016, but the meeting was rescheduled for 08 April 2016 due to the State of the City Address. Below are the points that were highlighted in the meeting:

a) 8 April 2016 Committee meeting.


Author/ Initiator

Resolutions


Tshepo 10000 SED: Thembeka Mphefu

That cognisance be taken of presentation regarding the Tshepo 10000 programme and that a progress report in this regard be submitted in July 2016

2. Office of the Speaker

Section 79 Finance Oversight Committee: Third Quarter Performance Report

JRK Thema 1 .That cognizance be taken of the contents of this report. 2. That vacant posts be funded to capacitate the Finance Department, in the next financial year. A report on filling of vacancies should be submitted quarterly effective from July 2016, to update the Committee of the status quo.

23

3. That more budgets be allocated to improve security in Municipal stores in the next financial year. A quarterly report must be submitted, effective from July 2016 on the matter.

4. That the number of Tshepo 10000 co-operatives conducting business with the City be improved from 1.02% and 1.43% to at least 25% as per the requirement of Supply Chain Management for the next financial year. A progress report in that regard should be submitted to the Committee in July 2016.


MFMA In year Financial Report (Monthly Budget Statement) for the period ending 29 February 2016

ED: Nthabiseng Mokete

1.That cognizance be taken of the contents of this report

24

b) 12 May 2016 Committee meeting:

4.8 APPLICATION OF RELEVANT LEGISLATION, POLICIES AND BY-LAWS

An observation on legislative compliance was monitored through the Inspections-in-Loco conducted by the Committee in the three capital projects as mentioned in the report, the Library Park as well as the two stadia. Weaknesses were identified in that shortfalls on project’s budget poses a threat in completing the projects and this has a negative impact on the City’s core desired objective of providing service delivery to its communities. Capital projects are allocated budget which is provided for in the MTREF and the SDBIP as prescribed in the MFMA and Preferential Procurement Policy Framework Act. No.5 of 2000 and Regulations Section 19 (1) (d), stipulated as follows: “A Municipality may spend money on a capital project only if the sources of funding have been considered, are available and have not been committed for other purposes.” These projects mentioned above have been approved by Council, therefore by not injecting the approved total amount to the project contradicts the Council’s resolution and has negative repercussions.

4.9 ANALYSIS OF THE PROCESS PLAN

There were two inspections conducted in line the adopted 2015/16 Process Plan which is attached for ease of reference as an annexure to this report. The inspections focused on capital projects of the City with a view of establishing if they are in line with the Service Delivery Budget and Implementation Plan (SDBIP). Effective from the third quarter of the financial year, the process plan was not adhered to in order to dispose the backlog of outstanding reports which still needed to serve before the Committee. The backlog is mainly because reports which the Committee requested from the Department were not submitted timeously. In addition, the cancelled Committee meeting of November 2015 further added to the backlog.


Author/ Initiator

Resolutions


Creditors Age analysis: 31 January to 31 March

ED: Tommy Ngwenya

That cognisance be taken of the presentation regarding the Creditor’s Age analysis report from 31 January 2016 to 31 March 2016

25

The Inspection-in-Loco that was scheduled for February 2016, as per the approved process plan, was postponed to accommodate reports that were available to serve before the Committee. It is critical to note that strong systems are compulsory to promote coordination and prevent fragmentation of such systems, in accordance with the Municipal Systems Act (2000) Section 11(3)(g)(j) read with Section 40 which stipulate that: Section 11 (3) (g)(j) “A municipality exercises its legislative or executive authority by- (g) monitoring and, where appropriate, regulating municipal services where those

services are provided by service providers other than the municipality (j) monitoring the impact and effectiveness of any services, policies, programs or plans”

Section 40” “A Municipality must establish mechanisms to monitor and review its performance

management system.”

4.10 PERFORMANCE OF THE DEPARTMENT

a) Staff Complement The total staff complement for the Department was standing at 1448, during the last interaction with the Committee. There were 28 Director positions, in terms of the approved structure, which formed part of the 1448. Five (5) out of the twenty eight (28) positions were vacant and two (2) were never filled, according to the report received. The two positions were part of the new division, Treasury Office. The other two became vacant as a result of a resignation and retirement. The below diagram represented the state of affairs with regard to Director positions:

Designation Approved posts as per structure

Posts filled as per the Migration and Placement process

Vacancies Proposed vacancies to be filled in 2015/2016

Director 28 23 5 4

In addition to the vacant Director positions, the following incumbents were acting in Top Management positions: • ED: Financial Reporting & Assets – Acting GCFO; • ED: Tshwane Bus – Acting ED SCM; • ED: Treasury – Acting ED Revenue Management; • Director: Front Office and Funding Management – Acting ED Treasury; and • Director: Expenditure Management – Acting ED Financial Reporting & Assets.

26

The two Directors in the above category, continued doing their regular functions as Directors. The risk associated with this structure was that the staff had to overstretch by performing additional functions related to the vacant positions. This could result in low morale, fatigue and underperformance. Human Resources is a legislative requirement and the following legislation was therefore contravened. The Section 66 (1) (d) of the Municipal Systems Act states that: “A Municipal Manager, within a policy framework determined by the municipal Council and subject to any applicable legislation, must establish a process or mechanism to regularly evaluate the staff establishment and, if necessary, review the staff establishment and the remuneration and conditions of service.” b) Office Accommodation

The lease agreement of the building utilised by the department, expired on 31 December 2014. It is anticipated that the staff in BKS building will be moved to the new office space in Sammy Marks Square and the date will be communicated soon. Furthermore, offices are overcrowded and there are structural issues/problems to the building that include air conditioners as well as drainage system. However, the department is utilising the available resources to maximum capacity.

c) Departmental Business Plan

25% of procurement budget has been provided for empowerment of cooperatives, but in the first quarter only 1.43% was utilised with an additional 1.02% utilized in the second quarter. In view of this rate, the Strategic Objective 02, “Promoting shared economic growth and job creation” will not be achieved.

In order to improve the SCM, a turnaround strategy has been introduced and hopefully in the current quarter there will be improvements. In the previous financial year the Oversight Committee conducted inspections in all Municipal Stores and one of the findings were that security systems at the stores are poor. The Department is therefore commended for taking a step in addressing this issue. A feedback report from the Office of the Deputy City Manager: Service Delivery section was tabled before the March 2016 Oversight Committee meeting, wherein an estimated R16 million was allocated towards improvement of the security system in the Municipal stores.

d) Review of Supply Chain Management Policy

The Council of the City of Tshwane adopted an amended SCM Policy on the 31 July 2013. Section 6.4 of the SCM Policy states that the Accounting Officer should at least annually review the implementation of the policy and when he consider it necessary may submit the proposal for the amendments to Council. The review is placed on C9 for inclusion in the agenda for the next Mayoral Committee.

27

The review is therefore long overdue, noting that the National Treasury reviews policies of supply chain management annually. The supply chain section needs to keep abreast with the National Treasury and in that way, MFMA Regulations stated below will be complied with.

“The Accounting Officer of a municipality must in terms of Section 62(1)(f)(iv) of the Act, take all reasonable steps to ensure that the Municipality or municipal entity has and implements a supply chain management policy as set out in Regulation 2."

e) Progress on the Inspections conducted in 2015/2016

The Committee conducted an inspection on 10 September 2015 with a view of establishing whether the City’s capital projects are in line with the SDBIP. Zithobeni Sports Stadium, Refilwe Sports Stadium and Cullinan Library Park are capital projects which were visited by the Committee situated in Region 5 & 7.

Since the visit, there have been developments which are detailed as follows:

i) Cullinan Library Park

Progress to date:

General progress at 97%;

Roofing complete;

Lifts installed;

Electrical installations at 75%;

All doors and windows fitted;

Access road completed;

Caretaker’s house completed;

Interior finishes at 95% Water, sewer and storm water at 95%;

Landscaping to commence with completion in June 2016; and

Anticipated practical completion date 15 June 2016.

Challenges and mitigations:

Industrial actions from local sub-contractors and labour causing stoppages for 3 weeks during February 2016. Additional fund request as part of adjustment budget process approved to the value of R 11,500,000.

Budget shortfall has been addressed to complete project and honour contract. Intervention by SRAC Management on stoppages by local sub-contractors.

ii) Zithobeni Stadium: Progress to date:

General progress at 60%;

Roadworks and parking areas completed;

Pavilion extensions 80% complete;

28

All civil works completed;

Buildings under pavilions 95% complete; and

Completion and handover by June 2016.

Challenges and mitigations:

Consolidation of 2 sites prohibiting plan approval which could delay construction. Town Planning Department and Legal Department were brought in to resolve the matter;

Budget reduction during allocation of 2015/16 budget resulted in R 15 m shortfall. Funds from Pilditch Stadium were transferred to complete this project;

Local sub-contracting was a challenge but top Management intervened in this regard;

There were challenges with quality of concrete works on pavilion extensions wherein engineers were consulted and quality of work monitored by means of independent.tests.

iii) Refilwe Stadium:

As a result of the disputes between the two companies (Joint Venture), the other pulled out of the project and the notification of withdrawal had gone through relevant processes. It became an automatic cancellation of the contract between the City and the Joint Venture.

In light of this new development, the SRAC department instructed the professional team to assess the work already completed and to quantify the work that still needs to be undertaken to complete the work. Below is a summary of work carried out:

MILESTONE DESCRIPTION

DATE

COMMENT

Revised Bill of Quantity 29 January 2016 The document was forwarded to the PMU in the office of the DCM for the appointment of the new contractor to complete the works

Advertise tender February 2016 The tender was advertised and a site briefing session took place with the contractors

Closing Tender 2 March 2016 Completed

Adjudication of tender 3 March 2016 Completed

Appointment of contractor

End March 2016 In process

Completion Date: The initial completion date was agreed for 30 June 2016. The construction period will be 12 months after the appointment of a new contractor which will take the project to end February 2017.

29

Progress to date:

Previous appointment cancelled and new tender compiled;

Re-advertised and the recommended contractor exceeded the available budget. 4.11. PERFORMANCE OF THE FINANCE OVERSIGHT COMMITTEE

This current financial year the Committee not only attended to its oversight function as mandated but has also participated in the workshops, study tours, conferences and seminars as part of capacity building and skills development.

4.12 CHALLENGES FACED BY THE OVERSIGHT COMMITTEE FINANCE

The main challenges limiting the Committee in executing its responsibilities revolve around procedure during meetings. The procedure for meetings as outlined in the terms of reference of the Committee indicates that meetings are conducted in accordance with the provisions of the Council’s Rules and Orders By-Laws, read with any specific Council approved Policy and Procedure regarding the functioning of the Committee. The challenges can therefore be summarised as follows: i. Reports which the Committee requested from the Department were not submitted

timeously to the Committee and thus created a backlog.

ii. Diverse interpretation of the Rules and Orders By-Laws, Section 4 (2).

iii. Most of the Committee members have been performing tasks without laptops (tools of trade). The matter was reported and relevant documents provided for the laptops to be replaced or repaired but without luck. This hampered their individual performance and the Committee in executing its responsibilities.

Mitigations (in relation to the challenges above)

i. Presentations should be treated as Agenda items and should therefore be sent together with the notice of the meetings as required by the Rules and Orders. Circular 9 Report Flow must be complied with by the Department;

ii. The Department is compelled in terms of the Governance Model, to account on its

performance to the Section 79 Oversight Committee;

iii. The submission of reports by Department must be in line with the Rules and Orders By-Law, to avoid the backlog of reports.

5. COMMENTS OF THE STAKEHOLDER DEPARTMENTS Not applicable.

30

6. IMPLICATIONS 6.1 HUMAN RESOURCES

The performance of the department is likely to be affected negatively by the vacant positions.

6.2 FINANCES

Budget shortfalls create unnecessary delays on completion of projects.

6.3 COMMUNICATION

The report is for consideration by the Committee and Council, resolutions herein will be communicated to relevant department(s).

6.4 PREVIOUS COUNCIL AND MAYORAL COMMITTEE RESOLUTIONS

The content of report addresses the Governance Model which is a Council resolution of 09 June 2011 and highlights non-compliance with the Rules and Orders By-Law, a Council resolution of 29 November 2012 due to diverse interpretations.

6.5 CONSTITUTIONAL AND LEGAL FACTORS

The report reflects compliance or non-compliance with provisions of the following legislation:

Constitution of the Republic of South Africa; Local Government Municipal Systems Act, Act 32 of 2000; Local Government Municipal Structures Act, Act 117 of 1998; Local Government Municipal Finance Management Act, Act 56 of 2003; and Intergovernmental Relations Framework Act, Act 13 of 2005.

7. CONCLUSION

The Section 79 Oversight Committee: Finance has performed its duties according to its terms of reference as adopted by Council. Reports and presentations for the period under review will assist Council (through the Section 79 Committee) in proposing measures to improve the performance of the Department in line with the Municipal Systems Act. This report outlines Annual Performance of the Committee for the Financial Year 2015/16 and it covers meetings held and analysis of the performance of the department. The department should at all times strive for excellence by complying with the above provisions of legislation. This would assist the City to achieve a clean audit and adhere to good governance principles.

31

The Inspection conducted during the period under review and its findings will assist Council in developing measures to improve the quality of services rendered to the community, in line with Batho Pele Principles. This report outlines oversight activities for the 2015/2016 Financial Year and it covers meetings held, inspections conducted with regard to the legislative prescripts which informs the mandate of the department, as well as the analysis of the process plan and challenges faced by the Committee.

ANNEXURES:

A: Process Plan for 2015/16 financial year. B: Councillor’s Attendance Register. RECOMMENDED:

1. That congnisance be taken of the contents of this report.

2. That the Finance Department submit a report quarterly to the Committee, highlighting the

status of challenges listed in items 4.4 and 4.10, effective from September 2016.

3. That Rules and Orders Bylaw be complied with consistently, further that it be reviewed to

avoid diverse interpretation of the clauses that lead to wasteful expenditure through

cancellation of meetings.

(Remark:

The Section 79 Oversight Committee at its meetig held on 15 June 2016 unanimously agreed that certain minor amendments be made in the body of the report. The said amendments were made.)

32

ANNEXURE A: PROCESS PLAN

PROGRAM/ BUSINESS PLAN FOR CITY OF TSHWANE SECTION 79 OVERSIGHT COMMITTEE: FINANCE

JULY 2015 – JUNE 2016

DATE TIME ACTIVITY REPORTS AND PRESENTATIONS

ACTUAL REPORTS CONSIDERED

OUTSTANDING REPORTS

RESPONSIBLE DIVISION

16 July 2015

12:00 Committee Meeting

Report on the findings of the previous inspection In-Loco

Committee Annual

report

Planning Session for the Fin Year 2015/2016 and adoption of process plan

Oversight Committee : Finance

Oversight Committee: Finance

Oversight Committee: Finance

13 August 2015


Presentation on all Inspection In-Loco’s conducted at the stores in all the regions

Finance department

33

Presentation on the

turnaround strategy in the Supply Chain Division

Finance department

10 September 2015

09:00 Inspection In-Loco

Capital project/Asset under construction to be identified.

Oversight Committee

8 October 2015


Report on the findings of the previous inspection In-Loco

Quarterly progress report on the challenges identified in stores.

Quarterly progress report on the challenges identified in customer care centers.

Quarterly progress report on Tshepo 10000

Oversight Committee

Finance department

Finance department

Finance department

12 November 2015


Presentation on the

analysis of debtors per Regions and Wards.

Presentation on the budget spent on

Finance department

Finance department

34

indigents.

Presentation on tenders over R10m,awarded, deviations & contracts.

Presentation on the current staffing in the following departments: Treasury, Budget, Revenue, Supply Chain, assets & strategic customer centers & operation centers.

Finance department

Finance department

14 January 2016


Mid-term performance report of the oversight committee.

Mid-term report on CAPEX & OPEX

Mid-term progress report on the findings of the Auditor General(Management letter)

Finance department

Finance department

Finance department

11 February 2016

09:00 Inspection In-Loco



35

10 March 2016


Report on the findings of the previous inspection In-Loco.

Presentation on outstanding debtors, actual collection over 60 days.

Presentation on analysis of creditors payments: (monthly overdue)

Oversight committee: Finance

Finance department

Finance department

8 April 2016


Quarterly progress

report on the challenges identified in stores.

Quarterly progress report on the challenges identified in customer care centers.

Quarterly progress report on Tshepo 10000


Finance department

Finance department

36

12 May 2016

09:00 Inspection in-loco



9 June 2016


Report on the findings of the previous inspection In-Loco.

Presentation on CAPEX & OPEX

Presentation on all outstanding reports.


Finance department

Finance department

37

ANNEXURE B: COUNCILLORS ATTENDANCE REGISTER

Councillors: FINANCE OVERSIGHT COMMITTEE

16 Jul 2015

13 Aug 2015

10 Sep 2015

08 Oct 2015

12 Nov 2015

Dec 2015

Jan 2016

Feb 2016

Mar 2016

Apr 2016

May 2016

Jun 2016

CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN CM

IN

Kekana, RJ P - P - - P P - LOA

- - - P - P - P - P - P -

Dlamini, BL

P - P - - P P - AWL

- - - P - P - LOA

- P - P -

Fleming, DL

AWL

- AWL

- - A A - AWL

- - - AWL

- P - p - A - A -

KATAKE, NS

P - P - - P P - AWL

- - - P - P - P - P - P -

Lebese, OS

P - P - - P LOA

- P - - - P - AWL

- p - P - A -

Maredi,F P - P - - A P - P - - - AWL

- AWL

- P - A - P -

Mathenjjwa, N

P - P - - P P - AWL

- - - AWL

- AWL

- AWL

- A - P -

Morudu, MGR

P - P - - A A - P - - - P - AW

- P - P - P -

38

L

Ngwenya, C P P

- -

P - - P LOA

- P - - - P - P - P - P - P -

Rammushi, J

P - P - - P P - P - - - P - P - P - P - P -

Zitha, P P - P - - P P - AWL

- - - P - P - P - P - P -

Khumalo,Z Roos, A

P -

- -

A -

- -

- -

A -

A -

- -

P -

- -

- -

- -

P -

- -

- P

- -

- P

- -

- P

- -

- P

- -

Fourie,ML

P - P - - L OA

P - P - - - P - P - P - P - P -

Middelburg,L

P - A - - P P - P - - - p - P - LOA

- P - P -

Osman, A P - A - - P P - P - - - P - P - P - A - P -

Ramohoebo, M

P - P - - P P - P - - - P - P - P - P - P -

Campbell, AW Smith, F

P -

- -

AWL -

- -

- -

- AWL

- -

- -

- P

- -

- -

- -

- P

- -

- P

- -

- P

- -

- P

- -

- A

- -

Van Den Heever, C

LOA

- A - - P LOA

- P - - - P - P - P - P - P -

39

Visser, G

P - P - - P P - P - - - P - P - P - P - P -

Kissoonduth, A

P - P - - A P - P - - - P - P - P - P - P -

Glossary:

P=Present; A=Absent; CM=Committee meeting; IN=Inspection-in-loco; - = no committee meeting, no inspection, cllr not part of the committee at that time. AWL= absent without letter LOA= Leave Of Absent

Please note: That Councilor Roos, A replaced Councilor Khumalo, Z. from February 2016.

That Councilor Smith, F replaced Councilor Campbell from 08 October 2015

That Councilor Mathafa,O was present as the acting chairperson when the meeting was disrupted.

That the council was on recess in December, hence no meeting took place.

Documents

REPORT OF OVERSIGHT COMMITTEES REPORTING DIRECTLY TO … · The work of the Oversight Committee is guided mainly by the following legislation: ... plastering 80% complete as at 15